1
EXHIBIT 10.18
================================================================================
CREDIT AGREEMENT
BY AND BETWEEN
KANEB SERVICES, INC.
AND
KANEB SERVICES LLC
DATED AS OF ___________, 2001
================================================================================
2
TABLE OF CONTENTS
Page
-----
ARTICLE I - CREDIT FACILITIES.....................................................................................1
1.01 Extensions of Credit...................................................................1
1.02 Manner of Borrowing....................................................................1
1.03 Conversions and Continuations..........................................................2
1.04 Use of Proceeds of Advances............................................................3
1.05 Method of Payment......................................................................3
1.06 Prepayment; Compensation...............................................................3
1.07 Computation of Interest................................................................4
1.08 The Facilities.........................................................................4
1.09 Fees...................................................................................4
1.10 Reduction or Termination of Revolving Credit Commitment................................5
1.11 Letters of Credit......................................................................5
1.14 Interest Rate Evidence.................................................................6
ARTICLE II - REPRESENTATIONS AND WARRANTIES......................................................................7
2.01 Legal Existence........................................................................7
2.02 Corporate Power and Authority to Execute Documents.....................................7
2.03 Valid, Binding, Enforceable Obligations................................................7
2.04 No Violation of Charter, By-Laws or Agreements.........................................7
2.05 No Violation of Laws, Rules or Orders..................................................7
2.07 Board of Directors Authorization.......................................................8
ARTICLE III - DEFAULTS AND REMEDIES...............................................................................8
3.01 Events of Default......................................................................8
ARTICLE IV - TERMINATION OF LOANS................................................................................10
ARTICLE V - CONDITIONS PRECEDENT.................................................................................10
5.01 Conditions Precedent to Initial Loan..................................................10
5.02 Conditions Precedent to Each Loan.....................................................11
ARTICLE VI - COVENANTS...........................................................................................11
6.01 Insurance.............................................................................11
6.02 Lender Change of Control..............................................................11
ARTICLE VII - MISCELLANEOUS......................................................................................11
7.01 No Waivers Except by Writing; Governing Law...........................................11
7.02 Usury Laws............................................................................12
7.03 Notice................................................................................13
7.04 Waivers of Certain Rights.............................................................14
7.05 No Intended Third-Party Beneficiaries.................................................14
7.06 Severability of Provisions............................................................14
3
7.07 Survival of Representations and Warranties; Unsatisfied Conditions....................14
7.08 Assignments...........................................................................14
7.09 Gender and Usage......................................................................14
7.10 Multiple Counterparts.................................................................15
7.11 Debtor-Creditor Relationship..........................................................15
7.12 Agreement Controlling.................................................................15
7.13 Integration...........................................................................15
7.14 WAIVER OF JURY TRIAL..................................................................15
7.15 Headings..............................................................................15
DEFINITIONS.....................................................................................................A-1
Exhibit A -- Note
4
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated and effective as of __________, 2001
(together with any and all amendments and supplements hereto and/or restatements
and modifications hereof, collectively referred to hereinafter as the
"Agreement"), by and between KANEB SERVICES LLC, a Delaware limited liability
company ("Lender"), and KANEB SERVICES, INC., a Delaware corporation
("Borrower"). As used in this Agreement, terms shall have the respective
meanings set forth in Annex A hereto. Other terms defined herein have the
meanings so given them.
WITNESSETH:
WHEREAS, Borrower has requested Lender to make certain loans, from time
to time, to Borrower, and Lender has agreed to make such loans;
NOW THEREFORE, to induce Lender to make available the credit facility
herein described and referenced, and for and in consideration of the premises,
covenants and agreements herein contained, in reliance on the representations
and warranties herein made, and for other good and valuable considerations and
reasonably equivalent value, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, Lender and Borrower agree as follows:
ARTICLE I - CREDIT FACILITIES
1.01 Extensions of Credit. Subject to the terms and conditions of this
Agreement, Lender hereby agrees to lend to Borrower, and Borrower has the right
to borrow from Lender, from time to time during the period from the date hereof
to and including the Maturity Date, amounts not to exceed at any one time
outstanding the difference of the Total Credit Commitment and the sum of the
Total Letter of Credit Liabilities.
1.02 Manner of Borrowing.
(a) Borrower shall give to Lender, on or before 12:00 noon Dallas,
Texas time, notice (whether by telephone, facsimile, in person, by mail or
e-mail) specifying the amount of such Advance, the Pricing Selection and, with
respect to any Eurodollar Advance, the desired Interest Period. Such notice
shall be made at least three Business Days prior to the requested date for a
Eurodollar Advance and at least one Business Day prior to the requested date for
a Base Rate Advance. Each Advance shall be in the aggregate principal amount of
$100,000 or an integer multiple thereof.
(b) Lender shall, before 12:00 noon Dallas, Texas time on the requested
Borrowing Date, make available to Borrower, in same day funds the amount of the
Loan.
(c) If no Interest Period with respect to any Eurodollar Advance is
specified by Borrower when it notifies Lender, then Borrower shall be deemed to
have requested a one-month Interest Period available under the terms hereof with
respect to such Advance.
5
(d) The Loans shall be evidenced by the Note. Lender shall record on
its books, and prior to any transfer of the Note shall endorse on the schedule
forming a part thereof appropriate notations to evidence the date, amount and
maturity of each Loan and the date and amount of each payment of principal made
by Borrower with respect thereto; provided that the failure of Lender to make
any such recordation or endorsement shall not affect the obligations of Borrower
hereunder or under any other Loan Document. Lender is hereby irrevocably
authorized by Borrower so to endorse the Note and to attach to and make a part
of the Note a continuation of any such schedule as and when required.
(e) Each Advance shall bear interest on the unpaid balance of the
principal amount thereof from the date such Advance is made until paid in full
at a varying per annum rate of interest equal to, from day to day, the lessor of
(i) the Maximum Rate and (ii) the Applicable Rate.
(f) Accrued and unpaid interest on all Advances shall be due and
payable as follows: (i) in the case of each Base Rate Advance, or Eurodollar
Advance, on each Interest Payment Date, and (ii) in the case of any Advance,
when such Advance shall be due (whether at maturity, by reason of prepayment,
scheduled due date, acceleration or otherwise), or converted into another Type
but only to the extent accrued on the amount then due or converted. All unpaid
principal and accrued unpaid interest shall be due and payable on the Maturity
Date.
(g) Without duplication of the provisions of Section 1.03 hereof, all
past due principal, and, to the maximum extent permitted by Applicable Law, all
past due interest on Advances under this Agreement, the Note and other amounts
herein and under each other Loan Document due, shall bear interest on the
amounts thereof from time to time remaining unpaid (both before and after
judgment) at the Default Rate.
(h) The Note, in addition to the applicable terms and provisions hereof
and referenced herein, shall otherwise be subject to, and governed by the terms
and provisions therein set forth and referenced and such terms and provisions
incorporated herein for all purposes.
1.03 Conversions and Continuations. Borrower shall have the right from
time to time to convert all or a part of one Loan or Type into another Loan or
Type or to continue all or part of any Loan by giving Lender notice (whether by
telephone, facsimile, in person, by mail or e-mail) at least three (3) and not
more than ten (10) Business Days before conversion into or continuation of an
Advance, specifying: (i) the conversion or continuation date, (ii) the amount of
the Loan or Advance to be converted or continued, (iii) in the case of
conversions, the Loan or Type to be converted into, and (iv) in the case of a
continuation of or conversion into a Eurodollar Advance, the duration of the
Interest Period applicable thereto; provided that neither Base Rate Advances nor
Eurodollar Advances may be converted to, or, on the last day(s) of the
then-current Interest Period(s) for outstanding Eurodollar Advances, continued
as, as applicable, Eurodollar Advances, after the occurrence of an Event of
Default or Default or when any of the conditions referred to in Section 5.02(a)
or (b) are not then met. Eurodollar Advances shall only be converted or
continued on the last day of the Interest Period for such Eurodollar Advances.
All notices given under this Section shall be given not later than 12:00 noon,
Dallas, Texas time, on the day that is not less than the number of Business Days
specified above for such notice. If Borrower shall fail to give to Lender the
notice
2
6
as specified above for continuation or conversion of a Eurodollar Advance prior
to the end of the Interest Period with respect thereto, then such Eurodollar
Advance, on the last day of the Interest Period for such Eurodollar Advance
shall automatically be converted into a Base Rate Advance. Upon the occurrence
of an Event of Default, Lender may convert all Eurodollar Advances to Base Rate
Advances, and Borrower agrees to pay any and all costs and expenses associated
with or related to such conversion(s) of its Eurodollar Advances. The provisions
of the immediately preceding sentence notwithstanding, however, (i) the
provisions of such sentence shall not limit in any respect the obligation of
Borrower to pay interest at the Default Rate on all past due principal and, to
the maximum extent permitted by Applicable Law, all past due interest, whether
by acceleration or otherwise, as provided herein, and (ii) after the occurrence
and during the continuance of an Event of Default, all Base Rate Advances shall
bear interest at a rate per annum equal to the Default Rate rather than the Base
Rate.
1.04 Use of Proceeds of Advances. The proceeds of each Advance may be
used by Borrower for any corporate or business purposes.
1.05 Method of Payment. All payments of principal, interest and other
amounts to be paid by Borrower hereunder, under the Note and under any other
Loan Document shall be made, in Dollars to Lender by wire transfer of
immediately available funds, no later than 3:00 P.M. Dallas, Texas time on the
date on which payment shall become due, and each such payment made after such
time on such due date shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment hereunder, under the Note or under any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day and interest shall
continue to accrue during such extension.
1.06 Prepayment; Compensation.
(a) Subject to Section 1.06(b) hereof, Borrower may, without premium or
penalty thereon, upon at least one Business Day's prior written notice to Lender
in the case of Base Rate Advances, and at least three Business Days prior
written notice to Lender in the case of any Eurodollar Advance, prepay the Note
in whole at any time or from time to time in part, such prepaid amounts to be
delivered to Lender with accrued interest to the date of prepayment on the
amount so prepaid; provided that (i) each Eurodollar Advance prepaid on a day
other than the last day of the Interest Period for such Advance, must be
accompanied by the payment described in Section 1.06(b), and (ii) each partial
prepayment shall be in the principal amount equal to the lessor of (x) $100,000
or an integer multiple thereof and (y) the aggregate amount of the outstanding
Loans at the time of prepayment.
(b) Borrower shall pay to Lender, upon the request of Lender, such
amount or amounts as shall be sufficient to compensate it for any reasonable
loss, cost, damages, liabilities or expense incurred as a result of (i) any
payment, prepayment or conversion of a Eurodollar Advance on a date other than
the last day of an Interest Period for such Advance; or (ii) any failure by
Borrower to borrow, convert, or prepay a Eurodollar Advance on the date for such
borrowing, conversion, or prepayment, specified in the relevant notice of
borrowing, prepayment, or conversion under this Agreement.
3
7
1.07 Computation of Interest. Interest on Eurodollar Advances shall be
computed on the basis of a year of 360 days and the actual number of days
elapsed (including the first day but excluding the last day) occurring in the
period for which payable, unless such calculation would result in a usurious
rate or amount of interest under Applicable Law, in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be, and
the actual number of days elapsed (including the first day but excluding the
last day) occurring in the period for which payable. Interest on Base Rate
Advances shall be computed on the basis of a year of 365 or 366 days, as the
case may be, and the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
1.08 The Facilities. Notwithstanding any term or provision contained in
any Loan Document to the contrary, it is hereby agreed that in no event shall
Chapter 346 of the Texas Finance Code, as amended, apply to any Loan Document or
related documentation or the loan transactions provided for hereunder in any
manner. All payments by Borrower on account of the Note or other amounts payable
by Borrower pursuant to the terms of this Agreement shall be made in Dollars and
in immediately available funds not later than 3:00 P.M., Dallas, Texas time, on
the day such payment shall become due, and any payments received after such time
shall be deemed received on the next following Business Day. In any case where a
payment of principal of or interest on a Loan is due on a day that is not a
Business Day, Borrower shall be entitled to delay such payment until the next
succeeding Business Day, but interest shall continue to accrue at the rate then
effective under the Note, until the payment is, in fact, made. Each payment
received by Lender on the Note presented for payment, shall be applied first to
accrued and unpaid interest and, second, to any outstanding principal amounts.
1.09 Fees.
(a) Commitment Fee. The Borrower agrees to pay to Lender a commitment
fee equal to the lessor of (i) the commitment fee or other comparable fee that
Lender pays under the Existing Credit Agreement and (ii) .5% per annum on the
average daily unused portion of the Total Credit Commitment (determined by
subtracting the aggregate amount of all outstanding Revolving Loans then
outstanding and the face amount of Letters of Credit issued and outstanding and
the aggregate amount of any Reimbursement Obligations) computed on the basis of
the actual number of days elapsed over a year of 365 or 366 days, as the case
may be. Such commitment fee with respect to the Total Credit Commitment shall
accrue from and including the date hereof to but excluding the Maturity Date
(including all extensions thereof) and shall be payable quarterly in arrears
commencing on the last Business Day of September 2001, and continuing on the
last Business Day of each December, March, June and September thereafter until
the Maturity Date (including all extensions thereof). Pursuant to Section 1.10
hereof, Borrower shall have the right to permanently reduce the Total Credit
Commitment; and any such permanent reduction or termination of the Total Credit
Commitment shall proportionately reduce or terminate the commitment fee
otherwise payable pursuant to this Section 1.09(a) as of the date on which the
Total Credit Commitment is so permanently reduced or terminated.
4
8
(b) Letter of Credit Fees and Commissions. The Borrower agrees to pay
an issuance fee for each Letter of Credit issued equal to $500.00, which shall
be due and payable on the date of the issuance of any Letter of Credit. The
Borrower agrees to pay to Lender a fee for causing the issuance of the Letters
of Credit (calculated separately for each Letter of Credit) equal to 1% per
annum of the maximum liability of Lender existing from time to time under such
Letter of Credit, payable quarterly in arrears on the last Business Day of each
March, June, September and December during the period that such Letter of Credit
is outstanding.
1.10 Reduction or Termination of Revolving Credit Commitment. Subject
to the provisions hereof, Borrower may at any time or from time to time
permanently reduce the Total Credit Commitment or permanently terminate in whole
the Total Credit Commitment by giving not less than two (2) Business Days' prior
written notice to such effect to Lender, provided that (a) any partial reduction
of the Total Credit Commitment shall be in an aggregate amount of not less than
$100,000 and (b) unless Borrower shall provide to Lender cash in an amount
sufficient to satisfy and secure the payment in full of all Letter of Credit
Liabilities in excess of the Total Credit Commitment as so reduced, in no event
shall Borrower be entitled to terminate or reduce the Total Credit Commitment
if, after giving effect thereto, the Total Credit Commitment would be less than
the sum of the aggregate amount of all outstanding Revolving Loans plus the
Total Letter of Credit Liabilities.
1.11 Letters of Credit. Subject to all the terms of this Agreement,
prior to the Maturity Date, Lender agrees to cause a Financial Institution to
issue, renew and extend Letters of Credit as requested by Borrower in accordance
with Section 1.12 hereof; provided that in no event shall Total Letter of Credit
Liabilities exceed nor shall any Letter of Credit be issued, renewed or extended
that would result in the sum of the Total Letter of Credit Liabilities plus the
aggregate amount outstanding under the Revolving Loans exceeding the Total
Credit Commitment. Each Letter of Credit may be for any corporate or business
purpose of Borrower. Borrower hereby agrees to pay to Lender any Reimbursement
Obligation with respect to any Letter of Credit within ten Business Days of
being notified in writing by Lender of the existence of such Reimbursement
Obligation. If any Reimbursement Obligation is not paid within ten Business Days
of such notice by Lender, then such Reimbursement Obligation shall be
automatically, without any action on the part of Borrower or Lender, Base Rate
Advance on the date of the expiration of such 10-Business Day period. The
Letters of Credit issued pursuant to this Agreement shall contain such customary
and reasonable terms and conditions as the Financial Institution shall require
for the issuance of any Letter of Credit.
1.12 Notice and Manner of Obtaining Letters of Credit. Borrower shall
notify (whether by telephone, facsimile, in person, by mail or e-mail) Lender of
the beneficiary, amount and date of issuance, term, renewal, extension or
reissuance of a Letter of Credit pursuant to this Agreement at least six
Business Days prior to the requested date of such issuance, renewal, extension
or reissuance. All Letters of Credit issued hereunder shall expire on or before
the Maturity Date, except that Letters of Credit may be issued that expire no
later than one year after the Maturity Date, provided that Borrower shall have
first provided (prior to such issuance) to Lender, cash in an amount sufficient
to satisfy and secure the payment in full of all Letter of Credit Liabilities
that could be due within such one-year period after the Maturity Date.
5
9
1.13 Taxes.
(a) Payments Free and Clear. Any and all payments by Borrower under
this Agreement or any of the other Loan Documents shall be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of Lender, taxes imposed on its income, and
franchise or similar taxes imposed on it, by (i) any jurisdiction (or political
subdivision thereof) of which Lender is a citizen or resident or in which Lender
has a permanent establishment (or is otherwise engaged in the active conduct of
its business through an office or a branch), (ii) the jurisdiction (or any
political subdivision thereof) in which Lender is organized, or (iii) any
jurisdiction (or political subdivision thereof) in which Lender is presently
doing business which taxes are imposed solely as a result of doing business in
such jurisdiction (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities so arising out of payments by Borrower
being hereinafter referred to as "Taxes"). If Borrower shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder to Lender
(i) the sum payable shall be increased by the amount necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 1.13) Lender shall receive an amount equal to
the sum it would have received had no such deductions been made, (ii) Borrower
shall make such deductions and (iii) Borrower shall pay the full amount deducted
to the relevant taxing authority or other Governmental Authority in accordance
with applicable law.
(b) Other Taxes. In addition, Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
(c) Receipts. Within 30 days after the date of any payment of Taxes or
Other Taxes withheld by Borrower in respect of any payment to Lender, Borrower
will furnish to Lender the original or a certified copy of a receipt evidencing
payment thereof.
(d) Survival. Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 1.13
shall survive the payment in full of principal and interest hereunder.
1.14 Interest Rate Evidence. Upon the request of Borrower, Lender shall
timely provide to Borrower evidence to the reasonable satisfaction of Borrower
that establishes the interest rates and commitment fees that Lender is charged
under the Existing Credit Agreement.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows:
2.01 Legal Existence. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdictions under which it
is incorporated, and it is duly qualified to do business as of the date hereof
in all jurisdictions wherein the property owned or the
6
10
business transacted by it would require such qualification, except where the
failure to so qualify would not have a Material Adverse Effect on Borrower.
2.02 Corporate Power and Authority to Execute Documents. Borrower has
all requisite corporate power and authority to create, issue, execute, deliver,
carry out and comply with this Agreement and the Note. Borrower has all
requisite corporate power and authority and all necessary licenses, permits,
franchises and other authorizations to own and operate its property and to carry
on its business as now conducted and as proposed to be conducted, except where
the failure to have such licenses, permits, franchises or other authorizations
would not have a Material Adverse Effect on Borrower.
2.03 Valid, Binding, Enforceable Obligations. Borrower has duly and
effectively taken all corporate action requisite for the due creation,
execution, issuance, delivery and performance of this Agreement and the Note,
and this Agreement and the Note, will constitute a legally valid and binding
obligation of Borrower, enforceable against Borrower in accordance with their
respective terms except as limited by bankruptcy, reorganization, moratorium or
other similar laws and judicial decisions affecting the enforcement of
creditors' rights generally and by general equitable principles.
2.04 No Violation of Charter, By-Laws or Agreements. Borrower is not in
violation of any term of its certificate of incorporation or by-laws. Borrower
is not in default of any term of any indenture, mortgage, deed of trust,
promissory note, loan agreement, note agreement or other material agreement
including, but without limitation, any lease, to which it is a party or by which
it or any of its property may be bound, the effect of which would have a
Material Adverse Effect on Borrower.
2.05 No Violation of Laws, Rules or Orders. Except as disclosed in its
public filings made with the Securities and Exchange Commission, Borrower is
not:
(a) in violation of any laws, ordinances, statutes, rules,
regulations, franchises, certificates, permits or other Governmental
Requirements to which it is subject, the violation of which would have
a Material Adverse Effect on Borrower; or
(b) in violation of any judgment, order, writ, injunction,
decree or demand of any court, arbitrator or governmental body
applicable to it that individually or in the aggregate would have a
Material Adverse Effect on Borrower.
2.06 Loan Documents Do Not Violate Other Documents. Neither the
execution and delivery by Borrower of this Agreement or the Note nor the
consummation of the transactions herein and therein contemplated, nor the
performance of, or compliance with, the terms and provisions hereof and thereof,
does or will violate any provision of its certificate of incorporation or
bylaws, or any applicable law, statute, rule or regulation or any judgment,
decree, writ, injunction, franchise, order or permit applicable to Borrower or
its assets or properties, or does or will result in any breach of or default
under, any of the terms, covenants, conditions or provisions of, or result in
the creation or imposition of any lien, security interest, charge or encumbrance
upon any of the property or assets of Borrower pursuant to the terms, of any
indenture, mortgage, deed of trust, loan
7
11
agreement, or other instrument to which Borrower is a party and which terms are
applicable to Borrower the breach or default of which will have a Material
Adverse Effect on Borrower, or materially and adversely affect its abilities to
perform, promptly and fully, its obligations hereunder or under any of the other
Loan Documents.
2.07 Board of Directors Authorization. The Board of Directors of
Borrower, acting pursuant to a duly called and constituted meeting, after proper
notice, or pursuant to a valid and unanimous written consent, has determined
that entry into and performance of this Agreement and the Note benefits
Borrower, and that adequate and fair consideration has been received by Borrower
to execute and perform this Agreement and the Note.
ARTICLE III - DEFAULTS AND REMEDIES
3.01 Events of Default. If any of the following events shall occur and
be continuing (each an "Event of Default"):
(a) Borrower (i) shall fail to pay any principal of the Note as and
when due, (ii) shall fail to pay any interest on the Note within five Business
Days of the date when due, or (iii) shall fail to pay any other Obligation
hereunder or under any other Loan Document within ten Business Days of the date
when due; or
(b) Borrower shall (i) dissolve or terminate its existence (except for
a merger of Borrower with a Wholly Owned Subsidiary), or (ii) discontinue its
usual business, or (iii) apply for or consent to the appointment of a receiver,
trustee, custodian or liquidator of it or of all or a substantial part of its
property, or (iv) generally fail to pay its debts as they come due in the
ordinary course of business, or (v) commence, or file an answer admitting the
material allegations of or consenting to, or default in a petition filed against
it in, any case, proceeding or other action under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking to have an order for relief
entered with respect to it under the Federal Bankruptcy Code, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other similar relief with respect to it or its debt; or
(c) A receiver, conservator, liquidator, custodian or trustee of
Borrower or any of its properties is appointed by the order or decree of any
court or agency or supervisory authority having jurisdiction, and such decree or
order remains in effect for more than 60 days; or Borrower obtains an order for
relief under the Federal Bankruptcy Code; or any of the property of Borrower is
sequestered by court order and such order remains in effect for more than 60
days; or a petition is filed or a proceeding is commenced against Borrower under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or hereafter in
effect, and is not dismissed within 60 days after such filing; or
(d) An event of default occurs and continues for more than 60 days
under the Indenture or under any other Bank Credit Agreement; or
(e) Any of the Significant Subsidiaries shall (i) apply for or consent
to the appointment
8
12
of a receiver, trustee, custodian or liquidator of it or of all or a substantial
part of its property, or (ii) generally fail to pay its debts as they come due
in the ordinary course of business, or (iii) commence, or file an answer
admitting the material allegations of or consenting to, or default in a petition
filed against it in, any case, proceeding or other action under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking to have an order for
relief entered with respect to it under the Federal Bankruptcy Code, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other similar relief with respect to it or its debt; or
(f) A receiver, conservator, liquidator, custodian or trustee of the
any of the Significant Subsidiaries or any of its properties is appointed by the
order or decree of any court or agency or supervisory authority having
jurisdiction, and such decree or order remains in effect for more than 60 days;
or any of the Significant Subsidiaries obtains an order for relief under the
Federal Bankruptcy Code; or substantially all of the property of any of the
Significant Subsidiaries is sequestered by court order and such order remains in
effect for more than 60 days; or a petition is filed or a proceeding is
commenced against any of the Significant Subsidiaries under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, and is
not dismissed within 60 days after such filing; or
(g) A Change of Control occurs; or
(h) Borrower or any of the Significant Subsidiaries shall assert or
claim, that this Agreement or any of the Loan Documents executed in connection
herewith does not or will not constitute the legal, valid, binding and
enforceable obligations of the party or parties (as applicable) thereto; or
(i) Borrower or any of the Significant Subsidiaries shall have
concealed, removed, or permitted to be concealed or removed, any part of its
property, with intent to hinder, delay or defraud its creditors or any of them,
or made or suffered a transfer of any of its property that is fraudulent under
any bankruptcy, fraudulent conveyance or similar law; or shall have made any
transfer of its property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid, or shall have suffered or
permitted, while Insolvent, any creditor to obtain a Lien upon any of its
property through legal proceedings or distraint or other process that is not
vacated within sixty days from the date thereof;
then, unless Lender has consented to such event, Lender may declare the unpaid
principal portion of the Obligations to be forthwith due and payable, whereupon
the said portion of the Obligations and all other portions of the Obligations
then accrued, earned and unpaid shall become immediately due and payable by
Borrower without demand, presentment for payment, notice of non-payment,
protest, notice of protest, notice of intent to accelerate maturity, notice of
acceleration of maturity or any other notice of any kind to Borrower, or any
other Person liable thereon or with respect thereto, all of which are hereby
expressly waived by Borrower and each other Person liable thereon or with
respect thereto; and upon the happening of any Event of Default referred to in
Section 3.01(b) or Section 3.01(c), the unpaid principal portion of the
Obligations and all other
9
13
portions of the Obligations then accrued, earned and unpaid shall become
automatically due and payable by Borrower without demand, presentment for
payment, notice of nonpayment, protest, notice of protest, notice of intent to
accelerate maturity, notice of acceleration of maturity or any other notice of
any kind to Borrower or any other Person liable thereon or with respect thereto,
all of which are expressly waived by Borrower and each other Person liable
thereon or with respect thereto. Further, upon any Default or Event of Default,
Lender shall have all other rights and remedies as set forth herein and in the
other Loan Documents and as otherwise provided at law or in equity, all such
rights and remedies being cumulative.
ARTICLE IV - TERMINATION OF LOANS
Upon the occurrence of any Default and so long as such continues to
exist, Lender may, without prior notice to Borrower or any of the Significant
Subsidiaries or any other Person, terminate, temporarily or permanently as
chosen by Lender, the Loan Commitment, the Total Credit Commitment and the
obligations of Lender to advance any Loans, cause the issuance of any Letters of
Credit or extend any other type of credit or financial accommodations hereunder;
provided, however, upon the occurrence of any Default referred to in Sections
3.01(b) or 3.01(c), or upon acceleration of the maturity of the Note, the Loan
Commitment, the Total Credit Commitment and any and all obligations of Lender
hereunder to make any Loans, cause the issuance of any Letters of Credit or
extend any other type of credit or financial accommodations hereunder shall
automatically be permanently terminated; provided further, however,
notwithstanding any such termination of such obligation of Lender, all
covenants, agreements, obligations, liens and undertakings of Borrower shall
remain in full force and effect.
ARTICLE V - CONDITIONS PRECEDENT
5.01 Conditions Precedent to Initial Loan. The obligation of Lender to
make the initial Letters of Credit and the obligation of Lender to make the
initial Loan hereunder, in addition to the matters set forth in Section 1.02
hereof, shall be subject to the completion of the following conditions
precedent:
(a) Lender shall have received the Note.
(b) Lender shall have received all exhibits and annexes herein
referenced and such additional reports, certificates, documents, statements,
agreements and instruments, in form and substance reasonably satisfactory to
Lender, as Lender shall have reasonably requested from Borrower or its counsel.
5.02 Conditions Precedent to Each Loan. At the time of the making by
Lender of each Loan or the issuance of a Letter of Credit, including the initial
Loan or Letter of Credit but not including continuations or conversions pursuant
to Section 1.03 (before as well as after giving effect to such Loan):
(a) There shall exist no Default or Event of Default.
10
14
(b) (i) All representations and warranties (other than those
representations and warranties limited by their terms to a specific date)
contained herein and in the other Loan Documents executed and delivered on or
after the date hereof shall be true and correct in all material respects with
the same effect as though such representations and warranties had been made on
and as of the date of such Loan or the date of the issuance of such Letter of
Credit and (ii) no event shall have occurred since the date hereof that has
irrevocably and manifestly caused a Material Adverse Effect.
(c) The Lender shall have received from an officer of Borrower a
certificate, dated as of the date of such Loan or the date of the issuance of
such Letter of Credit, certifying as to the accuracy of subsections (a) and (b)
of this Section 5.02.
ARTICLE VI - COVENANTS
6.01 Insurance. Borrower will, and will cause each Significant
Subsidiary to, maintain with financially sound and reputable insurance companies
insurance on all their property and assets in such amounts and covering such
risks as is consistent with sound business practice, and in each case, with such
deductibles and with such self-insurance provisions as are customarily
maintained by similar businesses.
6.02 Lender Change of Control. Upon the occurrence of a Lender Change
of Control, Lender shall cause a Financial Institution acceptable to Borrower to
issue a letter of credit, containing only those other terms and conditions as
such Financial Institution shall reasonably and customarily require, for the
benefit of Borrower to secure Lender's obligations to make Loans under this
Agreement.
ARTICLE VII - MISCELLANEOUS
7.01 No Waivers Except by Writing; Governing Law. No failure or delay
on the part of Lender in exercising any power or right hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or powers preclude any other or
further exercise thereof or the exercise of any other right or power. No
modification or waiver of any provision of this Agreement or any other Loan
Document nor consent to any departure by Borrower, or any other Person thereof
shall in any event be effective unless the same shall be in writing, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose given. No notice to or demand on Borrower or any other Person in any
case shall entitle Borrower or such other Person to any other or further notice
or demand in similar or other circumstances. This Agreement and the other Loan
Documents shall be deemed to be contracts under the internal laws of the State
of Texas and for all purposes shall be construed and enforced in accordance with
the laws of the State of Texas, and, to the extent applicable, the laws of the
United States of America.
7.02 Usury Laws. It is the intent of the parties that each of Lender
and Borrower in the execution, delivery and performance of all Loan Documents,
the transactions provided for therein and contemplated thereby, and all matters
incidental and related thereto and arising therefrom, shall
11
15
comply and conform strictly with Applicable Law from time to time in effect,
including usury laws. In furtherance thereof, Lender and Borrower stipulate and
agree that none of the terms and provisions contained in, or pertaining to, the
Loan Documents shall ever be construed to create a contract to pay for the use
or forbearance or detention of money with interest at a rate or in an amount in
excess of the Maximum Rate or maximum amount of interest permitted or allowed to
be contracted for, charged, received, taken or reserved under said laws. For
purposes of each Loan Document, (i) "interest" shall include the aggregate of
all amounts that constitute or are deemed to constitute interest under
Applicable Law, including to the extent they may apply, the laws of the United
States of America, that are contracted for, chargeable, receivable (whether
received or deemed to have been received), taken or reserved under each such
document, and (ii) all computations of the maximum amount of interest permitted
or allowed under Applicable Law will be made on the basis of the period
prescribed by Applicable Law. Neither Borrower nor any other Person shall ever
be required to pay unearned interest on, or with respect to any of, the Loan
Documents and shall never be required to pay interest on, or with respect to any
of, the Loan Documents at a rate or in an amount in excess of the Maximum Rate
or maximum amount of interest that may be lawfully contracted for, charged,
received, taken or reserved under Applicable Law, AND THE PROVISIONS OF THIS
PARAGRAPH SHALL CONTROL OVER ALL OTHER PROVISIONS OF THE LOAN DOCUMENTS. If the
effective rate or amount of interest that would otherwise be payable under the
Loan Documents would exceed the Maximum Rate or maximum amount of interest
Lender or any other holder of any Note or other Obligations is allowed by
Applicable Law to charge, contract for, take, reserve or receive, or in the
event Lender or any holder of any Note or other Obligations shall charge,
contract for, take, reserve or receive monies that are deemed to constitute
interest that would, in the absence of this provision, increase the effective
rate or amount of interest payable under the Loan Documents to a rate or amount
in excess of that permitted or allowed to be charged, contracted for, taken,
reserved or received under Applicable Law then in effect, then the principal
amount of such Note or other Obligations or the amount of interest that would
otherwise be payable thereunder shall be payable at, or reduced to, as
applicable, the maximum amount allowed pursuant to the then applicable indicated
(weekly) rate ceiling referred to hereinabove in the definition of the term
Applicable Law, or if no such ceiling is then in effect, as authorized and
allowed under said laws as now or hereafter construed by the courts having
jurisdiction, and all such monies so charged, contracted, for, received, taken
or reserved that are deemed to constitute interest in excess of the Maximum Rate
or maximum amount of interest permitted by Applicable Law shall be immediately
returned or credited to the account of Borrower upon such determination. All
amounts paid or agreed to be paid in connection with any Note or other
Obligations that would under Applicable Law be deemed "interest" or if not so
deemed, would be deemed an amount that would be included in the calculation of
the Maximum Rate or maximum amount of interest allowed pursuant to Applicable
Law, shall, to the maximum extent not prohibited by Applicable Law, be
amortized, prorated, allocated and spread throughout the full term of this
Agreement or the Note, as the case may be; provided that, if the Note or other
Obligation is paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period of
existence thereof exceeds the Maximum Rate, Lender shall refund to Borrower the
amount of such excess or credit the amount of such excess against the principal
amount of such Note or other Obligation (as applicable) and, in such event,
Lender shall not be subject to any penalties provided by any Laws for
contracting for, charging, taking, reserving or receiving interest in excess of
the Maximum Rate.
12
16
7.03 Notice. All notices required or made hereunder shall be deemed to
have been given (i) five Business Days after being deposited in the United
States mail (certified, return receipt requested) or (ii) one Business Day after
being sent by telecopy to any party hereto at its address and telecopy number
given below, or at any other address of which it shall have notified the other
party hereto in writing. All notices, requests and demands shall be given to or
made upon the respective parties hereto as follows:
If to Borrower: Kaneb Services, Inc.
0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000-0000
Telecopy No. (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Vice President
With a copy to: Fulbright & Xxxxxxxx L.L.P.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Telecopy No. (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
If to Lender: Kaneb Services LLC
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Telecopy No. (000) 000-0000
Attention: Xxxx X. Xxxxxx
Chief Executive Officer and President
With a copy to: Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Telecopy No. (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
But actual notice to any party hereto, however given or received, shall always
be effective.
7.04 Waivers of Certain Rights. TO THE MAXIMUM EXTENT NOT PROHIBITED BY
APPLICABLE LAW FROM TIME TO TIME IN EFFECT, BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY (AND AFTER BORROWER HAS CONSULTED WITH ITS OWN
ATTORNEY) IRREVOCABLY AND UNCONDITIONALLY WAIVES THE PROVISIONS OF THE TEXAS
DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT (TEXAS BUSINESS AND COMMERCE
CODE, CHAPTER 17, SUBTITLE E, SECTIONS 17.41-17.63).
7.05 No Intended Third-Party Beneficiaries. This Agreement and all
other Loan Documents are intended to benefit only the parties hereto and the
parties hereby expressly acknowledge and agree that there are no intended
third-party beneficiaries.
13
17
7.06 Severability of Provisions. Any provision of this Agreement, or
any other Loan Document, or any portion or portions of such provisions, held by
a court of competent jurisdiction to be invalid, illegal or ineffective shall
not impair, invalidate or nullify the remainder of this Agreement or any of the
other Loan Documents, but the effect thereof shall be confined to such provision
or the portion or portions thereof so held to be invalid, illegal or
ineffective.
7.07 Survival of Representations and Warranties; Unsatisfied
Conditions. Except as otherwise expressly set forth herein, all representations
and warranties of Borrower herein shall survive the date of this Agreement and
the making of each Loan hereunder. Except to the extent, if at all, expressly
waived by Lender, any condition precedent not timely performed by or on behalf
of Borrower prior to or at a corresponding borrowing date shall survive such
date, unless otherwise expressly stated in this Agreement, and shall be deemed
to constitute a covenant by Borrower to accomplish such condition as promptly as
possible. All payment obligations hereunder or referenced herein shall survive
the termination of this Agreement.
7.08 Assignments. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Neither party to this Agreement may assign its rights under this
Agreement without the prior written consent of the other party.
7.09 Gender and Usage. As used herein and when required by the context,
each number (singular and plural) shall include all numbers and each gender
shall include all genders. The words "herein," "hereof," "hereby," "hereto,"
"hereunder" and words of similar import shall mean and refer to this Agreement
rather than to any specified provision of this Agreement.
7.10 Multiple Counterparts. This Agreement may be executed in any
number of counterparts, all of which, taken together, shall constitute one and
the same instrument.
7.11 Debtor-Creditor Relationship. None of the terms of this Agreement
or of any other Loan Document executed in conjunction herewith or related hereto
shall be deemed to give Lender the rights or powers to exercise control over the
business or affairs of Borrower. The relationship between Borrower and Lender
created by this Agreement is only that of debtor and creditor.
7.12 Agreement Controlling. To the extent that any provision of the
Note is expressly in direct conflict with the provisions of this Agreement, the
provisions of this Agreement shall control and govern. In all other regards, all
provisions of the Note are intended to be read and integrated in a harmonious
and consistent manner, including defined terms herein and therein.
7.13 Integration. This Agreement, together with the Note, embodies the
entire agreement between the parties thereto relating to the subject matter
hereof and thereof, and may be amended or supplemented only by an instrument in
writing executed jointly by an authorized officer of each of Borrower and
Lender.
7.14 WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL
BY JURY IN ANY PROCEEDING ENFORCING OR DEFENDING ANY RIGHTS UNDER THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR RELATING THERETO. THE BORROWER
ACKNOWLEDGES THAT THE
14
18
PROVISIONS OF THIS SECTION HAVE BEEN BARGAINED FOR AND THAT IT HAS BEEN
REPRESENTED BY COUNSEL IN CONNECTION THEREWITH. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. THE BORROWER AND THE LENDER ACKNOWLEDGE
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN ITS RELATED FUTURE DEALINGS.
THE BORROWER AND THE LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY IS
WAIVING ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN OR ANY LETTERS OF CREDIT.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
7.15 Headings. All headings used herein are for the convenience of the
parties only and shall not be used in construing the meaning or intent of the
terms or provisions hereof. 1.1
15
19
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
BORROWER:
KANEB SERVICES, INC.
By:
-----------------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
LENDER:
KANEB SERVICES LLC
By:
-----------------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
16
20
ANNEX A
DEFINITIONS
As used in this Agreement, the following terms shall have the
respective meanings indicated below:
"Adjusted Eurodollar Rate" means, for any Eurodollar Advance during any
Interest Period therefor the rate per annum equal to (rounded upwards, if
necessary, to the nearest 1/100 of 1%) (a) if Lender borrows funds under an
Existing Credit Agreement to fund such Eurodollar Advance, the lesser of (x) the
eurodollar rate (or other interest rate that is based on the interbank offered
rates for Dollar deposits in the London, England market) that Lender would be
charged under such Existing Credit Agreement if it were to borrow on the same
Borrowing Date the same amount with the same Pricing Selection and the Interest
Period as such Eurodollar Advance and (y) the Eurodollar Rate plus 1.5% and (b)
if Lender does not borrow funds under an Existing Credit Agreement to fund such
Eurodollar Advance, the Eurodollar Rate plus 1.5%.
"Advance" means any advance of funds by Lender to Borrower pursuant to
this Agreement, and after each initial advance thereof, any portion thereof
remaining outstanding and unpaid; and each advance of funds by Lender to
Borrower for a particular selected Interest Period (except for such Advances for
which an Interest Period need not be specified), shall constitute one "Advance"
for purposes of determining the number of "Advances" outstanding hereunder.
"Affiliate" means any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition "control"
(including "controlled by" and "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 such Person, whether through the
ownership of voting securities or otherwise. Without limiting the generality of
the foregoing, for purposes of this Agreement Borrower and each of its
Subsidiaries shall be deemed to be Affiliates of each other.
"Agreement" shall have the meaning assigned to that term in the
introduction hereto, and "Agreement", "hereof", "hereto" and "hereunder" and
words of similar import mean this Agreement as a whole, and not any particular
article, section or subsection.
"Applicable Law" means, with respect to Lender, the law in effect, from
time to time, applicable to this loan transaction and each Loan Document that
lawfully permits the contracting for, taking, reserving, receiving, charging
and/or collection of the maximum lawful, non-usurious rate of interest by such
Person on each Loan Document and the transactions evidenced thereby, and arising
in connection therewith (including, but without limitation, the Note), including
(i) laws of the State of Texas, (ii) to the extent controlling, the laws of the
United States of America, and (iii) laws of any jurisdiction whose laws may be
mandatorily applicable to such Person, notwithstanding other provisions of any
Loan Document or laws of the United States of America applicable to such Person
and the transaction contemplated hereby, which would permit such Person to
contract for, take, reserve, receive, charge or collect a greater amount of
interest than under such jurisdiction's law. To the extent that Applicable Law
is determined by reference to Chapter 303 of the Texas Finance Code, as amended,
the interest ceiling applicable hereto and in connection
A-1
21
herewith shall be the "indicated" (weekly) rate ceiling from time to time in
effect as referred to therein; provided however, it is agreed that the terms
hereof, including the rate, or index, formula or provision of law used to
compute the rate in connection herewith, will be subject to the revisions as to
current and future balances, from time to time, pursuant to Applicable Law. IT
IS FURTHER AGREED THAT IN NO EVENT SHALL CHAPTER 346 OF THE TEXAS FINANCE CODE,
AS AMENDED, APPLY TO ANY LOAN DOCUMENT OR THE TRANSACTIONS EVIDENCED THEREBY, OR
ARISING IN CONNECTION THEREWITH.
"Applicable Rate" means, during the period that (i) an Advance is a
Eurodollar Advance, the Adjusted Eurodollar Rate, and (ii) an advance is a Base
Rate Advance, the Base Rate.
"Bank Credit Agreement" means any credit agreement or loan agreement by
and between, or by and among, Borrower, or any of its Significant Subsidiaries,
and any bank or other financial institution.
"Base Rate" means, at the time any determination thereof is to be made,
(a) if Lender borrows the funds under an Existing Credit Agreement to fund the
Advance, then the lesser of (x) the base rate or prime rate (or other comparable
interest rate) that Lender is charged under the Existing Credit Agreement and
(y) the rate quoted by the Wall Street Journal as the prime rate, and (b) if
Lender does not borrow funds under the Existing Credit Agreement to lend to
Borrower, then the rate quoted by the Wall Street Journal from time to time as
the prime rate.
"Base Rate Advance" means any Advance that bears interest at a rate
based upon the Base Rate. Changes in the rate of interest on Base Rate Advances
will take effect simultaneously with each change in the Base Rate.
"Borrower" shall have the meaning assigned to that term in the
introduction to this Agreement.
"Borrowing Date" means a date upon that a Revolving Loan is to be made
pursuant to Section 1.02 hereof.
"Business Day" means any day that commercial banks are not authorized
or required to close in Dallas, Texas.
"Change of Control" shall be deemed to have occurred at such time as
(i) a "person" or "group" within the meaning of Sections 13(d) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), other than
Borrower becomes the "beneficial owner" (as defined in Rule 13d-3 under the 0000
Xxx) of more than 20% of the Voting Stock of Borrower, or (ii) a person enters
into an agreement with Borrower to purchase, lease, or otherwise acquire, all or
substantially all of the assets of Borrower or (iii) during any period of two
consecutive years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period constitute
Borrower's Board of Directors (and any new director, whose election by
Borrower's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was so approved), cease for
any reason to constitute a majority thereof.
A-2
22
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated" shall mean, with reference to any item, such item of
Borrower and its Subsidiaries, consolidated in accordance with GAAP.
"Consolidated Subsidiaries" means, when used in connection with
Borrower or any of its Subsidiaries, any corporation or other Person the
accounts and financial information of that is at the time included in the
Consolidated financial statements of Borrower or such Subsidiary prepared in
accordance with GAAP.
"Default Rate" means at any time a per annum rate of interest equal to
2% plus the Base Rate, but in no event to exceed the Maximum Rate.
"Dollars" or "$" means lawful currency of the United States of America.
"Environmental Laws" means any and all laws, statutes, ordinances,
rules, regulations, orders, requirements or determinations of any Governmental
Authority pertaining to health or the environment in effect in any and all
jurisdictions in that any of Borrower or any of its Subsidiaries is conducting
or at any time has conducted business, or where any Property of any of Borrower
or its Subsidiaries is located or where any hazardous substances generated by or
disposed of by any of Borrower of any of its Subsidiaries are located.
"Eurodollar Advance" means any Advance that bears interest at a rate
based on the Adjusted Eurodollar Rate.
"Eurodollar Rate" means the interest rate quoted by the Wall Street
Journal as the London Interbank Offered Rates (LIBOR).
"Event of Default" means any of the events specified in Section 3.01
hereof that has occurred and is continuing, provided that there has been
satisfied any requirement in connection with such event for the giving of
notice, or the lapse of time, or the happening of any further condition, event
or act, and "Default" shall mean any of such events, whether or not any such
requirement has been satisfied.
"Existing Credit Agreement" means any credit agreement or credit
facility under which Lender is entitled to borrow funds from a commercial bank
or a group of commercials banks.
"Financial Institution" means any bank or other financial institution
who has, both at the time of the issuance of the applicable Letter of Credit and
at every time thereafter, as reported by Xxxxx'x Investors Service , a
short-term debt rating of at least a "P-2" and a long-term debt rating of at
least an "A".
"Funded Debt" means for any Person (without duplication): (i) all
indebtedness for the repayment of borrowed money, whether or nor represented by
bonds, debentures, notes, securities, bankers' acceptances or other evidences of
indebtedness, regardless of whether such indebtedness would be classified in
accordance with GAAP as a current liability or long-term debt, and (ii) all
A-3
23
reimbursement and repayment obligations then due in respect of a drawing of a
letter of credit, or guaranty, surety, indemnity, reimbursement or other similar
obligations then due.
"GAAP" means United States generally accepted accounting principles,
applied on a consistent basis, as set forth in Opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants or in
statements of the Financial Accounting Standards Board or their successors that
are applicable in the circumstances as of the date of determination of any item;
and the requirement that such principles be applied on a "consistent basis"
shall mean that the accounting principles observed in a current period be
comparable in all material respects to those applied in a preceding period.
"Governmental Authority" means any domestic or foreign federal, state,
province, county, city, municipality or political subdivision in which any of
Borrower or any of its Subsidiaries, is located or that exercises jurisdiction
over any Property of Borrower or any of its Subsidiaries, and any agency,
department, commission, board, tribunal, court, bureau or instrumentality of any
of them that exercises or has jurisdiction over any such Property.
"Governmental Requirement" means (without duplication) any law,
statute, code, ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement (including, without limitation, Environmental Laws, energy
regulations and occupational, safety and health standards or controls) of any
Governmental Authority.
"Indenture" means that certain Indenture dated as of January 15, 1983
by and between Xxxxx Energy Inc. and First City National Bank of Houston, as
Trustee, as amended by that certain First Supplemental Indenture dated as of
March 20, 1984 by and between Kaneb Services, Inc. and First City National Bank
of Houston, as Trustee, and as the same is amended and in force and effect from
time to time.
"Insolvent" means, with respect to any Person, that (i) the fair
saleable value of the assets of such Person does not exceed the amount that
would be required to be paid on or in respect to the existing debts and other
liabilities (including, without limitation, pending or overtly threatened
litigation in amounts in excess of effective insurance coverage and all other
contingent liabilities) of such Person as they mature, or (ii) the assets of
such Person constitute unreasonably small capital for such Person to carry out
its business as then being conducted or as proposed to be conducted including
the capital needs of such Person, taking into account the particular capital
requirements of the business conducted by such Person and projected capital
requirements and capital availability thereof, or (iii) the fair saleable value
of the assets of such Person is not greater than the total fair value of the
liabilities, including contingent, subordinated, absolute, fixed, or matured or
unmatured liabilities of such Person.
"Interest Payment Date" means the last Business Day of each March,
June, September and December.
"Interest Period" means with respect to any Eurodollar Advance, the
period commencing on the date, as applicable, such Advance is made or converted
from an Advance of another Type or, in
A-4
24
the case of each subsequent, successive Interest Period applicable to a
Eurodollar Advance, the last day of the next preceding Interest Period with
respect to such Advance, and ending on the numerically corresponding day in the
first, third or sixth calendar month thereafter, as Borrower may select as
provided in Section 1.02 hereof, except that each such Interest Period that
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month.
Notwithstanding the foregoing:
(a) each Interest Period that would otherwise end on a day
that is not a Business Day shall end on the next succeeding Business
Day, except that if such succeeding Business Day falls in the next
succeeding calendar month, than such Interest Period shall end on the
next preceding Business Day;
(b) no Interest Period for any Eurodollar Advance shall have a
duration of less than one month, and if the Interest Period for any
Eurodollar Advance would otherwise be a shorter period, such Advance
shall not be available hereunder; and
(c) no Interest Period may extend beyond the maturity of the
Note or the Maturity Date.
"Law" means any constitution, statute, law, ordinance, regulation,
rule, order, writ, injunction or decree of any Tribunal.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, sale of
accounts, lien (statutory or other) or preferential arrangement of any kind or
nature whatsoever in respect of any Property (including those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing lease
having substantially the same economic effect as any of the foregoing, or the
filing of or agreement to file any financing statement under the UCC or any
comparable law naming the owner of the asset to which such lien relates as
debtor), but not including the interest of a lessor under an operating lease,
and any filing of, or agreement to give, any financing statement under the UCC
or equivalent statute in any jurisdiction or any other instrument that evidences
the creation, perfection, continuation, notice, registration and/or other aspect
of a present or future Lien or asserted Lien.
"Lender" shall have the meaning assigned to that term in the
introduction to this Agreement.
"Lender Change of Control" shall be deemed to have occurred at such
time as (i) a "person" or "group" within the meaning of Sections 13(d) or
14(d)(2) of the 1934 Act, other than Lender becomes the "beneficial owner" (as
defined in Rule 13d-3 under the 0000 Xxx) of more than 20% of the member
interests of Lender entitled to vote at a meeting of the Board of Directors of
Lender (calculated based on the number of votes), or (ii) a person enters into
an agreement with Lender to purchase, lease, or otherwise acquire, all or
substantially all of the assets of Lender or (iii) during any period of two
consecutive years (not including any period prior to the execution of this
Agreement),
A-5
25
individuals who at the beginning of such period constitute Lender's Board of
Directors (and any new director, whose election by Lender's shareholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was so approved), cease for any reason to constitute a
majority thereof.
"Letter of Credit" means a letter of credit (as defined in the UCC)
that Lender causes a Financial Institution to issue, naming a beneficiary (as
defined in the UCC) designated by Borrower, all in accordance with the
provisions of Sections 1.11 and 1.12 hereof.
"Letter of Credit Liability" means, at any time and in respect of any
Letter of Credit, the sum of (a) the undrawn face amount of such Letter of
Credit plus (b) the aggregate unpaid amount of all Reimbursement Obligations at
the time due and payable in respect of drawings made under such Letter of
Credit.
"Loan" means an extension of credit or financial accommodation by way
of a loan or Advance hereunder to Borrower.
"Loan Commitment" means the commitment of Lender to make Loans as set
forth in Section 1.01 hereof, up to the maximum aggregate amount of $_________.
"Loan Documents" means this Agreement, the Note, and all other
promissory notes, drafts, security agreements, reports, opinions, requests for
Advances, certificates and other instruments, documents, and agreements now or
hereafter executed and delivered pursuant to, or in connection with, this
Agreement.
"Material Adverse Effect" means, with respect to any Person, a material
and adverse effect on (i) the business, financial condition or results of
operations of such Person, or (ii) its ability to fulfill, punctually and
completely, its obligations under each Loan Document; provided, however, that
the distribution by Borrower to its stockholders of the common shares of Lender,
or the consummation of any transaction contemplated thereby, shall be deemed not
to be a Material Adverse Effect.
"Maturity Date" means 12:00 noon Dallas, Texas time on ________, _____.
"Maximum Rate" means the maximum lawful nonusurious rate of interest
(if any) that under Applicable Law Lender may charge Borrower on the Loans from
time to time. If, however, during any period interest accruing on any Loan is
not limited to any maximum lawful non-usurious rate of interest under Applicable
Law, then during each such period the "Maximum Rate" shall be equal to a per
annum rate of 2% plus the Base Rate from time to time in effect.
"Note" means that certain promissory note dated as of the date hereof
in substantially the form and substance as set forth in Exhibit A hereto, and
otherwise acceptable to Lender.
"Obligations" means all obligations, indebtedness, accrued unpaid
interest, fees, expenses, costs, indemnities and liabilities of Borrower to
Lender, including without limitation all Loans, now
A-6
26
existing or hereafter arising, whether direct, indirect, related, unrelated,
fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, under, or in connection with, this Agreement and the other Loan
Documents.
"Person" means any individual, corporation, business trust,
association, company, limited liability entity, partnership, joint venture,
trust, unincorporated organization or Governmental Authority, or any agency,
tribunal, court, instrumentality or subdivision thereof, or any other form of
entity.
"Pricing Selection" means Borrower's selection pursuant to this
Agreement of the Base Rate or the Adjusted Eurodollar Rate.
"Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, excluding capital stock in any other Person.
"Reimbursement Obligations" means, collectively, the obligation under
this Agreement of Borrower to pay Lender the aggregate amount of the obligations
of Lender to reimburse any Financial Institution for the amounts paid by such
Financial Institution in respect of drawings made under Letters of Credit.
"Revolving Loans" means the Loans to be made to Borrower pursuant to
the provisions of Article I hereof.
"Significant Subsidiaries" means each Subsidiary of Borrower that, at
any date of determination of the Subsidiaries that constitute Significant
Subsidiaries, either (i) has total tangible assets, determined in accordance
with GAAP as of the most recent date for which a consolidating balance sheet of
Borrower and its Subsidiaries is available, of at least $50,000,000, or (ii) had
total revenue (excluding revenues from Affiliates), determined in accordance
with GAAP as of the most recent date for which a consolidating income statement
from Borrower and its Consolidated Subsidiaries is available, of at least 25% of
Consolidated total revenues of Borrower and its Subsidiaries.
"Subsidiary" means any corporation or other Person (whether now
existing or hereafter created) of which more than 50% of the issued and
outstanding securities having ordinary voting power for the election of
directors, or more than 50% of the beneficial ownership interest, is now or
hereafter owned or controlled, directly or indirectly, by Borrower or any
Subsidiary thereof, with the voting power and ownership of Borrower and all
Subsidiaries aggregated together to determine whether a Person is a Subsidiary,
and "Subsidiary" shall include, without limiting the generality of the
foregoing, the Significant Subsidiaries.
"Total Credit Commitment" means the commitment of Lender to make
Advances and to cause the issuance of Letters of Credit, the principal amount of
such Advances and the face amount of such Letters of Credit, including any
Reimbursement Obligations, not to exceed $_________.
A-7
27
"Total Letter of Credit Liabilities" means the aggregate outstanding
amount of all Letter of Credit Liabilities in respect of all Letters of Credit.
"Tribunal" means any court, tribunal or governmental department,
commission, board, bureau, agency, or instrumentality of any state, province,
commonwealth, nation, territory, possession, county, parish, or municipality,
whether now or hereafter constituted and/or existing.
"Type" means any type of Advance (that is, a Base Rate Advance or a
Eurodollar Advance).
"UCC" means the Uniform Commercial Code as adopted and amended in the
State of Texas.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of capital stock in such Person entitling the holders thereof
(whether at all times or at the times that such class of capital stock has
voting power by reason of the happening of any contingency) to vote in the
election of members of the board of directors (or comparable body) of such
Person.
"Wholly Owned Subsidiary" means any Subsidiary 100% of whose capital
stock (of every class or type, including warrants, rights, options and
instruments convertible into capital stock), except shares required as
directors' qualifying shares, is owned directly or indirectly by Borrower.
Accounting Terms and Definitions.
(a) Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared,
in accordance with GAAP as in effect from time to time. All other terms used
herein shall have the meanings as otherwise stated herein or as otherwise
defined in the Code.
(b) All terms defined in this Agreement shall have their defined
meanings when used in each of the other Loan Documents, unless any such
instruments shall expressly indicate otherwise, and when required by the
context, each term shall include the plural as well as the singular. Definitions
of each Person specifically defined herein or in each other Loan Document shall
mean and include herein and therein, unless otherwise expressly provided to the
contrary, the successor, assigns, heirs and legal representatives of each such
Person. Unless the context otherwise requires or unless otherwise expressly
provided, references to this Agreement and each other Loan Document shall
include all amendments and modifications thereof or thereto, as applicable and
as in effect from time to time.
(c) Each reference herein to a section, or any subdivision thereof,
shall refer to the applicable section or subdivision thereof, of this Agreement,
unless another instrument is thereby expressly referenced. The headings in this
Agreement and the other Loan Documents are inserted for convenience only and
shall be ignored when construing any such instruments.
A-8
