<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-10485
TYLER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-2303920
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2121 SAN JACINTO STREET
SUITE 3200, DALLAS, TEXAS 75201
(Address of principal executive offices)
(Zip code)
(214) 754-7800
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
Number of shares of common stock of registrant outstanding at August 12, 1996:
19,875,454
Page 1
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TYLER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30 December 31 June 30
1996 1995 1995
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 15,505,000 $ 3,247,000 $ 2,824,000
Accounts receivable (less allowance
for losses of: 6/30/96 - $434,000;
12/31/95 - $396,000; 6/30/95 -
$627,000) 2,442,000 16,250,000 3,533,000
Amount due from Union
Acquisition Corporation -- 7,599,000 --
Merchandise inventories 21,800,000 22,258,000 23,072,000
Income tax receivable 5,625,000 4,361,000 3,703,000
Prepaid expense 5,309,000 5,529,000 2,549,000
Deferred income tax benefit 1,406,000 1,406,000 3,981,000
------------ ------------ ------------
Total current assets 52,087,000 60,650,000 39,662,000
Net assets of discontinued operations (1) -- -- 102,348,000
Property, plant and equipment, at cost 17,286,000 16,062,000 16,799,000
Less allowance for depreciation 7,158,000 6,376,000 6,039,000
------------ ------------ ------------
10,128,000 9,686,000 10,760,000
Other assets
Goodwill and other intangibles 53,161,000 54,265,000 56,540,000
Sundry 2,853,000 4,036,000 3,275,000
------------ ------------ ------------
56,014,000 58,301,000 59,815,000
------------ ------------ ------------
$118,229,000 $128,637,000 $212,585,000
============ ============ ============
</TABLE>
See accompanying notes.
- 2 -
<PAGE> 3
TYLER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
June 30 December 31 June 30
1996 1995 1995
------------ ------------ ------------
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 6,997,000 $ 7,587,000 $ 7,493,000
Accrued liabilities 7,517,000 15,972,000 14,475,000
------------ ------------ ------------
Total current liabilities 14,514,000 23,559,000 21,968,000
Deferred income tax 8,058,000 8,058,000 8,084,000
Other liabilities 3,521,000 3,658,000 5,022,000
Long-term debt -- -- 68,900,000
Commitments and contingencies (2)
Shareholders' equity
Common stock ($.01 par value, 50,000,000
shares authorized, 21,309,277 shares
issued) 213,000 213,000 213,000
Capital surplus 48,538,000 48,538,000 48,530,000
Retained earnings 50,021,000 51,247,000 66,515,000
------------ ------------ ------------
98,772,000 99,998,000 115,258,000
Less treasury shares, at cost: (6/30/96 -
1,433,823; 12/31/95 - 1,433,783;
6/30/95 - 1,437,408) 6,636,000 6,636,000 6,647,000
------------ ------------ ------------
Total shareholders' equity 92,136,000 93,362,000 108,611,000
------------ ------------ ------------
$118,229,000 $128,637,000 $212,585,000
============ ============ ============
</TABLE>
See accompanying notes.
- 3 -
<PAGE> 4
TYLER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net sales $ 57,358,000 $ 58,762,000
Costs and expenses
Cost of sales 28,435,000 29,710,000
Selling, general and administrative
expenses 31,734,000 33,818,000
Interest (income) expense, net (146,000) 1,321,000
------------ ------------
60,023,000 64,849,000
------------ ------------
Loss from continuing operations
before income tax benefit (2,665,000) (6,087,000)
Income tax benefit (1,439,000) (3,498,000)
------------ ------------
Loss from continuing operations (1,226,000) (2,589,000)
Income from discontinued operations,
net of income tax (1) -- 884,000
------------ ------------
Net loss $ (1,226,000) $ (1,705,000)
============ ============
Earnings (loss) per common share
Continuing operations $ (.06) $ (.13)
Discontinued operations -- .04
------------ ------------
Net loss per common share $ (.06) $ (.09)
============ ============
Average shares outstanding during
the period 19,875,000 19,866,000
</TABLE>
See accompanying notes.
- 4 -
<PAGE> 5
TYLER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net sales $ 26,594,000 $ 28,285,000
Costs and expenses
Cost of sales 14,231,000 15,480,000
Selling, general and administrative
expenses 14,917,000 15,377,000
Interest (income) expense, net (76,000) 661,000
------------ ------------
29,072,000 31,518,000
------------ ------------
Loss from continuing operations
before income tax benefit (2,478,000) (3,233,000)
Income tax benefit (1,338,000) (2,043,000)
------------ ------------
Loss from continuing operations (1,140,000) (1,190,000)
Income from discontinued operations,
net of income tax (1) -- 806,000
------------ ------------
Net loss $ (1,140,000) $ (384,000)
============ ============
Earnings (loss) per common share
Continuing operations $ (.06) $ (.06)
Discontinued operations -- .04
------------ ------------
Net loss per common share $ (.06) $ (.02)
============ ============
Average shares outstanding during
the period 19,875,000 19,869,000
</TABLE>
See accompanying notes.
- 5 -
<PAGE> 6
TYLER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (1,226,000) $ (1,705,000)
Adjustments to reconcile net loss
to net cash provided by operations
Depreciation and amortization 2,045,000 2,307,000
Provision for losses on
accounts receivable 80,000 111,000
Decrease in accounts receivable 13,728,000 15,897,000
Decrease in inventories 458,000 1,874,000
Increase in income tax receivable (1,264,000) (3,703,000)
Decrease in prepaid expense 220,000 468,000
Decrease in accounts payable (590,000) (1,026,000)
Decrease in accrued liabilities (7,135,000) (2,474,000)
Decrease in income tax payable -- (947,000)
Decrease in other liabilities (137,000) (69,000)
Discontinued operations-noncash charges
and working capital changes -- (7,555,000)
------------ -----------
Net cash provided by operations 6,179,000 3,178,000
------------ -----------
Cash flows from investing activities
Net amount due from Union
Acquisition Corporation 7,599,000 --
Additions to property, plant and
equipment (1,741,000) (618,000)
Cost of acquisition (1,320,000) --
Proceeds from disposal of property,
plant and equipment 358,000 13,000
Investing activities of discontinued
operations -- (6,743,000)
Other 1,183,000 (321,000)
------------ -----------
Net cash provided (used)
by investing activities 6,079,000 (7,669,000)
------------ -----------
Cash flows from financing activities
Long-term borrowings -- 5,400,000
Issuance of common stock -- 18,000
------------ -----------
Net cash provided by
financing activities -- 5,418,000
------------ -----------
Net increase in cash and cash equivalents 12,258,000 927,000
Cash and cash equivalents at beginning
of period 3,247,000 1,897,000
------------ -----------
Cash and cash equivalents at end of period $ 15,505,000 $ 2,824,000
============ ===========
Supplemental disclosures
Interest paid $ 13,000 $ 1,924,000
Income tax (received) paid $ (355,000) $ 2,038,000
</TABLE>
See accompanying notes.
- 6 -
<PAGE> 7
Tyler Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Discontinued Operations
On December 1, 1995, Tyler Corporation ("the Company") sold all the
outstanding capital stock of Swan Transportation Company ("Swan") to
Union Acquisition Corporation ("Union"), an Alabama corporation. In
the same transaction, Tyler Pipe Industries, Inc. ("Tyler Pipe"), a
wholly owned subsidiary of the Company, sold substantially all of its
assets to Union, and Union assumed substantially all the liabilities
of Tyler Pipe. The results of these entities are included as
discontinued operations. The assets Tyler Pipe sold and the
liabilities Union assumed included all those relating to Tyler Pipe's
business of manufacturing and marketing cast iron pipe and fittings,
excluding cash and certain other assets and liabilities. Swan is a
motor-carrier company that provided transportation services to Tyler
Pipe prior to the closing.
Based on a July 1, 1995 balance sheet, Union paid a net amount of
$66,139,000 for the stock of Swan and assets of Tyler Pipe of which
$58,540,000 was received at closing on December 1, 1995, and the net
remaining payment was received in January 1996. In addition, Tyler
Pipe distributed cash of approximately $17,700,000 to the Company from
July 1, 1995 through closing.
The net assets of discontinued operations at June 30, 1995, consist
principally of working capital (including accounts receivable,
inventories, accounts payable and accrued liabilities), property,
plant and equipment, and intangibles and other assets of Tyler Pipe.
Net sales of discontinued operations for the three and six months
ended June 30, 1995, were $59,612,000 and $109,428,000, respectively.
Results of discontinued operations include interest expense on debt
associated with discontinued operations of $912,000 and $1,757,000,
respectively, for the three and six months ended June 30, 1995.
Income tax of $835,000 and $916,000, respectively, for the three and
six months ended June 30, 1995, has been provided on discontinued
operations based on the income tax resulting from inclusion of the
discontinued segment in the Company's consolidated federal income tax
return.
Subsequent to the closing, Tyler Pipe was renamed TPI of Texas, Inc.
("TPI"). TPI is subject to various environmental laws and regulations
and, as such, is involved in environmental matters related to the
manufacturing operations conducted prior to the sale of TPI. TPI is
also involved in legal actions, including allegations of
anticompetitive business practices and claims arising in the ordinary
course of business. Certain contingent liabilities related to these
matters were retained by TPI in the transaction. See "Commitments and
Contingencies" footnote.
- 7 -
<PAGE> 8
(2) Commitments and Contingencies
The New Jersey Department of Environmental Protection and Energy
("NJDEPE") has alleged that a site where Jersey-Tyler Foundry Company
("Jersey-Tyler"),a former affiliate of TPI, once operated a foundry
contains lead and possible other priority pollutant metals and may
need on-site and off-site remediation. The foundry was operated on
the site from the early part of this century to 1969 when it was
acquired by Jersey-Tyler. Jersey- Tyler operated the foundry from
1969 to 1976, at which time the foundry was closed. Subsequently, the
property was sold to other persons who have operated a salvage yard on
the site. TPI and the NJDEPE have agreed to an administrative consent
order for TPI to perform a remedial investigation. While TPI has not
committed to further action, it is probable that the NJDEPE will seek
to require TPI to remediate the site. TPI denies liability because it
never owned the property. In connection with the sale of the assets
of TPI to Union, an affiliate of McWane, Inc., on December 1, 1995,
pursuant to an acquisition agreement among the Company, TPI and Union
(the "Acquisition Agreement"), Union agreed to manage and direct the
prosecution or defense of these matters on behalf of TPI. In
addition, Union agreed to reimburse TPI the first $3,000,000 of
certain costs and expenses incurred in connection with the
investigation or remediation of the site, and one-half of such
expenses in excess of $3,000,000. Under any circumstances, however,
the maximum amount that Union agreed to reimburse TPI in connection
with this matter is $6,500,000. Union, on behalf of TPI, is
proceeding against predecessor owners and operators of the site, as
well as others, to bear their share of the cost of the investigation
and any other costs, including any remediation incurred by TPI. Some
costs may also be covered by insurance although the insurance carriers
are expected to deny coverage. TPI expects Union, on its behalf, to
proceed against such insurance carriers seeking coverage of
remediation costs. Environmental consultants have been engaged to
estimate the extent of environmental contamination.
In June 1992 Anaheim Foundry Co. ("Anaheim") sued TPI in federal
district court in the Central District of California alleging that TPI
violated various antitrust laws and making other common law claims of
anticompetitive business practices. Anaheim seeks unspecified actual
damages (which may be trebled under antitrust laws), punitive damages,
attorneys' fees and injunctive relief. Union, on behalf of TPI, is
defending this lawsuit vigorously. In September 1995, the court
granted TPI's motion for partial summary judgement. In July 1996, the
court denied Anaheim's request to reconsider partial summary judgement
and Anaheim's request to amend the complaint. The court has not set
the case for trial.
- 8 -
<PAGE> 9
On January 18, 1988, the Environmental Protection Agency ("EPA")
notified TPI that it is a potentially responsible party at the Novak
Sanitary Landfill Superfund site in Lehigh County, Pennsylvania (the
"Novak Site"). TPI has recently negotiated a settlement agreement
with other potentially responsible parties at the Novak Site.
Although there is some possibility that the matter could be reopened
and Tyler continues to be required to guarantee its portion of the
cleanup costs, the settlement agreement should resolve TPI's liability
for the site. The settlement agreement is based in part on TPI's
payment of $213,500 and certain amounts previously paid. TPI will be
reimbursed by Union for these amounts, pursuant to the Acquisition
Agreement.
Pursuant to the Acquisition Agreement, Union agreed to manage and
direct the prosecution or defense of certain matters on behalf of TPI,
including but not limited to the Anaheim suit and remediation of the
Novak Site, and to reimburse related costs and expenses. Union agreed
to reimburse TPI the first $750,000 of all costs and expenses incurred
in connection with each such matter, and one-half of such expenses in
excess of $750,000. The maximum amount that Union agreed to reimburse
TPI in connection with all of these matters excluding Jersey- Tyler is
$8,000,000.
Although it is impossible to predict the outcome of legal or
regulatory proceedings, based on the Company's negotiations and
activities before the sale of TPI's business, the Company believes
that substantially all of the costs, expenses and damages, if any,
resulting from the legal proceedings and environmental matters
described above will be reimbursed by Union pursuant to the
Acquisition Agreement.
In connection with the sale of assets of Tyler Pipe, the Company
retained some additional legal exposure. However, the Company
believes that the resolution of any potential legal proceedings would
not be material.
In June 1995 Forest City Auto Parts Company ("Forest City") was sued
by a former executive in the Court of Common Pleas of Cuyahoga County,
Ohio alleging that Forest City terminated the plaintiff because of his
age and making other common law claims arising out of his termination.
The plaintiff seeks damages in excess of $16,000,000. Forest City is
defending this lawsuit vigorously. The case has subsequently been
moved to federal district court in Cleveland. The Company expects
that the outcome of this lawsuit will not have a material adverse
effect on its consolidated financial position or results of operations
and believes that any amounts paid in connection with this lawsuit not
covered by insurance will be immaterial.
Other than ordinary course, routine litigation incidental to the
business of the Company and except as described herein, there are no
material legal proceedings pending to which the Company or its
subsidiaries are parties or to which any of its properties are
subject.
- 9 -
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Analysis of Results of Continuing Operations
The operations data for 1995 exclude the results of operations of Tyler Pipe
unless otherwise stated. Interest expense has been charged to discontinued
operations based on debt associated with discontinued operations. Continuing
operations consist principally of the operations of Forest City and
Institutional Financing Services ("IFS").
For the quarter ended June 30, 1996, Tyler Corporation recorded a loss before
income tax benefit of $2.5 million versus a $3.2 million loss from continuing
operations last year. Sales declined 6% to $26.6 million. For the first half
of 1996, Tyler had a loss before income tax benefit of $2.7 million compared to
a $6.1 million loss from continuing operations in 1995. Sales were $57.4
million, down 2%.
Forest City sales for both the six months and the three months ended June 30,
1996, advanced 3% while same-store sales grew 5%. Forest City's store count
declined to 63 locations after closing two unprofitable stores and relocating
one store since June 30, 1995. A higher gross margin, partially offset by
operating expenses associated with the new point- of-sale computer system,
significantly boosted operating profit during the first six months of 1996.
IFS domestic sales for the first half of 1996 declined 12% from the comparable
1995 period. The company's withdrawal from its international markets resulted
in an additional 3% drop in sales. IFS's core middle and high school markets
have become much more competitive in recent years as new entrants scramble to
make inroads. Heightened competition and the loss of selling days to harsher
winter-weather conditions contributed to a reduction in order count. IFS
domestic sales for the three months ended June 30, 1996, declined 35% with an
additional 5% decrease as a result of the closure of international markets.
Easter was earlier in 1996 shifting one week's sales from the second quarter to
the first quarter making second-quarter sales comparisons with 1995 even more
difficult. IFS historically has posted an operating loss in the first nine
months of the year and must rely on a strong fourth quarter for its annual
operating profit. The operating loss for the first half of 1996 was smaller
than the amount for the same period in 1995. The sales shortfall was offset by
a 1.6% improvement in gross margin and lower operating expenses.
Corporate expense was reduced significantly through lower expenditures and a
gain produced through the sale of an asset. This reduction, coupled with
interest income as opposed to interest expense, helped reduce the pretax loss.
The effective tax rate declined from 57% in 1995 to 54% in 1996. Although
proceeds from the sale of Tyler Pipe eliminated the Company's outstanding debt,
accounting conventions caused a large portion of interest expense to be
allocated to continuing operations in 1995.
-10-
<PAGE> 11
In May 1996, the Company negotiated a one-year, $14-million credit facility
with its banks of which $4 million was outstanding letters of credit. Interest
rates are negotiated with the participating banks and are based on current
market conditions as evidenced by the LIBOR and Eurodollar rates. Even though
the Company had $15.5 million in cash at June 30, 1996, a portion of this
credit facility may be needed to fund the seasonal working capital requirements
of IFS. Seasonal loans, if any, would be repaid by year end.
In August 1996, the Company announced discontinuance of discussions relating to
the sale of Forest City and withdrawal of that company from the market. Talks
regarding a sale at approximately $35 million stalled because of inability to
conclude an agreement. The Company will continue to operate Forest City and in
so doing will be expansion-minded. In addition the Company will be looking at
broadening opportunities for IFS through supplementary acquisitions and market
expansion. The Company always tries to be alert for expansion opportunities
through supplementary acquisitions and market expansions as well as to
divestiture opportunities that could immediately benefit shareholders. The
Company intends to remain aggressively in business with Forest City and IFS and
to step up their acquisition search activity in an effort to diversify and
enlarge their business base.
June 30, 1996 vs. December 31, 1995
Cash and cash equivalents increased $12.3 million primarily due to the
settlement of outstanding amounts at December 31, 1995, related to the sale of
Tyler Pipe and seasonal working capital declines. In January 1996, the Company
received the net remaining payment of $7.6 million from Union for the sale of
Tyler Pipe. A substantial seasonal working capital decrease occurred at IFS,
offset somewhat by a modest increase in working capital at Forest City.
Historically, IFS generates approximately 60% of its sales in the fall.
Working capital builds from July through December with subsequent liquidations
when the company collects accounts receivable for fall sales.
In connection with the 1991 acquisition of Forest City, the Company made a
final payment of $1.3 million in the first quarter of 1996 to former
shareholders and executives of Forest City as the result of achieving certain
cumulative profit objectives. The amount paid was accrued at December 31,
1995.
Other assets and accrued liabilities each include a decline of approximately
$1.8 million relating to the settlement of certain employee benefit plans which
were primarily funded through insurance policies that the Company redeemed in
the first half of 1996.
-11-
<PAGE> 12
June 30, 1996 vs. June 30, 1995
Working capital at June 30, 1996, rose $19.9 million from June 30, 1995,
principally due to the cash retained from the sale of Tyler Pipe which
eliminated the Company's debt and significantly lower accrued liabilities.
Inventories decreased primarily at Forest City from June 30, 1995. Forest City
store locations have declined from 65 locations at June 30, 1995 to 63
locations at June 30, 1996.
Income tax receivable increased mainly due to the tax benefit associated with
the loss on the sale of Tyler Pipe.
In connection with the sale of Tyler Pipe to Union on December 1, 1995, and
pursuant to the terms of the acquisition agreement among the Company, Tyler
Pipe and Union, the Company froze benefit accruals for all Tyler Pipe employees
and agreed to transfer the benefit obligation relating to the Tyler Pipe
employees and the related assets to a new plan established by Union ("the Union
Plan"). As a result, in April of 1996 the Company transferred the Tyler Pipe
employees' obligation and related asset amounts to the Union Plan. The
Company's prepaid pension expense at June 30, 1996 and December 31, 1995 also
increased approximately $2.5 million. The Company is seeking approval to
terminate the defined benefit pension plan and expects to record a loss upon
settlement of the plan of approximately $3.0 to $4.0 million later in the year.
However, because the plan is overfunded, the Company does not anticipate any
cash contributions will be necessary to terminate the Plan.
Prior to the sale of Tyler Pipe to Union on December 1, 1995, the Company
maintained a savings and investment plan primarily for the employees at Tyler
Pipe and certain other employees of the Company. As a result of the sale, the
Company ceased substantially all contributions as of December 1, 1995. The
Company transferred all Tyler Pipe employee account balances to a new plan
established by Union in the first quarter of 1996 and anticipates terminating
the remaining savings and investment plan sometime in 1996 after obtaining all
necessary governmental approvals. Substantially all expenses relating to the
savings and investment plan are included in discontinued operations.
The deferred income tax benefit decline from June 30, 1995 is due to
recognizing benefit of foreign abandonment losses recorded in 1994 and deferred
tax related to the pension plan curtailment gain recorded in December 1995.
Accrued liabilities at June 30, 1995 were higher than 1996 due to $2.3 million
interest on related bank debt, $1.7 million for certain employee benefit plans
and $1.3 million of accrued earnout subsequently paid to former shareholders
and executives of Forest City.
-12-
<PAGE> 13
********************
The above unaudited information in the opinion of the Company's management
includes all adjustments which the Company considers necessary for a fair
summarized presentation of the condensed consolidated balance sheets at June
30, 1996 and 1995, the condensed consolidated results of operations for the
three months and six months ended June 30, 1996 and 1995, and the condensed
consolidated cash flows for the six months ended June 30, 1996 and 1995. The
consolidated results of operations for the six months ended June 30, 1996,
are not necessarily indicative of the results of operations for the full year.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<S> <C>
12 Ratio of Earnings to Fixed Charges
10.19 Credit Agreement of $14,000,000 among
Tyler Corporation and Societe Generale,
Southwest; and NationsBank of Texas, N.A.
dated May 15, 1996.
27 Financial Data Schedule
</TABLE>
(b) There were no reports filed on Form 8-K during the
second quarter of 1996.
-13-
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TYLER CORPORATION
By: /s/Linda K. Hill
------------------------------------
Linda K. Hill, Vice President,
Controller, Treasurer and
Assistant Secretary -
principal financial officer,
principal accounting officer
and an authorized signatory
Date: August 14, 1996
-14-
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<S> <C>
12 Ratio of Earnings to Fixed Charges
10.19 Credit Agreement of $14,000,000 among
Tyler Corporation and Societe Generale,
Southwest; and NationsBank of Texas, N.A.
dated May 15, 1996.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
Execution Copy
--------------
================================================================================
$14,000,000
CREDIT AGREEMENT
Dated as of May 15, 1996
Among
TYLER CORPORATION
as Borrower,
-----------
SOCIETE GENERALE, SOUTHWEST AGENCY
and
NATIONSBANK OF TEXAS, N.A.
as Banks
--------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Page
----
<S> <C> <C>
Section 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------------------
Section 1.02. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------------------------
Section 1.03. Accounting Terms; Changes in GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------------------------------
Section 1.04. Types of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-----------------
Section 1.05. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------
ARTICLE II
THE ADVANCES AND THE LETTERS OF CREDIT
Section 2.01. The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------
Section 2.02. Method of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-------------------
Section 2.03. Optional Reduction or Termination of the Commitments . . . . . . . . . . . . . . . . . . 16
----------------------------------------------------
Section 2.04. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----
Section 2.05. Repayment of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------------------
Section 2.06. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------
Section 2.07. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------
Section 2.08. Breakage Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------
Section 2.09. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------
Section 2.10. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------------------------
Section 2.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----
Section 2.12. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
------------------------
Section 2.13. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-----------------
Section 2.14. Collateral Bailee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-----------------
ARTICLE III
CONDITIONS OF LENDING
Section 3.01. Conditions Precedent to Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------------------------------
Section 3.02. Conditions Precedent after Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 30
-----------------------------------------
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
Section 4.01. Corporate Existence; Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
---------------------------------
Section 4.02. Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
---------------
Section 4.03. Authorization and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
---------------------------
Section 4.04. Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-----------------------
Section 4.05. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
--------------------
Section 4.06. True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
----------------------------
Section 4.07. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
----------
Section 4.08. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
---------------
Section 4.09. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
----------------------
Section 4.10. Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
----------------------------------
Section 4.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-----
Section 4.12. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-------------
Section 4.13. Condition of Property; Casualties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------------------------------
Section 4.14. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------
Section 4.15. No Burdensome Restrictions; No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . 35
---------------------------------------
Section 4.16. Environmental Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-----------------------
Section 4.17. Permits, Licenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
----------------------
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.01. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-------------------------
Section 5.02. Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------------------
Section 5.03. Preservation of Corporate Existence, Etc . . . . . . . . . . . . . . . . . . . . . . . . . 37
----------------------------------------
Section 5.04. Payment of Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------------------
Section 5.05. Visitation Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-----------------
Section 5.06. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
----------------------
Section 5.07. Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-----------------------
ARTICLE VI
NEGATIVE COVENANTS
Section 6.01. Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
----------
Section 6.02. Debts, Guaranties and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 42
---------------------------------------
Section 6.03. Agreements Restricting Liens and Distributions . . . . . . . . . . . . . . . . . . . . . . 42
----------------------------------------------
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
Section 6.04. Merger or Consolidation; Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------------------------------------
Section 6.05. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
-------------------
Section 6.06. Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
----------------------
Section 6.07. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
---------------------
Section 6.08. Maintenance of Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 43
----------------------------------------
Section 6.09. Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
-------------
Section 6.10. Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
---------------------------
Section 6.11. Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-----------------
Section 6.12. Environmental Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--------------------
Section 6.13. Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-------------------------------
ARTICLE VII
REMEDIES
Section 7.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
-----------------
Section 7.02. Optional Acceleration of Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
---------------------------------
Section 7.03. Automatic Acceleration of Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
----------------------------------
Section 7.04. Cash Collateral Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
------------------------
Section 7.05. Non-exclusivity of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
---------------------------
Section 7.06. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
----------------
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
---------------
Section 8.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
------------
Section 8.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
-------------------
Section 8.04. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
------------------
Section 8.05. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
--------------
Section 8.06. Bank Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
----------------
Section 8.07. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
---------------
Section 8.08. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
-------------------------
Section 8.09. Survival of Representations, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
--------------------------------
Section 8.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
------------
Section 8.11. Business Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
--------------
Section 8.12. Usury Not Intended . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
------------------
Section 8.13. Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
--------------------
Section 8.14. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
-------------
Section 8.15. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
--------------------
</TABLE>
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<TABLE>
<S> <C> <C>
Section 8.16. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
----------------
</TABLE>
EXHIBITS:
Exhibit A - Form of Note
Exhibit B - Form of Subsidiary Guaranty and Contribution Agreement
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of Notice of Conversion or Continuation
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Pledge Agreement
Exhibit G - Form of Opinion of Counsel to Borrower and Guarantors
Exhibit H - Form of Compliance Certificate
SCHEDULES:
Schedule 1.01(a) - Commitments and Notice Information for Banks
Schedule 1.01(b) - Existing Letters of Credit
Schedule 4.01 - Subsidiaries
Schedule 4.07 - Litigation
Schedule 4.12 - Termination Event
Schedule 4.16 - Environmental
Schedule 6.10 - Excluded Sale-Leaseback Transaction
-iv-
<PAGE> 6
CREDIT AGREEMENT
This Credit Agreement dated as of May 15, 1996 is among Tyler
Corporation, a Delaware corporation, as borrower (the "Borrower"), and Societe
Generale, Southwest Agency and NationsBank of Texas, N.A., as lenders (the
"Banks").
The Borrower and the Banks agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms. As used in this Agreement,
the term "Borrower" shall have the meaning set forth above and 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):
"Account Party" means, with respect to any Letter of Credit, the
Borrower or any Guarantor, as the case may be, for whose account such Letter of
Credit was issued.
"Adjusted Base Rate" means, for any day, the fluctuating rate per
annum of interest equal to the greater of (a) the Federal Funds Rate in effect
on such day plus 1/2% and (b) the Base Rate in effect on such day.
"Advance" means any advance by a Bank to the Borrower as part of a
Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance or a
Cost of Funds Advance.
"Advance Commitment" means the amount set opposite such Bank's name on
Schedule 1.01(a) as its Advance Commitment, or if such Bank has entered into
any Assignment and Acceptance after the Effective Date, set forth for such Bank
as its Advance Commitment in such Assignment and Acceptance, as such amount may
be reduced pursuant to Section 2.03.
"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 of a Control Percentage, by contract or otherwise.
<PAGE> 7
"Agreement" means this Credit Agreement dated as of May 15, 1996 among
the Borrower and the Banks, as it may be amended or supplemented from
time-to-time.
"Applicable Lending Office" means, with respect to each Bank, (a) such
Bank's Domestic Lending Office in the case of a Base Rate Advance or a Cost of
Funds Advance, and (b) such Bank's Eurodollar Lending Office in the case of a
Eurodollar Rate Advance.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and an Eligible Assignee, in substantially the form of the
attached Exhibit E.
"Banks" means the lenders listed on the signature pages of this
Agreement and each Eligible Assignee that shall become a party to this
Agreement pursuant to Section 8.06.
"Base Rate" means a fluctuating interest rate per annum as shall be in
effect from time-to-time equal to the rate of interest publicly announced by
NationsBank of Texas, N.A. as its base rate, whether or not the Borrower has
notice thereof.
"Base Rate Advance" means an Advance which bears interest as provided
in Section 2.06(a).
"Borrowing" means a borrowing consisting of simultaneous Advances of
the same Type made by each Bank pursuant to Section 2.01(a) or Converted by
each Bank to Advances of a different Type pursuant to Section 2.02(b).
"Business Day" means a day of the year, other than a Saturday or
Sunday, or other day on which banks are not required or authorized to close in
New York City and Dallas, Texas and, if the applicable Business Day relates to
any Eurodollar Rate Advance, on which dealings are carried on by banks in the
London interbank market.
"Capital Leases" means, as applied to any Person, any lease of any
Property by such Person as lessee 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.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, state and local analogs, and all rules
and regulations and requirements thereunder in each case as now or hereafter in
effect.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Commitment" means, with respect to any Bank, the sum of the Advance
Commitment and the LC Commitment of such Bank.
-2-
<PAGE> 8
"Control Percentage" means, with respect to any Person, the percentage
of the outstanding capital stock of such Person having ordinary voting power
which gives the direct or indirect holder of such stock the power to elect a
majority of the Board of Directors of such Person.
"Controlled Group" means all members of a controlled group of
corporations and all trades (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
"Convert", "Conversion", and "Converted" each refers to a conversion
of Advances of one Type into Advances of another Type pursuant to Section
2.02(b).
"Cost of Funds Rate" means the rate of interest per annum that the
Banks collectively agree to charge for a Borrowing comprised of Cost of Funds
Advances requested by the Borrower pursuant to Section 2.02.
"Cost of Funds Advance" means an Advance which bears interest as
provided in Section 2.06(c).
"Credit Documents" means this Agreement, the Notes, the Guaranty, the
Pledge Agreement, the LC Applications and each other agreement, instrument or
document executed by the Borrower or any of its Subsidiaries at any time in
connection with this Agreement or the Advances or Letters of Credit issued
hereunder.
"Debt," for any Person, means without duplication:
(a) indebtedness of such Person for borrowed money;
(b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments (excluding, however, endorsements of
negotiable instruments in the process of collection);
(c) obligations of such Person to pay the deferred purchase price
of property or services (excluding, however, trade payables incurred in the
ordinary course of business), obligations under any repurchase agreement
entered into in connection with the sale of assets, and obligations under
so-called "take or pay" contracts;
(d) obligations of such Person as lessee under Capital Leases;
(e) contingent obligations of such Person with respect to letters
of credit or similar instruments issued for the account of such Person;
-3-
<PAGE> 9
(f) obligations of such Person under direct or indirect guaranties
in respect of, and obligations (contingent or otherwise) of such Person to
purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to
in clauses (a) through (e) above; and
(g) indebtedness or obligations of others of the kinds referred to
in clauses (a) through (f) secured by any Lien on or in respect of any Property
of such Person.
"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.
"Dollars" and "$" means lawful money of the United States of America.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" opposite its name on
Schedule 1 or such other office of such Bank as such Bank may from time-to-time
specify to the Borrower.
"EBITDA" means, for any period, (a) net income for such period
(excluding for purposes of determining net income any gains or noncash losses
resulting from a Terminated Plan so long as such losses do not exceed
$3,000,000 on a pretax basis) plus (b) to the extent deducted or added in
determining net income, Interest Income, Interest Expense, taxes, depreciation
and amortization expense for such period.
"Effective Date" has the meaning set forth in Section 3.01.
"Eligible Assignee" means (a) a commercial bank organized under the
laws of the United States, or any State thereof, and having combined capital,
surplus and undivided profits of not less than $500,000,000 and approved by
each Issuing Bank and the Borrower, which approval by such Issuing Bank and the
Borrower will not be unreasonably withheld, (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development and having combined capital, surplus and
undivided profits (or its equivalent) of not less than $500,000,000 (or its
Dollar equivalent) and which maintains a branch or agency in the United States
that shall be designated its Domestic Lending Office and approved by each
Issuing Bank and the Borrower, which approval by such Issuing Bank and the
Borrower will not be unreasonably withheld, or (c) any Person that has been
approved by the Borrower and each Issuing Bank.
"Environment" or "Environmental" shall have the meanings set forth in
43 U.S.C. Section 9601(8) (1988).
"Environmental Claim" means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree,
-4-
<PAGE> 10
consent agreement or notice of potential or actual responsibility or violation
(including claims or proceedings under the Occupational Safety and Health Acts
or similar laws or requirements relating to health or safety of employees)
which seeks to impose liability under any Environmental Law.
"Environmental Law" means all Legal Requirements arising from,
relating to, or in connection with the Environment, health, or safety,
including without limitation CERCLA, relating to (a) pollution, contamination,
injury, destruction, loss, protection, cleanup, reclamation or restoration of
the air, surface water, groundwater, land surface or subsurface strata, or
other natural resources; (b) solid, gaseous or liquid waste generation,
treatment, processing, recycling, reclamation, cleanup, storage, disposal or
transportation; (c) exposure to pollutants, contaminants, hazardous, medical,
infectious, or toxic substances, materials or wastes; (d) the safety or health
of employees; or (e) the manufacture, processing, handling, transportation,
distribution in commerce, use, storage or disposal of hazardous, medical,
infectious, or toxic substances, materials or wastes.
"Environmental Permit" means any permit, license, order, approval or
other authorization under Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time-to-time.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Federal Reserve Board (or any successor), as in effect from
time-to-time.
"Eurodollar Lending Office" means, with respect to any Bank, the
office of such Bank specified as its "Eurodollar Lending Office" opposite its
name on Schedule 1 (or, if no such office is specified, its Domestic Lending
Office) or such other office of such Bank as such Bank may from time-to-time
specify to the Borrower.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Rate Advance comprising part of the same Borrowing, an interest rate per annum
(rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such
rate is not such a multiple) equal to the rate per annum at which deposits in
Dollars are offered by the principal office of NationsBank of Texas, N.A. in
London, England to prime banks in the London interbank market at 11:00 a.m.
(London time) two Business Days before the first day of such Interest Period in
an amount substantially equal to NationsBank of Texas, N.A.'s Eurodollar Rate
Advance comprising part of such Borrowing and for a period equal to such
Interest Period.
"Eurodollar Rate Advance" means an Advance which bears interest as
provided in Section 2.06(b).
-5-
<PAGE> 11
"Eurodollar Rate Reserve Percentage" of any Bank for the Interest
Period for any Eurodollar Rate Advance means the reserve percentage applicable
during such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time-to-time by the Federal Reserve Board for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such Bank
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
"Events of Default" has the meaning set forth in Section 7.01.
"Expiration Date" means, with respect to any Letter of Credit, the
date on which such Letter of Credit will expire or terminate in accordance with
its terms.
"Existing Letters of Credit" means those letters of credit issued by
NationsBank of Texas, N.A. prior to the Effective Date and outstanding on the
Effective Date, as described on Schedule 1.01(b).
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum 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 NationsBank of Texas, N.A. from 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.
"Financial Statements" means the Borrower's consolidated balance sheet
and income, retained earnings and cash flow statements dated December 31, 1995
referred to in Section 4.05, copies of which have been delivered to the Banks.
"Fund," "Trust Fund," or "Superfund" means the Hazardous Substance
Response Trust Fund, established pursuant to 42 U.S.C. Section 9631 (1988) and
the Post-closure Liability Trust Fund, established pursuant to 42 U.S.C. Section
9641 (1988), which statutory provisions have been amended or repealed by the
Superfunds Amendments and Reauthorization Act of 1986, and the "Fund," "Trust
Fund," or "Superfund" that are now maintained pursuant to Section 9507 of the
Code.
-6-
<PAGE> 12
"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 1.03.
"Governmental Authority" means any foreign governmental authority, the
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and any agency, department, commission,
board, authority or instrumentality, bureau or court having jurisdiction over
any Bank, the Borrower, or the Borrower's Subsidiaries or any of their
respective Properties.
"Governmental Proceedings" means any action or proceedings by or
before any Governmental Authority, including, without limitation, the
promulgation, enactment or entry of any Legal Requirement.
"Guarantor" means each Person that has entered into the Guaranty, and
"Guarantors" means such Persons collectively.
"Guaranty" means the Subsidiary Guaranty and Contribution Agreement
executed by the Guarantors in substantially the form of Exhibit B.
"Hazardous Substance" means the substances identified as such pursuant
to CERCLA and those regulated under any other Environmental Law, including
without limitation pollutants, contaminants, petroleum, petroleum products,
radionuclides, radioactive materials, and medical and infectious waste.
"Hazardous Waste" means the substances regulated as such pursuant to
any Environmental Law.
"Indemnified Party" has the meaning set forth in Section 8.07(a).
"Interest Expense" means, (a) for the fiscal quarter of the Borrower
and its Subsidiaries ending September 30, 1995, $6,000, (b) for the fiscal
quarter of the Borrower and its Subsidiaries ending December 31, 1995, $-0-,
(c) for the fiscal quarter of the Borrower and its Subsidiaries ending March
31, 1995, $-0-, and (d) for any other period of determination, total interest
expense for such period, whether paid or accrued (including that attributable
to obligations which have been or should be, in accordance with GAAP, recorded
as Capital Leases), including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under interest hedge agreements, all as
determined in conformity with GAAP.
"Interest Income" means, (a) for the fiscal quarter of the Borrower
and its Subsidiaries ending September 30, 1995, $-0-, (b) for the fiscal
quarter of the Borrower and its Subsidiaries ending December 31, 1995, $27,000,
(c) for the fiscal quarter of the
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Borrower and its Subsidiaries ending March 31, 1996, $70,000, and (d) for any
other period of determination, total interest income for such period, whether
received or accrued, as determined in conformity with GAAP.
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Advance into such
a Eurodollar Rate Advance and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and Section 2.02 and, thereafter,
each subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below and Section 2.02. The duration of
each such Interest Period shall be in the case of Eurodollar Rate Advances,
one, two, or three months as the Borrower may, upon notice received by the
Banks not later than 11:00 a.m. (Dallas, Texas time) on the third Business Day
prior to the first day of such Interest Period selected; provided, however,
that:
(a) Interest Periods commencing on the same date for
Advances comprising part of the same Borrowing shall be of the same
duration (the Borrower may, however, have more than one Borrowing on
the same date with different Interest Periods);
(b) 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 an Interest Period for a Eurodollar Rate Advance to occur in the
next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day; and
(c) any Interest Period which begins on the last Business
Day of a 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.
"Issuing Bank" means any Bank acting hereunder in the capacity as
issuer of a Letter of Credit.
"Knowledge" means, with respect to a natural person, the actual
knowledge of such person and, when used with respect to any other Person, the
actual knowledge of a Responsible Officer of such Person.
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"LC Application" means any letter of credit application which an
Issuing Bank may require a Guarantor to execute and deliver with respect to any
Letter of Credit requested by such Guarantor, which application shall contain
terms no more restrictive than the terms of this Agreement.
"LC Commitment" means the amount set opposite such Bank's name on
Schedule 1.01(a) as its LC Commitment, or if such Bank has entered into any
Assignment and Acceptance after the Effective Date, set forth for such Bank as
its LC Commitment in such Assignment and Acceptance, as such amount may be
reduced pursuant to Section 2.03.
"Lease Expense" means, for any period, (a) all amounts payable by a
Person during such period under any lease, sublease, or other instrument (other
than a Capital Lease) pursuant to which such Person is entitled to use any
Property of another Person minus (b) all rental income payable to such Person
during such period under any lease, sublease, or other instrument (other than a
Capital Lease) pursuant to which such Person was the lessor or sublessor of its
Property to another Person, all as determined in accordance with GAAP.
"Legal Requirement" means any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or official interpretation of
any of the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority.
"Letter of Credit" means, individually, any Existing Letter of Credit
and any letter of credit issued by an Issuing Bank on or after the Effective
Date which is subject to this Agreement, and "Letters of Credit" means all such
letters of credit collectively.
"Letter of Credit Exposure" means, at any time, the sum of (a) the
aggregate undrawn maximum face amount of each Letter of Credit outstanding at
such time and (b) the aggregate unpaid amount of all Reimbursement Obligations
at such time.
"Letter of Credit Obligations" means any obligations of the Borrower
under this Agreement in connection with the Letters of Credit.
"Lien" means any mortgage, lien, pledge, charge, deed of trust,
security interest, or encumbrance to secure or provide for the payment of any
obligation of any Person, whether arising by contract, operation of law or
otherwise (including, without limitation, the interest of a vendor or lessor
under any conditional sale agreement, Capital Lease or other title retention
agreement).
"Material Adverse Change" shall mean (a) a material adverse change in
the business or financial condition of the Borrower and its Subsidiaries, taken
as a whole, since the date of the Financial Statements, or (b) a material
adverse effect on the ability of the Borrower
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<PAGE> 15
and the Guarantors, taken as a whole, to perform their obligations under any
Credit Document.
"Maturity Date" means the earlier of (a) the date which is 364 days
from the date of this Agreement, and (b) the termination in whole of the
Commitments pursuant to Section 2.03 or Article VII.
"Maximum Rate" means the maximum nonusurious interest rate under
applicable law.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any member of the
Controlled Group is making or accruing an obligation to make contributions.
"Note" means a promissory note of the Borrower payable to the order of
any Bank, in substantially the form of the attached Exhibit A, evidencing
indebtedness of the Borrower to such Bank resulting from Advances owing to such
Bank.
"Notice of Borrowing" means a notice of borrowing in the form of the
attached Exhibit C signed by a Responsible Officer of the Borrower.
"Notice of Conversion or Continuation" means a notice of conversion or
continuation in the form of the attached Exhibit D signed by a Responsible
Officer of the Borrower.
"Obligations" means all Advances, Reimbursement Obligations, and other
amounts payable by the Borrower to the Banks under the Credit Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means the Liens permitted to exist pursuant to
Section 6.01.
"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.
"Plan" means an employee benefit plan (other than a Multiemployer
Plan) maintained for employees of the Borrower or any member of the Controlled
Group and covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code.
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"Pledge Agreement" means the Pledge Agreement executed by the Borrower
in favor of the Banks in substantially the form of Exhibit F.
"Property" of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.
"Pro Rata Share" means, with respect to any Bank, (a) at any time
prior to termination of the Commitments, the ratio (expressed as a percentage)
of such Bank's Commitment at such time to the aggregate Commitments of all the
Banks at such time, and (b) at any time after the Commitments have terminated
and the Advances have been accelerated in accordance with Section 7.02 or 7.03,
the ratio (expressed as a percentage) of (i) such Bank's aggregate outstanding
Advances and its Pro Rata Share of the Letter of Credit Exposure at such time
to (ii) the aggregate outstanding Advances of all the Banks and the Letter of
Credit Exposure at such time.
"Quarterly Date" shall mean the last Business Day of each March, June,
September, and December of each year.
"Reimbursement Obligations" means all of the reimbursement obligations
of the Account Parties for Letters of Credit as set forth in paragraph (c) of
Section 2.13 and any related LC Application.
"Release" shall have the meaning set forth in CERCLA or under any
other Environmental Law.
"Response" shall have the meaning set forth in CERCLA or under any
other Environmental Law.
"Responsible Officer" means the Chief Executive Officer, President,
Treasurer, any Vice President or Secretary of any Person.
"Restricted Payment" means the making by any Person of any dividends
or other distributions (in cash, property or otherwise) on, or payment for the
purchase, redemption or other acquisition of, any shares of any capital stock
of such Person, other than dividends payable in such Person's stock.
"Significant Subsidiary" means TPI and any other Subsidiary (a) in
which the investments and advances of the Borrower and its consolidated
Subsidiaries, exceed 10% of the total assets of the Borrower and its
consolidated Subsidiaries as of the end of the most recently completed fiscal
year, (b) of which the Borrower's and its other Subsidiaries' proportionate
share of the total assets (after intercompany eliminations) of such Subsidiary
exceeds 10% of the total assets of the Borrower and its consolidated
Subsidiaries as of the
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<PAGE> 17
end of the most recently completed fiscal year, or (c) of which the Borrower's
and its other Subsidiaries' equity in the income from continuing operations
before income taxes, extraordinary items and cumulative effect of a change in
accounting principles of such Subsidiary exceeds 10% of such income of the
Borrower and its consolidated Subsidiaries for the most recently completed
fiscal year.
"Subsidiary" means any corporation, association, partnership or other
business entity of which more than 50% of the outstanding capital stock (or
other equivalent interests) having by the terms thereof ordinary voting power
under ordinary circumstances to elect a majority of the board of directors or
Persons performing similar functions (or, if there are no such directors or
Persons, having general voting power) of such entity (irrespective of whether
at such time capital stock (or other equivalent interests) of any other class
or classes of such entity shall or might have voting power upon the occurrence
of any contingency) is at the time directly or indirectly owned or controlled
by the Borrower, by the Borrower and one or more Subsidiaries of the Borrower
or by one or more Subsidiaries of the Borrower.
"Termination Event" means (a) the occurrence of a Reportable Event
with respect to a Plan, as described in Section 4043 of ERISA and the
regulations issued thereunder (other than a Reportable Event not subject to the
provision for 30-day notice to the PBGC under such regulations), (b) the
withdrawal of the Borrower or any member of the Controlled Group from a Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, (c) the giving of a notice of intent to terminate
a Plan under Section 4041(c) of ERISA, (d) the institution of proceedings to
terminate a Plan by the PBGC, or (e) any other event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
"TPI" means TPI of Texas, Inc., a Delaware corporation which is a
wholly-owned Subsidiary of the Borrower.
"Terminated Plan" means the (i) the Tyler Corporation Master
Retirement Income Plan and (ii) the Tyler Corporation Savings and Investment
Plan.
"Type" has the meaning set forth in Section 1.04.
Section 1.02. 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".
Section 1.03. Accounting Terms; Changes in GAAP.
(a) All accounting terms not specifically defined in this
Agreement shall be construed in accordance with GAAP applied on a consistent
basis with those applied in the
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<PAGE> 18
preparation of the Financial Statements (except for changes to which the
Borrower's independent public accountants take no exception).
(b) Unless otherwise indicated, all financial statements of the
Borrower, all calculations for compliance with covenants in this Agreement and
all calculations of any amounts to be calculated under the definitions in
Section 1.01 shall be based upon the consolidated accounts of the Borrower and
its Subsidiaries in accordance with GAAP and consistent with the principles of
consolidation applied in preparing the Financial Statements (except for changes
in the principles of consolidation to which the Borrower's independent public
accountants take no exception and excluding the cumulative effect of any such
change).
Section 1.04. Types of Advances. Advances made with respect to any
Borrowing are distinguished by "Type". The "Type" of an Advance refers to the
determination whether such Advance is a Eurodollar Rate Advance or Base Rate
Advance or a Cost of Funds Advance, each of which constitutes a Type.
Section 1.05. Miscellaneous. Article, Section, Schedule and
Exhibit references are to Articles and Sections of and Schedules and Exhibits
to this Agreement, unless otherwise specified.
ARTICLE II
THE ADVANCES AND THE LETTERS OF CREDIT
Section 2.01. The Advances. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make Advances to the
Borrower from time-to-time on any Business Day during the period from the date
of this Agreement until the Maturity Date in an aggregate amount not to exceed
at any time outstanding such Bank's Advance Commitment; provided that,
following the making of each Borrowing, the aggregate amount of all Advances
then outstanding shall not exceed the aggregate amount of the Advance
Commitments of the Banks. Each Borrowing shall consist of Advances of the
same Type made on the same day by the Banks ratably according to their
respective Pro Rata Shares. Within the limits of each Bank's Advance
Commitment, the Borrower may from time-to-time borrow, prepay pursuant to
Section 2.07 and reborrow under this Section 2.01(a). The indebtedness of the
Borrower to each Bank resulting from Advances owing to such Bank shall be
evidenced by the Note of the Borrower payable to the order of such Bank in
substantially the form of Exhibit A.
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<PAGE> 19
Section 2.02. Method of Borrowing.
(a) Notice. Each Borrowing shall be made pursuant to a Notice of
Borrowing, given not later than (i) 11:00 a.m. (Dallas, Texas time) on the
third Business Day before the date of the proposed Borrowing, in the case of a
Borrowing comprised of Eurodollar Rate Advances, or (ii) 11:00 a.m. (Dallas,
Texas time) on the Business Day of the proposed Borrowing, in the case of a
Borrowing comprised of Base Rate Advances or Cost of Funds Advances, by the
Borrower to the Banks. Each Notice of Borrowing shall be by telecopier or
telex specifying the requested (i) date of such Borrowing, (ii) Type of
Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing,
and (iv) Interest Period for Eurodollar Rate Advances comprising such Borrowing
or the proposed maturity date for Cost of Funds Advances comprising such
Borrowing. In the case of a proposed Borrowing comprised of Eurodollar Rate
Advances or Cost of Funds Advances, the Banks shall determine the applicable
rate and a Bank shall promptly notify the Borrower thereof by telephone or
telecopy. In the event the Cost of Funds Rate for any requested Borrowing
would exceed the Adjusted Base Rate, the Borrower agrees that the Advances
comprising such Borrowing, without further notice or other action by the
Borrower or the Banks, shall instead be made as Base Rate Advances on the
requested date of Borrowing. Each Bank shall, before 1:00 p.m. (Dallas, Texas
time) on the date of such Borrowing provided all conditions precedent to
Borrowing are satisfied on such date, make available to the Borrower in same
day funds, such Bank's Pro Rata Share of such Borrowing.
(b) Conversions and Continuations. In order to elect to Convert
or continue any Advance which is part of a Borrowing under this Section, the
Borrower shall deliver an irrevocable Notice of Conversion or Continuation to
the Banks no later than 11:00 a.m. (Dallas, Texas time) (i) the Business Day of
the proposed conversion date in the case of a conversion to a Base Rate Advance
or a Cost of Funds Advance, and (ii) at least three Business Days in advance of
the proposed Conversion or continuation date in the case of a Conversion to, or
a continuation of, a Eurodollar Rate Advance. Each such Notice of Conversion
or Continuation shall be by telex or telecopier specifying (i) the requested
Conversion or continuation date (which shall be a Business Day), (ii) the
amount and Type of the Advance to be Converted or continued, (iii) whether a
Conversion or continuation is requested, and if a Conversion, into what Type of
Advance, and (iv) in the case of a Conversion to, or a continuation of, a
Eurodollar Rate Advance, the requested Interest Period. For purposes other
than the making of deemed representations and warranties pursuant to Section
3.02, the portion of Advances comprising part of the same Borrowing that are
converted to Advances of another Type shall constitute a new Borrowing.
(c) Certain Limitations. Notwithstanding anything in paragraphs
(a) and (b) above:
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<PAGE> 20
(i) at no time shall there be more than three (3)
Interest Periods applicable to outstanding Borrowings comprised of
Eurodollar Rate Advances;
(ii) each Borrowing comprised of Base Rate Advances or
Cost of Funds Advances shall be in an aggregate amount not less than
$500,000 (or an integral multiple of $100,000 in excess thereof) and
each Borrowing comprised of Eurodollar Rate Advances shall be in an
aggregate amount not less than $1,000,000 (or an integral multiple of
$100,000 in excess thereof);
(iii) (A) if any Bank shall, at least one Business Day
before the date of any requested Borrowing, notify the Borrower and
the other Banks that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any
central bank or other governmental authority asserts that it is
unlawful, for such Bank or its Eurodollar Lending Office to perform
its obligations under this Agreement to make Eurodollar Rate Advances
or to fund or maintain Eurodollar Rate Advances, the right of the
Borrower to select Eurodollar Rate Advances for such Borrowing or for
any subsequent Borrowing shall be suspended until such Bank shall
notify the Borrower and the other Banks that the circumstances causing
such suspension no longer exist, and each Advance comprising such
Borrowing shall be a Base Rate Advance; and (B) such Bank agrees to
use commercially reasonable efforts (consistent with its internal
policies and legal and regulatory restrictions) to designate a
different Applicable Lending Office if the making of such designation
would avoid the effect of this paragraph and would not, in the
reasonable judgment of such Bank, be otherwise disadvantageous to such
Bank;
(iv) if any Bank is unable to determine the Eurodollar
Rate comprising any requested Borrowing, the right of the Borrower to
select Eurodollar Rate Advances for such Borrowing or for any
subsequent Borrowing shall be suspended until such Bank shall notify
the Borrower and the other Banks that the circumstances causing such
suspension no longer exist, and each Advance comprising such Borrowing
shall be a Base Rate Advance;
(v) if the Banks shall, at least one Business Day before
the date of any requested Borrowing, notify the Borrower that the
Eurodollar Rate for Eurodollar Rate Advances comprising such Borrowing
will not adequately reflect the cost to the Banks of making or funding
their respective Eurodollar Rate Advances, as the case may be, for
such Borrowing, the right of the Borrower to select Eurodollar Rate
Advances for such Borrowing or for any subsequent Borrowing shall be
suspended until the Banks shall notify the Borrower that the
circumstances causing such suspension no longer exist, and each
Advance comprising such Borrowing shall be a Base Rate Advance;
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<PAGE> 21
(vi) if the Borrower shall fail to select the duration or
continuation of any Interest Period for any Eurodollar Rate Advances
in accordance with the provisions contained in the definition of
"Interest Period" in Section 1.01 and paragraphs (a) and (b) above,
the Banks will forthwith so notify the Borrower and such Advances, in
the case of a new Borrowing, will be made available to the Borrower on
the date of such Borrowing as Base Rate Advances and, in the case of
outstanding Advances, will be Converted into Base Rate Advances at the
end of the current Interest Period; and
(vii) the Borrower may not select any Interest Period which would
end after the Maturity Date.
(d) Notices Irrevocable. Each Notice of Borrowing and Notice of
Conversion or Continuation shall be irrevocable and binding on the Borrower.
In the case of any Borrowing which the related Notice of Borrowing specifies is
to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each
Bank against any loss, out-of-pocket cost or expense actually incurred by such
Bank as a result of any failure to fulfill on or before the date specified in
such Notice of Borrowing for such Borrowing the applicable conditions set forth
in Article III, including, without limitation, any loss, cost or expense
actually incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Bank to fund the Advance to be made by such Bank
as part of such Borrowing when such Advance, as a result of such failure, is
not made on such date.
(e) Bank Obligations Several. The failure of any Bank to make the
Advance to be made by it as part of any Borrowing shall not relieve any other
Bank of its obligation, if any, to make its Advance on the date of such
Borrowing. No Bank shall be responsible for the failure of any other Bank to
make the Advance to be made by such other Bank on the date of any Borrowing.
Section 2.03. Optional Reduction or Termination of the Commitments.
The Borrower shall have the right, upon at least three Business Days'
irrevocable notice to the Banks, to terminate in whole or reduce ratably in
part the unused portion of the Commitments; provided that each partial
reduction shall be in the aggregate amount of $1,000,000 or an integral
multiple of $1,000,000 in excess thereof. Any reduction or termination of the
Commitments pursuant to this Section 2.03 shall be permanent, with no
obligation of the Banks to reinstate such Commitments and the commitment fees
provided for in Sections 2.04(a) shall thereafter be computed on the basis of
the Commitments, as so reduced.
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Section 2.04. Fees.
(a) Commitment Fees. The Borrower agrees to pay to each Bank a
commitment fee on the average daily amount by which such Bank's Commitment
exceeds the sum of such Bank's outstanding Advances and Pro Rata Share of the
Letter of Credit Exposure, from the date of this Agreement until the Maturity
Date at the rate of 3/8ths of 1% per annum, such fee due and payable quarterly
in arrears on each Quarterly Date and on the Maturity Date.
(b) Letter of Credit Fees. The Borrower agrees to pay, or cause
the respective Account Party to pay (i) to each Bank (including the Issuing
Bank) such Bank's Pro Rata Share of a fee per annum for each Letter of Credit
equal to (x) the undrawn face amount of such Letter of Credit, multiplied by
(y) in the case of any standby Letter of Credit, two percent (2%), and in the
case of any commercial Letter of Credit, one percent (1%), and (ii) to the
Issuing Bank, a fee per annum for each Letter of Credit equal to (x) the
undrawn face amount of such Letter of Credit, multiplied by (y) 1/8%. Each
such fee shall be based on the average daily maximum amount available to be
drawn under such Letter of Credit from the date of issuance of the Letter of
Credit until its Expiration Date and be payable quarterly in arrears on each
Quarterly Date.
(c) Closing Fees. The Borrower agrees to pay to each Bank on the
Effective Date a fee of 1/2% of such Bank's Commitment.
Section 2.05. Repayment of Advances. The Borrower shall repay the
outstanding principal amount of each Advance on the Maturity Date.
Section 2.06. Interest. The Borrower shall pay interest on the
unpaid principal amount of each Advance made by each Bank from the date of such
Advance until such principal amount shall be paid in full, at the following
rates per annum:
(a) Base Rate Advances. If such Advance is a Base Rate Advance, a
rate per annum equal at all times to the lesser of (i) the Adjusted Base Rate
in effect from time-to-time and (ii) the Maximum Rate, payable in arrears on
each Quarterly Date and on the date such Base Rate Advance shall be paid in
full, provided that any amount of principal which is not paid when due (whether
at stated maturity, by acceleration or otherwise) shall bear interest from the
date on which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to the lesser of (i) the
Adjusted Base Rate in effect from time-to-time plus 2% and (ii) the Maximum
Rate.
(b) Eurodollar Rate Advances. If such Advance is a Eurodollar
Rate Advance, a rate per annum equal at all times during the Interest Period
for such Advance to the lesser of (i) the Eurodollar Rate for such Interest
Period plus two percent (2%) and (ii) the
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Maximum Rate, payable on the last day of such Interest Period; provided that
any amount of principal which is not paid when due (whether at stated maturity,
by acceleration or otherwise) shall bear interest from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to the lesser of (i) the greater of (A) the
Adjusted Base Rate in effect from time-to-time plus 2% and (B) the rate
required to be paid on such Advance immediately prior to the date on which such
amount became due plus 2% and (ii) the Maximum Rate.
(c) Cost of Funds Advances. If such Advance is a Cost of Funds
Advance, a rate per annum equal to the lesser of (i) the Cost of Funds Rate for
the period from the date of such Advance until the requested maturity date for
such Advance plus two percent (2%) and (ii) the Maximum Rate, payable in
arrears on each Quarterly Date and on the date such Advance shall be paid in
full, provided that any amount of principal which is not paid when due (whether
at stated maturity, by acceleration or otherwise) shall bear interest from the
date on which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to the lesser of (i) the greater
of (A) the Adjusted Base Rate in effect from time-to-time plus 2% and (B) the
rate required to be paid on such Advance immediately prior to the date on which
such amount became due plus 2% and (ii) the Maximum Rate.
(d) Additional Interest on Eurodollar Rate Advances. The Borrower
shall pay to each Bank, so long as any such Bank shall be required under
regulations of the Federal Reserve Board to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities,
additional interest on the unpaid principal amount of each Eurodollar Rate
Advance of such Bank, from the later of (i) the date of such Advance and (ii)
the date such reserve requirement is imposed until the earlier of (A) the date
such principal amount is paid in full and (B) the date such reserve requirement
is suspended, at an interest rate per annum equal at all times to the remainder
obtained by subtracting (1) the Eurodollar Rate for the Interest Period for
such Advance from (2) the rate obtained by dividing such Eurodollar Rate by a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such
Bank for such Interest Period, payable on each date on which interest is
payable on such Advance. Such additional interest payable to any Bank shall be
determined by such Bank and notified to the Borrower (such notice to include
the calculation of such additional interest, which calculation shall be
conclusive in the absence of manifest error). Each Bank agrees to use
commercially reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Applicable Lending Office
if the making of such a designation would avoid the effect of this paragraph
and would not, in the reasonable judgment of such Bank, be otherwise
disadvantageous to such Bank.
(e) Usury Recapture. In the event the rate of interest chargeable
under this Agreement or the Notes at any time is greater than the Maximum Rate,
the unpaid principal
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<PAGE> 24
amount of the Notes shall bear interest at the Maximum Rate until the total
amount of interest paid or accrued on the Notes equals the amount of interest
which would have been paid or accrued on the Notes if the stated rates of
interest set forth in this Agreement had at all times been in effect. In the
event, upon payment in full of the Notes, the total amount of interest paid or
accrued under the terms of this Agreement and the Notes is less than the total
amount of interest which would have been paid or accrued if the rates of
interest set forth in this Agreement had, at all times, been in effect, then
the Borrower shall, to the extent permitted by applicable law, pay the Banks an
amount equal to the difference between (i) the lesser of (A) the amount of
interest which would have been charged on the Notes if the Maximum Rate had, at
all times, been in effect and (B) the amount of interest which would have
accrued on the Notes if the rates of interest set forth in this Agreement had
at all times been in effect and (ii) the amount of interest actually paid or
accrued under this Agreement on the Notes. In the event the Banks ever
receive, collect or apply as interest any sum in excess of the Maximum Rate,
such excess amount shall, to the extent permitted by law, be applied to the
reduction of the principal balance of the Notes, and if no such principal is
then outstanding, such excess or part thereof remaining shall be paid to the
Borrower.
Section 2.07. Prepayments.
(a) Right to Prepay. The Borrower shall have no right to prepay
any principal amount of any Advance except as provided in this Section 2.07.
(b) Optional. The Borrower may elect to prepay any of the
Advances, after giving written notice to the Banks stating the proposed date
and aggregate principal amount of such prepayment, which notice must be
received by 11:00 a.m. (Dallas, Texas time) (i) in the case of Eurodollar Rate
Advances, at least three Business Days prior to the proposed date of
prepayment, and (ii) in the case of Base Rate Advances or Cost of Funds
Advances, on the Business Day of the proposed prepayment. If any such notice
is given, the Borrower shall prepay Advances comprising part of the same
Borrowing in whole or ratably in part in an aggregate principal amount equal to
the amount specified in such notice, together with accrued interest to the date
of such prepayment on the principal amount prepaid and amounts, if any,
required to be paid pursuant to Section 2.08 as a result of such prepayment
being made on such date; provided, however, that each partial prepayment shall
be in an aggregate principal amount not less than $500,000 or in integral
multiples of $100,000 in excess thereof.
(c) Illegality. If any Bank shall notify the other Banks and the
Borrower that the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or that any central bank or other
governmental authority asserts that it is unlawful for such Bank or its
Eurodollar Lending Office to perform its obligations under this Agreement to
maintain any Eurodollar Rate Advances of such Bank then outstanding hereunder,
(i) the Borrower shall, no later than 11:00 a.m. (Dallas, Texas time), (A) if
not
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prohibited by law or regulation to maintain such Eurodollar Rate Advances for
the duration of the Interest Period, on the last day of the Interest Period for
each outstanding Eurodollar Rate Advance or (B) if prohibited by law or
regulation to maintain such Eurodollar Rate Advances for the duration of the
Interest Period, on the second Business Day following its receipt of such
notice, prepay all of the Eurodollar Rate Advances of all of the Banks then
outstanding, together with accrued interest on the principal amount prepaid to
the date of such prepayment and amounts, if any, required to be paid pursuant
to Section 2.08 as a result of such prepayment being made on such date, (ii)
each Bank shall simultaneously make a Base Rate Advance to the Borrower on such
date in an amount equal to the aggregate principal amount of the Eurodollar
Rate Advances prepaid to such Bank, and (iii) the right of the Borrower to
select Eurodollar Rate Advances for any subsequent Borrowing shall be suspended
until the Bank which gave notice referred to above shall notify the Borrower
and the other Banks that the circumstances causing such suspension no longer
exist. Each Bank agrees to use commercially reasonable efforts (consistent
with its internal policies and legal and regulatory restrictions) to designate
a different Applicable Lending Office if the making of such designation would
avoid the effect of this paragraph and would not, in the reasonable judgment of
such Bank, be otherwise disadvantageous to such Bank.
(d) Ratable Payments; Effect of Notice. Each payment of any
Advance pursuant to this Section 2.07 or any other provision of this Agreement
shall be made in a manner such that all Advances comprising part of the same
Borrowing are paid in whole or ratably in part. All notices given pursuant to
this Section 2.07 shall be irrevocable and binding upon the Borrower.
Section 2.08. Breakage Costs. If (a) any payment of principal of
any Eurodollar Rate Advance is made other than on the last day of the Interest
Period for such Advance (or, in the case of a Cost of Funds Advance, on the
original scheduled maturity date of such Advance) as a result of any prepayment
pursuant to Section 2.07 or the acceleration of the maturity of the Notes
pursuant to Article VIII or (b) the Borrower fails to make a principal or
interest payment with respect to any Eurodollar Rate Advance on the date such
payment is due and payable, the Borrower shall, within 10 days of any written
demand sent by any Bank to the Borrower, pay to such Bank any amounts (without
duplication of any other amounts payable in respect of breakage costs) required
to compensate such Bank for any additional losses, out-of-pocket costs or
expenses which it may reasonably incur as a result of such payment or
nonpayment, including, without limitation, any loss, cost or expense actually
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by any Bank to fund or maintain such Advance.
Section 2.09. Increased Costs.
(a) Changed Circumstances. If, due to either (i) the introduction
of or any change (other than any change by way of imposition or increase of
reserve requirements included
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in the Eurodollar Rate Reserve Percentage) in, or in the interpretation of, any
law or regulation or (ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the force
of law), there shall be any increase in the cost to any Bank of agreeing to
make or making, funding or maintaining Eurodollar Rate Advances, or of agreeing
to issue or participate, or issuing or participating in Letters of Credit
hereunder, then the Borrower shall from time-to-time, upon demand by such Bank,
immediately pay to such Bank additional amounts (without duplication of any
other amounts payable in respect of increased costs) sufficient to compensate
such Bank for such increased cost; provided, however, that, before making any
such demand, each Bank agrees to use commercially reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
designate a different Applicable Lending Office if the making of such a
designation would avoid the need for, or reduce the amount of, such increased
cost and would not, in the reasonable judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate as to the amount of such increased
cost and detailing the calculation of such cost submitted to the Borrower by
such Bank shall be presumptively correct for all purposes, absent manifest
error.
(b) Capital Adequacy. If any Bank determines in good faith that
compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force
of law) implemented or effective after the date of this Agreement affects or
would affect the amount of capital required or expected to be maintained by
such Bank or any corporation controlling such Bank and that the amount of such
capital is increased by or based upon the existence of such Bank's Commitment
to make Advances hereunder or to issue or participate in Letters of Credit
hereunder and other commitments of this type, then, upon 30 days prior written
notice by such Bank, the Borrower shall immediately pay to such Bank additional
amounts (without duplication of any other amounts payable in respect of
increased costs) sufficient to compensate such Bank in light of such
circumstances to the extent that such Bank reasonably determines such increase
in capital to be allocable to the existence of such Bank's Commitment hereunder
to make Advances or to issue or participate in Letters of Credit. A
certificate as to such amounts and detailing the calculation of such amounts
submitted to the Borrower by such Bank shall be presumptively correct for all
purposes, absent manifest error.
Section 2.10. Payments and Computations.
(a) Payment Procedures. The Borrower shall make each payment
under this Agreement and under the Notes not later than 11:00 a.m. (Dallas,
Texas time) on the day when due in Dollars to each Bank, at the location such
Bank shall designate in writing to the Borrower.
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(b) Computations. All computations of interest based on the
Adjusted Base Rate and of the commitment fees described in Section 2.04(a)
shall be made by the Banks on the basis of a year of 365 or 366 days, as the
case may be, and all computations of interest based on the Eurodollar Rate, the
Cost of Funds Rate, and of letter of credit fees described in Section 2.04(b)
shall be made by the Banks on the basis of a year of 360 days, 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. Each
determination by the Banks of an interest rate shall be conclusive and binding
for all purposes, absent manifest error.
(c) Non-Business Day Payments. 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; provided, however, that if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(d) Interest on Overdue Amounts. Except as otherwise provided in
Section 2.06 with respect to overdue principal payments of Advances, the
Borrower agrees to pay interest on demand at a rate per annum equal at all
times to the Adjusted Base Rate plus 2% (not to exceed, however, the Maximum
Rate) on any other amount hereunder payable by the Borrower which is not paid
when due from the date such amount became due until paid in full.
Section 2.11. Taxes.
(a) No Deduction for Certain Taxes. Any and all payments by the
Borrower shall be made, in accordance with Section 2.10, 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,
excluding, in the case of each Bank or any of their respective subsidiaries or
foreign branches, taxes imposed on or measured by its income, and franchise
taxes imposed on it, by the United States or by the jurisdiction under the laws
of which such Bank or such subsidiary or foreign branch (as the case may be),
is organized or any political subdivision of the jurisdiction (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes") and, in the case of each
Bank, Taxes by the jurisdiction of such Bank's Applicable Lending Office or any
political subdivision of such jurisdiction. If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable to any Bank,
(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 2.11), such Bank receives an amount equal to
the sum it would have received had no such deductions been
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made; provided, however, that if the Borrower's obligation to deduct or
withhold Taxes is caused solely by such Bank's failure to provide the forms
described in paragraph (e) of this Section 2.11 and such Bank could have
provided such forms, no such increase shall be required; (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. In addition, 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, the Notes, or the other Credit Documents (hereinafter referred to as
"Other Taxes").
(c) Indemnification. Except to the extent the Borrower makes
payments pursuant to this Section 2.11, and subject to the proviso in Section
2.11(a)(i), the Borrower indemnifies each Bank for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.11) paid by such Bank
and any liability (including interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Each payment required to be made by the Borrower in respect
of this indemnification shall be made to the Bank claiming such indemnification
within 30 days from the date the Borrower receives written demand detailing the
calculation of such amounts therefor from such Bank. If any Bank receives a
refund in respect of, or receives a net tax benefit with respect to, any taxes
paid by the Borrower under this paragraph (c), such Bank shall promptly pay to
the Borrower the Borrower's share of such refund or such net tax benefit.
(d) Evidence of Tax Payments. The Borrower will pay prior to
delinquency all Taxes payable in respect of any payment. Within 30 days after
the date of any payment of Taxes, the Borrower will furnish to each Bank the
original or a certified copy of a receipt evidencing payment of such Taxes.
(e) Foreign Bank Withholding Exemption. Each Bank not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrower on the date of this Agreement or
upon the effectiveness of any Assignment and Acceptance (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 Note 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
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<PAGE> 29
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 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 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 such
extensions or renewals thereof as may reasonably be requested by the Borrower
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 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 timely provide the requisite Internal
Revenue Service forms.
Section 2.12. Sharing of Payments, Etc. If any Bank shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off or otherwise) on account of the Advances made by it in excess of its
Pro Rata Share of payments on account of the Advances or Letter of Credit
Obligations obtained by all the Banks, such Bank shall notify each other Bank
and forthwith purchase from the other Banks such participations in the Advances
made by them or Letter of Credit Obligations held by them as shall be necessary
to cause such purchasing Bank to share the excess payment ratably in accordance
with the requirements of this Agreement with each of them; provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Bank, such purchase from each Bank shall be rescinded and such
Bank shall repay to the purchasing Bank the purchase price to the extent of
such Bank's ratable share (according to the proportion of (a) the amount of the
participation sold by such Bank to the purchasing Bank as a result of such
excess payment to (b) the total amount of such excess payment) of such
recovery, together with an amount equal to such Bank's ratable share (according
to the proportion of (a) the amount of such Bank's required repayment to the
purchasing Bank to (b) the total amount of all such required repayments to the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower
agrees that any Bank so purchasing a participation from another Bank pursuant
to this Section 2.12 may, to the fullest extent permitted by law, unless and
until rescinded as provided above, exercise all its rights of payment
(including the right of
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set-off) with respect to such participation as fully as if such Bank were the
direct creditor of the Borrower in the amount of such participation.
Section 2.13. Letters of Credit.
(a) Issuance. From time-to-time from the date of this Agreement
until the Maturity Date, at the request of the Borrower, each Bank agrees to
issue Letters of Credit for the account of any Account Party on any Business
Day and on the terms and conditions hereinafter set forth, and to increase or
extend the expiration date of any such Letters of Credit issued by such Issuing
Bank for the account of such Account Party. No Letter of Credit will be
issued, increased, or extended (i) if such issuance, increase, or extension
would cause the Letter of Credit Exposure to exceed the aggregate LC
Commitments; (ii) unless such Letter of Credit has an Expiration Date not later
than the Maturity Date (except as provided in paragraph (g) of this Section
2.13); (iii) unless such Letter of Credit is in form and substance acceptable
to the respective Issuing Bank in its sole discretion; (iv) unless such Letter
of Credit is a standby letter of credit not supporting the repayment of
indebtedness for borrowed money of any Person or a commercial letter of credit;
(v) unless a Responsible Officer of the respective Account Party has delivered
to the respective Issuing Bank a completed and executed LC Application at least
two Business Days prior to the date requested for the issuance, increase or
extension of such Letter of Credit; and (vi) unless such Letter of Credit is
governed by the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 ("UCP") or any
successor to the UCP. If the terms of any LC Application conflict with the
terms of this Agreement, the terms of this Agreement shall control.
Notwithstanding that the Borrower is not the named Account Party in connection
with any Letter of Credit issued for the account of a Guarantor, the Borrower
shall be obligated to pay all Reimbursement Obligations in connection with each
Letter of Credit issued for the account of a Guarantor in accordance with the
terms of this Section 2.13.
(b) Participations. On the Effective Date with respect to each
Existing Letter of Credit, and thereafter on the date of the issuance or
increase of any Letter of Credit, the respective Issuing Bank shall be deemed
to have sold to each other Bank and each other Bank shall have been deemed to
have purchased from such Issuing Bank a participation in the related Letter of
Credit Obligations equal to such Bank's Pro Rata Share at such date and such
sale and purchase shall otherwise be in accordance with the terms of this
Agreement. Each Issuing Bank shall promptly notify each such participant Bank
by telex, telephone, or telecopy of each Letter of Credit issued or increased
and the actual dollar amount of such Bank's participation in such Letter of
Credit. Within 30 days after each Quarterly Date each Issuing Bank will
provide to each other Bank and the Borrower a summary of all Letters of Credit
issued by such Issuing Bank and outstanding on such Quarterly Date.
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<PAGE> 31
(c) Reimbursement. The Borrower hereby agrees to pay on demand,
or to cause the respective Account Party to pay on demand to each Issuing Bank
an amount equal to any amount paid or to be paid by such Issuing Bank under or
in respect of any Letter of Credit issued by such Issuing Bank. In the event
such Reimbursement Obligation is not paid to the respective Issuing Bank on the
date such Issuing Bank has made payment of such amount under the Letter of
Credit, interest shall accrue on such Reimbursement Obligation from the date
such payment is made by such Issuing Bank, until the date such reimbursement is
made by the Borrower, such interest to be payable on demand to such Issuing
Bank and shared pro rata with each Bank which has funded its share of the
payment under the Letter of Credit as set forth below. In the event any
Issuing Bank makes a payment pursuant to a request for draw presented under a
Letter of Credit and such payment is not promptly reimbursed upon demand as set
forth in the preceding sentence, such Issuing Bank shall give notice of such
payment to the other Banks, and each Bank shall promptly reimburse such Issuing
Bank for such Bank's Pro Rata Share of such payment, whether or not the Advance
Commitments have been terminated or otherwise. In the event any Bank fails to
make its Pro Rata Share of the reimbursement payment due to any Issuing Bank on
the same day payment is made by such Issuing Bank of the related draw under a
Letter of Credit (provided demand for such payment is received by such Bank by
1:00 p.m., Dallas, Texas time, on such day), such Bank shall pay interest
thereon to the Issuing Bank at a rate per annum equal to the Federal Funds Rate
from the date of such payment by the Issuing Bank to the date of such
reimbursement payment by such Bank.
(d) Obligations Unconditional. The obligations of the Borrower
under this Agreement or in any LC Application in respect of each Letter of
Credit, the obligations of each Account Party under each LC Application
executed and delivered by such Account Party to an Issuing Bank, and the
obligations of each Bank to reimburse an Issuing Bank as provided in paragraph
(c) above shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances,
notwithstanding the following circumstances:
(i) any lack of validity or enforceability of any Credit
Documents;
(ii) any amendment or waiver of or any consent to
departure from any Credit Documents;
(iii) the existence of any claim, set-off, defense or other
right which the Borrower or any Subsidiary may have at any time
against any beneficiary or transferee of such Letter of Credit (or any
Persons for whom any such beneficiary or any such transferee may be
acting), any Issuing Bank or any other Person, whether in connection
with this Agreement, the transactions contemplated in this Agreement
or in any Credit Documents or any unrelated transaction;
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<PAGE> 32
(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 to the extent the Issuing Bank would not be
liable therefor pursuant to the following paragraph (e);
(v) payment by any Issuing Bank under such Letter of
Credit against presentation of a draft or certificate which does not
comply with the terms of such Letter of Credit; or
(vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
(e) Liability of Issuing Bank. Each Account Party and the
Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letter of
Credit. No Issuing Bank nor any of its officers or directors shall 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, 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 such Issuing Bank against presentation of
documents which do not 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 such
Issuing Bank's own negligence);
except that each Account Party and the Borrower shall have a claim against an
Issuing Bank, and such Issuing Bank shall be liable to, and shall promptly pay
to, such Account Party and the Borrower, to the extent of any direct, as
opposed to consequential, damages suffered by such Account Party or the
Borrower which such Account Party or the Borrower proves were caused by (A)
such Issuing Bank's willful misconduct or gross negligence in determining
whether documents presented under a Letter of Credit comply with the terms of
such Letter of Credit or (B) such Issuing Bank's willful failure to make lawful
payment under any Letter of Credit after the presentation to it of a draft and
certificate strictly complying with the terms and conditions of such Letter of
Credit. In furtherance and not in limitation of the foregoing, each Issuing
Bank may accept documents that appear on their face to be in order,
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without responsibility for further investigation, regardless of any notice or
information to the contrary.
(F) INDEMNIFICATION. THE BANKS SEVERALLY AGREE TO INDEMNIFY EACH
ISSUING BANK (TO THE EXTENT NOT REIMBURSED BY THE BORROWER), ACCORDING TO THEIR
RESPECTIVE PRO RATA SHARES IN EFFECT ON THE DATE ON WHICH INDEMNIFICATION IS
SOUGHT (OR, IF INDEMNIFICATION IS SOUGHT AFTER THE DATE UPON WHICH THE LC
COMMITMENTS SHALL HAVE BEEN TERMINATED, NO LETTER OF CREDIT REMAINS
OUTSTANDING, AND THE REIMBURSEMENT OBLIGATIONS SHALL HAVE BEEN PAID IN FULL,
RATABLY IN ACCORDANCE WITH THEIR PRO RATA SHARES IMMEDIATELY PRIOR TO THE DATE
THE REIMBURSEMENT OBLIGATIONS WERE PAID IN FULL) FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH
MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH ISSUING BANK IN ANY
WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED
BY SUCH ISSUING BANK UNDER THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
(INCLUDING SUCH ISSUING BANK'S OWN NEGLIGENCE), PROVIDED THAT NO BANK SHALL BE
LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS
RESULTING FROM ANY ISSUING BANK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(g) Cash Collateral. In the event at any time prior to the
Maturity Date the Banks agree in their sole discretion to permit an Issuing
Bank to issue a Letter of Credit hereunder with an Expiration Date later than
the Maturity Date (there being no commitment whatsoever hereunder on the part
of any Bank to so agree to the issuance of any such Letter of Credit), then in
such event the Borrower hereby unconditionally and irrevocably agrees that on
the Maturity Date, the Borrower shall deposit with each Bank an amount of cash
equal to the outstanding Letter of Credit Exposure of such Bank in connection
with each such Letter of Credit to remain outstanding after the Maturity Date
as security for the Obligations relating to such Letter of Credit; provided
that no extension or increase of any such Letter of Credit shall be made on or
after the Maturity Date, and all obligations of the Borrower in connection with
such Letters of Credit shall be due and payable on the date such Letter of
Credit expires or is fully drawn in accordance with its terms.
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Section 2.14. Collateral Bailee. The Banks hereby agree that
NationsBank of Texas, N.A. shall act as collateral bailee for the benefit of
the Banks under and pursuant to the terms of the Pledge Agreement.
ARTICLE III
CONDITIONS OF LENDING
Section 3.01. Conditions Precedent to Effectiveness. This
Agreement and the Commitments shall become effective on the date the following
conditions precedent are met ("Effective Date"):
(a) The Borrower and each Bank shall have duly and validly
executed three originals of this Agreement;
(b) Each Bank shall have received an original Note payable to its
order in the amount of its Advance Commitment and an original counterpart of
the following:
(i) the Pledge Agreement duly executed by the Borrower;
(ii) the Guaranty, duly executed by each Significant
Subsidiary;
(iii) copies, each certified as of the date of this
Agreement by a Secretary or Assistant Secretary of the Borrower (A) of
the resolutions of the Board of Directors of the Borrower approving
this Agreement and the Pledge Agreement, and (B) of the certificate of
incorporation and bylaws of the Borrower;
(iv) copies, each certified as of the date of this
Agreement by a Secretary or Assistant Secretary of each Significant
Subsidiary (A) of the resolutions of the Board of Directors of such
Significant Subsidiary approving the Guaranty and (B) of the
certificate of incorporation and bylaws of such Significant
Subsidiary;
(v) a certificate of the Secretary or an Assistant
Secretary of the Borrower dated as of the date of this Agreement
certifying as of such date the names and true signatures of officers
of the Borrower authorized to sign this Agreement;
(iv) a certificate of the Secretary or an Assistant
Secretary of each Significant Subsidiary dated as of the date of this
Agreement certifying as of such date the names and true signatures of
officers of such Significant Subsidiary authorized to sign the
Guaranty; and
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(vii) a favorable opinion of counsel to the Borrower and the
Significant Subsidiaries, dated as of the date of this Agreement and
in form and substance satisfactory to the Banks and covering the
matters described on Exhibit G hereto.
(c) The Borrower shall have paid to each Bank the fees required by
Section 2.04(c).
(d) No Default or Event of Default shall have occurred and be
continuing.
(e) The representations and warranties contained in Article IV
hereof and in Section 7 of the Guaranty shall be true and correct in all
material respects.
Section 3.02. Conditions Precedent after Effective Date. The
obligation of each Bank to fund an Advance on the occasion of each Borrowing
(other than the Conversion or continuation of any existing Borrowing) and of
any Issuing Bank to issue, extend or increase any Letter of Credit shall be
subject to the further conditions precedent that on the date of such Borrowing
or the issuance, extension or increase of such Letter of Credit:
(a) the following statements shall be true (and each of the giving
of the applicable Notice of Borrowing and the acceptance by the Borrower of the
proceeds of such Borrowing or the issuance, extension or increase of such
Letter of Credit shall be deemed to constitute a representation and warranty by
the Borrower that on the date of such Borrowing or the issuance, extension or
increase of such Letter of Credit such statements are true):
(i) the representations and warranties contained in
Article IV hereof and Section 7 of the Guaranty are correct in all
material respects on and as of the date of such Borrowing or the
issuance or increase of such Letter of Credit, before and after giving
effect to such Borrowing or to the issuance, extension or increase of
such Letter of Credit and to the application of the proceeds from such
Borrowing, as though made on and as of such date and
(ii) no Default has occurred and is continuing or would
result from such Borrowing or from the application of the proceeds
therefrom; and
(b) the Banks shall have received such other approvals, opinions
or documents reasonably requested by any Bank which are deemed necessary or
desirable as a result of circumstances occurring after the date of this
Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
Section 4.01. Corporate Existence; Subsidiaries. The Borrower is a
corporation duly organized, validly existing, and in good standing under the
laws of Delaware and in good standing and qualified to do business in each
jurisdiction where its ownership or lease of property or conduct of its
business requires such qualification and where a failure to be qualified would
reasonably be expected to cause a Material Adverse Change. Each Significant
Subsidiary is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation and in good
standing and qualified to do business in each jurisdiction where its ownership
or lease of property or conduct of its business requires such qualification and
where a failure to be qualified would reasonably be expected to cause a
Material Adverse Change. The Borrower has no Subsidiaries on the date of this
Agreement other than the Subsidiaries listed on the attached Schedule 4.01, and
Schedule 4.01 lists the jurisdiction of incorporation and the address of the
principal office of each such Subsidiary existing on the date of this
Agreement.
Section 4.02. Corporate Power. The execution, delivery, and
performance by the Borrower of this Agreement, the Notes, and the other Credit
Documents to which it is a party and by the Guarantors of the Guaranty and the
consummation of the transactions contemplated hereby and thereby (a) are within
the Borrower's and the Guarantors' corporate powers, (b) have been duly
authorized by all necessary corporate action, (c) do not contravene (i) the
Borrower's or any Guarantor's certificate or articles, as the case may be, of
incorporation or by-laws or (ii) any law or any contractual restriction binding
on or affecting the Borrower or any Guarantor, the contravention of which would
reasonably be expected to cause a Material Adverse Change and (d) will not
result in or require the creation or imposition of any Lien prohibited by this
Agreement. At the time of each Borrowing, such Borrowing and the use of the
proceeds of such Borrowing (a) will be within the Borrower's corporate powers,
(b) will have been duly authorized by all necessary corporate action, (c) will
not contravene (i) the Borrower's certificate of incorporation or by-laws or
(ii) any law or any contractual restriction binding on or affecting the
Borrower the contravention of which would reasonably be expected to cause a
Material Adverse Change and (d) will not result in or require the creation or
imposition of any Lien prohibited by this Agreement.
Section 4.03. Authorization and Approvals. No authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority is required for the due execution, delivery and performance by the
Borrower of this Agreement, the Notes, or the other Credit Documents to which
the Borrower is a party or by each Guarantor of the
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Guaranty or the consummation of the transactions contemplated thereby. At the
time of each Borrowing, no authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority will be required for such
Borrowing or the use of the proceeds of such Borrowing.
Section 4.04. Enforceable Obligations. This Agreement, the Notes
and the other Credit Documents to which the Borrower is a party have been duly
executed and delivered by the Borrower and the Guaranty has been duly executed
and delivered by the Significant Subsidiary which is a party to it. Each
Credit Document is the legal, valid, and binding obligation of the Borrower and
each Guarantor which is a party to it enforceable against the Borrower and each
such Guarantor in accordance with its terms, except as such enforceability may
be limited by any applicable bankruptcy, insolvency, reorganization,
moratorium, or similar law affecting creditors' rights generally and by general
principles of equity (whether considered in proceeding at law or in equity).
Section 4.05. Financial Statements. (a) The consolidated balance
sheet of the Borrower and its Subsidiaries as at December 31, 1995, and the
related statements of income, cash flow, and retained earnings of the Borrower
and its Subsidiaries for the fiscal year then ended, copies of which have been
furnished to each Bank duly certified by an authorized financial officer of the
Borrower, fairly present the financial condition of the Borrower and its
Subsidiaries as at such date and the results of the operations of the Borrower
and its Subsidiaries for the year ended on such date, and such balance sheet
and statements of income, cash flow, and retained earnings were prepared in
accordance with GAAP.
(b) Since December 31, 1995, no Material Adverse Change has
occurred.
Section 4.06. True and Complete Disclosure. No representation,
warranty, or other statement made by the Borrower or any Significant Subsidiary
(or on behalf of the Borrower or any Significant Subsidiary) in any Credit
Document contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which they were made as of the date of this
Agreement the effect of which would reasonably be expected to cause a Material
Adverse Change. The Borrower has no Knowledge on the date of this Agreement
and on the Effective Date of a fact that has not been disclosed to the Banks
which would reasonably be expected to cause a Material Adverse Change.
Section 4.07. Litigation. Except as disclosed to the Banks on the
attached Schedules 4.07 and 4.16, there is no pending or, to the Knowledge of
the Borrower, probable assertion of an action or proceeding affecting the
Borrower or any of its Significant Subsidiaries before any court, Governmental
Agency or arbitrator, which would, if adversely determined, reasonably be
expected to cause a Material Adverse Change or, with respect to proceedings
that involve Environmental Claims to which a Governmental Authority is a party,
which the
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Borrower reasonably believes could result in monetary sanctions in excess of
$100,000 or which purports to affect materially and adversely the legality,
validity, binding effect or enforceability of this Agreement, any Note, or any
other Credit Document.
Section 4.08. Use of Proceeds. The proceeds of Advances will be
used by the Borrower to provide working capital for the Borrower and its
Significant Subsidiaries and for other general corporate purposes. The
Borrower is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U). No
proceeds of any Advance will be used to purchase or carry any margin stock in
violation of Regulations G, T, U or X of the Federal Reserve Board as in effect
from time to time, and all official rulings and interpretations thereunder or
thereof.
Section 4.09. Investment Company Act. Neither the Borrower nor any
of its Significant Subsidiaries is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 4.10. Public Utility Holding Company Act. Neither the
Borrower nor any of its Significant Subsidiaries is a "holding company", or a
"Subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "Subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 4.11. Taxes. Proper and accurate (in all material
respects) federal, state, local and foreign tax returns, reports and statements
required to be filed (after giving effect to any extension granted in the time
for filing) by the Borrower, its Subsidiaries (since the respective date on
which the same became Subsidiaries) or any member of the Controlled Group
(hereafter collectively called the "Tax Group") have been filed with the
appropriate governmental agencies in all jurisdictions in which such returns,
reports and statements are required to be filed and where the failure to file
would cause a Material Adverse Change, and all taxes and other impositions
(which are material in amount) due and payable have been timely paid prior to
the date on which any fine, penalty, interest, late charge or loss may be added
thereto for non-payment thereof except where contested in good faith and by
appropriate proceeding. Neither the Borrower nor any member of the Tax Group
has given, or been requested to give, a waiver of the statute of limitations
relating to the payment of any federal, state, local or foreign taxes or other
impositions. None of the property owned by the Borrower or any other member of
the Tax Group is property which the Borrower or any member of the Tax Group is
required to treat as being owned by any other Person pursuant to the provisions
of Section 168(f)(8) of the Code. Proper and accurate amounts have been
withheld by the Borrower and all other members of the Tax Group from their
employees for all periods to comply in all material respects with the tax,
social security and unemployment withholding provisions of applicable federal,
state, local and foreign law. Timely payment
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of all material sales and use taxes required by applicable law have been made
by the Borrower and all other members of the Tax Group, the failure to timely
pay of which would reasonably be expected to cause a Material Adverse Change.
The amounts shown on all tax returns to be due and payable have been paid in
full or adequate provision therefor is included on the books of the appropriate
member of the Tax Group.
Section 4.12. Pension Plans. Except as set forth on Schedule 4.12,
no Termination Event has occurred with respect to any Plan, and each Plan has
complied with and been administered in all material respects in accordance with
applicable provisions of ERISA and the Code. No "accumulated funding
deficiency" (as defined in Section 302 of ERISA) has occurred and there has
been no excise tax imposed under Section 4971 of the Code. To the Knowledge of
the Borrower, no Reportable Event has occurred with respect to any
Multiemployer Plan, and each Multiemployer Plan has complied with and been
administered in all material respects with applicable provisions of ERISA and
the Code. The present value of all benefits vested under each Plan (based on
the assumptions used to fund such Plan) did not, as of the last annual
valuation date applicable thereto, exceed the value of the assets of such Plan
allocable to such vested benefits in any amount that would reasonably be
expected to cause a Material Adverse Change. Neither the Borrower nor any
member of the Controlled Group has had a complete or partial withdrawal from
any Multiemployer Plan for which there is any material withdrawal liability.
As of the most recent valuation date applicable thereto, neither the Borrower
nor any member of the Controlled Group has received notice that any
Multiemployer Plan is insolvent or in reorganization. Based upon GAAP existing
as of the date of this Agreement and current factual circumstances, the
Borrower has no reason to believe that the annual cost during the term of this
Agreement to the Borrower or any of its Significant Subsidiaries for post-
retirement benefits to be provided to the current and former employees of the
Borrower or any of its Significant Subsidiaries under welfare benefit plans (as
defined in Section 3(1) of ERISA) could, in the aggregate, reasonably be
expected to cause a Material Adverse Change.
Section 4.13. Condition of Property; Casualties. The material
Properties used or to be used in the continuing operations of the Borrower and
each of its Significant Subsidiaries, taken as a whole, are (a) in
substantially the same or better repair, working order, and condition as such
Properties were as of December 31, 1995, normal wear and tear excepted and (b)
in such repair, working order and condition to permit the Borrower and its
Significant Subsidiaries to operate such Properties in substantially the same
or better manner as operated as of December 31, 1995.
Section 4.14. Insurance. The Borrower and each of its Significant
Subsidiaries carry insurance with reputable insurers in respect of such of
their respective Properties, in such amounts and against such risks as is
customarily maintained by other Persons of similar size engaged in similar
businesses or self-insure to the extent that is customary for Persons of
similar size engaged in similar businesses.
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Section 4.15. No Burdensome Restrictions; No Defaults.
(a) Neither the Borrower nor any of its Significant
Subsidiaries is a party to any indenture, loan or credit agreement or any lease
or other agreement or instrument or subject to any charter or corporate
restriction or provision of applicable law or governmental regulation which
would reasonably be expected to cause a Material Adverse Change. The Borrower
and the Guarantors are not in default under or with respect to any contract,
agreement, lease or other instrument to which the Borrower or any Guarantor is
a party and which would reasonably be expected to cause a Material Adverse
Change. To the Knowledge of the Borrower, neither the Borrower nor any
Guarantor has received any notice of default under any contract, agreement,
lease or other instrument to which the Borrower or such Guarantor is a party
which is continuing and which, if not cured, would reasonably be expected to
cause a Material Adverse Change.
(b) No Default has occurred and is continuing.
Section 4.16. Environmental Condition.
(a) The Borrower and its Subsidiaries, taken as a whole, (i) have
obtained all Environmental Permits necessary for the ownership and operation of
their respective material Properties and the conduct of their respective
businesses of which the failure to obtain reasonably would be expected to cause
a Material Adverse Change; (ii) have been and are in compliance with all terms
and conditions of such Environmental Permits and with all other material
requirements of applicable Environmental Laws of which the failure to comply
would reasonably be expected to cause a Material Adverse Change; (iii) have not
received notice of any violation or alleged violation of any Environmental Law
or Environmental Permit the violation of which would reasonably be expected to
cause a Material Adverse Change; and (iv) except as set forth on the attached
Schedule 4.16, are not subject to any actual or contingent Environmental Claim,
which Environmental Claim, if adversely determined, would reasonably be
expected to cause a Material Adverse Change or, with respect to proceedings
that involve Environmental Claims to which a Governmental Authority is a party,
which the Borrower reasonably believes could result in monetary sanctions in
excess of $100,000.
(b) Except as disclosed to the Banks on the attached Schedule
4.16, to the Knowledge of the Borrower, none of the present or previously owned
or operated Property of the Borrower or of any of its present or former
Subsidiaries, wherever located, (i) has been placed on or proposed to be placed
on the National Priorities List, the Comprehensive Environmental Response
Compensation Liability Information System list, or their state or local
analogs, or have been otherwise designated, listed, or identified as a
potential site for removal, remediation, cleanup, closure, restoration,
reclamation, or other response activity
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under any Environmental Laws; (ii) is subject to a Lien, arising under or in
connection with any Environmental Laws, that attaches to any revenues or to any
Property owned or operated by the Borrower or any of its Subsidiaries, wherever
located, which Lien would reasonably be expected to cause a Material Adverse
Change; or (iii) has been the site of any Release of Hazardous Substances or
Hazardous Wastes from present or past operations which has caused at the site
or at any third-party site any condition that has resulted in or would
reasonably be expected to result in the need for Response that would cause a
Material Adverse Change.
(c) Without limiting the foregoing, the present and, to the
Knowledge of the Borrower, future liability, if any, of the Borrower and its
Subsidiaries, taken as a whole, which would reasonably be expected to arise in
connection with requirements under Environmental Laws will not result in a
Material Adverse Change.
Section 4.17. Permits, Licenses, etc. The Borrower and its
Significant Subsidiaries possess all permits, licenses, patents, patent rights
or licenses, trademarks, trademark rights, trade names rights and copyrights
which are material to the conduct of its business. The Borrower and its
Significant Subsidiaries manage and operate their business in accordance with
all applicable Legal Requirements which the failure to so manage or operate
would reasonably be expected to cause a Material Adverse Change.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall
remain unpaid, any Letter of Credit shall remain outstanding, or any Bank shall
have any Commitment hereunder, the Borrower agrees, unless the Banks shall
otherwise consent in writing, to comply with the following covenants.
Section 5.01. Compliance with Laws, Etc. The Borrower will comply,
and cause each of its Subsidiaries to comply, with all Legal Requirements of
which the failure to comply would reasonably be expected to cause a Material
Adverse Change. Without limiting the generality and coverage of the foregoing,
the Borrower shall comply, and shall cause each of its Subsidiaries to comply,
in all material respects, with all Environmental Laws and, in all material
respects, all laws, regulations, or directives with respect to equal employment
opportunity and employee safety in all jurisdictions in which the Borrower, or
any of its Subsidiaries do business if and to the extent the failure to comply
would reasonably be expected to cause a Material Adverse Change; provided,
however, that this Section 5.01 shall not prevent the Borrower, or any of its
Subsidiaries from, in good faith and
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with reasonable diligence, contesting the validity or application of any such
laws or regulations by appropriate legal proceedings.
Section 5.02. Maintenance of Insurance. The Borrower will
maintain, and cause each of its Subsidiaries to maintain, insurance with
responsible and reputable insurance companies or associations 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 the
Borrower or such Subsidiary operates, provided that the Borrower or such
Subsidiary may self-insure to the extent and in the manner normal for similarly
situated companies of like size, type and financial condition that are part of
a group of companies under common control.
Section 5.03. Preservation of Corporate Existence, Etc. The
Borrower will preserve and maintain, and cause each of its Significant
Subsidiaries to preserve and maintain, its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified, and cause each such Significant Subsidiary to qualify and
remain qualified, as a foreign corporation in each jurisdiction in which
qualification is necessary or desirable in view of its business and operations
or the ownership of its properties, and, in each case, where failure to qualify
or preserve and maintain its rights and franchises would reasonably be expected
to cause a Material Adverse Change; provided, however, that nothing contained
in this Section 5.03 shall prevent any transaction permitted by Section 6.04.
Section 5.04. Payment of Taxes, Etc. The Borrower will pay and
discharge, and cause each of its Subsidiaries to pay and discharge, before the
same shall become delinquent and which the failure to timely pay or discharge
would reasonably be expected to cause a Material Adverse Change, (a) all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or Property that are material in amount, prior to the date on
which penalties attach thereto and (b) all lawful claims that are material in
amount which, if unpaid, might by law become a Lien upon its Property;
provided, however, that neither the Borrower nor any such Subsidiary shall be
required to pay or discharge any such tax, assessment, charge, levy, or claim
which is being contested in good faith and by appropriate proceedings, and with
respect to which reserves in conformity with GAAP have been provided.
Section 5.05. Visitation Rights. At any reasonable time during
normal business hours and from time-to-time and so long as any visit or
inspection will not unreasonably interfere with the Borrower's or any of its
Subsidiaries' operations, upon reasonable notice, the Borrower will, and will
cause its Subsidiaries to, permit any Bank or any of its agents or
representatives thereof, to examine and make copies of and abstracts from the
records and books of account of, and visit and inspect at its reasonable
discretion the properties of, the Borrower and any such Subsidiary, to discuss
the affairs, finances and accounts of the
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Borrower and any such Subsidiary with any of their respective officers or
directors. Such visits shall (unless a Default has occurred and is continuing)
be at the expense of the visitor.
Section 5.06. Reporting Requirements. The Borrower will furnish to
each Bank:
(a) Monthly Financials. As soon as available and in any event not
later than 30 days after the end of each of calendar month, the consolidating
and consolidated balance sheets of Borrower and its Subsidiaries as of the end
of such month and the statements of income and cash flows of the Borrower and
its Subsidiaries for the period commencing at the end of the previous month and
ending with the end of such month, all in reasonable detail and duly certified
with respect to such statements by an authorized financial officer of the
Borrower as having been prepared in accordance with GAAP, together with a
compliance certificate duly executed by a Responsible Officer in substantially
the form of the attached Exhibit H;
(b) Quarterly Financials. As soon as available and in any event
not later than 60 days after the end of each of the first three quarters of
each fiscal year of the Borrower, the consolidating and consolidated balance
sheets of Borrower and its Subsidiaries as of the end of such quarter and the
statements of income and cash flows of the Borrower and its Subsidiaries for
the period commencing at the end of the previous year and ending with the end
of such quarter, all in reasonable detail and duly certified with respect to
such statements (subject to year-end audit adjustments) by an authorized
financial officer of the Borrower as having been prepared in accordance with
GAAP, together with a compliance certificate duly executed by a Responsible
Officer in substantially the form of the attached Exhibit H;
(c) Annual Financials. 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 year for the Borrower and its
Subsidiaries, including therein the consolidated balance sheet of the Borrower
and its Subsidiaries as of the end of such fiscal year and consolidated
statements of income and retained earnings and of cash flows of Borrower and
its Subsidiaries for such fiscal year, in each case certified by a firm of
independent certified public accountants of internationally recognized standing
selected by the Borrower, (ii) the consolidating balance sheet of the Borrower
and its Subsidiaries as of the end of such fiscal year and consolidating
statements of income and retained earnings and of cash flows of Borrower and
its Subsidiaries for such fiscal year, (iii) any management letters delivered
by such accountants to the Borrower in connection with such audit, (iv) a
certificate of such accounting firm to the Banks stating that, in the course of
the regular audit of the business of the Borrower and its Subsidiaries, which
audit was conducted by such accounting firm in accordance with generally
accepted auditing standards, such accounting firm has obtained no knowledge
that a Default has occurred and is continuing, or if, in the opinion of such
accounting firm, a Default has occurred and is continuing, a statement as to
the nature
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thereof, and (v) a compliance certificate duly executed by a Responsible
Officer in substantially the form of the attached Exhibit H;
(d) Securities Law Filings. Promptly and in any event within 15
days after the sending or filing thereof, copies of all proxy material, reports
and other information which the Borrower sends to its shareholders generally or
which the Borrower or any of its Subsidiaries either sends to (or files with)
the United States Securities and Exchange Commission or sends to shareholders
other than the Borrower generally;
(e) Termination Events. As soon as possible and in any event (i)
within 30 days after the Borrower has Knowledge or reasonably should have
Knowledge that any Termination Event described in clause (a) of the definition
of Termination Event with respect to any Plan has occurred, and (ii) within 10
days after any Responsible Officer of the Borrower has Knowledge or reasonably
should have Knowledge that any other Termination Event with respect to any Plan
has occurred, a statement of the Treasurer of the Borrower describing such
Termination Event and the action, if any, which the Borrower or such Affiliate
proposes to take with respect thereto;
(f) Termination of Plans. Promptly and in any event within ten
days after the Knowledge of the Borrower of receipt thereof by the Borrower or
any member of the Controlled Group from the PBGC, copies of each notice
received by the Borrower or any such member of the Controlled Group of the
PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(g) Other ERISA Notices. Promptly and in any event within ten
days after the Knowledge the Borrower of receipt thereof by the Borrower or any
member of the Controlled Group from a Multiemployer Plan sponsor, a copy of
each notice received by the Borrower or any member of the Controlled Group
concerning the imposition of withdrawal liability pursuant to Section 4202 of
ERISA in an amount that could reasonably be expected to cause a Material
Adverse Change;
(h) Environmental Notices. Promptly upon the Knowledge of the
Borrower of receipt thereof by the Borrower or any of its Subsidiaries, a copy
of any form of notice, summons or citation received from the EPA, or any other
Governmental Authority directly engaged in protection of the Environment,
concerning (i) material violations or alleged violations of Environmental Laws,
which seeks to impose liability therefor and which, based upon information
reasonably available to the Borrower at the time or after such violation, would
reasonably be expected to cause a Material Adverse Change, (ii) any action or
omission on the part of the Borrower or any of its Subsidiaries in connection
with Hazardous Waste or Hazardous Substances which, based upon information
reasonably available to the Borrower at the time of such receipt, would
reasonably cause a Material Adverse Change, (iii) any notice of potential
responsibility under CERCLA, or (iv) the filing of a Lien other
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than a Permitted Lien upon, against or in connection with the Borrower, its
present or former Subsidiaries, or any of their leased or owned material
Property, wherever located;
(i) Material Changes. Promptly and in any event within ten days
after the Knowledge thereof by the Borrower, written notice of any condition or
event, which condition or event has resulted or may reasonably be expected to
result in (i) a Material Adverse Change or (ii) a breach of or noncompliance
with any term, condition, or covenant of any contract to which the Borrower or
any of its Significant Subsidiaries is a party or by which they or their
properties may be bound, which breach or noncompliance would reasonably be
expected to cause a Material Adverse Change;
(j) Disputes, etc. Prompt written notice of any claims,
proceedings, or disputes pending, or to the Knowledge of the Borrower probable
of assertion, or affecting the Borrower, or any of its Subsidiaries which, if
adversely determined, could reasonably be expected to cause a Material Adverse
Change;
(k) Defaults. As soon as possible and in any event within ten
days after the occurrence of each Default of which the Borrower has Knowledge
or of which any of its Subsidiaries has Knowledge which is continuing on the
date of such statement, a statement of an authorized financial officer of the
Borrower setting forth the details of such Default and the actions which the
Borrower has taken and proposes to take with respect thereto;
(l) Other Information. Such other information respecting the
business or Properties, or the condition or operations, financial or otherwise,
of the Borrower, or any of its Subsidiaries, as the Banks may from time-to-time
reasonably request.
Section 5.07. Maintenance of Property. The Borrower shall, and
shall cause each of its Subsidiaries to, (a) maintain their material owned,
leased, or operated property, equipment, buildings and fixtures in
substantially the same or better condition and repair as the condition and
repair as of December 31, 1995, normal wear and tear and obsolescence excepted
and (b) not knowingly or willfully permit the commission of waste or other
injury, or the occurrence of pollution, contamination or any other condition
in, on or about the owned or operated property involving the Environment, that
would reasonably be expected to cause a Material Adverse Change.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall
remain unpaid, any Letter of Credit remain outstanding, or any Bank shall have
any Commitment, the
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Borrower agrees, unless the Banks otherwise consent in writing, to comply with
the following covenants.
Section 6.01. Liens, Etc. The Borrower will not create, assume,
incur or suffer to exist, or permit any of its Subsidiaries to create, assume,
incur, or suffer to exist, any Lien on or in respect of any of its Property
whether now owned or hereafter acquired, or assign any right to receive income,
except that the Borrower and its Subsidiaries may create, incur, assume or
suffer to exist Liens:
(a) securing the Obligations;
(b) for taxes, assessments or governmental charges or levies on
Property of the Borrower or any Subsidiary to the extent not required to be
paid pursuant to Sections 5.01 and 5.04;
(c) imposed by law, such as landlords', carriers', warehousemen's
and mechanics' liens and other similar Liens arising in the ordinary course of
business securing obligations (i) which are not overdue for a period of more
than 15 days, (ii) which are overdue for a period of more than 15 days but
which do not, in the aggregate, represent claims of more than $1,000,000, and
(iii) which, in either case, are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Borrower and its Subsidiaries in accordance with
GAAP;
(d) arising in the ordinary course of business out of pledges or
deposits under workers' compensation laws, unemployment insurance, old age
pensions or other social security or retirement benefits, or similar
legislation or to secure public or statutory obligations of the Borrower or any
of its Subsidiaries;
(e) existing on Property acquired by the Borrower or any of its
Subsidiaries in the ordinary course of business prior to the Borrower's or such
Subsidiaries' acquisition of such Property provided that the Debt secured
thereby is permitted under Section 6.02;
(f) constituting easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of Property or minor imperfections in title thereto
which, in the aggregate, are not material in amount, and which do not in any
case materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the Borrower
and its Subsidiaries;
(g) on life insurance policies owned by the Borrower or any of its
Subsidiaries securing Debt of the Borrower and such Subsidiaries permitted
under Section 6.02;
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Section 6.02. Debts, Guaranties and Other Obligations. The
Borrower will not, and will not permit any of its Subsidiaries to, create,
assume, suffer to exist or in any manner become or be liable in respect of any
Debt except:
(a) Debt of the Borrower and its Subsidiaries under the Credit
Documents;
(b) Debt, direct or contingent, of the Borrower or any of its
Subsidiaries existing on the date of this Agreement which is reflected, or the
arrangements under which such liabilities arise are reflected, in the Financial
Statements, and all renewals, extensions, rearrangements or refinancings of any
such credit arrangements on terms and for amounts substantially similar to the
terms and amounts existing as of the date of this Agreement;
(c) intercompany Debt incurred in the ordinary course of business
owed by any Subsidiary of the Borrower to the Borrower; provided, that TPI
shall at no time have Debt outstanding to the Borrower or to any other
Subsidiary exceeding $2,000,000 in the aggregate;
(d) Debt related to surety bonds, performance bonds or similar
instruments that are required in the ordinary course of business that do not
secure Debt.
Section 6.03. Agreements Restricting Liens and Distributions. The
Borrower will not, nor will it permit any of its Subsidiaries to, enter into
any agreement (other than a Credit Document) which (a) except with respect to
specific Property encumbered to secure payment of Debt related to such
Property, imposes restrictions upon the creation or assumption of any Lien upon
its properties, revenues or assets, whether now owned or hereafter acquired or
(b) limits dividends, distributions, or advances by any of the Borrower's
Subsidiaries to the Borrower.
Section 6.04. Merger or Consolidation; Asset Sales. The Borrower
will not, and will not permit any of its Subsidiaries to,
(a) merge or consolidate with or into any other Person (other than
the merger of a Subsidiary into the Borrower or of a Subsidiary into another
Subsidiary, provided that in the case of any such merger to which a Significant
Subsidiary is a party but not the Borrower, the surviving corporation is a
Significant Subsidiary); or
(b) sell, lease, transfer, or otherwise dispose of any Property
except to the Borrower and/or one or more Significant Subsidiaries; provided
that the Borrower and its Subsidiaries may sell (i) inventory in the ordinary
course of business, (ii) equipment or inventory which is worn or obsolete, and
(iii) an aggregate amount of Property not to exceed $2,000,000 after the
Effective Date as long as no Default has occurred and is continuing or would
result from any such sales.
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Section 6.05. Restricted Payments. The Borrower will not make or
pay any Restricted Payment, provided that the Borrower may repurchase up to an
aggregate amount of $2,000,000 of its capital stock during the term of this
Agreement as long as no Default has occurred and is continuing or would result
from any such repurchases.
Section 6.06. Affiliate Transactions. Except as expressly
permitted elsewhere in this Agreement, the Borrower will not, and will not
permit any of its Subsidiaries to, make, directly or indirectly: (a) any
investment in any Affiliate other than a Subsidiary of the Borrower; (b) any
transfer, sale, lease, assignment or other disposal of any assets to any such
Affiliate or any purchase or acquisition of assets from any such Affiliate; or
(c) any arrangement or other transaction directly or indirectly with or for the
benefit of any such Affiliate (including without limitation, guaranties and
assumptions of obligations of such Affiliate); provided that the Borrower and
its Subsidiaries (i) may enter into any arrangement or other transaction with
any such Affiliate providing for the leasing of property, the rendering or
receipt of services or the purchase or sale of inventory and other assets in
the ordinary course of business if the monetary or business consideration
arising therefrom would be substantially as advantageous to the Borrower and
its Subsidiaries as the monetary or business consideration which it would
obtain in a comparable arm's length transaction with a Person not such an
Affiliate, and (ii) may maintain the existing arrangements with its Affiliates
that are listed on the attached Schedule 6.06.
Section 6.07. Compliance with ERISA. The Borrower will not, and
will not permit any of the Controlled Group to, (a) terminate any Plan so as to
result in any material (in the opinion of the Banks) liability of the Borrower
or any of its Subsidiaries to the PBGC or (b) permit to exist any occurrence of
any Reportable Event (as defined in Title IV of ERISA), or any other event or
condition, which presents a material (in the opinion of the Banks) risk of such
a termination by the PBGC of any Plan under Section 4042 of ERISA.
Section 6.08. Maintenance of Ownership of Subsidiaries. The
Borrower will not, and will not permit any of its Subsidiaries to, sell or
otherwise dispose of any shares of capital stock of any of its Subsidiaries,
except as permitted under Section 6.04.
Section 6.09. Current Ratio. The Borrower will not permit the
ratio of its consolidated current assets to its consolidated current
liabilities (excluding any assets or liabilities relating to a Terminated Plan)
to be less than 2.0 to 1.0 as of the end of any fiscal quarter.
Section 6.10. Fixed Charge Coverage Ratio. The Borrower will not
permit the ratio of (a) its consolidated EBITDA plus its consolidated Lease
Expense minus its consolidated capital expenditures (excluding the asset
purchase and sale-leaseback transaction described on Schedule 6.10) to (b) its
consolidated Interest Expense minus its consolidated Interest Income plus its
consolidated Lease Expense plus the aggregate Dollar amount of any
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common stock of the Borrower which is repurchased by the Borrower as of the end
of any fiscal quarter for the four fiscal quarters then ended to be less than
(i) 1.85 to 1.0 as of June 30, 1996, (ii) 1.5 to 1.0 as of September 30, 1996,
(iii) 1.3 to 1.0 as of December 31, 1996, and (iv) 1.15 to 1.0 as of March 31,
1997.
Section 6.11. Minimum Net Worth. The Borrower will not permit its
consolidated net worth (as reduced by common stock repurchased by the Borrower
and excluding any gains or noncash losses resulting from a Terminated Plan so
long as such noncash losses do not exceed $3,000,000 on a pretax basis) to be
less than (i) $90,400,000 as of June 30, 1996, (ii) $88,900,000 as of September
30, 1996, (iii) $93,900,000 as of December 31, 1996, and (iv) $93,800,000 as of
March 31, 1997.
Section 6.12. Environmental Claims. The Borrower will not permit
the aggregate amount of payments made by the Borrower and its Subsidiaries in
respect of environmental claims to exceed $2,000,000 after the Effective Date.
Section 6.13. Investments, Loans and Advances. The Borrower will
not, and will not permit any of its Subsidiaries to, make or permit to exist
any loans, advances or capital contributions to, or make any investment in, or
purchase or commit to purchase any stock or other securities or evidences of
indebtedness of or interests in any Person, except the following:
(a) the purchase of Liquid Investments;
(b) trade and customer accounts receivable which are for goods
furnished or services rendered in the ordinary course of business and are
payable in accordance with customary trade terms;
(c) ordinary course of business contributions, loans or advances
to, or investments in, the Borrower or a Guarantor (except to the extent
limited by Section 6.02(c)); or
(d) investments not otherwise permitted above provided that the
aggregate amount of funds so invested do not exceed $2,000,000 from and after
the date of this Agreement.
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ARTICLE VII
REMEDIES
Section 7.01. Events of Default. The occurrence of any of the
following events shall constitute an "Event of Default" under any Credit
Document:
(a) Payment. The Borrower or any Account Party shall fail to pay
any principal of any Note or any Reimbursement Obligation when the same becomes
due and payable, or any interest on any Note or any fee or other amount payable
hereunder or under any other Credit Document within three Business Days after
the same becomes due and payable;
(b) Representation and Warranties. Any representation or warranty
made or deemed to be made (i) by the Borrower in this Agreement or in any other
Credit Document, (ii) by the Borrower (or any of its officers) in connection
with this Agreement or any other Credit Document, or (iii) by any Significant
Subsidiary in any Credit Document shall prove to have been incorrect in any
material respect when made or deemed to be made;
(c) Covenant Breaches. (i) The Borrower shall (A) fail to perform
or observe any covenant contained in Section 5.03, 5.04, 5.06(k), (e), (f),
(g), (h) or (i), or in Article VI of this Agreement or (B) fail to perform or
observe any other term or covenant set forth in this Agreement or in any other
Credit Document which is not covered by clause (i)(A) above or any other
provision of this Section 7.01 if such failure shall remain unremedied for 30
days after the earlier of written notice of such failure shall have been given
to such Person by any Bank or such Person's Knowledge of such failure or (ii)
any Guarantor shall fail to perform or observe any covenant contained in its
Guaranty and such failure shall continue (A) for three Business Days, in the
case of any covenant to make payment of any monetary obligation, and (B) 30
days after the earlier of written notice of such failure shall have been given
to such Guarantor by any Bank or such Guarantor's Knowledge of such failure, in
the case of any non-monetary covenant;
(d) Cross-Defaults. (i) The Borrower or any its Subsidiaries
shall fail to pay any principal of or premium or interest on its Debt which is
outstanding in a principal amount of at least $250,000 individually or when
aggregated with all such Debt of the Borrower or its Subsidiaries so in default
(but excluding Debt evidenced by the Notes) when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to such
Debt; (ii) any other event shall occur or condition shall exist under any
agreement or instrument relating to Debt which is outstanding in a principal
amount of at least $250,000 individually or when aggregated with all such Debt
of the Borrower and its Subsidiaries so in default, and shall continue after
the applicable grace period, if any, specified in such agreement or instrument,
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if the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or (iii) any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;
(e) Insolvency. The Borrower or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against the Borrower or any of its Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against the
Borrower or any such Subsidiary, either such proceeding shall remain
undismissed for a period of 90 days or any of the actions sought in such
proceeding shall occur; or the Borrower or any of its Subsidiaries shall take
any corporate action to authorize any of the actions set forth above in this
paragraph (e);
(f) Judgments. One or more final judgments or orders is rendered
against the Borrower or any of its Subsidiaries (which judgments or orders have
not been acknowledged as payable by a reputable issuer under any valid and
enforceable insurance policy) for the payment of money individually or in the
aggregate in excess of $250,000 and either (i) enforcement proceedings shall
have been commenced by any creditor upon any such judgments or orders or (ii)
there shall be any period of 30 consecutive days during which a stay of
enforcement of such judgments or orders shall not be in effect;
(g) Termination Events. Any Termination Event with respect to a
Plan shall have occurred, and, 30 days after notice thereof shall have been
given to the Borrower by the Banks, (i) such Termination Event shall have
created and caused to be continuing a material risk of Plan termination or
liability for withdrawal from the Plan as a substantive employer and (ii) the
then present value of such Plan's vested benefits exceeds the then current
value of assets accumulated in such Plan by more than the amount of $250,000
(or in the case of a Termination Event involving the withdrawal of a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA), the
withdrawing employer's proportionate share of such excess shall exceed such
amount);
(h) Plan Withdrawals. The Borrower or any member of the
Controlled Group as employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer Plan and the plan
sponsor of such Multiemployer Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability in an annual
amount exceeding $250,000; or
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(i) Guaranty. Any provision of the Guaranty requiring the payment
of the Guaranteed Obligations (as defined in the Guaranty) shall for any reason
cease to be valid and binding on the applicable Guarantor (or on any successor
to such Guarantor with respect to any merger permitted by Section 6.04) or the
Borrower or the applicable Guarantor shall so state in writing.
Section 7.02. Optional Acceleration of Maturity. If any Event of
Default (other than an Event of Default pursuant to paragraph (e) of Section
7.01) shall have occurred and be continuing, then, and in any such event,
(a) the Banks may, by notice to the Borrower, (i) declare the
obligations of the Banks to make Advances and to issue, increase, or extend
Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) declare the Notes, all interest thereon, the Letter of
Credit Obligations, and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest, all such
Letter of Credit Obligations and all such amounts shall become and be forthwith
due and payable in full, without presentment, demand, protest or further notice
of any kind (including, without limitation, any notice of intent to accelerate
or notice of acceleration), all of which are hereby expressly waived by the
Borrower and
(b) the Borrower shall, on demand of the Banks, deposit with each
Bank, as cash collateral, an amount of cash equal to the Letter of Credit
Exposure of such Bank as security for the Obligations to the extent the Letter
of Credit Obligations are not otherwise paid at such time.
Section 7.03. Automatic Acceleration of Maturity. If any Event of
Default pursuant to paragraph (e) of Section 7.01 shall occur,
(a) the obligation of each Bank to make Advances and to issue,
increase, or extend Letters of Credit shall immediately and automatically be
terminated and the Notes, all interest on the Notes, all Letter of Credit
Obligations, and all other amounts payable under this Agreement shall
immediately and automatically become and be due and payable in full, without
presentment, demand, protest or any notice of any kind (including, without
limitation, any notice of intent to accelerate or notice of acceleration), all
of which are hereby expressly waived by the Borrower and
(b) the Borrower shall deposit with each Bank, as cash collateral,
an amount of cash equal to the outstanding Letter of Credit Exposure of such
Bank as security for the Obligations to the extent the Letter of Credit
Obligations are not otherwise paid at such time.
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Section 7.04. Cash Collateral Accounts.
(a) Pledge. The Borrower hereby pledges, and grants to each Bank
for the ratable benefit of the Banks a security interest in, all funds held in
any cash collateral account with such Bank or any Affiliate of such Bank from
time-to-time and all proceeds thereof, as security for the payment of the
Letter of Credit Obligations. Nothing in this Section 7.04, however, shall
obligate the Banks to require any funds to be deposited in any cash collateral
account or limit the right of any Bank, which it may exercise at any time and
from time-to-time, to release to the Borrower any funds held in any such cash
collateral account pursuant to the other provisions of this Section 7.04.
(b) Application against Letter of Credit Obligations; Release of
Funds. Each Bank, subject to its sharing obligations set forth in Section 2.12
hereof, may, at any time or from time-to-time apply funds then held in any cash
collateral account of the Borrower to the payment of any Letter of Credit
Obligations in such order as such Bank may elect, as shall have become or shall
become due and payable by an Account Party to the Issuing Bank under this
Agreement or any LC Application in connection with the Letters of Credit. So
long as no Event of Default referred to in paragraph (a) or (e) of Section 7.01
shall have occurred and be continuing, each will release to the Borrower at the
Borrower's written request funds held in any such cash collateral account in an
amount up to but not exceeding the excess, if any (immediately prior to the
release of any such funds), of (i) the total amount of funds held in such cash
collateral account over (ii) the Letter of Credit Exposure of such Bank.
(c) Duty of Care. Each Bank shall exercise reasonable care in the
custody and preservation of any funds held in any such cash collateral account
of the Borrower and shall be deemed to have exercised such care if such funds
are accorded treatment substantially equivalent to that which such Bank accords
its own property, it being understood that such Bank shall not have any
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any such funds.
Section 7.05. Non-exclusivity of Remedies. No remedy conferred
upon the Banks is intended to be exclusive of any other remedy, and each remedy
shall be cumulative of all other remedies existing by contract, at law, in
equity, by statute or otherwise.
Section 7.06. Right of Set-off. Upon (a) the occurrence and during
the continuance of any Event of Default and (b) the declaration of all amounts
payable under the Notes and any other amount payable hereunder due and payable
pursuant to the provisions of Section 7.02 or the automatic acceleration of the
Notes and all amounts payable under this Agreement pursuant to Section 7.03,
each Bank is hereby authorized at any time and from time-to-time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebted-
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ness at any time owing by such Bank to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement, the Note held by such Bank, and the
other Credit Documents, irrespective of whether or not such Bank shall have
made any demand under this Agreement, such Note, or such other Credit
Documents, and although such obligations may be unmatured. Each Bank agrees to
promptly notify the Borrower and each other Bank after any such set-off and
application made by such Bank, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Bank under this Section are in addition to any other rights and remedies
(including, without limitation, other rights of set-off) which such Bank may
have.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, the Notes, or any other Credit Document, nor
consent to any departure by the Borrower or any Guarantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Banks and the Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
Section 8.02. Notices, Etc. All notices and other communications
shall be in writing (including telecopy or telex) and mailed by certified or
registered mail, telecopied, telexed, hand delivered or delivered by a
nationally recognized overnight courier, if to the Borrower, at its address at
3200 San Jacinto Tower, 2121 San Jacinto Street, Dallas, Texas 75201,
Attention: Ms. Linda K. Hill, Treasurer, (telecopy: (214) 754-7821;
telephone: (214) 754-7850); if to any Bank at its Domestic Lending Office
specified on Schedule 1.01; or, as to each party, at such other address or
teletransmission number as shall be designated by such party in a written
notice to the other parties. All such notices and communications shall, when
mailed, telecopied, telexed or hand delivered or delivered by overnight
courier, be effective five Business Days after being sent by registered or
certified mail postage paid, when telecopy transmission is completed and
receipt is confirmed by telephone, when confirmed by telex answer-back or when
delivered, respectively, except that notices and communications to the Banks
pursuant to Article II shall not be effective until received by each of the
Banks.
Section 8.03. No Waiver; Remedies. No failure on the part of any
Bank to exercise, and no delay in exercising, any right hereunder or under any
Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or
the exercise of any other right. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law.
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Section 8.04. Costs and Expenses. The Borrower agrees to pay on
demand all reasonable out-of-pocket costs and expenses of the Banks in
connection with the preparation, execution, delivery, administration,
modification and amendment of this Agreement, the Notes and the other Credit
Documents including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for each Bank and with respect to advising such Bank, as to
its rights and responsibilities under this Agreement, and (except as provided
in Section 5.05) all reasonable out-of-pocket costs and expenses, if any, of
each Bank (including, without limitation, reasonable counsel fees and expenses
of each Bank) in connection with the good faith enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Notes and
the other Credit Documents.
Section 8.05. Binding Effect. This Agreement shall become
effective when (a) it shall have been executed by the Borrower and each Bank,
and thereafter shall be binding upon and inure to the benefit of the Borrower
and each Bank and their respective successors and assigns.
Section 8.06. Bank Assignments
(a) Assignments. Except as otherwise permitted hereby, any Bank may
assign to one or more banks a portion of its initial Commitments and related
rights and obligations under this Agreement (including, without limitation, the
Advances owing to it, the Note held by it, and the participation interests in
the Letter of Credit Obligations held by it); provided, however, that (i) each
such assignment shall be of an equal percentage of all of such Bank's rights
and obligations under this Agreement (including both its Advance Commitment and
its LC Commitment) and shall not cause the total amount of all such
assignments by such Bank and all participating interests sold by such Bank in
accordance with paragraph (d) below to exceed 49% of such Bank's initial
Commitments and related rights and obligations under this Agreement, (ii) the
amount of the Commitments and Advances of such Bank being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than
$1,000,000 and shall be an integral multiple of $1,000,000, (iii) each such
assignment shall be to an Eligible Assignee, and (iv) the parties to each such
Assignment and Acceptance shall execute and deliver to a copy thereof to the
Borrower and each other Bank, together with the Note subject to such
assignment. From and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least three Business Days after
the Borrower has received a copy thereof, (A) the assignee thereunder shall be
a Bank 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.
Notwithstanding anything herein to the contrary, any Bank may assign, as
collateral or
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otherwise, any of its rights under the Credit Documents to any Federal Reserve
Bank with notice to, but without the consent of, the Borrower and any Issuing
Bank.
(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 the
Borrower or the Guarantors or the performance or observance by the Borrower or
the Guarantors of any of their 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
financial statements referred to in Section 4.05 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 will,
independently and without reliance upon 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; and (v) such assignee agrees that it will 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) Procedures. Upon its receipt of an Assignment and Acceptance
executed by a Bank and an Eligible Assignee, together with the Note subject to
such assignment, the Borrower shall, at its own expense, execute and deliver to
the new Bank in exchange for the surrendered Note a new Note payable to the
order of such new Bank in an amount equal to the Commitments assumed and
Advances purchased by it pursuant to such Assignment and Acceptance and a new
Note payable to the order of such assigning Bank in an amount equal to the
Commitments and Advances, respectively, retained by it hereunder. Such new
Notes shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of the attached Exhibits A.
(d) Participations. Any Bank may, in the ordinary course of its
commercial lending business and in accordance with applicable law, at any time
sell to one or more banks, financial institutions, or other entities
("Participants") participating interests in its initial Commitments and related
rights and obligations under the Agreement (including, without limitation, the
Advances owing to such Bank, the Note held by it, and its Pro Rata Share of the
Letter of Credit Exposure); provided, however, that such Bank's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain
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the holder of any such Advances and Commitments for all purposes under this
Agreement and the other Credit Documents (including, without limitation, for
purpose of calculating any amounts payable under Sections 2.08, 2.09, 2.11 and
8.07), and the Borrower 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 the other Credit Documents. The Borrower agrees that
if amounts outstanding under this Agreement or the other Credit Documents are
due or unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement and the other Credit Documents to the same extent as
if the amount of its participating interest were owing directly to it as a Bank
hereunder, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Banks the proceeds
thereof as provided in subsection 2.12 as fully as if it were a Bank hereunder.
(e) Confidentiality. Each Bank may furnish any information
concerning the Borrower and its Subsidiaries in the possession of such Bank
from time-to-time to assignees and participants (including prospective
assignees and participants); provided that, prior to any such disclosure, the
assignee or participant or proposed assignee or participant shall agree in
writing to preserve the confidentiality of any confidential information
relating to the Borrower and its Subsidiaries received by it from such Bank.
Such Bank shall promptly deliver a signed copy of any such confidentiality
agreement to the Borrower.
(f) Compliance with Securities Laws. All transfers of any
interests in the Notes shall be in compliance with all applicable Federal and
state securities laws.
SECTION 8.07. INDEMNIFICATION. (A) THE BORROWER SHALL INDEMNIFY
EACH BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS (EACH AN "INDEMNIFIED PARTY") FROM, AND DISCHARGE,
RELEASE, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES,
LIABILITIES, CLAIMS OR DAMAGES TO WHICH ANY OF THEM MAY BECOME SUBJECT, INSOFAR
AS SUCH LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISE OUT OF OR RESULT FROM (I)
ANY ACTUAL OR PROPOSED USE BY THE BORROWER OR ANY AFFILIATE OF THE BORROWER OF
THE PROCEEDS OF ANY ADVANCE, (II) ANY BREACH BY THE BORROWER OF ANY PROVISION
OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, (III) ANY INVESTIGATION,
LITIGATION OR OTHER PROCEEDING (INCLUDING ANY THREATENED INVESTIGATION OR
PROCEEDING) RELATING TO THE FOREGOING, OR (IV) ANY ENVIRONMENTAL CLAIM OR
REQUIREMENT OF ENVIRONMENTAL LAWS CONCERNING OR RELATING TO THE PRESENT OR
PREVIOUSLY-OWNED OR OPERATED PROPERTIES, OR THE OPERATIONS OR BUSINESS, OF THE
BORROWER OR ANY OF ITS SUBSIDIARIES, AND THE BORROWER SHALL REIMBURSE THE
INDEMNIFIED PARTY, UPON DEMAND FOR ANY REASONABLE OUT-OF-POCKET EXPENSES
(INCLUDING LEGAL FEES) INCURRED IN CONNECTION WITH ANY SUCH INVESTIGATION,
LITIGATION OR OTHER PROCEEDING; AND EXPRESSLY INCLUDING ANY SUCH LOSSES,
LIABILITIES, CLAIMS, DAMAGES, OR EXPENSE INCURRED BY REASON OF THE
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<PAGE> 58
INDEMNIFIED PARTY'S OWN NEGLIGENCE, BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES,
CLAIMS, DAMAGES OR EXPENSES INCURRED BY REASON OF THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY.
(B) IN THE EVENT THAT ANY CLAIM OR DEMAND FOR WHICH THE BORROWER
WOULD BE LIABLE HEREUNDER IS ASSERTED, OR SOUGHT TO BE COLLECTED, BY A THIRD
PARTY, THE INDEMNIFIED PARTY SHALL WITH REASONABLE PROMPTNESS NOTIFY IN WRITING
THE BORROWER OF SUCH CLAIM OR DEMAND, SPECIFYING THE NATURE OF AND SPECIFIC
BASIS FOR SUCH CLAIM OR DEMAND AND THE AMOUNT OR THE ESTIMATED AMOUNT THEREOF
TO THE EXTENT THEN FEASIBLE (WHICH ESTIMATE SHALL NOT BE CONCLUSIVE OF THE
FINAL AMOUNT OF SUCH CLAIM AND DEMAND); PROVIDED, HOWEVER, THAT ANY FAILURE TO
GIVE SUCH NOTICE WILL NOT WAIVE ANY RIGHTS OF THE INDEMNIFIED PARTY EXCEPT TO
THE EXTENT THE RIGHTS OF THE BORROWER ARE ACTUALLY PREJUDICED. IF REQUESTED BY
THE BORROWER, AND IF THE INDEMNIFIED PARTY DETERMINES SUCH REQUEST IS NOT
ADVERSE TO THE INTEREST OF THE INDEMNIFIED PARTY, THE INDEMNIFIED PARTY AGREES
TO COOPERATE WITH THE BORROWER IN CONTESTING ANY CLAIM OR DEMAND WHICH THE
BORROWER DEFENDS, OR, IF APPROPRIATE AND RELATED TO THE CLAIM IN QUESTION
AGAINST THE INDEMNIFIED PARTY, IN MAKING ANY COUNTERCLAIM AGAINST THE PERSON
ASSERTING SUCH CLAIM, OR ANY CROSS-COMPLAINT AGAINST SUCH PERSON. IN ORDER TO
MAINTAIN THE INDEMNIFIED PARTY'S RIGHT TO INDEMNIFICATION UNDER THIS SECTION
8.07 WITH RESPECT TO SUCH CLAIM OR DEMAND, NO CLAIM OR DEMAND MAY BE SETTLED
WITHOUT THE CONSENT OF THE BORROWER, WHICH CONSENT WILL NOT BE UNREASONABLY
WITHHELD; PROVIDED, HOWEVER, THAT NO INDEMNIFIED PARTY SHALL HAVE ANY
OBLIGATION TO REQUEST THE BORROWER'S CONSENT PRIOR TO SETTLING ANY CLAIM OR
DEMAND AGAINST THE INDEMNIFIED PARTY.
Section 8.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section 8.09. Survival of Representations, Etc. All
representations and warranties contained in this Agreement or made in writing
by or on behalf of the Borrower in connection herewith shall survive the
execution and delivery of this Agreement and the Credit Documents, the making
of the Advances and any investigation made by or on behalf of the Banks, none
of which investigations shall diminish any Bank's right to rely on such
representations and warranties. All obligations of the Borrower provided for
in Sections 2.08, 2.09, 2.11(c), and 8.07 shall survive any termination of this
Agreement and repayment in full of the Obligations.
Section 8.10. Severability. In case one or more provisions of this
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions contained herein or therein
shall not be affected or impaired thereby.
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<PAGE> 59
Section 8.11. Business Loans. The Borrower warrants and represents
that the Advances evidenced by the Notes are and shall be for business,
commercial, investment or other similar purposes and not primarily for
personal, family, household or agricultural use, as such terms are used in
Chapter One ("Chapter One") of the Texas Credit Code. At all such times, if
any, as Chapter One shall establish a Maximum Rate, the Maximum Rate shall be
the "indicated rate ceiling" (as such term is defined in Chapter One) from time
to time in effect.
Section 8.12. Usury Not Intended. It is the intent of the Borrower
and each Bank in the execution and performance of this Agreement and the other
Credit Documents to contract in strict compliance with applicable usury laws,
including conflicts of law concepts, governing the Advances of each Bank
including such applicable laws of the State of Texas and the United States of
America from time-to-time in effect. In furtherance thereof, the Banks and the
Borrower stipulate and agree that none of the terms and provisions contained in
this Agreement or the other Credit Documents shall ever be construed to create
a contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Maximum Rate and that for purposes
hereof "interest" shall include the aggregate of all charges which constitute
interest under such laws that are contracted for, charged or received under
this Agreement; and in the event that, notwithstanding the foregoing, under any
circumstances the aggregate amounts taken, reserved, charged, received or paid
on the Advances, include amounts which by applicable law are deemed interest
which would exceed the Maximum Rate, then such excess shall be deemed to be a
mistake and each Bank receiving same shall credit the same on the principal of
its Notes (or if such Notes shall have been paid in full, refund said excess to
the Borrower). In the event that the maturity of the Notes are accelerated by
reason of any election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest may
never include more than the Maximum Rate and excess interest, if any, provided
for in this Agreement or otherwise shall be cancelled automatically as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited on the applicable Notes (or, if the applicable Notes shall have been
paid in full, refunded to the Borrower of such interest). In determining
whether or not the interest paid or payable under any specific contingencies
exceeds the Maximum Rate, the Borrower and the Banks shall to the maximum
extent permitted under applicable law amortize, prorate, allocate and spread in
equal parts during the period of the full stated term of the Notes all amounts
considered to be interest under applicable law at any time contracted for,
charged, received or reserved in connection with the Obligations. The
provisions of this Section shall control over all other provisions of this
Agreement or the other Credit Documents which may be in apparent conflict
herewith.
Section 8.13. Bank Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon any other Bank and based on the
financial statements referred to in Section 4.05 and such other documents and
information as it has
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<PAGE> 60
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon 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.
Section 8.14. Governing Law. This Agreement, the Notes and the
other Credit Documents shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
SECTION 8.15. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANKS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER CREDIT DOCUMENT
OR ANY COUNTERCLAIM THEREIN.
SECTION 8.16. ENTIRE AGREEMENT. PURSUANT TO SECTION 26.02 OF THE
TEXAS BUSINESS AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED
IN THE LOAN AGREEMENT EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE
LOAN AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR THAT
PARTY'S AUTHORIZED REPRESENTATIVE.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO
THE PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN
AGREEMENT, AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY
AND MERGED INTO THE LOAN AGREEMENT. THIS WRITTEN AGREEMENT AND THE CREDIT
DOCUMENTS, AS DEFINED IN THIS AGREEMENT, 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 BETWEEN THE PARTIES.
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<PAGE> 61
EXECUTED as of the 15th day of May, 1996.
BORROWER:
--------
TYLER CORPORATION
By:
-----------------------------------
Linda K. Hill
Treasurer
BANKS:
-----
NATIONSBANK OF TEXAS, N.A.
By:
-----------------------------------
Steven Deily
Senior Vice President
SOCIETE GENERALE, SOUTHWEST
AGENCY
By:
-----------------------------------
Richard M. Lewis
Vice President
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<PAGE> 1
EXHIBIT 12
TYLER CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS(1)
(in thousands)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
1996 1996
------------ -----------
<S> <C> <C>
Loss as adjusted:
Loss from operations before income
tax benefit $(2,478) $(2,665)
Interest expense 77 103
Rental expense interest factor 255 510
------- -------
Loss as adjusted $(2,146) $(2,052)
======= =======
Fixed charges:
Interest expense $ 77 $ 103
Rental expense interest factor 255 510
------- -------
$ 332 $ 613
======= =======
Ratio of earnings to fixed
charges --(2) --(2)
</TABLE>
(1) For purposes of computing the ratio of earnings to fixed charges and
preferred stock dividends, the loss, as adjusted, consists of the loss
from operations before income tax benefit, plus fixed charges. Fixed
charges consist of interest on all indebtedness and the portion of
rental expense that the Company believes to be representative of
interest. For the periods indicated, no preferred stock of the
Company was outstanding.
(2) The loss from operations before income tax benefit was inadequate to
cover fixed charges for the three and six months ended June 30, 1996,
by $2,478,000 and $2,665,000, respectively.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996
<CASH> 12,647,000 15,505,000
<SECURITIES> 0 0
<RECEIVABLES> 9,356,000 2,442,000
<ALLOWANCES> 441,000 434,000
<INVENTORY> 22,044,000 21,800,000
<CURRENT-ASSETS> 54,660,000 52,087,000
<PP&E> 16,260,000 17,286,000
<DEPRECIATION> (6,714,000) (7,158,000)
<TOTAL-ASSETS> 121,291,000 118,229,000
<CURRENT-LIABILITIES> 16,432,000 14,514,000
<BONDS> 0 0
<COMMON> 213,000 213,000
0 0
0 0
<OTHER-SE> 93,063,000 91,923,000
<TOTAL-LIABILITY-AND-EQUITY> 121,291,000 118,229,000
<SALES> 30,764,000 57,358,000
<TOTAL-REVENUES> 0 0
<CGS> 14,204,000 28,435,000
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 60,000 80,000
<INTEREST-EXPENSE> 26,000 103,000
<INCOME-PRETAX> (187,000) (2,665,000)
<INCOME-TAX> (101,000) (1,439,000)
<INCOME-CONTINUING> (86,000) (1,226,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (86,000) (1,226,000)
<EPS-PRIMARY> .00 (.06)
<EPS-DILUTED> .00 (.06)
</TABLE>
