<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
Commission file number 0-18335
TETRA Technologies, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 74-2148293
(State of incorporation) (I.R.S. Employer
Identification No.)
25025 I-45 NORTH, THE WOODLANDS, TEXAS 77380
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (281) 367-1983
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 .
------ ------
As of August 7, 1997 there were 13,204,904 shares of the Company's
common stock, $.01 par value per share, issued and outstanding.
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
TETRA TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
($ THOUSANDS)
Revenues:
Product sales $35,515 $29,287 $69,499 $55,765
Services 16,883 7,423 29,765 15,139
------- ------- ------- -------
TOTAL REVENUES 52,398 36,710 99,264 70,904
Cost of Revenues:
Cost of product sales 25,216 19,993 48,947 38,247
Cost of services 11,950 5,012 21,289 10,472
------- ------- ------- -------
Total Cost of Revenues 37,166 25,005 70,236 48,719
------- ------- ------- -------
GROSS PROFIT 15,232 11,705 29,028 22,185
General and Administrative Expense 8,760 7,053 16,736 13,215
------- ------- ------- -------
OPERATING INCOME 6,472 4,652 12,292 8,970
Interest Expense 616 290 1,296 314
Interest Income 54 33 107 78
Equity in Earnings from Joint Ventures 103 182 223 237
Other Income 136 62 497 181
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 6,149 4,639 11,823 9,152
Provision for Income Taxes 2,486 1,734 4,544 3,436
------- ------- ------- -------
NET INCOME $ 3,663 $ 2,905 $ 7,279 $ 5,716
======= ======= ======= =======
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.26 $ 0.22 $ 0.52 $ 0.43
======= ======= ======= =======
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 14,066 13,492 14,107 13,410
======= ======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
1
<PAGE> 3
TETRA TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
($ THOUSANDS) 1997 1996
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,727 $ 2,829
Trade accounts receivable, net of allowance for doubtful
accounts of $1,267 in 1997 and $1,266 in 1996 43,424 43,768
Costs and estimated earnings in excess of billings
on incomplete contracts 2,308 1,410
Inventories 32,302 24,360
Deferred tax assets 1,588 1,676
Prepaid expenses and other current assets 3,771 2,083
--------- ---------
Total Current Assets 91,120 76,126
PROPERTY, PLANT AND EQUIPMENT:
Land and building 10,350 8,428
Machinery and Equipment 48,184 43,477
Automobiles and trucks 7,694 5,276
Chemical plants 45,328 45,014
Construction in progress 14,204 5,409
--------- ---------
125,760 107,604
Less accumulated depreciation and amortization (39,410) (35,436)
--------- ---------
Net Property, Plant, and Equipment 86,350 72,168
OTHER ASSETS:
Patents and licenses, net of accumulated amortization
of $788 in 1997 and $750 in 1996 422 460
Investment in Joint Ventures 5,762 5,928
Cost in excess of net assets acquired, net of accumulated
amortization of $1,445 in 1997 and $964 in 1996 18,918 17,381
Other, net of accumulated amortization of $1,355 in 1997
and $1,218 in 1996 7,100 6,443
--------- ---------
Total Other Assets 32,202 30,212
--------- ---------
$ 209,672 $ 178,506
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 4
TETRA TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
($ THOUSANDS) (Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ -- $ 2,202
Trade accounts payable 24,107 22,618
Accrued expenses 12,295 9,085
Billings in excess of costs and estimated
earnings on incomplete contracts 498 567
Current portions of all long-term debt and capital
lease obligations 1,628 4,256
--------- --------
Total Current Liabilities 38,528 38,728
LONG-TERM DEBT, LESS CURRENT PORTION 45,171 23,853
CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION 1,229 835
DEFERRED INCOME TAXES 8,825 6,687
OTHER LIABILITIES -- 381
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share
40,000,000 shares authorized, with 13,190,220 shares
issued and outstanding in 1997 and 13,069,396 shares
issued and outstanding in 1996 131 131
Additional paid-in capital 68,834 67,811
Cumulative Translation Adjustment (17) 387
Retained earnings 46,971 39,693
--------- --------
Total Stockholders' Equity 115,919 108,022
--------- --------
$ 209,672 $178,506
========= ========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 5
TETRA TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
($ THOUSANDS) 1997 1996
-------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 7,279 $ 5,716
Adjustments to reconcile net income to net cash
provided by operating activities :
Depreciation and amortization 5,163 3,923
Undistributed (earnings) losses from joint venture (223) (237)
Provision for deferred income taxes 214 307
Provision for doubtful accounts (13) 345
(Gain) on sale of property, plant and equipment (169) (15)
Changes in operating assets and liabilities, net of assets acquired :
Trade accounts receivable 147 (287)
Costs and estimated earnings in excess
of billings on incomplete contracts (898) (16)
Inventories (7,942) (5,773)
Prepaid expenses and other current assets (1,680) (972)
Trade accounts payable and accrued expenses 4,926 (3,037)
Billings in excess of costs and estimated
earnings on incomplete contracts (69) 181
Other (1,775) (981)
------- ------
Net cash provided by operating activities 4,960 (846)
------- ------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (18,449) (6,394)
Acquisition of businesses, net of cash acquired -- (1,400)
Payments from notes receivable -- 18
Proceeds from sale of property, plant and equipment 470 176
------- ------
Net cash used by investing activities (17,979) (7,600)
------- ------
FINANCING ACTIVITIES:
Net repayments and borrowings from short-term credit lines (2,202) (63)
Proceeds from long-term debt and capital
lease obligations 22,550 2,575
Principal payments on long-term debt and capital
lease obligations (3,455) (962)
Proceeds from sale of common stock and exercised stock options 1,024 525
------- -------
Net cash used by financing activities 17,917 2,075
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,898 (6,371)
CASH & INVESTMENTS AT BEGINNING OF PERIOD 2,829 7,510
------- -------
CASH & INVESTMENTS AT END OF PERIOD $ 7,727 $ 1,139
======= =======
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are wholly-owned. The Company's
investment in its joint ventures is stated at cost plus equity in undistributed
earnings. All significant intercompany balances and transactions have been
eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X for interim financial
statements required to be filed with the Securities and Exchange Commission and
do not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. However, the
information furnished reflects all normal recurring adjustments which are, in
the opinion of management, necessary to a fair statement of the results for the
interim periods.
The accompanying financial statements should be read in conjunction
with the audited financial statements for the year ended December 31, 1996.
For the purposes of the statements of cash flows, the Company
considers all highly liquid cash investments with a maturity of three months or
less to be cash equivalents.
Interest paid on debt during the six months ended June 30, 1997 and
1996 was $1,392,000 and $491,000, respectively.
Income tax payments made during the six months ended June 30, 1997 and
1996 were $2,595,000 and $2,191,000, respectively.
NOTE B - COMMITMENTS AND CONTINGENCIES
The Company, its subsidiaries and other related companies are named
defendants in several lawsuits and respondents in certain governmental
proceedings arising in the ordinary course of business. While the outcome of
lawsuits or other proceedings against the Company cannot be predicted with
certainty, management does not expect these matters to have a material adverse
impact on the Company.
NOTE C - NET INCOME PER SHARE
The following is a reconciliation of the weighted average number of
common shares outstanding with the number of shares used in the computations of
net income per common and common equivalent share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
June 30 June 30
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average number
of common shares outstanding ........................... 13,190,220 12,869,821 13,156,046 12,848,250
Assumed exercise of stock options......................... 875,686 622,026 951,359 562,162
---------- ---------- ---------- ----------
Weighted average common and common
equivalent shares outstanding........................... 14,065,906 13,491,847 14,107,404 13,410,412
========== ========== ========== ==========
</TABLE>
-5-
<PAGE> 7
In applying the treasury stock method to determine the dilutive effect
of the stock options outstanding during the second quarter of 1997, the average
market price of $23.29 was used.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
Three months ended June 30, 1997 compared with three months ended June 30,
1996.
Total revenues for the quarter ended June 30, 1997 were $52.4 million
compared to $36.7 million in the prior period, an increase of $15.7 million or
42.8%. Revenues from the Oil & Gas Services Division were up approximately 49%
over the prior quarter. This division's domestic Gulf Coast onshore operations
realized substantial growth during the quarter. The impact of late 1996
acquisitions, added service equipment and additional market penetration have
all combined to achieve these increased revenues. The Company continues to
expand aggressively in this area, taking advantage of the growing market. Oil
and gas international revenues also improved significantly during the quarter.
Specialty Chemicals Division revenues were up approximately 30% over second
quarter 1996 due to improved dry calcium chloride sales, stronger activity in
the process technologies group and contributions from the Wilchem acquisition
in late 1996.
Gross profits were $15.2 million in the 1997 quarter compared to $11.7
million in the 1996 quarter, for an increase of $3.5 million or 29.9%. Gross
profit as a percentage of revenues was 29.1% in 1997 versus 31.9% in 1996. The
Specialty Chemicals Division's gross profit percentage was down, offsetting a
moderate increase by the Oil & Gas Services Division. Operations at the
Specialty Chemicals Division's Fairbury, Nebraska plant were disrupted due to
site improvements, plant modifications and compliance with E.P.A. requirements.
This disruption in the plant operations resulted in lost profits and
significant gross margin erosion, which is expected to diminish in the third
quarter. The plant is now able to utilize a variety of feedstocks while
adhering to strict E.P.A. guidelines regarding the use of certain feedstocks
for the production and sale of zinc-based micronutrients for fertilizers.
General and administrative expenses were $8.8 million in the second
quarter of 1997 compared to $7.1 million in the second quarter of 1996. The
inclusion of acquired operations accounted for a significant portion of this
increase. General and administrative expenses as a percentage of revenues
continued to drop from 19% in 1996 to 17% in 1997.
Operating income for the quarter ended June 30, 1997 was $6.5 million,
up $1.8 million or 38.3% from $4.7 million in 1996. This increase is the
combined result of a gross margin increase of $5.0 million due to increased
volume, a $1.5 million decrease due the lower gross margin rates, and a $1.7
million increase in general and administrative expenses.
Interest expense increased during the current quarter compared to the
prior quarter due to increased long-term debt over the past twelve months in
support of the Company's acquisition and internal growth programs.
Net income after taxes for the three months ended June 30, 1997 was
$3.7 million versus $2.9 million in 1996, an increase of $0.8 million or 27.6%.
Net income per share was $0.26 in the 1997 quarter on 14,066,000 weighted
average common and common equivalent shares outstanding compared to earnings in
1996 of $0.22 based on 13,492,000 weighted average common and common equivalent
shares outstanding.
Six months ended June 30, 1997 compared with six months ended June 30, 1996.
For the period ended June 30, 1997, total revenues were $99.3
million, up $28.4 million or 40.1% over the 1996 period of $70.9 million. The
Oil & Gas Services Division's revenues were up approximately 37% over the prior
year. This division's well abandonment and production testing businesses have
grown substantially over the last six months in response to strong market
conditions. This division has also benefited from a domestic offshore market
that has remained strong and improved international completion fluid and
filtration operations.
-6-
<PAGE> 8
The Specialty Chemicals Division's revenues were up approximately 46% over
1996, reflecting substantial contributions from two prior year acquisitions:
Sulfamex, a Mexican manufacturer of manganese sulfate, and Wilchem, a producer
of mold and mildew products. The division's dry calcium chloride sales
rebounded from the mild winter weather experienced along the East Coast,
contributing to the period's improved revenues.
Gross profits were $29.0 million in the 1997 period compared to $22.2
million in the 1996 period, for an increase of $6.8 million or 30.6%. Gross
profit as a percentage of revenues was 29.2% in 1997, down from 31.3% in 1996.
The Oil & Gas Services Division's gross profit percentage was comparable to the
prior year; however, the Specialty Chemicals Division's gross profit percentage
was down due principally to disruptions at the Division's Fairbury, Nebraska
plant.
General and administrative expenses were $16.7 million in the 1997
period compared to $13.2 million in the 1996 period. The addition of personnel
in the Oil & Gas Services Division and the inclusion of such expenses from
acquired operations in both divisions accounted for a significant portion of
this increase. General and administrative expenses as a percentage of revenues
continued to drop from 18.6% in 1996 to 16.9% in 1997.
Operating income for the six months ended June 30, 1997 was $12.3
million, up $3.3 million or 36.7% from $9.0 million in the comparable period of
1996. This increase is attributable to a gross margin improvement of $8.8
million relating to increased volume less $2.0 million from lower gross margin
rates, and by increased general and administrative expenses of $3.5 million.
Interest expense increased during the six month period due in part to
capitalized interest in 1996 in conjunction with the Lake Charles plant
expansion with no comparable capitalization in 1997. Additionally, the
long-term debt has increased by over $38 million in the past twelve months in
support of the Company's acquisition and internal growth programs, resulting in
increased interest expense.
Net income after taxes for the first six months of 1997 totaled $7.3
million versus $5.7 million in 1996, an increase of $1.6 million or 28.1%. Net
income per share was $0.52 in the 1997 period based on 14,107,000 weighted
average common and common equivalent shares outstanding compared to earnings
for the comparable 1996 period of $0.43 based on 13,410,000 weighted average
common and common equivalent shares outstanding.
LIQUIDITY AND CAPITAL RESOURCES
The Company's investment in working capital, excluding cash and cash
equivalents, increased to $44.9 million at June 30, 1997 compared to $34.6
million at December 31, 1996. Inventories increased $7.9 million during this
period principally in dry calcium chloride, as a result of lower than
anticipated first quarter sales and in oil and gas operations in response to
increased drilling activity. Trade payables and accrued expenses increased
during the period by $4.7 million. Oil and gas operations accounted for a
substantial portion of this change, as increased inventory and capital
equipment were acquired. Short-term borrowings and current portion of long-term
debt decreased by nearly $4.8 million, as the Company reduced its cost of
capital by refinancing the long-term debt and working capital loans of its
American MicroTrace subsidiary.
The Company has announced its intention to augment internal growth
with acquisitions. To fund this acquisition program, the Company will use
existing cash and cash flow as well as its general purpose, unsecured, prime
rate/LIBOR-based line-of-credit with a syndicate of banks led by NationsBank.
As of June 30, 1997, the Company has $2.4 million in letters of credit and $45
million in long-term debt outstanding against a $120 million line-of-credit,
leaving a net availability of $72.6 million. The line-of-credit matures in
1999. The Company also has 4.8 million shares of TETRA common stock available
under a shelf registration statement to finance its acquisition program.
Capital expenditures during the six months ended June 30, 1997 totaled
approximately $18.4 million. Significant components include production
equipment for the Oil & Gas Services Division's well abandonment and production
testing operations and additional process equipment and plant modifications at
the Company's American Microtrace subsidiary.
-7-
<PAGE> 9
The Company believes that its existing funds, cash generated by
operations, funds available under its bank line-of-credit, as well as other
traditional financing arrangements, such as secured credit facilities, leases
with institutional leasing companies, and vendor financing, will be sufficient
to meet its current and anticipated operations and its anticipated capital
expenditures through 1997 and thereafter.
PENDING ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. The impact is expected
to result in an increase in primary earnings per share for the quarter ended
June 30, 1997 and 1996 of $.02 and $.01 per share, respectively, and for the
six months ended June 30, 1997 and 1996 of $.03 and $.02 per share,
respectively. The calculation of fully diluted earnings per share for these
quarters is not expected to change from reported amounts as a result of
Statement 128.
CAUTIONARY STATEMENT FOR PURPOSES OF FORWARD LOOKING STATEMENTS
Certain statements contained herein and elsewhere may be deemed to be
forward-looking within the meaning of The Private Securities Litigation Reform
Act of 1995 and are subject to the "safe harbor" provisions of that act,
including without limitation, statements concerning future sales, earnings,
costs, expenses, acquisitions or corporate combinations, asset recoveries,
working capital, capital expenditures, financial condition, and other results
of operations. Such statements involve risks and uncertainties. Actual results
could differ materially from the expectations expressed in such forward-looking
statements. Some of the risk factors that could affect the Company's actual
results and cause actual results to differ materially from any such results
that might be projected, forecast, estimated or budgeted by the Company in such
forward-looking statements are set forth in the section entitled "Cautionary
Statement for Purposes of Forward Looking Statements" contained in the
Company's report on Form 10-Q for the quarter ended March 31, 1997.
-8-
<PAGE> 10
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company, its subsidiaries and other related companies are named
defendants in several lawsuits and respondents in certain governmental
proceedings arising in the ordinary course of business. While the outcome of
lawsuits or other proceedings against the Company cannot be predicted with
certainty, management does not expect these matters to have a material adverse
impact on the Company.
ITEM 6. EXHIBITS
(a) Exhibits
(i) A statement of computation of per share earnings is included
in Note C of the Notes to Consolidated Financial Statements
included in this report and is incorporated by reference into
Part II of this report.
(ii) 10.31 Credit Agreement dated April 10, 1997 between TETRA
Technologies, Inc. and Nationsbank.
27 Financial Data Schedule
(b) Reports on Form 8-K: None
-9-
<PAGE> 11
SIGNATURES
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.
TETRA Technologies, Inc.
Date: August 14, 1997 By: [Geoffrey M. Hertel]
-------------------------------------
Geoffrey M. Hertel
Executive Vice President -
Finance and Administration
(Principal Financial Officer)
Date: August 14, 1997 By: [Bruce A. Cobb]
------------------------------------
Bruce A. Cobb, Corporate Controller
(Principal Accounting Officer)
-10-
<PAGE> 12
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
(i) A statement of computation of per share earnings is included
in Note C of the Notes to Consolidated Financial Statements
included in this report and is incorporated by reference into
Part II of this report.
(ii) 10.31 Credit Agreement dated April 10, 1997 between TETRA
Technologies, Inc. and Nationsbank.
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.31
[Execution Version]
CREDIT AGREEMENT
Among
TETRA TECHNOLOGIES, INC.
as Borrower,
THE FINANCIAL INSTITUTIONS
NAMED IN THIS CREDIT AGREEMENT
as Banks,
and
NATIONSBANK OF TEXAS, N.A.,
as Agent for the Banks
$120,000,000
April 10, 1997
Arranged by:
NATIONSBANC CAPITAL MARKETS, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.3 Accounting Terms; Preparation of Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.4 Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 2. CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1 Revolving Loan Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.4 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.5 Breakage Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.6 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.7 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.8 Market Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.9 Payment Procedures and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.1 Conditions Precedent to Initial Extensions of Credit . . . . . . . . . . . . . . . . . . . . . . . . 28
3.2 Conditions Precedent to Each Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.4 Absence of Conflicts and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.5 Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.6 Public Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.7 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.8 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.10 Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.11 Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.12 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.15 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.1 Organization; Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.2 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.5 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.6 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.8 Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.9 Corporate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.10 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.11 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.13 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.14 Lines of Business; Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.15 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.16 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.17 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.18 Payment of Certain Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.19 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.20 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.21 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 6. DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.2 Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.3 Acceleration of Credit Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.4 Cash Collateralization of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.5 Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.6 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.7 Actions Under Credit Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.8 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.9 Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 7. THE AGENT AND THE ISSUING BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1 Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.2 Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.3 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.4 Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.7 Successor Agent and Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.3 Modifications, Waivers, and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.4 Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.5 Assignment and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.6 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.7 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.8 Forum Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.9 Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.10 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.13 No Further Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
EXHIBITS
<S> <C> <C>
Exhibit A - Form of Compliance Certificate
Exhibit B - Form of Borrowing Request
Exhibit C - Form of Continuation/Conversion Request
Exhibit D - Form of Note
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Closing Documents List
Exhibit G - Form of Joinder Agreement
SCHEDULES
Schedule I - Administrative Information
Schedule II - Disclosures
</TABLE>
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<PAGE> 6
CREDIT AGREEMENT
This Credit Agreement dated as of April 10, 1997, is among TETRA
Technologies, Inc., a Delaware corporation, as Borrower, the financial
institutions named herein, as Banks, and NationsBank of Texas, N.A., as Agent
for the Banks.
The parties hereto agree as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.
1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (unless otherwise indicated,
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Acquisition" means the direct or indirect purchase or acquisition,
whether in one or more related transactions, of any Person or group of Persons
or any related group of assets, liabilities, or securities of any Person or
group of Persons.
"Adjusted EBITDA" means, with respect to the Borrower and for any
period of its determination, the sum of (a) the EBITDA of the Borrower and its
Subsidiaries that are Guarantors plus (b) any cash dividends received during
such period by the Borrower from any Subsidiaries that are not Guarantors up to
an aggregate amount for the period not to exceed $3,000,000 on an annualized
basis.
"Adjusted Prime Rate" means, for any day, the fluctuating rate per
annum of interest equal to the greater of (a) the Prime Rate in effect on such
day and (b) the Federal Funds Rate in effect on such day plus 0.50%.
"Advance" means the outstanding principal from a Bank which represents
such Bank's ratable share of a Borrowing.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person or any Subsidiary of such Person.
The term "control" (including the terms "controlled by" or "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership, by contract, or otherwise.
"Agent" means NationsBank in its capacity as an agent pursuant to
Article 7 and any successor agent pursuant to Section 7.7.
"Agent Fee Letter" means the confidential letter agreement dated as of
February 5, 1997, among the Borrower, NationsBank, and NationsBanc Capital
Markets, Inc., regarding certain fees
<PAGE> 7
owed by the Borrower to NationsBank and NationsBanc Capital Markets, Inc., in
connection with this Agreement.
"Agreement" means this Credit Agreement.
"Applicable Lending Office" means, with respect to each Bank and for
any particular type of transaction, the office of such Bank set forth in
Schedule I to this Agreement (or in the applicable Assignment and Acceptance by
which such Bank joined this Agreement) as its applicable lending office for
such type of transaction or such other office of such Bank as such Bank may
from time to time specify in writing to the Borrower and the Agent for such
particular type of transaction.
"Applicable Margin" means, with respect to interest rates and letter
of credit fees and as of any date of its determination, an amount equal to the
percentage amount set forth in the table below opposite the applicable ratio of
(i) the consolidated Debt of the Borrower as of the end of the fiscal quarter
then most recently ended to (ii) the consolidated Adjusted EBITDA of the
Borrower for the four fiscal quarters then most recently ended:
<TABLE>
<CAPTION>
Debt to Adjusted Applicable Margin Applicable Margin Applicable Margin
EBITDA LIBOR Tranches Prime Rate Tranches Letter of Credit Fee
- ---------------- ----------------- ------------------- --------------------
<S> <C> <C> <C>
less than or equal to 1.00 0.75% 0.00% 0.75%
greater than 1.00 but less than or equal to 1.50 1.00% 0.00% 1.00%
greater than 1.50 but less than or equal to 2.00 1.25% 0.00% 1.25%
greater than 2.00 but less than or equal to 2.50 1.50% 0.00% 1.50%
greater than 2.50 1.75% 0.25% 1.75%
</TABLE>
From the date of this Agreement until the delivery of the June 30, 1997,
financial statements to the Agent pursuant to Section 5.2(b), the Applicable
Margin shall be 1.00% for LIBOR Tranches, 0.00% for Prime Rate Tranches, and
1.00% for Letter of Credit Fees. Thereafter, the Agent shall determine the
Applicable Margin based upon the most recent financial statements dated as of
the end of a fiscal quarter delivered to the Agent pursuant to Section 5.2(b).
Any adjustments to the Applicable Margin shall become effective on the first
day after the end of the fiscal quarter following the date of calculation of
such Applicable Margin. Upon any change in the Applicable Margin, the Agent
shall promptly notify the Borrower and the Banks of the new Applicable Margin.
If such financial statements are not delivered when required hereunder, the
Applicable Margin shall increase to the maximum percentage amount set forth in
the table above from such 45th day until three days after such financial
statements are received by the Agent; provided that such increase shall not
limit the Agent's capacity to declare a default under this Agreement.
"Assignment and Acceptance" means an Assignment and Acceptance in
substantially the form of Exhibit E executed by an assignor Bank, an assignee
Bank, and the Agent, in accordance with Section 8.5.
"Banks" means the lenders listed as Banks on the signature pages of
this Agreement and each Eligible Assignee that shall become a party to this
Agreement pursuant to Section 8.5(b).
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<PAGE> 8
"Borrower" means TETRA Technologies, Inc., a Delaware corporation.
"Borrower Account" means the principal operating account of Borrower
with the Agent or any other account of Borrower with the Agent which is
designated as Borrower's "Borrower Account" in writing by the Borrower to the
Agent.
"Borrowing" means any aggregate amount of principal advanced on the
same day and pursuant to the same Borrowing Request under the revolving loan
facility created in Section 2.1.
"Borrowing Request" means a Borrowing Request in substantially the
form of Exhibit B executed by a Responsible Officer of the Borrower and
delivered to the Agent.
"Business Day" means any Monday through Friday during which commercial
banks are open for business in Houston, Texas, and Dallas, Texas, and, if the
applicable Business Day relates to any LIBOR Tranche, on which dealings are
carried on in the London interbank market.
"Capital Expenditures" means, with respect to any Person and with
respect to any period of its determination, the consolidated expenditures of
such Person during such period that are required to be included in or are
reflected by the consolidated property, plant, or equipment accounts of such
Person, or any similar fixed asset or long term capitalized asset accounts of
such Person, on the consolidated balance sheet of such Person in conformity
with GAAP, provided, that Capital Expenditures shall not include expenditures
deemed to occur in connection with Acquisitions made pursuant to Section 5.9.
"Capital Leases" means, with respect to any Person, any lease of any
property by such Person which would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on the balance sheet of such
Person.
"Change of Control" means, with respect to the Borrower, the direct or
indirect acquisition after the date hereof by any Person or related Persons
constituting a group of (a) beneficial ownership of issued and outstanding
shares of Voting Securities of the Borrower, the result of which acquisition is
that such Person or such group possesses 30% or more of the combined voting
power of all then-issued and outstanding Voting Securities of the Borrower, or
(b) the power to elect, appoint, or cause the election or appointment of at
least a majority of the members of the board of directors of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Commitment" means, for any Bank, the amount set forth below such
Bank's name on the signature pages hereof as its Commitment, or if such Bank
has entered into any Assignment and Acceptance, as set forth for such Bank as
its Commitment in the Register maintained by the Agent pursuant to Section
8.5(c), in each case, as such amount may be reduced pursuant to Section 2.1(b)
or terminated pursuant to Section 6.2.
-3-
<PAGE> 9
"Commonly Controlled Entity" means, with respect to any Person, any
other Person which is under common control with such Person within the meaning
of Section 414 of the Code.
"Compliance Certificate" means a compliance certificate executed by a
Responsible Officer of the Borrower in substantially the form of Exhibit A.
"Continuation/Conversion Request" means a Continuation/Conversion
Request in substantially the form of Exhibit C executed by a Responsible
Officer of the Borrower and delivered to the Agent.
"Credit Documents" means this Agreement, the Notes, the Agent Fee
Letter, the Letter of Credit Documents, the Guaranty, the Interest Hedge
Agreements, and each other agreement, instrument, or document executed at any
time in connection with this Agreement.
"Credit Obligations" means all principal, interest, fees,
reimbursements, indemnifications, and other amounts now or hereafter owed by
the Borrower to the Agent and the Banks (or with respect to the Interest Hedge
Agreements, any Affiliates of the Banks) under this Agreement, the Notes, the
Letter of Credit Documents, and the other Credit Documents and any increases,
extensions, and rearrangements of those obligations under any amendments,
supplements, and other modifications of the documents and agreements creating
those obligations.
"Credit Parties" means the Borrower and the Guarantors.
"Debt" means, with respect to any Person, without duplication, (a)
indebtedness of such Person for borrowed money, (b) obligations of such Person
evidenced by bonds, debentures, notes, or other similar instruments, (c)
obligations of such Person to pay the deferred purchase price of property or
services (other than trade debt and normal operating liabilities incurred in
the ordinary course of business), (d) obligations of such Person as lessee
under Capital Leases, (e) obligations of such Person under or relating to
letters of credit, guaranties, purchase agreements, or other creditor
assurances assuring a creditor against loss in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (d) of
this definition, and (f) nonrecourse indebtedness or obligations of others of
the kinds referred to in clauses (a) through (e) of this definition secured by
any Lien on or in respect of any property of such Person. For the purposes of
determining the amount of any Debt, the amount of any Debt described in clause
(e) of the definition of Debt shall be valued at the maximum amount of the
contingent liability thereunder and the amount of any Debt described in clause
(f) that is not covered by clause (e) shall be valued at the lesser of the
amount of the Debt secured or the book value of the property securing such
Debt.
"Debt Service" means, with respect to any Person and for any period of
its determination, (a) the interest expense of such Person for such period,
including interest expense allocable to Capital Leases, plus (b) the scheduled
and required principal payments of Debt of such Person for such period,
including scheduled principal payments allocable to Capital Leases.
-4-
<PAGE> 10
"Default" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Default Rate" means, with respect to any amount due hereunder, a per
annum interest rate equal to (a) if such amount is either outstanding principal
accruing interest based upon a rate established elsewhere in this Agreement or
accrued but unpaid interest thereon, the sum of (i) the interest rate
established elsewhere in this Agreement from time to time for such principal
amount, including any applicable margin, plus (ii) 2.00% per annum or (b) in
all other cases, the Adjusted Prime Rate in effect from time to time plus the
Applicable Margin for Prime Rate Tranches in effect from time to time plus
2.00% per annum.
"Derivatives" means any swap, hedge, cap, collar, or similar
arrangement providing for the exchange of risks related to price changes in any
commodity, including money.
"Dividend Payments" means, with respect to any Person and for any
period of its determination, any cash dividends paid by such Person on the
common, preferred, or other capital stock of such Person during such period
plus any amounts paid by such Person for the purchase, redemption, retirement,
or other acquisition of any of such Person's capital stock during such period.
"Dollars or $" means lawful money of the United States of America.
"EBITDA" means, with respect to any Person and for any period of its
determination, the consolidated net income of such Person for such period
(exclusive of any extraordinary gains), plus the consolidated interest expense,
income taxes, and depreciation and amortization of such Person for such period.
"Eligible Assignee" means, with respect to any assignment hereunder at
the time of such assignment, any commercial bank organized under the laws of
the United States or any of the countries parties to the Organization for
Economic Cooperation and Development or any political subdivision of any
thereof which has primary capital (or its equivalent) of not less than
$250,000,000, and which is approved by the Agent and (provided that no Default
or Event of Default exists) the Borrower, such approvals not to be unreasonably
withheld.
"Environmental Law" means all federal, state, and local laws, rules,
regulations, ordinances, orders, decisions, agreements, and other requirements
now or hereafter in effect relating to the pollution, destruction, loss, or
injury of the environment, the presence of any contaminant in the environment,
the protection, cleanup, remediation, or restoration of the environment, the
creation, handling, transportation, use, or disposal of any waste product in
the environment, exposure of Persons to any contaminant, waste, or hazardous
substance in the environment, and the health and safety of employees in
relation to their environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning specified in Section 6.1.
-5-
<PAGE> 11
"Existing Letters of Credit" means the standby letters of credit
issued by the Issuing Bank for the account of the Borrower prior to the date of
this Agreement, which Existing Letters of Credit are subject to the letter
participation agreement dated as of January 27, 1997, between the Issuing Bank
and TCB, and which are listed in the attached Schedule II.
"Federal Funds Rate" means, for any period, a fluctuating per annum
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for any such day
on such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any of its successors.
"Fixed Charges" means with respect to any Person and for any period of
its determination, the sum of the (a) consolidated Debt Service of such Person
for the preceding four fiscal quarters then ended, plus (b) consolidated
Capital Expenditures of such Person for the preceding four fiscal quarters then
ended, plus (c) consolidated Dividend Payments of such Person for the preceding
four fiscal quarters.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, applied on a basis consistent with the
requirements of Section 1.3.
"Guarantor" means (a) the Subsidiaries of the Borrower listed in
Schedule II that have executed the Guaranty dated as of April 10, 1997, and (b)
any future Subsidiaries of the Borrower that join the Guaranty pursuant to
Section 5.19.
"Guaranty" means the Guaranty dated as of April 10, 1997, made by
certain Subsidiaries of the Borrower in favor of the Agent guaranteeing the
Credit Obligations.
"Hazardous Materials" means any substance or material identified as a
hazardous substance pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended and as now or hereafter in
effect; any substance or material regulated as a hazardous waste pursuant to
the Resource Conservation and Recovery Act of 1976, as amended and as now or
hereafter in effect; and any substance or material designated as a hazardous
substance or hazardous waste pursuant to any other Environmental Law.
"Highest Lawful Rate" means the maximum lawful interest rate, if any,
that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to the relevant Bank 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. The maximum lawful rate under this
Agreement shall be the
-6-
<PAGE> 12
weekly indicated rate ceiling under Article 5069-1.04 of the Texas Revised
Civil Statutes, unless any other lawful rate ceiling exceeds the rate ceiling
so determined, and then the higher rate ceiling shall apply.
"Interest Hedge Agreements" means any swap, hedge, cap, collar, or
similar arrangement between the Borrower and any Bank (or any Affiliate of any
Bank) providing for the exchange of risks related to price changes in the
interest rate on the Advances under this Agreement.
"Interest Period" means, with respect to each LIBOR Tranche, the
period commencing on the date of such LIBOR Tranche and ending on the last day
of the period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three, or six months,
in each case as the Borrower may select in the applicable Borrowing Request or
Continuation/Conversion Request (unless there shall exist any Default or Event
of Default, in which case the Borrower may only select one month Interest
Periods); provided, however, that:
(a) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day; provided that
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day;
(b) any Interest Period which begins on the last Business Day of
the calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month in which it would have ended if there
were a numerically corresponding day in such calendar month; and
(c) the Borrower may not select an Interest Period for any LIBOR
Tranche which extends beyond the Maturity Date.
"Initial Financial Statements" means the financial statements of the
Borrower referred to in Section 4.7(a).
"Issuing Bank" means NationsBank and any successor issuing bank
pursuant to Section 7.7.
"Letter of Credit" means any commercial or standby letter of credit
issued by the Issuing Bank for the account of the Borrower pursuant to the
terms of this Agreement, including the Existing Letters of Credit.
"Letter of Credit Application" means the Issuing Bank's standard form
letter of credit application for either a commercial or standby letter of
credit, as the case may be, which has been executed by a Borrower and accepted
by the Issuing Bank in connection with the issuance of a Letter of Credit.
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"Letter of Credit Application Amendment" means the Issuing Bank's
standard form application to amend a letter of credit for either a commercial
or standby letter of credit, as the case may be, which has been executed by a
Borrower and accepted by the Issuing Bank in connection with the increase or
extension of a Letter of Credit.
"Letter of Credit Collateral Account" means a special cash collateral
account pledged to the Agent containing cash deposited pursuant to Section 6.4
to be maintained with the Agent in accordance with Section 2.2(f).
"Letter of Credit Documents" means all Letters of Credit, Letter of
Credit Applications, Letter of Credit Application Amendments, and agreements,
documents, and instruments entered into in connection with or relating thereto.
"Letter of Credit Exposure" means, as of any date of its
determination, the aggregate outstanding undrawn amount of Letters of Credit
plus the aggregate of the reimbursement obligations of the Borrower under the
Letter of Credit Applications and this Agreement.
"Letter of Credit Sublimit" means $10,000,000.
"LIBOR" means, for any LIBOR Tranche for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "LIBOR" shall mean, for any LIBOR Tranche for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates.
"LIBOR Tranche" shall mean any Tranche which bears interest based upon
the LIBOR, as determined in accordance with Section 2.4.
"Lien" means any mortgage, lien, pledge, charge, deed of trust,
security interest, encumbrance, or other type of preferential arrangement to
secure or provide for the payment of any obligation of any Person, whether
arising by contract, operation of law, or otherwise (including any title
retention for such purposes under any conditional sale agreement, any Capital
Lease, or any other title transfer or retention agreement).
"Major Capital Expenditures" means, with respect to any Person and
with respect to any period of its determination, the Capital Expenditures of
such Person with respect to fixed asset or long term capitalized asset accounts
which (a) cost in excess of $5,000,000, (b) are for the construction,
improvement, replacement, or expansion of any single operating facility owned
by the
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<PAGE> 14
Borrower, and (c) for which third-party financing acceptable to the Agent
(other than Credit Obligations) has been arranged in advance of such
expenditure; provided, however, that the Capital Expenditures of the Borrower
related to the plant expansion of its Lake Charles, Louisiana, plant during
the period from January 1, 1996, to December 31, 1996, are deemed to be Major
Capital Expenditures to the extent such Capital Expenditures do not exceed
$4,480,000.
"Majority Banks" means, at any time, Banks holding more than 66 2/3%
of the then aggregate unpaid principal amount of the Notes held by the Banks
and the Letter of Credit Exposure of the Banks at such time; provided that if
no such principal amount or Letter of Credit Exposure is then outstanding,
"Majority Banks" shall mean Banks having more than 66 2/3% of the aggregate
amount of the Commitments at such time.
"Material Adverse Effect" means any material and adverse change in or
effect on (a) the consolidated assets, liabilities, financial condition,
business, operations, affairs, or circumstances of the Borrower from those
reflected in the most recent financial statements furnished by the Borrower
pursuant to Section 5.2(a) or from the facts represented or warranted in this
Agreement or any other Credit Document, or (b) the ability of the Borrower to
carry out its business or to meet its obligations under the Notes, this
Agreement, or any other Credit Document to which it is a party on a timely
basis.
"Maturity Date" means March 31, 2002.
"Minimum Borrowing Amount" means, with respect to any Borrowing,
$1,000,000.
"Minimum Borrowing Multiple" means $500,000.
"Minimum Tranche Amount" means, with respect to any Tranche,
$1,000,000.
"Minimum Tranche Multiple" means $500,000.
"NationsBank" means NationsBank of Texas, N.A., in its individual
capacity.
"Net Worth" means, with respect to any Person and as of any date of
its determination, the excess of (a) the assets of such Person over (b) the
liabilities of such Person.
"Note" means a promissory note of the Borrower payable to the order of
a Bank, in substantially the form of Exhibit D, evidencing the indebtedness of
the Borrower to such Bank resulting from Advances made by such Bank to the
Borrower.
"PBGC" means Pension Benefit Guaranty Corporation or its successor.
"Permitted Debt" means all of the following Debt:
(a) Debt outstanding under the Credit Documents;
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<PAGE> 15
(b) Debt in the form of borrowed money set forth in the
Initial Financial Statements and in Schedule II hereto and any extensions,
renewals, or replacements of the foregoing which do not increase the
outstanding principal amount thereof at the time of such extension, renewal, or
replacement;
(c) Debt in the form of purchase money indebtedness
arising in the ordinary course of business, and Debt assumed in connection with
any Acquisition of Property of any Person pursuant to Section 5.9, and any
extensions, renewals, or replacements of the foregoing which do not increase
the outstanding principal amount thereof at the time of such extension,
renewal, or replacement; provided that such Debt does not exceed an aggregate
outstanding amount of $15,000,000; and
(d) Debt in the form of loans and advances made by the
Borrower and Subsidiaries of the Borrower to Subsidiaries of the Borrower to
the extent permitted by Section 5.13.
"Permitted Investments" means all of the following investments:
(a) advances to or investments in Subsidiaries of the
Borrower that hold substantially all of their assets in the United States and
are Guarantors, including such investments occurring in connection with
Acquisitions permitted under Section 5.9;
(b) investments in Persons (other than those described in
clause (a) above) provided that the aggregate outstanding amount of all such
investments shall not exceed 10% of the Borrower's consolidated Net Worth as of
the end of any fiscal quarter, including such investments occurring in
connection with Acquisitions permitted under Section 5.9;
(c) investments set forth in Schedule II hereto;
(d) investments in the form of loans, guaranties, open
accounts, and other extensions of trade credit in the ordinary course of
business;
(e) investments in commercial paper and bankers'
acceptances maturing in twelve months or less from the date of issuance and
which, at the time of acquisition are rated A-2 or better by Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc., and P-2 or better by Moody's
Investors Service, Inc;
(f) investments in direct obligations of the United
States, or investments in any Person which investments are guaranteed by the
full faith and credit of the United States, in either case maturing in twelve
months or less from the date of acquisition thereof;
(g) investments in time deposits or certificates of
deposit maturing within one year from the date such investment is made, issued
by a bank or trust company organized under the laws of the United States or any
state thereof having capital, surplus, and undivided profits aggregating at
least $250,000,000 or a foreign branch thereof and whose long-term certificates
of
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<PAGE> 16
deposit are, at the time of acquisition thereof, rated A-2 by Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc., or Prime-2 by Moody's
Investors Service, Inc.; and
(h) investments in money market funds holding only
obligations of the types described in clauses (e)-(g) above and repurchase
agreements having a term of less than one year that are fully collateralized by
obligations of the type described in clauses (e)-(g) above provided that such
repurchase agreements are entered into with banks or trust companies described
in clause (g).
In valuing any investments for the purpose of applying the limitations set
forth in this Agreement, the amount of such investments shall be determined
from the consolidated balance sheets of the Borrower.
"Permitted Liens" means all of the following Liens:
(a) Liens securing the Credit Obligations;
(b) Liens described in Schedule II attached hereto
provided that no such Lien is spread to cover any additional property or
indebtedness;
(c) Liens covering Property other than accounts
receivable or inventory (as such terms are defined in the Texas Uniform
Commercial Code) of any Restricted Entity, securing purchase money debt
permitted under clause (c) of the definition of Permitted Debt, including Liens
on such Property acquired by any Restricted Entity in accordance with Section
5.9, provided that no such Lien is spread to cover any such Property not
purchased or leased in connection with the incurrence of such Debt; and
(d) Liens arising in the ordinary course of business
which are not incurred in connection with the borrowing of money or the
obtaining of advances or credit and which do not materially detract from the
value of the assets of any Restricted Entity or materially interfere with the
business of any Restricted Entity, including to the extent they meet the
foregoing requirements, (i) Liens for taxes, assessments, or other governmental
charges or levies; (ii) Liens in connection with worker's compensation,
unemployment insurance, or other social security, old age pension, or public
liability obligations; (iii) Liens in the form of legal or equitable
encumbrances deemed to exist by reason of negative pledge covenants and other
covenants or undertakings of like nature; (iv) Liens in the form of landlords',
vendors', carriers', warehousemen's, repairmen's, mechanics', workmen's,
materialmen's, construction, or other like Liens arising by operation of law in
the ordinary course of business or incident to the construction or improvement
of any property; and (v) Liens in the form of zoning restrictions, easements,
licenses, and other restrictions on the use of real property or minor
irregularities in title thereto which do not materially impair the use of such
property in the operation of the business of any Restricted Entity or the value
of such property.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, or other entity, or a government or any political subdivision or
agency thereof, or any trustee, receiver, custodian, or similar official.
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<PAGE> 17
"Plan" means any (a) employee medical benefit plan under Section 3(1)
of ERISA, (b) employee pension benefit plan under Section 3(2) of ERISA, (c)
multiemployer plan under Section 4001(a)(3) of ERISA, and (d) employee account
benefit plan under Section 3(2) of ERISA.
"Prime Rate" means, for any day, the fluctuating per annum interest
rate in effect on such day equal to the rate of interest publicly announced by
the Agent as its prime rate, whether or not the Borrower has notice thereof.
"Prime Rate Tranche" shall mean any Tranche which bears interest based
upon the Adjusted Prime Rate, as determined in accordance with Section 2.4.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.
"Property" of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.
"ratable share" or "pro rata share" means, with respect to any Bank
and as of any date of its determination, either (a) the ratio of such Bank's
Commitment at such time to the aggregate Commitments at such time or (b) if the
Commitments have been terminated, the ratio of such Bank's aggregate
outstanding Advances and share of the Letter of Credit Exposure at such time to
the aggregate outstanding Advances and Letter of Credit Exposure at such time.
"Related Parties" means, with respect to any Person, such Person's
stockholders, directors, officers, employees, agents, Affiliates, successors,
and assigns, and their respective stockholders, directors, officers, employees,
and agents, and, with respect to any Person that is an individual, such
Person's family relations and heirs.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA.
"Responsible Officer" means, with respect to any Person, such Person's
Chief Executive Officer, President, Chief Financial Officer, Secretary,
Treasurer, or any other officer of such Person designated by any of the
foregoing in writing from time to time.
"Restricted Entities" means the Borrower and each Subsidiary of the
Borrower.
"Revolving Loan" means the aggregate outstanding principal amount of
the Borrowings.
"Subsidiary" means, with respect to any Person, any other Person, a
majority of whose outstanding Voting Securities (other than directors'
qualifying shares) shall at any time be owned by such Person or one or more
Subsidiaries of such person.
"TCB" means Texas Commerce Bank National Association.
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<PAGE> 18
"Tranche" means any tranche of principal outstanding under the
Revolving Loan accruing interest on the same basis whether created in
connection with new advances of principal under the Revolving Loan pursuant to
Section 2.4(a)(i) or by the continuation or conversion of existing tranches of
principal under the Revolving Loan pursuant to Section 2.4(a)(ii) and shall
include any Prime Rate Tranche or LIBOR Tranche.
"Type" has the meaning set forth in Section 1.4.
"Voting Securities" means (a) with respect to any corporation, any
capital stock of the corporation having general voting power under ordinary
circumstances to elect directors of such corporation, (b) with respect to any
partnership, any partnership interest having general voting power under
ordinary circumstances to elect the general partner or other management of the
partnership, and (c) with respect to any other Person, such ownership interests
in such Person having general voting power under ordinary circumstances to
elect the management of such Person, in each case irrespective of whether at
the time any other class of stock, partnership interests, or other ownership
interest might have special voting power or rights by reason of the happening
of any contingency.
1.2 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding."
1.3 Accounting Terms; Preparation of Financials.
(a) All accounting terms, definitions, ratios, and other
tests described herein shall be construed in accordance with GAAP applied on a
consistent basis with those applied in the preparation of the Initial Financial
Statements, except as expressly set forth in this Agreement.
(b) The Restricted Entities shall prepare their financial
statements in accordance with GAAP applied on a consistent basis with those
applied in the preparation of the Initial Financial Statements, unless
otherwise approved in writing by the Agent.
1.4 Types. The "Type" of a Tranche refers to the determination
whether such tranche is a LIBOR Tranche or a Prime Rate Tranche.
1.5 Interpretation. Article, Section, Schedule, and Exhibit
references are to this Agreement, unless otherwise specified. All references
to instruments, documents, contracts, and agreements are references to such
instruments, documents, contracts, and agreements as the same may be amended,
supplemented, and otherwise modified from time to time, unless otherwise
specified. The word "including" shall mean "including but not limited to."
Whenever the Borrower has an obligation under this Agreement and the Credit
Documents the expense of complying with that obligation shall be an expense of
the Borrower unless otherwise specified. Whenever any determination is to be
made by the Agent or any Bank, such determination shall be in such Person's
sole discretion unless otherwise specified in this Agreement. If any provision
in this Agreement and the Credit Documents is held to be illegal, invalid, not
binding, or unenforceable, such provision
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<PAGE> 19
shall be fully severable and this Agreement and the Credit Documents shall be
construed and enforced as if such illegal, invalid, not binding, or
unenforceable provision had never comprised a part of this Agreement and the
Credit Documents, and the remaining provisions shall remain in full force and
effect. This Agreement and the Credit Documents have been reviewed and
negotiated by sophisticated parties with access to legal counsel and shall not
be construed against the drafter. In the event of a conflict between this
Agreement and the Credit Documents, this Agreement shall control.
ARTICLE 2. CREDIT FACILITIES.
2.1 Revolving Loan Facility.
(a) Commitment. Each Bank severally agrees, on the terms
and conditions set forth in this Agreement and for the purposes set forth in
Section 5.4, to make Advances to the Borrower as such Bank's ratable share of
Borrowings requested by the Borrower from time to time on any Business Day
during the period from the date of this Agreement until the Maturity Date
provided that the aggregate outstanding principal amount of Advances made by
such Bank plus such Bank's ratable share of the Letter of Credit Exposure shall
not exceed such Bank's Commitment. Borrowings must be made in an amount equal
to or greater than the Minimum Borrowing Amount and be made in multiples of the
Minimum Borrowing Multiple. Within the limits expressed in this Agreement, the
Borrower may from time to time borrow, prepay, and reborrow Borrowings. The
indebtedness of the Borrower to the Banks resulting from the Advances made by
the Banks shall be evidenced by Notes made by the Borrower.
(b) Reduction of Commitments. Beginning on March 31,
2000, and continuing on the last day of each calendar quarter thereafter, the
aggregate amount of the Commitments shall automatically reduce by $5,000,000
(such reductions to be apportioned ratably among each Bank's Commitment), each
such reduction to be effective immediately as of such date. In addition, the
Borrower shall have the right, upon at least 10 days' irrevocable written
notice to the Agent, to terminate in whole or reduce the unused portion of the
Commitments (such reductions to be apportioned ratably among each Bank's
Commitment); provided that each partial reduction shall be in the aggregate
amount of $5,000,000 or in integral multiples of $1,000,000 in excess thereof.
Any such reduction of the Commitments shall be irrevocable, and amounts by
which the Commitments are reduced hereunder shall not be available for Advances
following such reduction. Upon reduction of the Commitments under this
paragraph, the commitment fee provided for in Section 2.3(b) shall thereafter
be computed on the basis of the Commitments, as so reduced. All Advances
outstanding on the date of any reduction in the Commitments are subject to
prepayment in accordance with Section 2.1(d)(ii) below.
(c) Method of Advancing
(i) Each Borrowing shall be made pursuant to a
Borrowing Request given by the Borrower to the Agent in writing or by telecopy
not later than the time required pursuant to Section 2.4(a)(i) to select the
interest rate basis for the Borrowing. Each Borrowing Request shall
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be fully completed and shall specify the information required therein, and
shall be irrevocable and binding on the Borrower. The Agent shall promptly
forward notice of the Borrowing to the Banks. Each Bank shall, before 2:00
p.m. (local time at the Applicable Lending Office of the Agent) on the date of
the requested Borrowing, make available from its Applicable Lending Office to
the Agent at the Agent's Applicable Lending Office, in immediately available
funds, such Bank's ratable share of such Borrowing. Subject to the
satisfaction of all applicable conditions precedent, after receipt by the Agent
of such funds, the Agent shall before close of business on the date requested
for such Borrowing make such Borrowing available to the Borrower in immediately
available funds at the Borrower Account.
(ii) Unless the Agent shall have received notice
from a Bank before the date of any Borrowing that such Bank shall not make
available to the Agent such Bank's ratable share of such Borrowing, the Agent
may assume that such Bank has made its ratable share of such Borrowing
available to the Agent on the date of such Borrowing in accordance with
paragraph (i) above and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Bank shall not have so made its ratable share of such
Borrowing available to the Agent, such Bank agrees that it shall pay interest
on such amount for each day from the date such amount is made available to the
Borrower by the Agent until the date such amount is paid to the Agent by such
Bank at the Federal Funds Rate in effect from time to time, provided that with
respect to such Bank if such amount is not paid by such Bank by the end of the
second day after the Agent makes such amount available to the Borrower, the
interest rates specified above shall be increased by a per annum amount equal
to 2.00% on the third day and shall remain at such increased rate thereafter.
Interest on such amount shall be due and payable by such Bank upon demand by
the Agent. If such Bank shall pay to the Agent such amount and interest as
provided above, such amount so paid shall constitute such Bank's Advance as
part of such Borrowing for all purposes of this Agreement even though not made
on the same day as the other Advances comprising such Borrowing. In the event
that such Bank has not repaid such amount by the end of the fifth day after
such amount was made available to the Borrower, the Borrower agrees to repay to
the Agent on demand such amount, together with interest on such amount for each
day from the date such amount was made available to the Borrower until the date
such amount is repaid to the Agent at the interest rate charged to the Borrower
for such Borrowing under the terms of this Agreement.
(iii) The failure of any Bank to make available its
ratable share of any Borrowing shall not relieve any other Bank of its
obligation, if any, to make available its ratable share of such Borrowing. No
Bank shall be responsible for the failure of any other Bank to honor such other
Bank's obligations hereunder, including any failure to make available any funds
as part of any Borrowing.
(d) Prepayment.
(i) The Borrower may prepay the outstanding
principal amount of the Revolving Loan pursuant to written notice given by the
Borrower to the Agent in writing or by telecopy not later than 1:00 p.m. (local
time at the Applicable Lending Office of the Agent) (A) on
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the third Business Day before the date of the proposed prepayment, in the case
of the prepayment of any portion of the Revolving Loan which is comprised of
LIBOR Tranches, or (B) on the same Business Day of the proposed prepayment, in
the case of the prepayment of any portion of the Revolving Loan comprised
solely of Prime Rate Tranches. Each such notice shall specify the principal
amount and the Tranches of the Revolving Loan which shall be prepaid, the date
of the prepayment, and shall be irrevocable and binding on the Borrower.
Prepayments of the Revolving Loan shall be made in integral multiples of the
Minimum Borrowing Multiple. If the prepayment would cause the aggregate
outstanding principal amount of any LIBOR Tranche comprising the Revolving Loan
or the aggregate outstanding principal amount of all Prime Rate Tranches
comprising the Revolving Loan, to be less than the Minimum Tranche Amount, the
prepayment must be in an amount equal to the entire outstanding principal
amount of such LIBOR Tranche under the Revolving Loan or the entire outstanding
principal amount of all such Prime Rate Tranches under the Revolving Loan, as
the case may be. Upon receipt of any notice of prepayment, the Agent shall
give prompt notice of the intended prepayment to the Banks. For each such
notice given by the Borrower, the Borrower shall prepay the Revolving Loan in
the specified amount on the specified date as set forth in such notice. The
Borrower shall have no right to prepay any principal amount of the Revolving
Loan except as provided in this Section 2.1(d)(i).
(ii) If the aggregate outstanding principal amount
of the Revolving Loan plus the Letter of Credit Exposure ever exceeds the
Commitment, the Borrower shall, upon receipt of written notice of such
condition from the Bank and to the extent of such excess, prepay to the Bank
outstanding principal of the Revolving Loan, and, if the Revolving Loan has
been repaid in full, make deposits into the Letter of Credit Collateral Account
to provide cash collateral for the Letter of Credit Exposure, such that such
excess is eliminated.
(iii) Each prepayment of principal of any LIBOR
Tranche under the Revolving Loan pursuant to this Section 2.1(d) shall be
accompanied by payment of all accrued but unpaid interest on the principal
amount prepaid and any amounts required to be paid pursuant to Section 2.5 as a
result of such prepayment.
(e) Repayment. The Borrower shall pay to the Agent for
the ratable benefit of the Banks the aggregate outstanding principal amount of
the Revolving Loan on the Maturity Date.
2.2 Letter of Credit Facility.
(a) Commitment for Letters of Credit. The Issuing Bank
shall, on the terms and conditions set forth in this Agreement and for the
purposes set forth in Section 5.4, issue, increase, and extend Letters of
Credit at the request of the Borrower from time to time on any Business Day
during the period from the date of this Agreement until the Maturity Date
provided that (i) the Letter of Credit Exposure shall not exceed the Letter of
Credit Sublimit and (ii) the aggregate outstanding principal amount of
Borrowings plus the Letter of Credit Exposure shall not exceed the aggregate
amount of the Commitments. No Letter of Credit may have an expiration date
later than 12 months after its issuance date, and each Letter of Credit which
is self-extending beyond its expiration date must be cancelable upon at least
30 days notice given by the Issuing Bank to the beneficiary of such
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Letter of Credit. No Letter of Credit may have an expiration date later than
12 months after the Maturity Date unless approved by the Issuing Bank, the
Agent, and the Banks. Each Letter of Credit must be in form and substance
acceptable to the Issuing Bank. The indebtedness of the Borrower to the
Issuing Bank resulting from Letters of Credit requested by the Borrower shall
be evidenced by the Letter of Credit Applications made by the Borrower.
(b) Requesting Letters of Credit. Each Letter of Credit
shall be issued, increased, or extended pursuant to a Letter of Credit
Application or Letter of Credit Application Amendment, as applicable, given by
the Borrower to the Issuing Bank in writing or by telecopy promptly confirmed
in writing, such Letter of Credit Application or Letter of Credit Application
Amendment being given not later than 10:00 a.m. (local time at the Applicable
Lending Office of the Agent) on the third Business Day before the date of the
proposed issuance, increase, or extension of the Letter of Credit. Each Letter
of Credit Application or Letter of Credit Application Amendment shall be fully
completed and shall specify the information required therein (including the
proposed form of the Letter of Credit or change thereto), and shall be
irrevocable and binding on the Borrower. The Issuing Bank shall give prompt
notice of the Letter of Credit Application or Letter of Credit Application
Amendment to the Agent, and the Agent shall promptly inform the Banks of the
proposed Letter of Credit or change thereto. Subject to the satisfaction of
all applicable conditions precedent, the Issuing Bank shall before close of
business on the date requested by the Borrower for the issuance, increase, or
extension of such Letter of Credit issue, increase, or extend such Letter of
Credit to the specified beneficiary. Upon the date of the issuance, increase,
or extension of a Letter of Credit, the Issuing Bank shall be deemed to have
sold to each other Bank and each other Bank shall be deemed to have purchased
from the Issuing Bank a ratable participation in the related Letter of Credit.
The Issuing Bank shall notify the Agent of each Letter of Credit issued,
increased, or extended and the date and amount of each Bank's participation in
such Letter of Credit, and the Agent shall in turn notify the Banks.
(c) Reimbursements for Letters of Credit. With respect
to any Letter of Credit and in accordance with the related Letter of Credit
Application, the Borrower agrees to pay to the Issuing Bank on demand of the
Issuing Bank any amount due to the Issuing Bank under such Letter of Credit
Application (provided that fees due with respect to such Letter of Credit shall
be payable as specified in Section 2.3(c)). If the Borrower does not pay upon
demand of the Issuing Bank any amount due to the Issuing Bank under any Letter
of Credit Application, in addition to any rights the Issuing Bank may have
under such Letter of Credit Application, the Issuing Bank may upon written
notice to the Agent request the satisfaction of such obligation by the making
of a Borrowing. Upon such request, the Borrower shall be deemed to have
requested the making of a Borrowing in the amount of such obligation and the
transfer of the proceeds thereof to the Issuing Bank. Such Borrowing shall be
comprised of a Prime Rate Tranche. The Agent shall promptly forward notice of
such Borrowing to the Borrower and the Banks, and each Bank shall, in
accordance with the procedures of Section 2.1(c), other than limitations on the
size of Borrowings, and notwithstanding the failure of any conditions
precedent, make available such Bank's ratable share of such Borrowing to the
Agent, and the Agent shall promptly deliver the proceeds thereof to the Issuing
Bank for application to such Bank's share of the obligations under such Letter
of Credit. The Borrower hereby unconditionally and irrevocably authorizes,
empowers, and directs the Issuing Bank to make such
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requests for Borrowings on behalf of the Borrower, and the Banks to make
Advances to the Agent for the benefit of the Issuing Bank in satisfaction of
such obligations. The Agent and each Bank may record and otherwise treat the
making of such Borrowings as the making of a Borrowing to the Borrower under
this Agreement as if requested by the Borrower. Nothing herein is intended to
release the Borrower's obligations under any Letter of Credit Application, but
only to provide an additional method of payment therefor. The making of any
Borrowing under this Section 2.2(c) shall not constitute a cure or waiver of
any Default or Event of Default caused by the Borrower's failure to comply with
the provisions of this Agreement or any Letter of Credit Application.
(d) Prepayments of Letters of Credit. In the event that
any Letters of Credit shall be outstanding according to their terms after the
Maturity Date, the Borrower shall pay to the Agent an amount equal to the
Letter of Credit Exposure allocable to such Letters of Credit to be held in the
Letter of Credit Collateral Account and applied in accordance with paragraph
(g) below.
(e) Obligations Unconditional. The obligations of the
Borrower and each Bank under this Agreement and the Letter of Credit
Applications to reimburse the Issuing Bank for draws under Letters of Credit
and to make other payments due in respect of Letters of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and the Letter of Credit Applications under all
circumstances, including: (i) any lack of validity or enforceability of any
Letter of Credit Document; (ii) any amendment, waiver, or consent to departure
from any Letter of Credit Document; (iii) the existence of any claim, set-off,
defense, or other right which the Borrower or any Bank may have at any time
against any beneficiary or transferee of any Letter of Credit (or any Persons
for whom any such beneficiary or any such transferee may be acting), the
Issuing Bank, or any other person or entity, whether in connection with the
transactions contemplated in this Agreement or any unrelated transaction; (iv)
any statement or any other document presented under such Letter of Credit
proving to be forged, fraudulent, invalid, or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect; or (v) payment
by the Issuing Bank under any Letter of Credit against presentation of a draft
or certificate which does not comply with the terms of such Letter of Credit;
provided, however, that nothing contained in this paragraph (d) shall be deemed
to constitute a waiver of any remedies of the Borrower or any Bank in
connection with the Letters of Credit or the Borrower's or such Bank's rights
under paragraph (e) below.
(f) Liability of Issuing Bank. The Issuing Bank shall
not be liable or responsible for: (i) the use which may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (ii) the validity, sufficiency, or genuineness of
documents related to Letters of Credit, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent, or forged; (iii) payment by the Issuing Bank against presentation
of documents which do not strictly comply with the terms of a Letter of Credit,
including failure of any documents to bear any reference or adequate reference
to the relevant Letter of Credit; or (iv) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit (INCLUDING THE
ISSUING BANK'S OWN NEGLIGENCE); except that the Issuing Bank shall be liable to
the Borrower or any Bank to the extent of any direct, as opposed to
consequential, damages suffered by the Borrower or such Bank
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<PAGE> 24
which the Borrower or such Bank proves were caused by (A) the Issuing Bank's
gross negligence or willful misconduct in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of
Credit, (B) the Issuing Bank's willful failure to make or delay in making
lawful payment under any Letter of Credit after the presentation to it of
documentation strictly complying with the terms and conditions of such Letter
of Credit, or (C) the Issuing Bank's negligence in the handling of money.
(g) Letter of Credit Collateral Account.
(i) If the Borrower is required to deposit funds
in the Letter of Credit Collateral Account pursuant to Sections 2.1(d)(ii),
2.2(d) or 6.4, then the Borrower and the Agent shall establish the Letter of
Credit Collateral Account and the Borrower shall execute any documents and
agreements, including the Agent's standard form assignment of deposit accounts,
that the Agent requests in connection therewith to establish the Letter of
Credit Collateral Account and grant the Agent a first priority security
interest in such account and the funds therein. The Borrower hereby pledges to
the Agent and grants the Agent a security interest in the Letter of Credit
Collateral Account, whenever established, all funds held in the Letter of
Credit Collateral Account from time to time, and all proceeds thereof as
security for the payment of the Obligations.
(ii) So long as no Event of Default exists, (A)
the Agent shall apply the funds held in the Letter of Credit Collateral Account
only to the reimbursement of any reimbursement obligations and other
obligations under Letter of Credit Documents, (B) the Agent shall release to
the Borrower at the Borrower's written request funds held in the Letter of
Credit Collateral Account in an amount up to but not exceeding the excess, if
any (immediately prior to the release of any such funds), of the total amount
of funds held in the Letter of Credit Collateral Account over the Letter of
Credit Exposure, and (C) the Agent shall, at the unanimous written direction of
the Banks in their sole discretion, at any time release to the Borrower any
funds held in the Letter of Credit Collateral Account. During the existence of
any Default or Event of Default, the Agent may apply any funds held in the
Letter of Credit Collateral Account to any Credit Obligations in any order
determined by the Agent, regardless of any Letter of Credit Exposure which may
remain outstanding.
(iii) Funds held in the Letter of Credit Collateral
Account shall be invested in money market funds of the Agent or in another
investment if mutually agreed upon by the Borrower and the Agent, but the Agent
shall have no other obligation to make any other investment of the funds
therein. The Agent shall exercise reasonable care in the custody and
preservation of any funds held in the Letter of Credit Collateral Account and
shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Agent accords its own
property, it being understood that the Agent shall not have any responsibility
for taking any necessary steps to preserve rights against any parties with
respect to any such funds.
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(h) Existing Letters of Credit. Upon the date of the
execution of this Agreement, the Issuing Bank and TCB shall be deemed to have
sold to each other Bank and each other Bank shall be deemed to have purchased
from the Issuing Bank and TCB a ratable participation in each Existing Letter
of Credit, which shall thereafter be treated as a Letters of Credit under this
Agreement for all purposes. The Issuing Bank and TCB shall arrange with the
Agent and the Banks to prorate and ratably distribute to the Banks the fees
previously paid to the Issuing Bank or TCB with respect to such Existing
Letters of Credit.
2.3 Fees.
(a) Upfront Fees. Subject to Section 2.4(d), the
Borrower shall pay to the Agent for the ratable benefit of each Bank an upfront
fee for such Bank equal to the product of (i) the Commitment of such Bank
multiplied by (ii) (A) if such Commitment is equal to or greater than
$20,000,000, 0.20%, or (B) if such Commitment is less than $20,000,000, 0.125%.
(b) Commitment Fees. The Borrower shall pay to the Agent
for the ratable benefit of the Banks a commitment fee in an amount equal to the
product of 0.25% multiplied by the average daily amount by which (i) the
aggregate amount of the Commitments exceeds (ii) the outstanding principal
amount of the Revolving Loan plus the Letter of Credit Exposure. The
commitment fee shall be due and payable quarterly in arrears on the last day of
each calendar quarter commencing June 30, 1997, and on the Maturity Date.
(c) Fees for Letters of Credit. For each Letter of
Credit issued by the Issuing Bank, the Borrower shall pay to the Agent for the
ratable benefit of the Banks a letter of credit fee equal to the Applicable
Margin for Letter of Credit fees per annum in effect from time to time on the
original face amount of such Letter of Credit for the stated term of such
Letter of Credit. In addition, for each Letter of Credit issued by the Issuing
Bank, the Borrower shall pay to the Agent for the benefit of the Issuing Bank a
fronting fee of 0.125% per annum on the original face amount of such Letter of
Credit for the stated term of such Letter of Credit, with a minimum fee of
$500. The Borrower shall pay such letter of credit fees for each Letter of
Credit quarterly in arrears within ten days after when billed therefor by the
Issuing Bank. The Borrower shall have no right to any refund of letter of
credit fees previously paid by the Borrower, including any refund claimed
because the Borrower cancels any Letter of Credit prior to its expiration date.
(d) Agent Fee Letter. The Borrower shall pay to the
parties specified therein the fees and other amounts payable under the Agent
Fee Letter.
2.4 Interest.
(a) Election of Interest Rate Basis. The Borrower may
select the interest rate basis for each Borrowing in accordance with the terms
of this Section 2.4(a):
(i) Under the Borrowing Request provided to the
Agent in connection with the making of each Borrowing under the Revolving Loan,
the Borrower shall select the amount
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and the Type of the Tranches, and for each LIBOR Tranche selected, any
permitted Interest Period for each such LIBOR Tranche, which will comprise such
Borrowing, provided that (A) at no time shall there be more than eight separate
LIBOR Tranches outstanding under the Revolving Loan and (B) each Tranche must
be in a principal amount equal to or greater than the Minimum Tranche Amount
and be made in multiples of the Minimum Tranche Multiple. Such interest rate
elections must be provided to the Agent in writing or by telecopy not later
than 10:00 a.m. (local time at the Applicable Lending Office of the Agent) (A)
on the third Business Day before the date of any proposed Borrowing comprised
of a LIBOR Tranche, or (B) on the same day of any proposed Borrowing comprised
solely of a Prime Rate Tranche. The Agent shall promptly forward copies of
such interest rate elections to the Banks. In the case of any Borrowing
comprised of a LIBOR Tranche, upon determination by the Agent, the Agent shall
promptly notify the Borrower and the Banks of the applicable interest rate for
such Tranche.
(ii) With respect to any Tranche under the
Revolving Loan, the Borrower may continue or convert any portion of any LIBOR
Tranche or Prime Rate Tranche to form new LIBOR Tranches or Prime Rate Tranches
under the Revolving Loan in accordance with this paragraph. Each such
continuation or conversion shall be made pursuant to a Continuation/Conversion
Request given by the Borrower to the Agent in writing or by telecopy not later
than 12:00 noon (local time at the Applicable Lending Office of the Agent) on
the third Business Day before the date of the proposed continuation or
conversion. Each Continuation/Conversion Request shall be fully completed and
shall specify the information required therein, and shall be irrevocable and
binding on the Borrower. The Agent shall promptly forward notice of the
continuation or conversion to the Banks. In the case of any continuation or
conversion into LIBOR Tranches, upon determination by the Agent, the Agent
shall notify the Borrower and the Banks of the applicable interest rate.
Continuations and conversions of Tranches shall be made in integral multiples
of the Minimum Tranche Multiple. No continuation or conversion shall be
permitted if such continuation or conversion would cause the aggregate
outstanding principal amount of any LIBOR Tranche which would remain
outstanding or the aggregate outstanding principal amount of all Prime Rate
Tranches which would remain outstanding to be less than the Minimum Tranche
Amount. At no time shall there be more than eight separate LIBOR Tranches
outstanding under the Revolving Loan. Any conversion of an existing LIBOR
Tranche is subject to Section 2.5. Subject to the satisfaction of all
applicable conditions precedent, the Agent and the Banks shall before close of
business on the date requested by the Borrower for the continuation or
conversion, make such continuation or conversion.
(iii) At the end of the Interest Period for any
LIBOR Tranche, if the Borrower has not continued or converted such LIBOR
Tranche into new Tranches as provided for in paragraph (ii) above, the Borrower
shall be deemed to have continued such LIBOR Tranche as a Prime Rate Tranche.
Each Prime Rate Tranche shall continue as a Prime Rate Tranche unless the
Borrower converts such Prime Rate Tranche as provided for in paragraph (ii)
above.
(b) LIBOR Tranches. Each LIBOR Tranche shall bear
interest during its Interest Period at a per annum interest rate equal to the
lesser of (i) the Highest Lawful Rate or (ii) the sum of the LIBOR for such
Tranche plus the Applicable Margin for LIBOR Tranches in effect from time
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<PAGE> 27
to time. The Borrower shall pay to the Agent for the ratable benefit of the
Banks all accrued but unpaid interest on each LIBOR Tranche on the last day of
the applicable Interest Period for such LIBOR Tranche (and with respect to
LIBOR Tranches with Interest Periods of greater than three months, on the date
which is three months after the first date of the Interest Period for such
LIBOR Tranche), when required upon prepayment as specified elsewhere in this
Agreement, on any date when any portion of any LIBOR Tranche is prepaid (but
only to the extent of the portion of any such LIBOR Tranche is prepaid), and on
the Maturity Date.
(c) Prime Rate Tranches. Each Prime Rate Tranche shall
bear interest at a per annum interest rate equal to the lesser of (i) the
Highest Lawful Rate or (ii) the Adjusted Prime Rate in effect from time to time
plus the Applicable Margin for Prime Rate Tranches in effect from time to time.
The Borrower shall pay to the Agent for the ratable benefit of the Banks all
accrued but unpaid interest on outstanding Prime Rate Tranches on the last day
of each calendar quarter, when required upon prepayment as specified elsewhere
in this Agreement, on any date all Prime Rate Tranches are prepaid in full, and
on the Maturity Date.
(d) Usury Protection.
(i) Nothing contained in this Agreement or the
Notes shall require the Borrower to pay interest at a rate exceeding the
Highest Lawful Rate. Each provision in the Credit Documents and any other
agreement executed in connection herewith is expressly limited so that in no
event whatsoever shall the amount paid thereunder, or otherwise paid, by the
Borrower for the use, forbearance or detention of the money to be loaned under
this Agreement, exceed that amount of money which would cause the effective
rate of interest thereon to exceed the Highest Lawful Rate, and all amounts
payable under the Credit Documents or any other agreement executed in
connection herewith, or otherwise payable in connection therewith, shall be
subject to reduction so that such amounts paid or payable for the use,
forbearance or detention of money to be loaned under this Agreement shall not
exceed that amount of money which would cause the effective rate of interest
thereon to exceed the Highest Lawful Rate.
(ii) If the amount of interest payable for the
account of any Bank on any interest payment date in respect of the immediately
preceding interest computation period, computed pursuant to this Section 2.04,
would exceed the maximum amount permitted by applicable law to be charged by
such Bank, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
(iii) If the amount of interest payable for the
account of any Bank in respect of any interest computation period is reduced
pursuant to clause (d)(ii) above and the amount of interest payable for its
account in respect of any subsequent interest computation period, computed
pursuant to this Section 2.04, would be less than the maximum amount permitted
by applicable law to be charged by such Bank, then the amount of interest
payable for its account in respect of such subsequent interest computation
period shall be automatically increased to the maximum amount permitted by
applicable law to be charged by such Bank; provided that at no time shall the
aggregate amount by which interest paid for the account of any Bank has been
increased pursuant to this clause
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<PAGE> 28
(d)(iii) exceed the aggregate amount by which interest paid for its account has
theretofore been reduced pursuant to clause (d)(ii) of this Section.
(iv) In the event that maturity of the loans made
hereunder is accelerated for any reason, or in the event of any required or
permitted prepayment of such loans, then such consideration that constitutes
interest payable for the account of any Bank shall never include more than the
maximum amount permitted by applicable law to be charged by such Bank and
excess interest, if any, payable for the account of such Bank pursuant to its
Note, this Agreement or otherwise shall be canceled automatically as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited on the loans made hereunder by such Bank (or, to the extent in excess
of such loans, refunded by such Bank to the Borrower).
(v) It is further agreed that, without limitation
of the foregoing, all calculations of the rate of interest contracted for,
charged or received for the account of any Bank under the Note held by it,
under this Agreement, under any other agreement executed in connection herewith
or otherwise in connection with the loans made hereunder by or the Commitment
of such Bank for the purpose of determining whether such rate exceeds the
Highest Lawful Rate, shall be made, to the extent permitted by applicable usury
law (now or hereafter enacted), by amortizing, prorating and spreading in equal
parts during the period of the full stated terms of the loans evidenced by such
Note all interest at any time contracted for, charged or received by such Bank
in connection therewith.
2.5 Breakage Costs. If (i) any payment of principal on or any
conversion of any LIBOR Tranche is made on any date other than the last day of
the Interest Period for such LIBOR Tranche, whether as a result of any
voluntary or mandatory prepayment, any acceleration of maturity, or any other
cause, (ii) any payment of principal on any LIBOR Tranche is not made when due,
or (iii) any LIBOR Tranche is not borrowed, converted, or prepaid in accordance
with the respective notice thereof provided by the Borrower to the Agent,
whether as a result of any failure to meet any applicable conditions precedent
for borrowing, conversion, or prepayment, the permitted cancellation of any
request for borrowing, conversion, or prepayment, the failure of the Borrower
to provide the respective notice of borrowing, conversion, or prepayment, or
any other cause not specified above which is created by the Borrower, then the
Borrower shall pay to each Bank upon demand any amounts required to compensate
such Bank for any losses, costs, or expenses, including lost profits and
administrative expenses, which are reasonably allocable to such action,
including losses, costs, and expenses related to the liquidation or
redeployment of funds acquired or designated by such Bank to fund or maintain
such Bank's ratable share of such LIBOR Tranche or related to the reacquisition
or redesignation of funds by such Bank to fund or maintain such Bank's ratable
share of such LIBOR Tranche following any liquidation or redeployment of such
funds caused by such action. A certificate as to the amount of such loss,
cost, or expense detailing the calculation thereof and certifying that such
Bank customarily charges such amounts to its other customers in similar
circumstances submitted by such Bank to the Borrower shall be conclusive and
binding for all purposes, absent manifest error.
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<PAGE> 29
2.6 Increased Costs.
(a) Cost of Funds. If due to either (i) any introduction
of, change in, or change in the interpretation of any law or regulation after
the date of this Agreement or (ii) compliance with any guideline or request
from any central bank or other governmental authority having appropriate
jurisdiction (whether or not having the force of law) given after the date of
this Agreement, there shall be any increase in the costs of any Bank allocable
to (x) committing to make any Advance or obtaining funds for the making,
funding, or maintaining of such Bank's ratable share of any LIBOR Tranche in
the relevant interbank market or (y) committing to make Letters of Credit or
issuing, funding, or maintaining Letters of Credit (including any increase in
any applicable reserve requirement specified by the Federal Reserve Board,
including those for emergency, marginal, supplemental, or other reserves), then
the Borrower shall pay to such Bank upon demand any amounts required to
compensate such Bank for such increased costs, such amounts being due and
payable upon demand by such Bank. A certificate as to the cause and amount of
such increased cost detailing the calculation of such cost and certifying that
such Bank customarily charges such amounts to its other customers in similar
circumstances submitted by such Bank to the Borrower shall be conclusive and
binding for all purposes, absent manifest error. Notwithstanding the
foregoing, the Borrower shall not be obligated to pay any such amounts that
accrued more than 90 days prior to delivery of such certificate to the
Borrower.
(b) Capital Adequacy. If, due to either (i) any
introduction of, change in, or change in the interpretation of any law or
regulation after the date of this Agreement or (ii) compliance with any
guideline or request from any central bank or other governmental authority
having appropriate jurisdiction (whether or not having the force of law) given
after the date of this Agreement, there shall be any increase in the capital
requirements of any Bank or its parent or holding company allocable to (x)
committing to make Advances or making, funding, or maintaining Advances or (y)
committing to make Letters of Credit or issuing, funding, or maintaining
Letters of Credit, as such capital requirements are allocated by such Bank,
then the Borrower shall pay to such Bank upon demand any amounts required to
compensate such Bank or its parent or holding company for such increase in
costs (including an amount equal to any reduction in the rate of return on
assets or equity of such Bank or its parent or holding company), such amounts
being due and payable upon demand by such Bank. A certificate as to the cause
and amounts detailing the calculation of such amounts and certifying that such
Bank customarily charges such amounts to its other customers in similar
circumstances submitted by such Bank to the Borrower shall be conclusive and
binding for all purposes, absent manifest error. Notwithstanding the
foregoing, the Borrower shall not be obligated to pay any such amounts that
accrued more than 90 days prior to delivery of such certificate to the
Borrower.
2.7 Illegality. Notwithstanding any other provision in this
Agreement, if it becomes unlawful for any Bank to obtain deposits or other
funds for making or funding such Bank's ratable share of any LIBOR Tranche in
the relevant interbank market, such Bank shall so notify the Borrower and the
Agent and such Bank's commitment to create LIBOR Tranches shall be suspended
until such condition has passed, all LIBOR Tranches applicable to such Bank
shall be converted to Prime Rate Tranches as of the end of each applicable
Interest Period or earlier if necessary, and all subsequent requests for LIBOR
Tranches shall be deemed to be requests for Prime Rate Tranches with respect to
such Bank.
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<PAGE> 30
2.8 Market Failure. Notwithstanding any other provision in this
Agreement, if the Agent determines that: (a) quotations of interest rates for
the relevant deposits referred to in the definition of "LIBOR" are not being
provided in the relevant amounts, or maturities for purposes of determining the
rate of interest referred to in the definition of "LIBOR" or (b) the relevant
rates of interest referred to in the definition of "LIBOR" which are used as
the basis to determine the rate of interest for LIBOR Tranches are not likely
to adequately cover the cost to any Bank of making or maintaining such Bank's
ratable share of any LIBOR Tranche, then if the Agent so notifies the Borrower,
the commitment of the Banks to make any Borrowing comprised of LIBOR Tranches
shall be suspended until such condition has passed, all LIBOR Tranches shall be
converted to Prime Rate Tranches as of the end of each applicable Interest
Period or earlier if necessary, and all subsequent requests for LIBOR Tranches
shall be deemed to be requests for Prime Rate Tranches.
2.9 Payment Procedures and Computations.
(a) Payment Procedures. Time is of the essence in
this Agreement and the Credit Documents. All payment hereunder shall be made
in Dollars. The Borrower shall make each payment under this Agreement and
under the Notes not later than 1:00 p.m. (local time at the Applicable Lending
Office of the Agent) on the day when due to the Agent at the Agent's Applicable
Lending Office in immediately available funds. All payments by the Borrower
hereunder shall be made without any offset, abatement, withholding, or
reduction. Upon receipt of payment from the Borrower of any principal,
interest, or fees due to the Banks, the Agent shall promptly after receipt
thereof distribute to the Banks their ratable share of such payments for the
account of their respective Applicable Lending Offices. If and to the extent
that the Agent shall not have so distributed to any Bank its ratable share of
such payments, the Agent agrees that it shall pay interest on such amount for
each day after the day when such amount is made available to the Agent by the
Borrower until the date such amount is paid to such Bank by the Agent at the
Federal Funds Rate in effect from time to time, provided that if such amount is
not paid by the Agent by the end of the third day after the Borrower makes such
amount available to the Agent, the interest rates specified above shall be
increased by a per annum amount equal to 2.00% on the fourth day and shall
remain at such increased rate thereafter. Interest on such amount shall be due
and payable by the Agent upon demand by such Bank. Upon receipt of other
amounts due solely to the Agent, the Issuing Bank, or a specific Bank, the
Agent shall distribute such amounts to the appropriate party to be applied in
accordance with the terms of this Agreement.
(b) Agent Reliance. Unless the Agent shall have received
written notice from the Borrower prior to any date on which any payment is due
to the Banks that the Borrower shall not make such payment in full, the Agent
may assume that the Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such date an amount equal to the amount then due
such Bank. If and to the extent the Borrower shall not have so made such
payment in full to the Agent, each Bank shall repay to the Agent forthwith on
demand such amount distributed to such Bank, together with interest thereon
from the date such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at an interest rate equal to, the Federal
Funds Rate in effect from time to time, provided that with respect to such
Bank, if such amount is not repaid by such Bank by the end of the
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<PAGE> 31
second day after the date of the Agent's demand, the interest rates specified
above shall be increased by a per annum amount equal to 2.00% on the third day
after the date of the Agent's demand and shall remain at such increased rate
thereafter.
(c) Sharing of Payments. Each Bank agrees that if it
should receive any payment (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the Credit
Documents, or otherwise) in respect of any obligation of the Borrower to pay
principal, interest, fees, or any other obligation incurred under the Credit
Documents in a proportion greater than the total amount of such principal,
interest, fees, or other obligation then owed and due by the Borrower to such
Bank bears to the total amount of principal, interest, fees, or other
obligation then owed and due by the Borrower to all of the Banks immediately
prior to such receipt, then such Bank receiving such excess payment shall
purchase for cash without recourse from the other Banks an interest in the
obligations of the Borrower to such Banks in such amount as shall result in a
participation by all of the Banks, in proportion with the Banks' respective pro
rata shares, in the aggregate unpaid amount of principal, interest, fees, or
any such other obligation, as the case may be, owed by the Borrower to all of
the Banks; provided that if all or any portion of such excess payment is
thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, in proportion with the
Banks' respective pro rata shares, but without interest.
(d) Authority to Charge Accounts. The Agent, if and to
the extent payment owed to the Agent or any Bank is not made when due, may
charge from time to time against any account of the Borrower with the Agent any
amount so due. The Agent agrees promptly to notify the Borrower after any such
charge and application made by the Agent provided that the failure to give such
notice shall not affect the validity of such charge and application.
(e) Interest and Fees. Unless expressly provided for in
this Agreement, (i) all computations of interest based on the Prime Rate
(including the Adjusted Prime Rate, when applicable) shall be made on the basis
of a 360 day year, (ii) all computations of interest based on the Federal Funds
Rate (including the Adjusted Prime Rate, when applicable) shall be made on the
basis of a 360 day year, (iii) all computations of interest based upon the
LIBOR shall be made on the basis of a 360 day year, and (iv) all computations
of fees shall be made on the basis of a 360 day year, in each case for the
actual number of days (including the first day, but excluding the last day)
occurring in the period for which such interest or fees are payable; provided,
however, that if the use of a 360 day year would cause the interest contracted
for, charged, or received hereunder to exceed the Highest Lawful Rate, such
computations shall instead be made on the basis of a year of 365 or 366 days,
as the case may be. Each determination by the Agent of an interest rate or fee
shall be conclusive and binding for all purposes, absent manifest error.
(f) Payment Dates. Whenever any payment shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.
If the time for payment for an amount payable is not specified in this
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<PAGE> 32
Agreement or in any other Credit Document, the payment shall be due and payable
on demand by the Agent or the applicable Bank.
2.10 Taxes.
(a) No Deduction for Certain Taxes. Any and all payments
by the Borrower shall be made 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, other than taxes
imposed on the income of and franchise taxes imposed on the Agent, any Bank, or
the Applicable Lending Office thereof by any jurisdiction in which any such
entity is a citizen or resident or any political subdivision of such
jurisdiction (all such nonexcluded 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 to the Agent, any Bank, or the Applicable Lending Office
thereof, (i) the sum payable shall be increased as may be necessary so that,
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.10), such Person receives 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 taxation authority or other
authority in accordance with applicable law.
(b) Other Taxes. The Borrower agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges, or similar levies which arise from any payment made or from the
execution, delivery, or registration of, or otherwise with respect to, this
Agreement or the other Credit Documents (other than those which become due as a
result of any Bank joining this Agreement as a result of any Assignment and
Acceptance, which shall be paid by the Bank which becomes a Bank hereunder as a
result of such Assignment and Acceptance).
(c) Foreign Bank Withholding Exemption. Each Bank and
Issuing Bank that is not incorporated under the laws of the United States of
America or a state thereof agrees that it shall deliver to the Borrower and the
Agent (i) two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may be, certifying
in each case that such Bank is entitled to receive payments under this
Agreement and the Notes payable to it, without deduction or withholding of any
United States federal income taxes, (ii) if applicable, an Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax, and (iii) any
other governmental forms which are necessary or required under an applicable
tax treaty or otherwise by law to reduce or eliminate any withholding tax,
which have been reasonably requested by the Borrower. Each Bank which delivers
to the Borrower and the Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant
to the next preceding sentence further undertakes to deliver to the Borrower
and the Agent two further copies of the said letter and Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such letter
or form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent letter and form previously delivered by
it to the Borrower and the Agent, and such extensions or renewals thereof as
may reasonably be requested by the Borrower and the
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Agent certifying in the case of a Form 1001 or 4224 that such Bank is entitled
to receive payments under this Agreement without deduction or withholding of
any United States federal income taxes. If an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any delivery required by the preceding sentence would otherwise
be required which renders all such forms inapplicable or which would prevent
any Bank from duly completing and delivering any such letter or form with
respect to it and such Bank advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax, and in the case of a Form W-8 or W-9, establishing
an exemption from United States backup withholding tax, such Bank shall not be
required to deliver such letter or forms. The Borrower shall withhold tax at
the rate and in the manner required by the laws of the United States with
respect to payments made to a Bank failing to provide the requisite Internal
Revenue Service forms in a timely manner. Each Bank which fails to provide to
the Borrower in a timely manner such forms shall reimburse the Borrower upon
demand for any penalties paid by the Borrower as a result of any failure of the
Borrower to withhold the required amounts that are caused by such Bank's
failure to provide the required forms in a timely manner.
ARTICLE 3. CONDITIONS PRECEDENT.
3.1 Conditions Precedent to Initial Extensions of Credit.
(a) The obligation of each Bank to make the initial
extension of credit under this Agreement, including the making of any Advances,
and the issuance of any Letters of Credit, shall be subject to the condition
precedent that the Borrower shall have delivered or shall have caused to be
delivered the documents and other items listed on Exhibit F, together with any
other documents requested by the Agent to document the agreements and intent of
the Credit Documents, each in form and with substance satisfactory to the
Agent; and
(b) the Borrower's existing obligations to NationsBank
and TCB shall be paid in full and such facilities shall be terminated.
3.2 Conditions Precedent to Each Extension of Credit. The
obligation of each Bank to make any extension of credit under this Agreement,
including the making of any Advances, and the issuance, increase, or extension
of any Letters of Credit, shall be subject to the further conditions precedent
that on the date of such extension of credit:
(a) Representations and Warranties. As of the date of
the making of any extension of credit hereunder, the representations and
warranties contained in each Credit Document shall be true and correct in all
material respects as of such date (and the Borrower's request for the making of
any extension of credit hereunder shall be deemed to be a restatement,
representation, and additional warranty of the representations and warranties
contained in each Credit Document as of such date); and
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(b) Default. As of the date of the making of any
extension of credit hereunder, there shall exist no Default or Event of
Default, and the making of the extension of credit would not cause or be
reasonably expected to cause a Default or Event of Default.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Agent and each Bank, and with each request for any extension of
credit hereunder, including the making of any Advances, and the issuance,
increase, or extension of any Letters of Credit, again represents and warrants
to the Agent and each Bank, as follows:
4.1 Organization. As of the date of this Agreement, each
Restricted Entity (a) is duly organized, validly existing, and in good standing
under the laws of such Person's respective jurisdiction of organization and (b)
is duly licensed, qualified to do business, and in good standing in the State
of Texas and in each jurisdiction in which such Person is organized, owns
property, or conducts operations to the extent that any failure to be so
licensed, qualified, or in good standing could reasonably be expected to cause
a Material Adverse Effect.
4.2 Authorization. The execution, delivery, and performance by
each Credit Party of the Credit Documents to which such Credit Party is a party
and the consummation of the transactions contemplated thereby (a) do not
contravene the organizational documents of such Credit Party, (b) have been
duly authorized by all necessary corporate action of each Credit Party, and (c)
are within each Credit Party's corporate powers.
4.3 Enforceability. Each Credit Document to which any Credit
Party is a party has been duly executed and delivered by each Credit Party
which is a party to such Credit Document and constitutes the legal, valid, and
binding obligation of each such Credit Party, enforceable against each such
Credit Party in accordance with such Credit Document's terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws at the time in effect affecting the rights of creditors generally and
subject to the availability of equitable remedies.
4.4 Absence of Conflicts and Approvals. The execution, delivery,
and performance by each Credit Party of the Credit Documents to which such
Credit Party is a party and the consummation of the transactions contemplated
thereby, (a) do not result in any violation or breach of any provisions of, or
constitute a default under, any note, indenture, credit agreement, security
agreement, credit support agreement, or other similar agreement to which such
Credit Party is a party or any other material contract or agreement to which
such Credit Party is a party, (b) do not violate any law or regulation binding
on or affecting such Credit Party, (c) do not require any authorization,
approval, or other action by, or any notice to or filing with, any governmental
authority, and (d) do not result in or require the creation or imposition of
any Lien prohibited by this Agreement.
4.5 Investment Companies. No Restricted Entity or Affiliate
thereof is an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
4.6 Public Utilities. No Restricted Entity or Affiliate thereof
is a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a
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"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended. No Restricted Entity or
Affiliate thereof is a regulated public utility.
4.7 Financial Condition.
(a) The Borrower has delivered to the Agent the annual
audited consolidated financial statements of the Borrower dated as of December
31, 1996, including therein the balance sheet of the Borrower as of such date
and the statements of income, stockholders' equity, and cash flows for the
Borrower for the fiscal year ending on such date. These financial statements
are accurate and complete in all material respects and present fairly the
financial condition of the Borrower as of such date in accordance with GAAP.
(b) As of the date of the Initial Financial Statements,
there were no material contingent obligations, liabilities for taxes, unusual
forward or long-term commitments, or unrealized or anticipated losses of the
Borrower or any of the Borrower's Subsidiaries, except as disclosed in the
Initial Financial Statements, and adequate reserves for such items have been
made in accordance with GAAP. Since the date of the Initial Financial
Statements, no change has occurred in the condition, financial or otherwise, of
the Borrower which would have a Material Adverse Effect. No Default exists.
4.8 Condition of Assets. Each Restricted Entity has good and
indefeasible title to substantially all of its owned property and valid
leasehold rights in all of its leased property, as reflected in the financial
statements most recently provided to the Agent, free and clear of all Liens
except Permitted Liens. Each Restricted Entity possesses and has properly
approved, recorded, and filed, where applicable, all permits, licenses,
patents, patent rights or licenses, trademarks, trademark rights, trade names
rights, and copyrights which are useful in the conduct of its business and
which the failure to possess could reasonably be expected to cause a Material
Adverse Effect. The material properties used or to be used in the continuing
operations of each Restricted Entity are in good repair, working order, and
condition, normal wear and tear excepted. The properties of each Restricted
Entity have not been 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 a governmental authority, riot,
activities of armed forces, or acts of God or of any public enemy in any manner
which (after giving effect to any insurance proceeds) could reasonably be
expected to have a Material Adverse Effect.
4.9 Litigation. There are no actions, suits, or proceedings
pending or, to the knowledge of any Restricted Entity, threatened against any
Restricted Entity at law, in equity, or in admiralty, or by or before any
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, or any arbitrator which could reasonably be expected to
result in a judgment or liability not fully covered by insurance which would
have a Material Adverse Effect.
4.10 Subsidiaries and Affiliates. As of the date of this
Agreement, the Borrower has no Subsidiaries, except as disclosed in Schedule II
hereto. The Borrower has no Subsidiaries which have not been disclosed in
writing to the Agent.
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4.11 Laws and Regulations. Each Restricted Entity has been and is
in compliance with all federal, state, and local laws and regulations which are
applicable to the operations and property of such Person and which the failure
to comply with could reasonably be expected to have a Material Adverse Effect.
4.12 Environmental Compliance. Each Restricted Entity has been and
is in compliance with all Environmental Laws and has obtained and is in
compliance with all related permits necessary for the ownership and operation
of any such Person's properties which the failure to be in compliance with
could reasonably be expected to have a Material Adverse Effect. Each
Restricted Entity has never received notice of and has never been investigated
for any violation or alleged violation of any Environmental Law in connection
with any such Person's presently or previously owned properties which threaten
action or suggest liabilities which could reasonably be expected to have a
Material Adverse Effect. Each Restricted Entity does not and has not created,
handled, transported, used, or disposed of any Hazardous Materials on or about
any such Person's properties (nor has any such Person's properties been used
for those purposes), except in compliance with all Environmental Laws and
related permits; has never been responsible for the release of any Hazardous
Materials into the environment in connection with any such Person's operations
and have not contaminated any properties with Hazardous Materials; and does not
and has not owned any properties contaminated by any Hazardous Materials, in
each case in any manner which could reasonably be expected to have a Material
Adverse Effect. For the purposes of this Section 4.12, any losses covered by
the Borrower's reserve for environmental losses set forth on its most recent
consolidated balance sheet shall be excluded in determining whether any
Material Adverse Effect has occurred.
4.13 ERISA. Each Restricted Entity is in compliance in all
material respects with all provisions of ERISA. No Restricted Entity
participates in or during the past five years has participated in any employee
pension benefit plan covered by Title IV of ERISA or any multiemployer plan
under Section 4001(a)(3) of ERISA. With respect to the Plans of the
Restricted Entities, no material Reportable Event or Prohibited Transaction has
occurred and exists.
4.14 Taxes. Each Restricted Entity has filed all United States
federal, state, and local income tax returns and all other domestic and foreign
tax returns which are required to be filed by such Person and has paid, or
provided for the payment before the same became delinquent of, all taxes due
pursuant to such returns or pursuant to any assessment received by the such
Person. The charges, accruals, and reserves on the books of the Restricted
Entities in respect of taxes are adequate in accordance with GAAP.
4.15 True and Complete Disclosure. All factual information
furnished by or on behalf of any Credit Party in writing to the Agent or any
Bank in connection with the Credit Documents and the transactions contemplated
thereby is true and accurate in all material respects on the date as of which
such information was dated or certified and does not contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements contained therein not misleading. All projections, estimates,
and pro forma financial information furnished by any Credit Party were prepared
on the basis of assumptions, data, information, tests, or conditions believed
to
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be reasonable at the time such projections, estimates, and pro forma financial
information were furnished.
ARTICLE 5. COVENANTS. Until the Agent and the Banks receive irrevocable
payment of the Credit Obligations and have terminated this Agreement and each
other Credit Document, the Borrower shall comply with and cause compliance with
the following covenants:
5.1 Organization; Maintenance of Properties. The Borrower shall
cause each Restricted Entity to (a) maintain itself as an entity (i) duly
organized, validly existing, and in good standing under the laws of each such
Person's respective jurisdiction of organization and (ii) duly licensed,
qualified to do business, and in good standing in each jurisdiction in which
such Person is organized, owns property, or conducts operations and which
requires such licensing or qualification and where failure to be so licensed,
qualified, or in good standing could reasonably be expected to have a Material
Adverse Effect, (b) maintain all franchises, licenses, rights, privileges, and
intangible properties necessary in the conduct of its business, if any, and (c)
duly observe and conform to all material requirements of any governmental
authorities relative to the conduct of its business or the operation of its
Property, if such failure duly to observe and conform to said requirements
would have a Material Adverse Effect or is likely to result in criminal
prosecution.
5.2 Reporting. The Borrower shall furnish to the Agent all of the
following:
(a) Annual Financial Reports. As soon as available and
in any event not later than 90 days after the end of each fiscal year of the
Borrower, (i) a copy of the annual audit report for such fiscal year for the
Borrower, including therein the consolidated balance sheets of the Borrower as
of the end of such fiscal year and the consolidated statements of income,
stockholders' equity, and cash flows for the Borrower for such fiscal year,
setting forth the consolidated financial position and results of the Borrower
for such fiscal year and certified, without any qualification or limit of the
scope of the examination of matters relevant to the financial statements, by a
nationally recognized certified public accounting firm, (ii) separately
reported information regarding operating divisions and Subsidiaries of the
Borrower that are not Guarantors, including a statement of dividends received
by the Borrower and the Guarantors from such non-guarantor Subsidiaries of the
Borrower; and (iii) a completed Compliance Certificate duly certified by a
Responsible Officer of the Borrower;
(b) Quarterly Financial Reports. As soon as available
and in any event not later than 45 days after the end of each fiscal quarter,
(i) a copy of the internally prepared consolidated financial statements of the
Borrower for such fiscal quarter and for the fiscal year to date period ending
on the last day of such fiscal quarter, including therein the consolidated
balance sheets of the Borrower as of the end of such fiscal quarter and the
consolidated statements of income, and cash flows for such fiscal quarter and
for such fiscal year to date period, setting forth the consolidated financial
position and results of the Borrower for such fiscal quarter and fiscal year to
date period, all in reasonable detail and duly certified by a Responsible
Officer of the Borrower as having been prepared in accordance with generally
accepted accounting principles, including those applicable to interim financial
reports which permit normal year end adjustments and do not require complete
financial notes; (ii) separately reported information regarding operating
divisions and Subsidiaries of the Borrower that are not Guarantors, including a
statement of dividends received by the Borrower
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and the Guarantors from such non-guarantor Subsidiaries of the Borrower; and
(iii) a completed Compliance Certificate duly certified by a Responsible
Officer of the Borrower;
(c) SEC Filings. As soon as available and in any event
not later than thirty days after the filing or delivery thereof, copies of all
financial statements, reports, and proxy statements which the Borrower shall
have sent to its stockholders generally and copies of all regular and periodic
reports, if any, which any Restricted Entity shall have filed with the
Securities and Exchange Commission;
(d) Defaults. Promptly, but in any event within five
Business Days after the discovery thereof, a notice of any facts known to any
Restricted Entity which constitute a Default, together with a statement of a
Responsible Officer of the Borrower setting forth the details of such facts and
the actions which the Borrower has taken and proposes to take with respect
thereto;
(e) Litigation; Material Contingent Liabilities; Material
Agreement Defaults. The Borrower shall provide to the Banks:
(i) promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting any Restricted Entity which, if determined adversely, could
reasonably be expected to have a Material Adverse Effect;
(ii) promptly after acquiring knowledge thereof,
notice of any actual or potential material contingent liabilities, including
without limitation any actual or potential material contingent liability in an
amount which equals or exceeds $1,000,000; and
(iii) promptly after obtaining knowledge thereof,
notice of any breach by any Restricted Entity of any contract or agreement
which breach could reasonably be expected to cause a Material Adverse Effect;
(f) Material Adverse Effects. Prompt written notice of
any condition or event of which any Restricted Entity has knowledge, which
condition or event has resulted in or could reasonably be expected to have a
Material Adverse Effect; and
(g) Other Information. Such other information respecting
the business operations or property of any Restricted Entity, financial or
otherwise, as the Agent or the Banks may from time to time reasonably request.
5.3 Inspection. The Borrower shall cause each Restricted Entity
to permit the Agent and the Banks to visit and inspect any of the properties of
such Restricted Entity, to examine all of such Person's books of account,
records, reports, and other papers, to make copies and extracts therefrom, and
to discuss their respective affairs, finances, and accounts with their
respective officers, employees, and independent public accountants all at such
reasonable times and as often as may be reasonably requested provided that the
Borrower is given at least one Business Day advance notice
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thereof and reasonable opportunity to be present when independent public
accountants or other third parties are contacted.
5.4 Use of Proceeds. The proceeds of Advances and Letters of
Credit shall be used by the Borrower only for general corporate and working
capital purposes, for Capital Expenditures, and for financing Acquisitions in
accordance with Section 5.9. The Borrower shall not, directly or indirectly,
use any part of such proceeds for any purpose which violates, or is
inconsistent with, Regulations G, T, U, or X of the Board of Governors of the
Federal Reserve System.
5.5 Financial Covenants. The Agent shall determine compliance
with the following financial covenants based upon the most recent financial
statements dated as of the end of a fiscal quarter delivered to the Agent
pursuant to Section 5.2(b) (except when available at the time of testing the
audited financial statements delivered pursuant to Section 5.2(a) shall be
used).
(a) Debt to Adjusted EBITDA Ratio. As of the last day of
each fiscal quarter of the Borrower, the Borrower shall not permit the ratio of
(i) the consolidated Debt of the Borrower as of end of the fiscal quarter then
ended to (ii) the consolidated Adjusted EBITDA of the Borrower for the
preceding four fiscal quarters then ended (plus, without duplication, the
consolidated Adjusted EBITDA for such period of any Person or assets acquired
by the Borrower by Acquisition during such period to the extent permitted or
required below), to be greater than 3.00 to 1.00. The addition of any
historical EBITDA of any Person or assets acquired by the Borrower by
Acquisition shall be governed by the following rules:
(A) If the Borrower elects to include such
consolidated Adjusted EBITDA for the purposes of calculating the foregoing
ratio, then the Borrower must provide the Agent, simultaneously with its
delivery of the financial statements and Compliance Certificate for such fiscal
quarter, with the following information: (1) historical financial statements
regarding the acquired Person or assets including (x) historical financial
statements for the most recent fiscal year of such acquired Person or assets,
reviewed by an independent certified public accounting firm reasonably
acceptable to the Agent, and (y) interim historical financial statements for
the applicable calculation period duly certified by a Responsible Officer of
the Borrower as being, to the best of such Responsible Officer's knowledge
after due inquiry, accurate and complete and having been prepared in accordance
with generally accepted accounting principles, including those applicable to
interim financial reports which permit normal year end adjustments and do not
require complete financial notes and (2) a detailed calculation of the
combination of the consolidated Adjusted EBITDA of the Person or assets
acquired by the Borrower with the consolidated Adjusted EBITDA of the Borrower
for the purposes of calculating the foregoing ratio, without adjustments to the
historical consolidated Adjusted EBITDA of such Person or assets except as
permitted below.
(B) If the Borrower wishes to include any
adjustments to the historical consolidated Adjusted EBITDA of any Person or
assets acquired by the Borrower by Acquisition for the purposes of calculating
the foregoing ratio, then the Borrower must provide the Agent, in addition to
the detailed calculation required above in paragraph (A)(2) above, a detailed
explanation of such adjustments to the historical consolidated Adjusted EBITDA
of the Person or assets acquired by the Borrower and a certification that they
may be made in accordance with U.S. Securities and
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Exchange Commission guidelines regarding the reporting of such matters. The
Agent may approve such adjustments in its own discretion, and if such
adjustments are approved by the Agent they shall be included in the calculation
of the foregoing ratio.
(C) If the historical consolidated Adjusted
EBITDA of any Person or assets acquired by the Borrower by Acquisition is less
than negative $2,500,000 for the preceding four fiscal quarters of such Person
or assets then most recently ended, then the Borrower must include the
historical consolidated Adjusted EBITDA of such Person or assets during such
period for the purposes of calculating the foregoing ratio, which calculation
shall be subject to the same requirements and on the same terms as set forth in
paragraphs (A) (1) and (2) and (B) above for the inclusion of positive
consolidated Adjusted EBITDA.
(b) Fixed Charge Coverage Ratio. As of the last day of
each fiscal quarter of the Borrower, the Borrower shall not permit the ratio of
(i) the consolidated Adjusted EBITDA of the Borrower for the preceding four
fiscal quarters then ended less the consolidated cash taxes paid by the
Borrower for such period to (ii) the consolidated Fixed Charges of the Borrower
for such period less the consolidated Major Capital Expenditures of the
Borrower during such period, to be less than 1.25 to 1.00;
(c) Net Worth Minimum. The Borrower shall not permit its
consolidated Net Worth to be less than $96,000,000 plus an amount equal to the
sum of (a) 50% of the cumulative annual consolidated net earnings of the
Borrower as of the end of each fiscal year ending after the date of this
Agreement during which the Borrower has positive net earnings (and therefore
without reduction for any annual net losses), plus (b) 100% of the net proceeds
of any sale or issuance of any equity securities of the Borrower (including any
equity securities issued or transferred by the Borrower in connection with any
Acquisition) since December 31, 1996, to the extent such sale or issuance
increases the consolidated Net Worth of the Borrower.
(d) Capital Expenditures. The Borrower shall not and
shall not permit any other Restricted Entity to make any Capital Expenditure
(other than Capital Expenditures that are deemed to occur because of the making
of an Acquisition pursuant to Section 5.9) that would cause (i) the sum of such
Capital Expenditures of the Restricted Entities during the preceding four
fiscal quarters then ended to exceed (ii) 30% of the consolidated Net Worth of
the Borrower as of the end of the fiscal quarter then ended.
5.6 Debt. The Borrower shall not permit any Restricted Entity to
(a) create, assume, incur, suffer to exist, or in any
manner become liable, directly, indirectly, or contingently in respect of, any
Debt other than Permitted Debt; or
(b) make any unscheduled payment of principal, interest,
or other amounts owing with respect to any Debt of such Restricted Entity
(other than the Credit Obligations), or otherwise make any payment of any such
amounts prior to the date that such amounts become due and payable under the
terms of the documents creating such Debt without the prior written consent of
the Agent.
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5.7 Liens. The Borrower shall not permit any Restricted Entity to
(a) create, assume, incur, or suffer to exist any Lien on any of its Property
whether now owned or hereafter acquired, or assign any right to receive its
income, except for Permitted Liens; or (b) enter into any agreement with any
Person (other than the Agent and the Banks pursuant to this Agreement)
restricting the capacity of the Borrower or any other Restricted Entity to
create Liens in favor of the Agent and the Banks.
5.8 Other Obligations.
(a) The Borrower shall not permit any Restricted Entity
to create, incur, assume, or suffer to exist any obligations in respect of
unfunded vested benefits under any pension Plan or deferred compensation
agreement; and
(b) The Borrower shall not permit any Restricted Entity
to create, incur, assume, or suffer to exist any obligations in respect of
Derivatives, other than Derivatives used by any Restricted Entity in such
Restricted Entity's respective business operations in aggregate notional
quantities not to exceed the reasonably anticipated consumption of such
Restricted Entity of the underlying commodity for the relevant period, but no
Derivatives which are speculative in nature.
5.9 Corporate Transactions. The Borrower shall not and shall not
permit any other Restricted Entity to (1) merge or consolidate with or be a
party to a merger or consolidation with any other Person, (2) make any
Acquisition, (3) assign, sell, lease, dispose of, or otherwise transfer any
assets outside of the ordinary course of business, including wholesale sales of
accounts receivable, or (4) enter into any binding agreement regarding any of
the foregoing, provided however that:
(a) Any Restricted Entity organized under a jurisdiction
of the United States may be merged or consolidated with the Borrower or any
other Restricted Entity organized under a jurisdiction of the United States
provided that, in any such merger or consolidation to which the Borrower is a
party, the Borrower shall be the continuing or surviving corporation;
(b) any Restricted Entity may make any Acquisition (by
purchase or merger) provided that (i) the Restricted Entity is the acquiring or
surviving entity, (ii) the aggregate consideration paid or incurred by the
Restricted Entity (in either case including cash, indebtedness, assumed
indebtedness, and transaction related contractual payments such as amounts
payable under noncompete, consulting, and similar agreements, but excluding
stock and preferred stock of the Borrower) in connection with any Acquisition
does not exceed an amount equal to 20% of the consolidated Net Worth of the
Borrower as of the end of the most recent fiscal year ending prior to such
Acquisition, unless the Borrower provides the information specified below and
obtains the approval of the Agent and the Majority Banks, (iii) the aggregate
such consideration paid or incurred by the Restricted Entities in connection
with all Acquisitions during any continuous four fiscal quarter period does not
exceed an amount (the "Aggregate Acquisition Limit") equal to 50% of the
consolidated Net Worth of the Borrower as of the end of the most recent fiscal
year ending prior to, but not concurrently with, the end of such four quarter
period; provided, that if the Borrower provides the information specified below
and obtains the approval of the Agent and the Majority Banks, any Acquisitions
made by the Restricted Entities during the applicable period and so
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approved by the Agent and the Majority Banks shall be excluded from future
calculations of the Aggregate Acquisition Limit, (iv) the Majority Banks
determine that no Default or Event of Default exists and the Acquisition would
not reasonably be expected to cause a Default or Event of Default, (v) the
acquired assets are in substantially the same business as the Borrower or any
of the Restricted Entities, and (vi) the transaction is not hostile, as
reasonably determined by the Majority Banks;
(c) any Restricted Entity organized under a jurisdiction
of the United States may sell, lease, assign, transfer, or otherwise dispose of
any or all of its assets (i) to the Borrower or (ii) to any other Restricted
Entity organized under a jurisdiction of the United States; and
(d) the Borrower and the other Restricted Entities may
sell Property in the ordinary course of business or with the prior written
consent of the Agent and the Majority Banks.
If the Borrower requests the approval of the Agent and the Majority Banks for
any Acquisition pursuant to Section 5.9(b)(ii) or (iii) above, the Borrower
must provide the following information to the Agent for distribution to the
Banks: (A) historical financial statements regarding the Acquisition,
including at a minimum: (x) historical financial statements for the
immediately preceding three fiscal years of the acquired assets, reviewed by an
independent certified public accounting firm reasonably acceptable to the
Agent, and (y) interim historical financial statements for the most recent
fiscal quarter of the acquired assets, duly certified by a Responsible Officer
of the Borrower as being, to the best of such Responsible Officer's knowledge
after due inquiry, accurate and complete and having been prepared in accordance
with generally accepted accounting principles, including those applicable to
interim financial reports which permit normal year end adjustments and do not
require complete financial notes; and (B) consolidated historical proforma
financial statements for the Borrower for the most recently completed four
fiscal quarters of the Borrower giving effect to the Acquisition, and the
schedules and methods used to prepare such proforma financial statements; (C)
consolidated proforma financial statements for the Borrower for the next four
fiscal quarters of the Borrower giving effect to the Acquisition, and the
schedules and methods used to prepare such proforma financial statements; and
(D) such other information regarding the acquired assets as the Agent or the
Majority Banks may reasonably request.
5.10 Distributions. The Borrower shall not (a) declare or pay any
dividends; (b) purchase, redeem, retire, or otherwise acquire for value any of
its capital stock now or hereafter outstanding; or make any distribution of
assets to its stockholders as such, whether in cash, assets, or in obligations
of it; (c) allocate or otherwise set apart any sum for the payment of any
dividend or distribution on, or for the purchase, redemption, or retirement of,
any shares of its capital stock; or (d) make any other distribution by
reduction of capital or otherwise in respect of any shares of its capital
stock; provided, however, that the Borrower may make Dividend Payments so long
as the same do not cause an Event of Default.
5.11 Transactions with Affiliates. The Borrower shall not and
shall not permit any other Restricted Entity to enter into any transaction
directly or indirectly with or for the benefit of an Affiliate except
transactions with an Affiliate for the leasing of property, the rendering or
receipt of services, or the purchase or sale of inventory or other assets in
the ordinary course of business if the
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monetary or business consideration arising from such a transaction would be
substantially as advantageous to such Restricted Entity as the monetary or
business consideration which such Restricted Entity would obtain in a
comparable arm's length transaction.
5.12 Insurance. The Borrower shall cause each Restricted Entity to
maintain insurance with responsible and reputable insurance companies or
associations reasonably acceptable to the Agent in such amounts and covering
such risks as are usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which such Persons
operate. Without limiting the foregoing, the Borrower shall maintain insurance
coverage for the Restricted Entities equal to or better than, on an item by
item basis for each item, the coverage for the Restricted Entities existing on
the date of this Agreement. The Borrower shall deliver to the Agent
certificates evidencing such policies or copies of such policies at the Agent's
request following a reasonable period to obtain such certificates taking into
account the jurisdiction where the insurance is maintained.
5.13 Investments. The Borrower shall not and shall not permit any
other Restricted Entity to make or hold any direct or indirect investment in
any Person, including capital contributions to the Person, investments in the
debt or equity securities of the Person, and loans, guaranties, trade credit,
or other extensions of credit to the Person, except for Permitted Investments.
5.14 Lines of Business; Distribution. The Borrower shall not and
shall not permit any other Restricted Entity to change the character of the
business of such Restricted Entity as conducted on the date of this Agreement,
or engage in any type of business not reasonably related to such business as
presently and normally conducted.
5.15 Compliance with Laws. The Borrower shall and shall cause each
Restricted Entity to comply with all federal, state, and local laws and
regulations which are applicable to the operations and property of such Persons
and which the failure to comply with could reasonably be expected to have a
Material Adverse Effect.
5.16 Environmental Compliance. The Borrower shall and shall cause
each Restricted Entity to comply with all Environmental Laws and obtain and
comply with all related permits necessary for the ownership and operation of
any such Person's properties which the failure to comply with could reasonably
be expected to have a Material Adverse Effect. The Borrower shall and shall
cause each Restricted Entity to promptly disclose to the Banks any notice to
or investigation of such Persons for any violation or alleged violation of any
Environmental Law in connection with any such Person's presently or previously
owned properties which represent liabilities which could reasonably be expected
to have a Material Adverse Effect. The Borrower shall not and shall not permit
any Restricted Entity to create, handle, transport, use, or dispose of any
Hazardous Materials on or about any such Person's properties except in
compliance with all Environmental Laws and related permits; release any
Hazardous Materials into the environment in connection with any such Person's
operations or contaminate any properties with Hazardous Materials; or own
properties contaminated by any Hazardous Materials, in each case if such action
could reasonably be expected to have a Material Adverse Effect. For the
purposes of this Section 5.16, any losses covered by the Borrower's reserve for
environmental losses set forth on its most
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recent consolidated balance sheet shall be excluded in determining whether any
Material Adverse Effect has occurred.
5.17 ERISA Compliance. The Borrower shall and shall cause each
Restricted Entity to (i) comply in all material respects with all applicable
provisions of ERISA and prevent the occurrence of any Reportable Event or
Prohibited Transaction with respect to, or the termination of, any of their
respective Plans where the failure to do so could reasonably be expected to
have a Material Adverse Effect and (ii) not create or participate in any
employee pension benefit plan covered by Title IV of ERISA or any multiemployer
plan under Section 4001(a)(3) of ERISA.
5.18 Payment of Certain Claims. The Borrower shall and shall cause
each Restricted Entity to pay and discharge, before the same shall become
delinquent, (a) all taxes, assessments, levies, and like charges imposed upon
any such Person or upon any such Person's income, profits, or property by
authorities having competent jurisdiction prior to the date on which penalties
attach thereto except for tax payments being contested in good faith for which
adequate reserves have been made and reported in accordance with GAAP and which
could not reasonably be expected to have a Material Adverse Effect, (b) all
lawful claims which are secured by or which, if unpaid, would by law become
secured by a Lien upon any such Person's property, and (c) all trade payables
and current operating liabilities, unless the same are less than 90 days past
due or are being contested in good faith, have adequate reserves established
and reported in accordance with GAAP, and could not reasonably be expected to
have a Material Adverse Effect.
5.19 Subsidiaries. Upon the formation or acquisition of any new
wholly-owned Subsidiary which is organized under a jurisdiction of the United
States, the Borrower shall cause such Subsidiary to promptly execute and
deliver to the Agent a Joinder Agreement in substantially the form of Exhibit G
with such modifications thereto as the Agent may reasonably request for the
purpose of joining such Subsidiary as a party to the Guaranty and providing to
the Agent the rights of the Agent intended to be provided thereunder. In
connection therewith, the Borrower shall provide corporate documentation and
opinion letters reasonably satisfactory to the Agent reflecting the corporate
status of such new Subsidiary of the Borrower and the enforceability of such
agreements.
5.20 Further Assurances. Each Restricted Entity shall promptly
cure any defects in the creation and issuance of the Notes and the execution
and delivery of the other Credit Documents, including this Agreement. When
requested by the Agent, each Restricted Entity shall, at its own expense,
promptly execute and deliver or cause to be executed and delivered to the Agent
all such other and further documents, agreements, and instruments (a) to comply
with or accomplish the covenants and agreements in the Credit Documents, or (b)
to correct any omissions in the Credit Documents.
5.21 Management. The Borrower shall give the Agent written
notification of any change in the management structure of the Borrower
simultaneously with such change in management and disclosure to shareholders.
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ARTICLE 6. DEFAULT AND REMEDIES.
6.1 Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement and any
other Credit Document:
(a) Payment Failure. The Borrower (i) fails to pay when
due any principal amounts due under this Agreement or any other Credit Document
or (ii) fails to pay when due any interest, fees, reimbursements,
indemnifications, or other amounts due under this Agreement or any other Credit
Document and such failure has not been cured within five Business Days;
(b) False Representation. Any representation or warranty
made by the Borrower, any Credit Party, or any officer or partner thereof in
this Agreement or in any other Credit Document is materially false or erroneous
at the time it was made or deemed made;
(c) Breach of Covenant. (i) Any breach by the Borrower of
any of the covenants contained in Sections 5.2(d), 5.3, 5.6, 5.7, 5.8, 5.9,
5.10, 5.11, 5.12, 5.13, or 5.14 of this Agreement, or (ii) any breach by the
Borrower of any of the other covenants contained in this Agreement and such
breach is not cured within 30 days following the earlier of knowledge of such
breach by the Borrower or the receipt of written notice thereof from the Agent
or any Bank;
(d) Guaranty. (i) the Guaranty shall at any time and for
any reason cease to be in full force and effect or shall be contested by any
party thereto, or any Guarantor shall deny it has any further liability or
obligation thereunder, (ii) any breach by any Guarantor of any of the covenants
contained in Section 1 of the Guaranty, or (iii) or any breach by any Guarantor
of any other covenants contained in the Guaranty or any other Credit Document
and such breach is not cured within 30 days following the earlier of knowledge
of such breach by such Guarantor or the receipt of written notice thereof from
the Agent or any Bank;
(e) Cross Default. (i) Any principal, interest, fees,
or other amounts due on any Debt of any Restricted Entity is not paid when due,
whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise, and such failure is not cured within the applicable grace period, if
any, and the aggregate amount of all Debt of the Restricted Entities so in
default exceeds $1,000,000; (ii) any other event shall occur or condition shall
exist under any agreement or instrument relating to any Debt of any Restricted
Entity the effect of which is to accelerate or to permit the acceleration of
the maturity of any such Debt, whether or not any such Debt is actually
accelerated, and the aggregate amount of all Debt of the Restricted Entities so
in default exceeds $1,000,000; or (iii) any Debt of any Restricted Entity shall
be declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled prepayment) prior to the stated maturity thereof, and the
aggregate amount of all Debt of the Restricted Entities so accelerated exceeds
$1,000,000;
(f) Bankruptcy and Insolvency. (i) there shall have been
filed against any Restricted Entity or any such Person's properties, without
such Person's consent, any petition or other request for relief seeking an
arrangement, receivership, reorganization, liquidation, or similar relief under
bankruptcy or other laws for the relief of debtors and such request for relief
(A) remains
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in effect for 60 or more days, whether or not consecutive, or (B) is approved
by a final nonappealable order, or (ii) any such Person consents to or files
any petition or other request for relief of the type described in clause (i)
above seeking relief from creditors, makes any assignment for the benefit of
creditors or other arrangement with creditors, or admits in writing such
Person's inability to pay such Person's debts as they become due (Events of
Default under clause (i) and (ii) collectively being referred to as "Bankruptcy
Events of Default");
(g) Adverse Judgment. A judgment which has a Material
Adverse Effect, including without limitation any judgement in excess of an
amount equal to 10% of the consolidated Net Worth of the Borrower is rendered
against the Borrower or any other Restricted Entity and such judgment is not
discharged or stayed pending appeal within 30 days following its entry; or
(h) Change of Control. There shall occur any Change of
Control.
6.2 Termination of Commitments. Upon the occurrence of any
Bankruptcy Event of Default, all of the commitments of the Agent and the Banks
hereunder shall terminate. During the existence of any Event of Default other
than a Bankruptcy Event of Default, the Agent shall at the request of the
Majority Banks declare by written notice to the Borrower all of the commitments
of the Agent and the Banks hereunder terminated, whereupon the same shall
immediately terminate.
6.3 Acceleration of Credit Obligations. Upon the occurrence of
any Bankruptcy Event of Default, the aggregate outstanding principal amount of
all loans made hereunder, all accrued interest thereon, and all other Credit
Obligations shall immediately and automatically become due and payable. During
the existence of any Event of Default other than a Bankruptcy Event of Default,
the Agent shall at the request of the Majority Banks declare by written notice
to the Borrower the aggregate outstanding principal amount of all loans made
hereunder, all accrued interest thereon, and all other Credit Obligations to be
immediately due and payable, whereupon the same shall become immediately due
and payable. In connection with the foregoing, except for the notice provided
for above, the Borrower waives notice of intent to demand, demand, presentment
for payment, notice of nonpayment, protest, notice of protest, grace, notice of
dishonor, notice of intent to accelerate, notice of acceleration, and all other
notices.
6.4 Cash Collateralization of Letters of Credit. Upon the
occurrence of any Bankruptcy Event of Default, the Borrower shall pay to the
Agent an amount equal to the Letter of Credit Exposure allocable to the Letters
of Credit requested by the Borrower to be held in the Letter of Credit
Collateral Account for disposition in accordance with Section 2.2(g). During
the existence of any Event of Default other than a Bankruptcy Event of Default,
the Agent shall at the request of the Majority Banks require by written notice
to the Borrower that the Borrower pay to the Agent an amount equal to the
Letter of Credit Exposure allocable to the Letters of Credit requested by the
Borrower to be held in the Letter of Credit Collateral Account for disposition
in accordance with Section 2.2(f), whereupon the Borrower shall immediately pay
to the Agent such amount.
6.5 Default Interest. If any Event of Default exists, the Agent
shall at the request of the Majority Banks declare by written notice to the
Borrower that the Credit Obligations specified in such notice shall bear
interest beginning on the date specified in such notice until paid in full at
the
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applicable Default Rate for such Credit Obligations, and the Borrower shall pay
such interest to the Agent for the benefit of the Agent and the Banks, as
applicable, upon demand.
6.6 Right of Setoff. During the existence of an Event of Default,
the Agent and each Bank is hereby authorized at any time, to the fullest extent
permitted by law, to set off and apply any indebtedness owed by the Agent or
such Bank to the Borrower against any and all of the obligations of the
Borrower under this Agreement and the Credit Documents, irrespective of whether
or not the Agent or such Bank shall have made any demand under this Agreement
or the Credit Documents and although such obligations may be contingent and
unmatured. The Agent and each Bank, as the case may be, agrees promptly to
notify the Borrower after any such setoff and application made by such party
provided that the failure to give such notice shall not affect the validity of
such setoff and application.
6.7 Actions Under Credit Documents. Following an Event of
Default, the Agent shall at the request of the Majority Banks take any and all
actions permitted under the other Credit Documents, including the Guaranty.
6.8 Remedies Cumulative. No right, power, or remedy conferred to
the Agent or the Banks in this Agreement and the Credit Documents, or now or
hereafter existing at law, in equity, by statute, or otherwise, shall be
exclusive, and each such right, power, or remedy shall to the full extent
permitted by law be cumulative and in addition to every other such right,
power, or remedy. No course of dealing and no delay in exercising any right,
power, or remedy conferred to the Agent or the Banks in this Agreement and the
Credit Documents, or now or hereafter existing at law, in equity, by statute,
or otherwise, shall operate as a waiver of or otherwise prejudice any such
right, power, or remedy.
6.9 Application of Payments. Prior to an Event of Default, all
payments made hereunder shall be applied to the Credit Obligations as directed
by the Borrower, subject to the rules regarding the application of payments to
certain Credit Obligations provided for hereunder and in the Credit Documents.
During the existence of an Event of Default, all payments and collections shall
be applied to the Credit Obligations in the following order:
First, to the payment of the costs, expenses, reimbursements
(other than reimbursement obligations with respect to draws
under Letters of Credit), and indemnifications of the Agent
that are due and payable under the Credit Documents;
Then, ratably to the payment of the costs, expenses,
reimbursements (other than reimbursement obligations with
respect to draws under Letters of Credit), and
indemnifications of the Banks that are due and payable under
the Credit Documents;
Then, ratably to the payment of all accrued but unpaid
interest and fees due and payable under the Credit Documents;
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Then, ratably to the payment of all outstanding principal and
reimbursement obligations for draws under Letters of Credit
due and payable under the Credit Documents;
Then, ratably to the payment of any other amounts due and
owing with respect to the Credit Obligations; and
Finally, any surplus held by the Agent and remaining after
payment in full of all the Credit Obligations and reserve for
Credit Obligations not yet due and payable shall be promptly
paid over to the Borrower or to whomever may be lawfully
entitled to receive such surplus. All applications shall be
distributed in accordance with Section 2.9(a).
ARTICLE 7. THE AGENT AND THE ISSUING BANK
7.1 Authorization and Action. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof and of the other Credit Documents, together with such powers as are
reasonably incidental thereto. Statements under the Credit Documents that the
Agent may take certain actions, without further qualification, means that the
Agent may take such actions with or without the consent of the Banks or the
Majority Banks, but where the Credit Documents expressly require the
determination of the Banks or the Majority Banks, the Agent shall not take any
such action without the prior written consent thereof. As to any matters not
expressly provided for by this Agreement or any other Credit Document
(including, without limitation, enforcement or collection of the Notes), the
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the written instructions
of the Majority Banks, and such instructions shall be binding upon all Banks
and all holders of Notes; provided, however, that the Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement, any other Credit Document, or applicable
law.
7.2 Reliance, Etc. Neither the Agent, the Issuing Bank, nor any
of their respective Related Parties (for the purposes of this Section 7.2,
collectively, the "Indemnified Parties") shall be liable for any action taken
or omitted to be taken by any Indemnified Party under or in connection with
this Agreement or the other Credit Documents, INCLUDING ANY INDEMNIFIED PARTY'S
OWN NEGLIGENCE, except for any Indemnified Party's gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent
and the Issuing Bank: (a) may treat the payee of any Note as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Agent; (b) may
consult with legal counsel (including counsel for the Borrower), independent
public accountants, and other experts selected by it and shall not be liable
for any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants, or experts; (c) makes no warranty
or representation to any Bank and shall not be responsible to any Bank for any
statements, warranties, or representations made in or in connection with this
Agreement or the
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other Credit Documents; (d) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants, or
conditions of this Agreement or any other Credit Document on the part of the
Credit Parties or to inspect the property (including the books and records) of
the Credit Parties; (e) shall not be responsible to any Bank for the due
execution, legality, validity, enforceability, genuineness, sufficiency, or
value of this Agreement or any other Credit Document; and (f) shall incur no
liability under or in respect of this Agreement or any other Credit Document by
acting upon any notice, consent, certificate, or other instrument or writing
(which may be by telecopier or telex) reasonably believed by it to be genuine
and signed or sent by the proper party or parties.
7.3 Affiliates. With respect to its Commitments, the Advances
made by it, its interests in the Letters of Credit, and the Notes issued to it,
the Agent and the Issuing Bank shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not the
Agent. The term "Bank" or "Banks" shall, unless otherwise expressly indicated,
include the Agent and the Issuing Bank in their individual capacity. The
Agent, the Issuing Bank, and their respective Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage
in any kind of business with, any Credit Party, and any Person who may do
business with or own securities of any Credit Party, all as if the Agent were
not an agent hereunder and the Issuing Bank were not the issuer of Letters of
Credit hereunder and without any duty to account therefor to the Banks.
7.4 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based
on the Initial Financial Statements and such other documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Bank also acknowledges that it shall, independently
and without reliance upon the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.
7.5 Expenses. To the extent not paid by the Borrower, each Bank
severally agrees to pay to the Agent and the Issuing Bank on demand such Bank's
ratable share of the following: (a) all reasonable out-of-pocket costs and
expenses of the Agent and the Issuing Bank in connection with the preparation,
execution, delivery, administration, modification, and amendment of this
Agreement and the other Credit Documents, including the reasonable fees and
expenses of outside counsel for the Agent and the Issuing Bank with respect to
advising the Agent and the Issuing Bank as to their respective rights and
responsibilities under this Agreement and the Credit Documents, and (b) all
out-of-pocket costs and expenses of the Agent and the Issuing Bank in
connection with the preservation or enforcement of the rights of the Agent, the
Issuing Bank, and the Banks under this Agreement and the other Credit
Documents, whether through negotiations, legal proceedings, or otherwise,
including fees and expenses of counsel for the Agent and the Issuing Bank. The
provisions of this paragraph shall survive the repayment and termination of the
credit provided for under this Agreement and any purported termination of this
Agreement which does not expressly refer to this paragraph.
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7.6 Indemnification. To the extent not reimbursed by the
Borrower, each Bank severally agrees to protect, defend, indemnify, and hold
harmless the Agent, the Issuing Bank, and each of their respective Related
Parties (for the purposes of this Section 7.6, collectively, the "Indemnified
Parties"), from and against all demands, claims, actions, suits, damages,
judgments, fines, penalties, liabilities, settlements, and out-of-pocket costs
and expenses, including reasonable costs of attorneys and related costs of
experts such as accountants (collectively, the "Indemnified Liabilities"),
actually incurred by any Indemnified Party which are related to any litigation
or proceeding relating to this Agreement, the Credit Documents, or the
transactions contemplated thereunder, INCLUDING ANY INDEMNIFIED LIABILITIES
CAUSED BY ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE, but not Indemnified
Liabilities which are a result of any Indemnified Party's gross negligence or
willful misconduct. The provisions of this paragraph shall survive the
repayment and termination of the credit provided for under this Agreement and
any purported termination of this Agreement which does not expressly refer to
this paragraph.
7.7 Successor Agent and Issuing Bank. The Agent or the Issuing
Bank may resign at any time by giving written notice thereof to the Banks and
the Borrower and may be removed at any time with or without cause by the
Majority Banks upon receipt of written notice from the Majority Banks to such
effect. Upon receipt of notice of any such resignation or removal, the
Majority Banks shall have the right to appoint a successor Agent or Issuing
Bank with the consent of the Borrower, which consent shall not be unreasonably
withheld. If no successor Agent or Issuing Bank shall have been so appointed
by the Majority Banks with the consent of the Borrower, and shall have accepted
such appointment, within 30 days after the retiring Agent's or Issuing Bank's
giving of notice of resignation or the Majority Banks' removal of the retiring
Agent or Issuing Bank, then the retiring Agent or Issuing Bank may, on behalf
of the Banks and the Borrower, appoint a successor Agent or Issuing Bank, which
shall be, in the case of a successor agent, a commercial bank organized under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000 and, in the case of the
Issuing Bank, a Bank. Upon the acceptance of any appointment as Agent or
Issuing Bank by a successor Agent or Issuing Bank, such successor Agent or
Issuing Bank shall thereupon succeed to and become vested with all the rights,
powers, privileges, and duties of the retiring Agent or Issuing Bank, and the
retiring Agent or Issuing Bank shall be discharged from any duties and
obligations under this Agreement and the other Credit Documents after such
acceptance, except that the retiring Issuing Bank shall remain the Issuing Bank
with respect to any Letters of Credit outstanding on the effective date of its
resignation or removal and the provisions affecting the Issuing Bank with
respect to such Letters of Credit shall inure to the benefit of the retiring
Issuing Bank until the termination of all such Letters of Credit. After any
Agent's or Issuing Bank's resignation or removal hereunder as Agent or Issuing
Bank, the provisions of this Article 7 shall inure to such Person's benefit as
to any actions taken or omitted to be taken by such Person while such Person
was Agent or Issuing Bank under this Agreement and the other Credit Documents.
ARTICLE 8. MISCELLANEOUS.
8.1 Expenses. The Borrower shall pay on demand of the applicable
party specified herein (a) all reasonable out-of-pocket costs and expenses of
the Agent and the Issuing Bank in connection
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with the preparation, execution, delivery, administration, modification, and
amendment of this Agreement and the other Credit Documents, including the
reasonable fees and expenses of outside counsel for the Agent and the Issuing
Bank, but not for each Bank, and (b) all out-of-pocket costs and expenses of
the Agent, the Issuing Bank, and each Bank in connection with the preservation
or enforcement of their respective rights under this Agreement and the other
Credit Documents following any Event of Default, whether through negotiations,
legal proceedings, or otherwise, including fees and expenses of counsel for the
Agent, the Issuing Bank, and each Bank. The provisions of this paragraph shall
survive the repayment and termination of the credit provided for under this
Agreement and any purported termination of this Agreement which does not
expressly refer to this paragraph.
8.2 Indemnification.
(a) The Borrower agrees to protect, defend, indemnify,
and hold harmless the Agent, the Issuing Bank, each Bank, and each of their
respective Related Parties (for the purposes of this Section 8.2, collectively,
the "Indemnified Parties"), from and against all demands, claims, actions,
suits, damages, judgments, fines, penalties, liabilities, settlements, and
out-of-pocket costs and expenses, including reasonable costs of attorneys and
related costs of experts such as accountants (collectively, the "Indemnified
Liabilities"), actually incurred by any Indemnified Party which are related to
any litigation or proceeding relating to this Agreement, the Credit Documents,
or the transactions contemplated thereunder, INCLUDING ANY INDEMNIFIED
LIABILITIES CAUSED BY ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE, but not
Indemnified Liabilities which are a result of any Indemnified Party's gross
negligence or willful misconduct. The provisions of this paragraph shall
survive the repayment and termination of the credit provided for under this
Agreement and any purported termination of this Agreement which does not
expressly refer to this paragraph.
(b) Within a reasonable period of time after any
Indemnified Party receives actual notice of the assertion of any claim or the
commencement of any action, or any threatened claim or action, which is covered
by this Section 8.2, such Indemnified Party shall, if indemnification with
respect thereof is intended to be sought from the Borrower under this Section
8.2, notify the Borrower of such claim or action; provided that the failure to
so notify the Borrower shall not relieve the Borrower from any liability which
the Borrower may have to such Indemnified Party hereunder. If any such claim or
action shall be brought or threatened against an Indemnified Party by a third
party, the Borrower shall be entitled to participate in the defense thereof so
long as no Event of Default exists. No consent order or settlement shall be
entered into by an Indemnified Party with respect to any such third party claim
or action prior to notification of and consultation with the Borrower, so long
as no Event of Default exists; provided that the failure to so notify or
consult with the Borrower shall not relieve the Borrower from any liability
which the Borrower may have to such Indemnified Party hereunder.
8.3 Modifications, Waivers, and Consents. No modification or
waiver of any provision of this Agreement or the Notes, nor any consent
required under this Agreement or the Notes, shall be effective unless the same
shall be in writing and signed by the Agent and Majority Banks and the
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Borrower, and then such modification, waiver, or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no modification, waiver, or consent shall, unless in
writing and signed by the Agent, all the Banks, and the Borrower do any of the
following: (a) waive any of the conditions specified in Section 3.1 or 3.2,
(b) increase the Commitments of the Banks, (c) forgive or reduce the amount or
rate of any principal, interest, fees, or other amounts payable under the
Credit Documents, or postpone or extend the time for payment thereof, (d)
release any Guaranty or any material collateral securing the Credit
Obligations, or (e) change the percentage of Banks required to take any action
under this Agreement or the Notes, including any amendment of the definition of
"Majority Banks" or of this Section 8.3. No modification, waiver, or consent
shall, unless in writing and signed by the Agent or the Issuing Bank affect the
rights or obligations of the Agent or the Issuing Bank, as the case may be,
under the Credit Documents. The Agent shall not modify or waive or grant any
consent under any other Credit Document if such action would be prohibited
under this Section 8.3 with respect to the Credit Agreement or the Notes.
8.4 Survival of Agreements. All representations, warranties, and
covenants of the Borrower in this Agreement and the Credit Documents shall
survive the execution of this Agreement and the Credit Documents and any other
document or agreement.
8.5 Assignment and Participation. This Agreement and the Credit
Documents shall bind and inure to the benefit of the Borrower and their
respective successors and assigns and the Agent and the Banks and their
respective successors and assigns. The Borrower may not assign its rights or
delegate its duties under this Agreement or any Credit Document.
(a) Assignments. Any Bank may assign to one or more
banks or other entities all or any portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitments, the Advances owing to it, the Notes held by it, and the
participation interest in the Letters of Credit owned by it); provided,
however, that (i) each such assignment shall be of a constant, and not a
varying, percentage of all of such Bank's rights and obligations under this
Agreement, (ii) assignments of Commitments shall be made in minimum amounts of
$5,000,000 and be made in integral multiples of $1,000,000 and the assigning
Bank, if it retains any Commitments, shall maintain at least $5,000,000 in
Commitments, (iii) each such assignment shall be to an Eligible Assignee, (iv)
the parties to each such assignment shall execute and deliver to the Agent, for
its acceptance and recording in the Register, an Assignment and Acceptance,
together with the Notes subject to such assignment, and (v) each Eligible
Assignee (other than the Eligible Assignee of the Agent) shall pay to the Agent
a $3,500 administrative fee. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least three Business Days after
the execution thereof, (A) the assignee thereunder shall be a party hereto for
all purposes and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and (B) such Bank thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion
-47-
<PAGE> 53
of such Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto).
(b) Term of Assignments. By executing and delivering an
Assignment and Acceptance, the Bank thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such Bank makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency of value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Credit Party or the performance or observance by any Credit Party of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the Initial Financial Statements and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee shall, independently and without reliance upon the Agent,
such Bank or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (v) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it shall perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Bank.
(c) The Register. The Agent shall maintain at its
address referred to in Section 8.6 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Banks and the Commitments of each Bank from time to time
(the "Register"). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Borrower, the Agent, the
Issuing Bank, and the Banks may treat each Person whose name is recorded in the
Register as a Bank hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
(d) Procedures. Upon its receipt of an Assignment and
Acceptance executed by a Bank and an Eligible Assignee, together with the Notes
subject to such assignment, the Agent shall, if such Assignment and Acceptance
has been completed in the appropriate form, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register, and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower shall execute and deliver to the
Agent in exchange for the surrendered Notes a new Note to the order of such
Eligible Assignee in an amount equal to the Commitment assumed by it pursuant
to such Assignment and Acceptance and, if such Bank has retained any Commitment
hereunder, a new Note to the order of such Bank in an amount equal to the
Commitment retained
-48-
<PAGE> 54
by it hereunder. Such new Notes shall be dated the effective date of such
Assignment and Acceptance and shall be in the appropriate form.
(e) Participation. Each Bank may sell participations to
one or more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Advances owing to it, its participation
interest in the Letters of Credit, and the Notes held by it); provided,
however, that (i) such Bank's obligations under this Agreement (including,
without limitation, its Commitments to the Borrower hereunder) shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Bank shall remain
the holder of any such Notes for all purposes of this Agreement, (iv) the
Borrower, the Agent, and the Issuing Bank and the other Banks shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement, and (v) such Bank shall not require the
participant's consent to any matter under this Agreement, except for change in
the principal amount of the Notes, reductions in fees or interest, extending
the applicable maturity date, or releasing any collateral or guarantor. The
Borrower hereby agrees that participants shall have the same rights under
Sections 2.4, 2.5, 2.6, 2.7, 2.9, and 8.2 as a Bank to the extent of their
respective participation.
8.6 Notice. All notices and other communications under this
Agreement and the Notes shall be in writing and mailed by certified mail
(return receipt requested), telecopied, telexed, hand delivered, or delivered
by a nationally recognized overnight courier, to the address for the
appropriate party specified in Schedule I or at such other address as shall be
designated by such party in a written notice to the other parties. Mailed
notices shall be effective when received. Telecopied or telexed notices shall
be effective when transmission is completed or confirmed by telex answerback.
Delivered notices shall be effective when delivered by messenger or courier.
Notwithstanding the foregoing, notices and communications to the Agent pursuant
to Article 2 or 7 shall not be effective until received by the Agent.
8.7 Choice of Law. This Agreement and the Notes have been
prepared, are being executed and delivered, and are intended to be performed in
the State of Texas, and the substantive laws of the State of Texas and the
applicable federal laws of the United States shall govern the validity,
construction, enforcement, and interpretation of this Agreement and the Notes;
provided however, Chapter 15 of the Texas Credit Code does not apply to this
Agreement or the Notes. Each Letter of Credit shall be governed by the Uniform
Customs and Practice for Documentary Credits, International Chamber of Commerce
Publication No. 500 (1993 version).
8.8 Forum Selection. THE BORROWER IRREVOCABLY CONSENTS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATED THERETO.
THE BORROWER AGREES AND SHALL NOT CONTEST THAT PROPER FORUM AND VENUE FOR ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY
TRANSACTIONS RELATING THERETO ARE IN THE COURTS OF THE STATE OF TEXAS
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<PAGE> 55
IN HARRIS COUNTY, TEXAS, AND THE FEDERAL COURTS LOCATED IN HARRIS COUNTY,
TEXAS. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE FOREGOING BASED UPON CLAIMS THAT THE FOREGOING COURTS ARE
AN INCONVENIENT FORUM.
8.9 Service of Process. IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO,
THE BORROWER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, OR OTHER
PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN RECEIPT
REQUESTED, TO THE BORROWER AT ITS ADDRESS FOR NOTICES HEREUNDER, OR ANY OTHER
FORM OF SERVICE PROVIDED FOR IN THE TEXAS CIVIL PRACTICE LAW AND RULES THEN IN
EFFECT SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON THE BORROWER.
8.10 Waiver of Jury Trial. THE BORROWER IRREVOCABLY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO.
8.11 Counterparts. This Agreement may be executed in multiple
counterparts which together shall constitute one and the same instrument.
8.12 Confidentiality. Each Bank acknowledges that it shall receive
information regarding the Borrower's business operations and financial
condition which is not available to the public. Each Bank agrees to maintain
the confidentiality of such nonpublic information according to such Bank's
standard practices for such nonpublic client information, but such policies
including the sharing of such information with auditors, accountants, and
legal advisors, and as required by law. Each Bank may share such information
with potential participants and assigns of its interests under the Credit
Documents if such transferees agree in writing to maintain the confidentiality
of such information in the same manner.
8.13 No Further Agreements. THIS WRITTEN AGREEMENT AND THE CREDIT
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG 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 AMONG THE PARTIES.
-50-
<PAGE> 56
EXECUTED as of the date first above written.
BORROWER:
TETRA TECHNOLOGIES, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
AGENT:
NATIONSBANK OF TEXAS, N.A., as Agent
By:
------------------------------
William T. Griffin
Vice President
-51-
<PAGE> 57
BANKS:
NATIONSBANK OF TEXAS, N.A.
By:
------------------------------
William T. Griffin
Vice President
Commitment: $25,000,000
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Commitment: $15,000,000
THE SUMITOMO BANK, LIMITED
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Commitment: $10,000,000
-52-
<PAGE> 58
GUARANTY FEDERAL BANK, F.S.B.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Commitment: $15,000,000
NATIONAL CITY BANK OF KENTUCKY
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Commitment: $20,000,000
THE BANK OF NOVA SCOTIA
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Commitment: $20,000,000
COMERICA BANK
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Commitment: $15,000,000
-53-
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 7,727
<SECURITIES> 0
<RECEIVABLES> 44,691
<ALLOWANCES> 1,267
<INVENTORY> 32,302
<CURRENT-ASSETS> 91,120
<PP&E> 125,760
<DEPRECIATION> 39,410
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<CURRENT-LIABILITIES> 38,528
<BONDS> 46,400
0
0
<COMMON> 131
<OTHER-SE> 115,788
<TOTAL-LIABILITY-AND-EQUITY> 209,672
<SALES> 69,499
<TOTAL-REVENUES> 99,264
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