EXHIBIT 4.7
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
HARLEY INDUSTRIES, INC., THE SAFE SEAL
COMPANY, INC., VALVE REPAIR OF SOUTH
CAROLINA, INC., SPINSAFE CORPORATION,
THE SAFE SEAL COMPANY (CANADA), INC.,
GSV, INC. and PLANT SPECIALTIES, INC.
BORROWERS
THE CHASE MANHATTAN BANK
AGENT FOR
THE CHASE MANHATTAN BANK
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
LENDERS
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................. 1
1.1 DEFINITIONS.................................................. 1
1.2 OTHER DEFINITIONS............................................ 23
ARTICLE II REVOLVING CREDIT LOANS AND LETTERS OF CREDIT................. 24
2.1 REVOLVING LOAN COMMITMENTS................................... 24
2.2 LETTERS OF CREDIT............................................ 24
2.3 BORROWING BASE............................................... 25
2.4 LOAN VALUE OF ELIGIBLE INVENTORY............................. 26
2.5 BORROWING PROCEDURE.......................................... 26
2.6 USE OF PROCEEDS.............................................. 28
2.7 REDUCTION OF REVOLVING CREDIT COMMITMENT..................... 28
2.8 REQUIRED PAYMENTS............................................ 29
ARTICLE III TERM LOANS................................................... 29
3.1 TERM LOANS................................................... 29
3.2 USE OF PROCEEDS.............................................. 29
ARTICLE IV STEAM SUPPLY LOANS........................................... 29
4.1 STEAM SUPPLY LOANS........................................... 29
4.2 BORROWING BASE............................................... 29
4.3 LOAN VALUE OF STEAM SUPPLY ELIGIBLE INVENTORY................ 30
4.4 BORROWING PROCEDURE.......................................... 30
4.5 USE OF PROCEEDS.............................................. 32
4.6 REDUCTION OF STEAM SUPPLY COMMITMENT......................... 32
4.7 REQUIRED PAYMENTS............................................ 33
ARTICLE V NOTES........................................................ 33
5.1 REVOLVING CREDIT NOTES....................................... 33
5.2 TERM NOTES................................................... 33
5.3 STEAM SUPPLY NOTES........................................... 33
5.5 APPLICABLE MARGIN............................................ 36
5.6 INTEREST RECAPTURE........................................... 37
5.7 DEFAULT RATE................................................. 38
5.8 MAXIMUM INTEREST............................................. 38
5.9 PAYMENTS ON THE NOTES........................................ 38
5.10 CALCULATION OF INTEREST RATES................................ 42
5.11 PREPAYMENTS.................................................. 42
5.12 MANNER OF PAYMENTS........................................... 43
5.13 PRO RATA TREATMENT........................................... 43
5.14 LENDING OFFICE............................................... 44
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5.15 RENEWALS OF NOTES............................................ 44
5.16 TAXES........................................................ 44
5.17 SHARING OF PAYMENTS.......................................... 45
5.18 SHARING OF SETOFFS........................................... 45
5.19 COMMITMENT FEES.............................................. 46
5.20 LETTERS OF CREDIT FEES....................................... 46
5.21 CONSEQUENTIAL LOSS........................................... 46
5.22 PAYMENTS IN RESPECT OF INCREASED COSTS....................... 47
ARTICLE VI SPECIAL PROVISIONS FOR EURODOLLAR LOANS...................... 48
6.1 INADEQUACY OF EURODOLLAR LOAN PRICING........................ 48
6.2 ILLEGALITY................................................... 49
6.3 EFFECT ON INTEREST OPTIONS................................... 49
6.4 PAYMENTS NOT AT END OF INTEREST PERIOD....................... 49
6.5 SURVIVAL OF OBLIGATIONS...................................... 50
ARTICLE VII COLLATERAL FOR LOANS......................................... 50
7.1 COLLATERAL FOR LOANS......................................... 50
7.2 COLLATERAL DOCUMENTS......................................... 51
7.3 FURTHER ASSURANCES........................................... 51
7.4 OTHER LOANS.................................................. 52
ARTICLE VIII CUSTODY, INSPECTION, COLLECTION AND MAINTENANCE OF
COLLATERAL................................................... 52
8.1 CASH COLLATERAL ACCOUNT...................................... 52
8.2 COLLECTION OF ACCOUNTS....................................... 52
8.3 VERIFICATION OF ACCOUNTS..................................... 54
8.4 SALES OF INVENTORY........................................... 54
8.5 INSPECTIONS AND FIELD EXAMINATIONS........................... 54
8.6 REPORTS...................................................... 55
8.7 COMPLIANCE WITH LAW.......................................... 55
8.8 ACCESS....................................................... 55
8.9 PROTECTION................................................... 55
8.10 RIGHT TO RECEIVE............................................. 56
8.11 STEAM SUPPLY CASH COLLATERAL ACCOUNT......................... 56
ARTICLE IX COVENANTS.................................................... 56
9.1 AFFIRMATIVE COVENANTS........................................ 56
9.2 FINANCIAL COVENANTS.......................................... 60
9.3 OTHER COVENANTS.............................................. 61
9.4 ERISA COMPLIANCE............................................. 63
9.5 INDEMNITY.................................................... 64
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ARTICLE X CONDITIONS PRECEDENT......................................... 65
10.1 INITIAL ADVANCES OF LOANS.................................... 65
10.2 SUBSEQUENT ADVANCES.......................................... 69
ARTICLE XI REPRESENTATIONS AND WARRANTIES............................... 69
11.1 REPRESENTATIONS AND WARRANTIES CONCERNING THE BORROWERS...... 69
11.2 REGULATORY MATTERS........................................... 73
11.3 REPRESENTATIONS REGARDING ACCOUNTS........................... 75
11.4 REPRESENTATIONS REGARDING INVENTORY.......................... 76
11.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES................... 76
ARTICLE XII DEFAULTS AND REMEDIES........................................ 77
12.1 EVENTS OF DEFAULT............................................ 77
12.2 REMEDIES..................................................... 80
12.3 NOTICES OF DEFAULT........................................... 80
ARTICLE XIII AGENT........................................................ 80
13.1 APPOINTMENT.................................................. 80
13.2 AUTHORIZATION................................................ 80
13.3 RESPONSIBILITIES OF AGENT.................................... 81
13.4 RESIGNATION AND SUCCESSOR.................................... 82
13.5 NOTEHOLDERS.................................................. 82
13.6 CONSULTATION WITH COUNSEL.................................... 82
13.7 INDEPENDENT INVESTIGATION.................................... 83
13.8 EXPENSES AND INDEMNIFICATION................................. 83
13.9 INDEPENDENT STATUS........................................... 83
13.10 BENEFIT AND APPLICABILITY OF ARTICLE......................... 83
ARTICLE XIV MISCELLANEOUS................................................ 83
14.1 NOTICES...................................................... 83
14.2 SEVERABILITY................................................. 84
14.3 CAPTIONS..................................................... 84
14.4 SUCCESSORS AND ASSIGNS....................................... 84
14.5 SYNDICATIONS................................................. 84
14.6 PARTICIPATIONS............................................... 84
14.7 NON-LIABILITY OF THE AGENT AND THE LENDERS................... 86
14.8 FINANCING STATEMENTS......................................... 87
14.9 LIST OF EXHIBITS AND SCHEDULES............................... 87
14.10 MODIFICATION................................................. 87
14.11 WAIVER....................................................... 87
14.12 GOVERNING LAW................................................ 87
14.13 CHOICE OF FORUM, SERVICE OF PROCESS AND JURISDICTION......... 88
14.14 WAIVER OF JURY TRIAL. ...................................... 88
14.15 NO THIRD PARTY BENEFICIARY................................... 88
14.16 PAYMENT OF EXPENSES.......................................... 88
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14.17 CONFLICTS.................................................... 89
14.18 ENTIRETY..................................................... 89
14.19 RIGHT OF SETOFF.............................................. 89
14.20 JOINT AND SEVERAL OBLIGATIONS................................ 89
14.21 MULTIPLE COUNTERPARTS........................................ 90
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amended and Restated Credit Agreement (the "SECOND RESTATED
AGREEMENT") is made and entered into effective July 28, 1997 (the "EFFECTIVE
DATE OF THIS SECOND RESTATED AGREEMENT"), by and among:
HARLEY INDUSTRIES, INC. ("HARLEY"), THE SAFE SEAL COMPANY, INC. ("SAFE
SEAL"), VALVE REPAIR OF SOUTH CAROLINA, INC. ("VALVE"), SPINSAFE CORPORATION
("SPINSAFE"), THE SAFE SEAL COMPANY (Canada), INC. ("SAFE SEAL CANADA"),
GSV, INC. ("GSV") and PLANT SPECIALTIES, INC. ("PSI," sometimes with Harley,
Safe Seal, Valve and Spinsafe, Safe Seal Canada and GSV being herein
collectively called the "BORROWERS," and singly called a "BORROWER"); and,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("TEXAS COMMERCE") and THE CHASE
MANHATTAN BANK ("CHASE" and Texas Commerce and Chase being herein sometimes
collectively, the "LENDERS", and individually, a "LENDER"); and,
THE CHASE MANHATTAN BANK (the "AGENT"), as Agent for the Lenders as set out
herein.
RECITALS
Harley, Safe Seal, Valve, Spinsafe, Safe Seal Canada, the Agent and the
Lenders entered into a Credit Agreement dated January 31, 1997, as amended in
First Amendment to Credit Agreement dated January 31, 1997 (collectively, the
"PRIOR AGREEMENT"). The Borrowers, the Agent and the Lenders modified the terms
of the Prior Agreement and entered into an Amended and Restated Credit Agreement
(the "RESTATED AGREEMENT") dated June 12, 1997. The Prior Agreement and the
Restated Agreement are sometimes collectively herein referred to as the "PRIOR
CREDIT AGREEMENTS." The Borrowers, the Agent and the Lenders desire to further
amend and restate the provisions of the Prior Credit Agreements as herein set
out. Subject to the terms hereof, the Lenders agree to make the Loans available
for the purposes herein set out to the Borrowers.
In consideration of the premises, for other good, fair and valuable
considerations, the receipt, adequacy and reasonable equivalency of which are
acknowledged, and for other valuable consideration, the parties agree as set out
herein.
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Second Restated Agreement and the
other Loan Documents, unless the context requires otherwise, the following terms
shall have the respective meanings ascribed to them in this Article or in the
Sections referred to below:
"ACCOUNT DEBTORS" means all, and "ACCOUNT DEBTOR" means any account debtor,
customer or other obligor with respect to any of the Accounts.
"ACCOUNTS", "CHATTEL PAPER", "CONTRACTS", "CONTRACT RIGHTS", "DOCUMENTS",
"EQUIPMENT", "FIXTURES", "GENERAL INTANGIBLES", "GOODS", and "INSTRUMENTS" shall
have the meanings ascribed to such terms in the UCC, and shall mean the
Accounts, Chattel Paper, Contracts, Contract Rights, Docu-
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ments, Equipment, Fixtures, General Intangibles, Goods, and Instruments of each
of the Borrowers in which the Agent is granted security interests for the
benefit of the Lenders pursuant to the Loan Documents.
"ACT OF COLLATERAL MORTGAGE" means the first priority Act of Collateral Mortgage
and Collateral Assignment of Proceeds executed and delivered pursuant to the
Prior Agreement.
"ADJUSTED LIBOR RATE LOANS" means all, and "ADJUSTED LIBOR RATE LOAN" means any,
of the Loans, with respect to any Interest Period, which bears interest at a
rate of interest determined by reference to the LIBOR Rate for such Interest
Period.
"ADJUSTED LIBOR RATE" means, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the product of (i) the LIBOR Rate in effect for
such Interest Period, and (ii) Statutory Reserves.
"ADVANCES" means all, and "ADVANCE" means any, of the disbursements by the
Lenders of the sums loaned to the Borrowers pursuant to this Second Restated
Agreement.
"AFFILIATE" of any Person means any other Person which, directly or indirectly,
controls or is controlled by or is under common control with such Person and,
without limiting the generality of the foregoing, includes (i) any Person which
beneficially owns or holds five per cent or more of any class of Voting Shares
of such Person or five per cent or more of the equity interest in such Person,
(ii) any Person of which such Person beneficially owns or holds five per cent or
more of any class of Voting Shares or in which such Person beneficially owns or
holds five per cent or more of the equity interest in such Person and (iii) any
director, officer, member, manager or employee of such Person. For the purposes
of this definition, the term "CONTROL" (including, with correlative meanings,
the terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with respect
to any Person, 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 Shares or by contract or otherwise.
"AGENT" shall have the meaning ascribed to such term in the preamble hereof.
"AGREEMENT" means this Second Restated Agreement and the Prior Credit
Agreements, as amended and restated herein, and as it may, from time to time, be
further amended and restated.
"ALLWASTE GUARANTY AGREEMENT" means the limited guaranty agreement executed by
Allwaste pursuant to the Prior Agreement for the benefit of the Lenders, the
Guaranty Confirmation Letter executed by Allwaste pursuant to the terms of the
Restated Agreement and the Guaranty Confirmation Letter executed by Allwaste
pursuant to the terms of this Second Restated Agreement
"ALLWASTE" means Allwaste, Inc., a Delaware corporation.
"ALTERNATE BASE RATE LOANS" means that portion of any Loan which bears interest
at a rate of interest determined by reference to the Alternate Base Rate.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the greater
of (i) the Base Rate in effect on such day, (ii) the Base CD Rate in effect on
such day PLUS one (1) per cent, or (iii) the Federal Funds Effective Rate in
effect on such day PLUS one-half (1/2) of one (1) per cent. If the
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Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Base CD Rate or the Federal
Funds Effective Rate, or both, for any reason, including the inability or
failure of the Agent to obtain sufficient quotations in accordance with the
terms hereof, the Alternate Base Rate shall be determined without regard to
clause (ii) or (iii), or both, of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Base Rate,
the Base CD Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Base Rate, the Three-Month Secondary CD
Rate or the Federal Funds Effective Rate, respectively.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such Lender's
Domestic Lending Office in the case of an Alternate Base Rate Loan and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Loan.
"APPLICABLE MARGIN" shall have the meaning ascribed to such term in Section 5.5.
"APPRAISAL" means the appraisals rendered in connection with the Prior Credit
Agreements.
"ASSESSMENT RATE" means the annual assessment rate (net of refunds) estimated by
the Agent (in good faith, but in no event in excess of statutory or regulatory
maximums) to be payable by the Agent to the Federal Deposit Insurance
Corporation (or any successor) for insurance to such Governmental Authority (or
such successor) of time deposits made in Dollars at the Agent's U.S. offices
during the current calendar year.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into by a
Lender and an assignee and accepted by the Agent, in substantially the form
attached to the Restated Agreement.
"ASSIGNMENT OF LEASES" means all, and "ASSIGNMENT OF LEASE" means any, of the
Assignment of Leases and Rents executed pursuant to the Prior Credit Agreements.
"AVAILABILITY" means, at any time, with respect to the Revolving Credit Loans,
the Revolving Credit Commitment (as such amount may be reduced or increased in
accordance with the provisions of this Second Restated Agreement), MINUS the
sum, at such time, of (i) the unpaid principal balance of, and accrued interest
and fees on, the Revolving Credit Loans, (ii) the amounts of outstanding Letters
of Credit and Letters of Credit fees, and (iii) the Reserves established by the
Agent pursuant to Section 2.3.B.
"BASE CD RATE" means the sum of (i) the product of (a) the Three-Month Secondary
CD Rate, and (b) Statutory Reserves, and (ii) the Assessment Rate.
"BASE RATE" means the variable rate of interest announced from time to time by
Chase as the prime rate, and used by Chase as a general reference rate of
interest, but which rate of interest may not be the lowest rate charged by Chase
on similar loans. If Chase shall, during the term of this Second Restated
Agreement, abolish or abandon the practice of announcing or publishing a "PRIME
RATE", then the "BASE RATE" used during the remaining term of this Second
Restated Agreement shall be that interest rate or other general reference rate
then in effect and used by Chase, which, from time to time, in the judgment of
Chase, most effectively approximates the initial definition of the "BASE RATE".
"BOARD" means the Board of Governors of the Federal Reserve System of the U.S.
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"BORROWERS" means all, and "BORROWER" means any, of Safe Seal, Harley, Valve,
Spinsafe, Safe Seal Canada, GSV, PSI and any other Consolidated Subsidiary of
Safe Seal which the Lenders may, at the time of its acquisition or formation by
a Borrower, or at any subsequent time, require to be a Borrower hereunder.
"BORROWING BASE CERTIFICATE" means any of the certificates attached to a
Certificate of Compliance and delivered by Borrowers to the Agent calculating
the Borrowing Base pursuant to Section 9.1.A.(6).
"BORROWING BASE" means the total amounts calculated pursuant to Section 2.3 to
determine Availability.
"BORROWING DATE" means the date (which must be a Business Day) specified in (i)
any Notice of Revolving Credit Advance, (ii) a Notice of Term Loan Advance,
(iii) Letter of Credit Agreement, or (iv) any Notice of Steam Supply Advance, as
a date on which the Borrowers request the Agent make an Advance or issue a
Letter of Credit.
"BORROWING" means any amount disbursed by the Agent, (i) to or on behalf of the
Borrowers under the Loan Documents, whether such amount advanced constitutes an
original disbursement of funds, the continuation of an amount outstanding, (ii)
amounts advanced and outstanding under a Letter of Credit (until such payment is
reimbursed in accordance with the applicable Letter of Credit Agreement or the
Letter of Credit is returned to the Agent), or (iii) a disbursement of funds in
accordance with and to satisfy the Obligations.
"BUILDINGS" shall have the meaning ascribed to such term in the Mortgages.
"BUSINESS DAY" means any day, other than a Saturday, Sunday or legal holiday in
the State of New York, on which banks are open for substantially all their
banking business in New York, New York except that, if any determination of a
"BUSINESS DAY" shall relate to a Eurodollar Loan, the term "BUSINESS DAY" shall,
in addition, exclude any day on which banks are not open for dealings in Dollar
deposits in the London interbank market.
"CAPITAL EXPENDITURE" means any expenditure by a Person for an asset which will
be used in a year or years subsequent to the year in which the expenditure is
made and which asset is properly classifiable in relevant financial statements
of such Person as equipment, real property, improvements, fixed assets, or a
similar type of capitalized asset in accordance with GAAP.
"CAPITAL LEASE" means, as of any date, any lease of property, real or personal,
which would be capitalized on a balance sheet of the lessee prepared as of such
date in accordance with GAAP, together with any other lease by such lessee which
is in substance a financing lease, including, without limitation, any lease
under which (i) such lessee has or will have an option to purchase the property
subject thereto at a nominal amount or at an amount less than a reasonable
estimate of the fair market value of such property as of the date such lease is
entered into, or (ii) the term of the lease approximates or exceeds the expected
useful life of the property leased thereunder.
"CASH COLLATERAL ACCOUNT" means the non-interest bearing cash collateral account
maintained by the Borrowers with Texas Commerce in the names of the Borrowers
pursuant to Section 8.1, and the Lockbox Agreement.
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"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended from time to time, and all regulations and
rulings issued thereunder.
"CERTIFICATE OF COMPLIANCE" means any of the certificates delivered by the
Borrowers pursuant to Section 9.1.A.(6).
"CHANGE OF CONTROL" means (i) if any Person, or group of Persons acting together
shall acquire sufficient stock ownership of any of the Borrowers or any of the
Steam Supply Group to permit such Person or group to elect a majority of the
Board of Directors of any Borrower or member of the Steam Supply Group or
otherwise control any Borrower or member of the Steam Supply Group, (ii) if
there shall occur any merger, consolidation or dissolution of any Borrower or
any member of the Steam Supply Group with any other Person, or (iii) if there
shall occur any sale, lease or other disposition of all or substantially all of
the assets or capital stock of any Borrower or any member of the Steam Supply
Group to any other Person.
"CODE" means the Internal Revenue Code of 1986, as amended from time to time.
"COLLATERAL ASSIGNMENT OF LEASES AND RENTS" means the first priority Collateral
Assignment of Leases and Rents executed and delivered pursuant to the Prior
Agreement.
"COLLATERAL DOCUMENTS" means all mortgages, acts of collateral mortgage and
collateral assignment of proceeds, assignments of leases, collateral assignments
of leases, security agreements, collateral pledge and security agreements,
pledge agreements, guaranty agreements, security agreement-collateral
assignments of notes, and any other agreements or documents executed or
delivered to secure the repayment of the Obligations or any part thereof.
"COLLATERAL MORTGAGE NOTE" means that one certain promissory note in the
original principal sum of $300,000.00, dated January 31, 1997, executed by
Harley payable to the order of Bearer pursuant to the Prior Agreement.
"COLLATERAL PLEDGE AND SECURITY AGREEMENT" means the first priority Collateral
Pledge and Security Agreement executed and delivered pursuant to the Prior
Agreement.
"COLLATERAL" means and includes all of each Borrower's assets now owned or
hereafter acquired, except for the interests owned by Valve in a real property
tract in Charleston, South Carolina, the interests owned by GSV in real property
tract in Florida and the interests owned by PSI in a real property tract in
Sulphur, Louisiana.
"COMMITMENT LETTER" means the commitment letter dated January 17, 1997, from
Chase and Texas Commerce addressed to the Safe Seal and Allwaste, as the same
may be amended, modified or supplemented from time to time.
"COMMITMENT TERMINATION DATE" means January 30, 2000, or if such date is not a
Business Day, then the Business Day preceding such date.
"COMMITMENT" means, with respect to each Lender, the obligation of the Lender to
extend credit to the Borrowers in an amount equal to its respective Percentage
of the Revolving Credit Commitment, the
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Total Term Loan Commitment, and the Steam Supply Commitment, as each such
Commitment may be adjusted from time to time pursuant to the terms of this
Second Restated Agreement.
"CONSEQUENTIAL LOSS" shall have the meaning set forth in Section 5.21.
"CONSOLIDATED SUBSIDIARIES" means Spinsafe, Safe Seal Canada, GSV and PSI as to
Safe Seal, and Valve as to Harley, and any other entity acquired by Safe Seal or
Harley, the capital stock of which is owned in its entirety by Safe Seal, Harley
or a wholly owned direct subsidiary of either of them, and "CONSOLIDATED
SUBSIDIARY" means any of them.
"CONTRACT RATE" means each, as applicable, of the rates of interest described in
Section 5.4.
"CONTROLLED GROUP" means (i) the controlled group of corporations as defined in
ss.1563 of the Code, or (ii) the group of trades or businesses under common
control as defined in ss.414(c) of the Code, of which a Borrower is or may
become a part.
"CONVERSION DATE" shall have the meaning ascribed to such term in Section
5.4.A.(4) or Section 5.4.B.(3), as applicable.
"DEBT SERVICE COVERAGE RATIO" shall have the meaning ascribed to such term in
Section 9.2.B.
"DEBT SERVICE EXPENSE" means, with respect to any Person for any period, the
aggregate of regularly scheduled principal payments of all long-term
Indebtedness (including, without limitation, Subordinated Indebtedness) made or
to be made by such Person during such period in accordance with GAAP.
"DEBTOR LAWS" means all applicable liquidation, conservatorship, bankruptcy,
moratorium, arrangement, receivership, insolvency, reorganization or similar
laws, from time to time in effect, affecting the rights of creditors generally.
"DEFAULT RATE" shall have the meaning ascribed to such term in Section 5.7.
"DEFAULT" shall have the meaning ascribed to such term in Section 12.1.
"DIVIDENDS" means in respect of any Person, (i) cash distributions or any other
distributions (including distributions by tax-option corporations) on, or in
respect of, any class of capital stock of such Person, whether in cash,
property, securities or a combination thereof (whether by reduction of capital
or otherwise), except for distributions made solely in shares of stock of the
same class, and (ii) any and all funds, cash or other payments (or the setting
aside of any amounts for any such purpose) made in respect of the redemp tion,
repurchase or acquisition of such stock, unless such stock shall be redeemed or
acquired through the exchange of such stock with stock of the same class.
"DOLLARS" and the symbol "$" shall refer to currency of the U.S.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the office of such
Lender specified as its "DOMESTIC LENDING OFFICE" opposite its name as set out
in the Prior Agreement, or such other office of such Lender as such Lender may,
from time to time, specify to the Borrowers and the Agent.
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"EBITDA" means for any fiscal period of the Borrowers, the sum of the following
which would be reflected on the consolidated income statement of the Borrowers
prepared in accordance with GAAP, (i) net income; PLUS, (ii) income taxes; PLUS
(iii) Interest Expense; PLUS, (iv) non-cash charges in respect of depreciation
and amortization.
"EFFECTIVE DATE OF THE PRIOR AGREEMENT" shall mean January 31, 1997.
"EFFECTIVE DATE OF THE RESTATED AGREEMENT" shall mean June 12, 1997.
"EFFECTIVE DATE OF THIS SECOND RESTATED AGREEMENT" shall mean July 28, 1997.
"EFFECTIVE DATES OF THE PRIOR CREDIT AGREEMENTS" shall mean, respectively, the
effective dates of the execution and delivery of the Prior Credit Agreements.
"ELIGIBLE ACCOUNTS" means, at the time of any determination thereof, each
Account of Harley (and for the purposes of the term "ELIGIBLE ACCOUNTS" as it
relates to Harley shall mean and include Harley and Valve) or Safe Seal (and for
the purposes of the term "ELIGIBLE ACCOUNTS" as it relates to Safe Seal shall
mean and include Safe Seal, Spinsafe, GSV and PSI) as to which the following
requirements have been fulfilled to the satisfaction of the Agent. Standards of
eligibility may be fixed and revised from time to time solely by the Agent in
the Agent's judgment. In general, without limiting the foregoing, an Account
shall in no event be deemed to be an Eligible Account unless:
A. Harley or Safe Seal has lawful and absolute title to the Account and
the Account constitutes an "ACCOUNT" within the meaning of the UCC.
B. All payments due on the Account have been invoiced and the Account is
not evidenced by any Chattel Paper, promissory note, or other
Instrument.
C. The Account is a valid, legally enforceable obligation of an Account
Debtor who is obligated under the Account for goods or services
previously delivered or rendered to the Person and the Account has not
been outstanding for more than ninety (90) days from invoice date.
D. There has been excluded from the Account any portion that is subject to
any dispute, setoff, counterclaim, contras, chargebacks, net-out
contract, deduction, credits, returns, discounts, and allowances of any
nature at any time issued, owing, granted, outstanding, available or
claimed, and other claim or defense on the part of the Account Debtor
or any claim on the part of the Account Debtor denying liability for
the Account.
E. The Account Debtor has finally accepted the goods or services from the
sale out of which the Account arose and has not objected to goods or
services or returned any of such goods, except for complaints made or
goods returned in the ordinary course of business for which, in the
case of goods returned, goods of equal or greater value have been
shipped in return.
F. Harley or Safe Seal has the full and unqualified right to assign and
grant a security interest in the Account to the Agent as security for
the Obligations.
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G. The Account is subject to a fully perfected first priority security
interest and Lien in favor of the Agent for the benefit of the Lenders
pursuant to the Loan Documents, prior to the rights of, and enforceable
as such, against any other Person.
H. The Account is not subject to any Lien in favor of any Person other
than the Lien of the Agent pursuant to the Loan Documents.
I. The Account arose from a transaction in the ordinary course of business
of Harley or Safe Seal from a completed, outright and lawful sale of
goods to which title (subject to any security interests retained by
Harley or Safe Seal or created by an Account Debtor in favor of Harley
or Safe Seal) has passed to the Account Debtor, or for the rendering of
services by or on behalf of Harley or Safe Seal to the Account Debtor.
J. The Account Debtor has not asserted that the Account, and neither
Harley nor Safe Seal is aware that the Account, arises out of a xxxx
and hold, consignment or progress billing arrangement.
K. An Eligible Account shall not include any Account from an Account
Debtor who is obligated to Harley or Safe Seal on any Account
whatsoever if more than fifty (50) per cent of the Accounts of that
Account Debtor has been due and payable for more than ninety (90) days
from the invoice date.
L. The Account Debtor is a U.S. Person and no Account Debtor in respect of
the Account is, (i) primarily conducting business in any jurisdiction
located outside the U.S., except those Accounts secured by letters of
credit specifically approved by the Agent, (ii) an Affiliate of a
Borrower or a Consolidated Subsidiary, (iii) any Governmental
Authority, domestic or foreign, unless secured by an assignment of
claims in form and content satisfactory to the Agent, and duly
confirmed by the Governmental Authority, or (iv) the subject of a
proceeding under any Debtor Laws.
M. An Eligible Account shall not include an Account from or among any
Affiliates of the Borrowers or an Account which arises out of a
transaction in which any Borrower or Xxxxxxx dated Subsidiary shall
have provided any surety or guaranty bond to the Account Debtor or
other Person.
N. The Account complies with all material requirements of all applicable
laws and regulations, whether Federal, state or local.
O. The Account is denominated in and provides for payment by the Account
Debtor in Dollars.
P. The Account has not been and is not required to be charged off or
written off as uncollectible in accordance with GAAP or the customary
business practice of Harley or Safe Seal.
Q. The Agent shall have the right to approve, in the Agent's business
judgment, the credit-worthiness of the Account Debtor.
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"ELIGIBLE INVENTORY" shall mean the Inventory described in Section 2.4, however,
there shall be excluded from Eligible Inventory any item in which the Lenders do
not have a perfected first priority Lien except as permitted in Section 2.4.
"EMPLOYEE PLAN" means any, and "EMPLOYEE PLANS" means all, employee benefit or
other plans maintained, in whole or in part, for the employees of the Borrowers
and the Consolidated Subsidiaries or any ERISA Affiliate, and covered by Title
IV of ERISA, or subject to the minimum funding standards under ss.412 of the
Code.
"ENVIRONMENTAL LAWS" means all Requirements relating to pollution or protection
of the environment (including, but not limited to, ambient air, surface water,
groundwater, land surface, and subsurface strata), including, but not limited
to, CERCLA/XXXX, RCRA/HSWA, and other laws relating to (i) Hazardous Materials,
or (ii) the generation, manufacture, processing distribution, use treatment,
handling, storage, disposal or transportation of Hazardous Materials.
"ENVIRONMENTAL SITE ASSESSMENTS" means the Phase I Environmental Site Assessment
and a Phase II Environmental Site Assessment of the Mortgaged Property in Tulsa,
Oklahoma performed pursuant to the Prior Agreement.
"ERISA AFFILIATE" means any Person which, together with a Borrower or any
Subsidiary, would be treated as a single employer under the provisions of Title
I or Title IV of ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
together with all regulations issued pursuant thereto.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the office of
such Lender specified as its "EURODOLLAR LENDING OFFICE" opposite its name as
set out in the Prior Agreement (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender as such Lender may, from
time to time, specify to the Borrowers and the Agent.
"EURODOLLAR LOANS" means all, and "EURODOLLAR LOAN" means any, of the Loans,
with respect to any Interest Period, which bears interest at a rate of interest
determined by reference to the Adjusted LIBOR Rate for such Interest Period.
"EVENT OF DEFAULT" shall have the meaning ascribed to such term in Section 12.1.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, 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 on the next
succeeding 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 the day of such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
"FINANCIAL OFFICER" means, with respect to any Person, the chairman, the
president, the chief executive officer, or the chief financial officer of such
Person.
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"FINANCIAL STATEMENTS" means all, and "FINANCIAL STATEMENT" means any, of the
balance sheets, income statements stockholders statements and statements of cash
flow and contingent liabilities of, (i) the Borrowers and the Consolidated
Subsidiaries, and (ii) the members of the Steam Supply Group.
"FINANCING STATEMENT" means each UCC-1 financing statement sufficient for
purposes of perfecting the Agent's security interest for the benefit of the
Lenders in the Collateral pursuant to the UCC.
"FISCAL YEAR" means the fiscal year of Safe Seal for accounting purposes ending
each December 31.
"FREE CASH FLOW" means, with respect to any Person for any period, the amount,
if any, by which Funds Flow From Operations of such Person and its Subsidiaries
for such period exceeds the sum of (i) Capital Expenditures, PLUS (ii)
Dividends, PLUS (iii) the Debt Service Expense of such Persons and its
Subsidiaries for such period, and PLUS (iv) Capital Lease payments of such
Person during such period.
"FUNDED DEBT RATIO" means Funded Debt divided by EBITDA.
"FUNDED DEBT" means interest bearing Indebtedness (including Subordinated
Indebtedness) and preferred stock.
"FUNDING ACCOUNT" means the non-interest bearing account maintained by the
Borrowers at Texas Commerce pursuant to Section 2.5.
"FUNDS FLOW FROM OPERATIONS" means Net Income PLUS depreciation, amortization,
and changes in deferred taxes.
"GAAP" means those generally accepted accounting principles and practices which
are recognized as such by the American Institute of Certified Public Accountants
acting through its Accounting Principles Board or by the Financial Accounting
Standards Board ("FASB") or through other appropriate boards or committees
thereof and which are consistently applied for all periods after the Effective
Date of the Prior Agreement so as to properly reflect the financial condition,
and the results of operations and cash flows, of the Borrowers, except that any
accounting principle or practice required to be changed by the Accounting
Principles Board or FASB (or other appropriate board or committee of the boards)
in order to continue as a generally accepted accounting principle or practice,
may be so changed. In the event of a change in GAAP, the Agent and the Borrowers
will thereafter negotiate in good faith to revise any covenants of this Second
Restated Agreement affected thereby in order to make such covenants consistent
with GAAP then in effect. If no agreement is reached, the financial covenants
shall be calculated based on GAAP before any change in GAAP.
"GOVERNMENTAL AUTHORITY" means any government (or any political subdivision or
jurisdiction thereof), court, bureau, agency or other governmental authority,
domestic or foreign, having jurisdiction over any Borrower or Guarantor or any
Borrower's business or properties.
"GUARANTORS" means all, and "GUARANTOR" means each Subsidiary of a Borrower or a
Consolidated Subsidiary which the Lenders may, at the time of its acquisition or
formation by a Borrower or any time subsequent thereto, require to be a
guarantor of the Obligations after the Effective Date of the Prior Agreement.
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"GUARANTY AGREEMENTS" means each of the guaranty agreements executed by the
Guarantors and any other Person pursuant to Section 10.1.E for the benefit of
the Lenders.
"GUARANTY" means any contract, agreement or understanding of any Person pursuant
to which such Person guarantees, or in effect guarantees, in writing any
Indebtedness of any other Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including, without limitation, agreements: (i) To
purchase such Indebtedness or any property constituting security therefor; (ii)
to advance or supply funds (a) for the purchase or payment of such Indebtedness,
or (b) to maintain net worth or working capital or other balance sheet
conditions, or otherwise to advance or make available funds for the purchase or
payment of such Indebtedness; (iii) to purchase property, securities or service
primarily for the purpose of assuring the holder of such Indebtedness of the
ability of the Primary Obligor to make payment of the Indebtedness; or, (iv)
otherwise to assure the holder of the Indebtedness of the Primary Obligor
against loss in respect thereof. "GUARANTY" shall not include, however, the
indorsement of negotiable instruments or documents for deposit or collection by
a Borrower or Guarantor in the ordinary course of business.
"HARLEY STOCK" means all of the outstanding and issued capital stock of Harley.
"HAZARDOUS MATERIALS INDEMNIFICATION AGREEMENT" means the agreement executed
pursuant to the Restated Agreement.
"HAZARDOUS MATERIALS" means hazardous substances (as defined in CERCLA/XXXX and
regulations promulgated thereunder), hazardous wastes (as defined in RCRA/HSWA
and regulations promulgated thereunder), Class I Industrial Solid Wastes,
asbestos or asbestos-containing materials or polychlorinated biphenyl, and any
material quantities of any other pollutants or contaminants, including, but not
limited to, any material quantities of any flammable material, explosive
materials, radioactive materials, waste oil, or used oil. In the event that
either CERCLA/XXXX or RCRA/HSWA is ever amended to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment. To the extent the Environmental Laws in effect
in any State wherein any of the Mortgaged Property or the Premises are located
establish a meaning of "HAZARDOUS SUBSTANCES" or "HAZARDOUS WASTES" which is
broader than that specified in either CERCLA/XXXX or RCRA/HSWA, such broader
meaning shall apply.
"HSWA" means the Hazardous and Solid Waste Amendments of 1984, as amended from
time to time, and all regulations and rulings issued thereunder.
"INDEBTEDNESS" means, with respect to any Person, all indebtedness, obligations
and liabilities of such Person, including, without limitation: (i) All
liabilities which would be reflected on a balance sheet of such Person prepared
in accordance with GAAP; (ii) all obligations of such Person in respect of any
Guaranty; (iii) all obligations, indebtedness and liabilities secured by any
Lien or any security interest on any property or assets of such Person; and,
(iv) all issued and outstanding preferred stock, which is redeemable by the
holder of such stock, of such Person valued at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends.
"INTANGIBLE ASSETS" means those assets of any Person which are (i) deferred
assets, other than prepaid insurance and prepaid taxes, (ii) patents,
copyrights, trademarks, trade names, franchises, goodwill, experimental
expenses, covenants not to compete and other similar assets which would be
classified as intangible assets on a balance sheet of such Person, prepared in
accordance with GAAP, (iii) unamor-
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tized debt discount and expense, and (iv) assets located, and notes and
receivables due from obligors domiciled, outside of the U.S. unless same are
backed fully by negotiable Letters of Credit issued or confirmed by U.S. banks
which are satisfactory to Agent.
"INTEREST OPTION" shall have the meaning ascribed to such term in Section 5.4.
"INTEREST PAYMENT DATE" means (i) as to any Adjusted Base Rate Loan, (a) the
last day of each month commencing on the first of such days to occur after such
Loan is made or any Adjusted Libor Rate Loan is converted to a Base Rate Loan,
and (b) the Commitment Termination Date, and (ii) as to any Eurodollar Loan, (a)
the last day of each month commencing on the first of such days to occur after
such Loan is made and the last day of the Interest Period for such Loan, and (b)
the Commitment Termination Date.
"INTEREST PERIOD" means, with respect to any Eurodollar Loan, the period
commencing on the Borrowing Date and ending on the Commitment Termination Date,
consistent with the following provisions. The duration of each Interest Period
shall be selected by the Borrowers in a Notice of Revolving Credit Advance as
provided in Section 2.1 or the Notice of Term Loan Advance as provided in
Section 3.1, or a Rollover Notice as provided in Section 5.4.A.(3):
A. With respect to Eurodollar Loans requested by the Borrowers:
(1) Initially, the period commencing on the Borrowing Date or
Conversion Date with respect to such Eurodollar Loan and ending one
(1), two (2), three (3) or six (6) months thereafter; and,
(2) Thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such Eurodollar
Loan and ending one (1), two (2), three (3) or six (6) months
thereafter, as selected by the Borrowers in a Rollover Notice.
B. Each Interest Period shall be as selected by the Borrowers, subject to
the Agent's consent, at the Agent's sole discretion. The Borrowers'
choice of Interest Period is also subject to the following limitations:
(1) No Interest Period shall end on a date after the Commitment
Termination Date; and,
(2) If the last day of an Interest Period would be a day other than a
Business Day, the Interest Period shall end on the next succeeding
Business Day (unless the Interest Period relates to a Eurodollar Loan
and the next succeeding Business Day is in a different calendar month
than the day on which the Interest Period would otherwise end, in which
event the Interest Period shall end on the preceding Business Day).
"INTEREST RATE PROTECTION AGREEMENT" means the agreement entered into pursuant
to the Prior Agreement.
"INVATEC STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement dated July
, 1996, among Invatec, X. Xxxxx Xxxx and X. X. Xxxx.
"INVATEC" means Innovative Valve Technologies, Inc., a Delaware corporation.
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"INVENTORY DESIGNATION REPORT" means each written report delivered to the Agent
pursuant to Section 9.1.A.(5) designating the Inventory of Harley, Valve, GSV or
PSI which is intended to be included in Eligible Inventory.
"INVENTORY" means, as of any date, (i) the inventory which would be reflected on
the balance sheet of the Borrowers as of such date prepared in accordance with
GAAP, and (ii) the assets of the Borrowers held for sale, and (iii) in all
instances inventory in which the Agent is granted security interests pursuant to
the Loan Documents.
"INVESTMENT" means any investment in any period, whether by means of share
purchase, loan, advance, extension of credit, capital contribution or otherwise,
in or to a Person, the Guaranty of any Indebtedness of such Person, or the
subordination of any claim against such Person to other Indebtedness of such
Person.
"IPO" means the consummation of the sale or issuance in a public or private
offering of any debt or equity securities of the Borrowers.
"IRS" means the Internal Revenue Service, Department of the U.S. Treasury, an
agency of the U.S.
"LANDLORD AGREEMENTS" means all, and "LANDLORD AGREEMENT" means any, of the
agreements executed pursuant to the provisions Section 10.1.C.
"LAND" means the real estate in Tulsa, Oklahoma and Gonzales, Louisiana owned by
Harley and each described in the Real Property Exhibit attached to the Prior
Agreement.
"LEASEHOLDS" means all, and "LEASEHOLD" means any, (i) of the leases described
in the Schedule to the Prior Credit Agreements by which a Borrower is entitled
to occupy and use the Premises, and (ii) any and all other leases, subleases,
licenses, concessions or other agreements, written or verbal, now or hereafter
in effect, which grant a possessory interest in and to, or the right to use, all
or any portion of the Premises and any other leased real property.
"LEASES" means any and all leases, subleases, licenses, concessions or other
agreements, written or verbal, now or hereafter in effect, which grant a
possessory interest in and to, or the right to use, all or any portion of the
Mortgaged Property, and all other agreements and contracts, which, in any
manner, relate to the use, occupancy, enjoyment or ownership of all or any
portion of the Mortgaged Property.
"LENDERS" means all, and "LENDER" means any, of the Lenders described in the
preamble hereof.
"LETTER OF CREDIT AGREEMENT" shall have the meaning ascribed to such term in
Section 2.2.A.
"LETTERS OF CREDIT" means all, and "LETTER OF CREDIT" means any, of the standby
or documentary letters of credit issued by the Agent for Lenders for the benefit
of a Borrower pursuant to Section 2.2.
"LIBOR RATE" means, with respect to any Eurodollar Loan for any Interest Period,
an interest rate per annum equal to the rate at which Dollar deposits
approximately equal in principal amount to the Euro- dollar Loan requested and
for a maturity equal to the applicable Interest Period are offered for Euro-
dollars in immediately available funds to the London branch of the Agent by
leading banks in whatever
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Eurodollar interbank market may be selected by the Agent, in its sole
discretion, at approximately 11:00 A.M., London time, two (2) Business Days
prior to the first day of such Interest Period.
"LIEN" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrangement, or any other
interest in property designed to secure the repayment of Indebtedness, whether
arising by agreement, under any statute or law, or otherwise.
"LOAN DOCUMENTS" means the Prior Credit Agreements, this Second Restated
Agreement, the Notes, including any renewals, extensions and modifications
thereof, the Guaranty Agreements, the Allwaste Guaranty Agreement, the Allwaste
Guaranty Confirmation Letter, the Collateral Documents and any agreements or
documents executed or delivered pursuant to the terms of the Prior Credit
Agreements or this Second Restated Agreement, and with respect to the Prior
Credit Agreements or this Second Restated Agreement, and such other agreements
and documents, any amendments or supplements thereto or modifications thereof.
"LOAN PARTIES" means the Borrowers and any Person who becomes a Borrower or a
Guarantor after the Effective Date of the Prior Agreement, and the term "LOAN
PARTY" means any of them.
"LOANS" means the Revolving Credit Loans, the Term Loans, and the Steam Supply
Loans and the term "LOAN" means any of them.
"LOCKBOX AGREEMENT" means the agreement executed pursuant to the Restated
Agreement.
"MACHINERY AND EQUIPMENT" means all machinery and equipment of Harley, exclusive
of office equipment and furniture.
"MANDATORY PREPAYMENT" means an amount equal to seventy-five (75) per cent of
Free Cash Flow, if any, of the Borrowers for each Fiscal Year.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on, (i) the
validity, performance, or enforceability of any of the Loan Documents, (ii) the
financial condition or business operations of any Loan Party or Allwaste, (iii)
the ability of any the Borrowers or the Guarantors to fulfill the Obligations,
and/or (iv) the value of the Collateral.
"MAXIMUM RATE" and "MAXIMUM AMOUNT" respectively mean the maximum non-usurious
rate and the maximum non-usurious amount of interest permitted by applicable
laws that at any time, or from time to time, may be contracted for, taken,
reserved, charged or received on the Obligations under the laws which are
presently in effect of the U.S. and the State of New York, applicable to the
holders of the Notes or, to the extent permitted by law, under such applicable
laws of the U.S. and the State of New York which may hereafter be in effect and
which allow a higher maximum non-usurious interest rate than applicable laws now
allow.
"MORTGAGED PROPERTY" means the Buildings, Land and other property described in
the Mortgages.
"MORTGAGES" means both, and "MORTGAGE" means each, of the Oklahoma Mortgage and
the Act of Collateral Mortgage.
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"NET INCOME" or "NET LOSS" means, with respect to any Person other than an
individual for any period, the aggregate income (or loss) of such Person for
such period which shall be an amount equal to net revenues and other proper
items of income for such Person less the aggregate for such Person of any and
all expenses, and less Federal, state and local income taxes, but excluding any
extraordinary gains or losses or any gains or losses from the sale or
disposition of assets other than in the ordinary course of business, all of the
foregoing being computed and calculated in accordance with GAAP.
"NET WORTH" means, with respect to any Person at any time, the sum of such
Person's capital stock, other than mandatorily redeemable preferred stock,
capital in excess of par or stated value of shares of its capital stock,
retained earnings, and any other account which, in accordance with GAAP
constitutes stockholders' equity.
"NOTEMAKER ESTOPPEL CERTIFICATE" shall have the meaning set out in Section
10.1.B.
"NOTES" means all, and "NOTE" means any of the Revolving Credit Notes and Term
Notes, together with any renewals, extensions or modifications thereof.
"NOTICE OF REVOLVING CREDIT ADVANCE" shall have the meaning ascribed to such
term in Section 2.1.
"NOTICE OF STEAM SUPPLY ADVANCE" shall have the meaning set out in Section 4.1.
"NOTICE OF TERM LOAN ADVANCE" shall have the meaning ascribed to such term in
Section 3.1.
"OBLIGATIONS" mean:
A. All present and future indebtedness, obligations and liabilities of any
Loan Party to any of the Lenders arising pursuant to any of the Loan
Documents, regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, joint, several, or
joint and several;
B. All costs incurred by the Agent or any of the Lenders to obtain,
preserve, perfect and enforce the Liens and security interests securing
payment of such indebtedness, liabilities and obligations, and to
maintain, preserve and collect the property in which any of the Lenders
has been granted a Lien to secure payment of the Loans, or any part
thereof, including but not limited to, taxes, assessments, insurance
premiums, repairs, attorneys' fees and legal expenses, rent, storage
charges, advertising costs, brokerage fees and expenses of sale; and,
C. Any other Indebtedness of any Loan Party owing, or which may hereafter
become owing, by any Loan Party to the Agent or any of the Lenders,
arising out of any overdraft or pursuant to any agreement directly
among any Loan Party with the Agent or any of the Lenders; and,
D. All renewals, extensions and modifications of the Indebtedness referred
to in the foregoing clauses, or any part thereof.
"OKLAHOMA MORTGAGE" means the first priority Mortgage executed and delivered
pursuant to the Prior Agreement.
"OPERATIONS AND MAINTENANCE PLAN" shall have the meaning set out in Section
9.1.T.
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"PBGC" means the Pension Benefit Guaranty Corporation, and any successor to all
or any of the Pension Benefit Guaranty Corporation's functions under ERISA.
"PENSION PLAN" means any Employee Plan which is subject to the provisions of
Title IV of ERISA.
"PERCENTAGE" shall mean, with respect to each Lender, the percentage set forth
opposite the name of such Lender on Schedule 2.1 to this Second Restated
Agreement, of the Total Commitment.
"PERMITS" shall have the meaning ascribed in Section 11.1.U.
"PERMITTED LIENS" means: (i) Liens granted to the Agent for the benefit of the
Lenders to secure the Obligations; and, (ii) pledges or deposits made to secure
payment of worker's compensation insurance (or to participate in any fund in
connection with worker's compensation insurance), unemployment insurance,
pensions or social security programs; and, (iii) Liens imposed by mandatory
provisions of law such as for materialmen's, mechanics', warehousemen's and
other like Liens arising in the ordinary course of business securing
Indebtedness the payment for which is not yet due, or if same is due, it is
being contested in good faith and as to which a bond has been provided; and,
(iv) Liens for taxes, assessments and governmental charges or levies imposed
upon a Person or upon such Person's income or profits or property, if the same
are not yet due and payable or if the same are being contested in good faith and
as to which adequate cash reserves have been provided; and, (v) Liens arising
from good faith deposits in connection with tenders, leases, real estate bids or
contracts (other than contracts involving the borrowing of money), pledges or
deposits to secure public or statutory obligations and deposits to secure (or in
lieu of) surety, stay, appearance or customs bonds and deposits to secure the
payment of taxes, assessments, customs duties or other similar charges; and,
(vi) encumbrances consisting of zoning restrictions, easements, or other
restrictions on the use of real property, provided that such items do not impair
the use of such property for the purposes intended, and none of which is
violated by existing or proposed structures or land use; and, (vi) Scheduled
Liens.
"PERSON" shall include an individual, a corporation, non-profit corporation, a
professional association, a joint venture, a general partnership, a limited
partnership, a limited liability company, a limited liability partnership, a
trust, an unincorporated organization or a government or any agency or political
subdivision thereof.
"PLEDGED NOTE" shall have the meaning ascribed to such term in Section 7.1.C.
"PLEDGED STOCK" shall have the meaning ascribed to such term in Section 7.1.B.
"PREMISES" collectively means the leased properties or demised premises
described in each of the Leaseholds.
"PREPAYMENT CHARGE" means a prepayment charge on, as applicable, (i) the
outstanding principal amount of any of the Term Loans being prepaid, or (ii) the
amount of the reduction in the Revolving Credit Commitment made pursuant to
Section 2.7 or the Steam Supply Commitment made pursuant to Section 4.6 and
equal, in either instance, to (a) one and one-half (1 1/2) per cent if such
prepayment or reduction occurs after July 31, 1997, but on or before January 31,
1998, (b) one (1) per cent if such prepayment or reduction occurs after January
31, 1998, but on or before July 31, 1998, or (c) one-half (1/2) of one (1) per
cent if such optional prepayment or reduction occurs after July 31, 1998, but on
or before January 31, 1999. No Prepayment Charge shall be due and owing by the
Borrowers for any
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optional prepayment or reduction after January 31, 1999. No Prepayment Charge
shall be payable on Mandatory Prepayments or if the there is a refinancing of
the Obligations by either of the Lenders.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as amended from
time to time, and all regulations and rulings issued thereunder.
"REGISTER" shall have the meaning ascribed to such term in Section 14.6.C.
"REGULATION D" means Regulation D of the Board, 12 C.F.R. Part 204, or any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"REGULATION G" means Regulation G of the Board, 12 C.F.R. Part 207, or any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"REGULATION T" means Regulation T of the Board, 12 C.F.R. Part 220, as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"REGULATION U" means Regulation U promulgated by the Board, 12 C.F.R. Part 221,
or any successor or other regulation hereafter promulgated by the Board to
replace the prior Regulation U and having substantially the same function.
"REGULATION X" means Regulation X promulgated by the Board, 12 C.F.R. Part 224,
or any successor or other regulation hereafter promulgated by the Board to
replace the prior Regulation X and having substantially the same function.
"REGULATORY DEFECTS" means the failure by any Borrower, the Guarantor or member
of the Steam Supply Group to comply with all laws, statutes, orders, rules and
regulations of any Governmental Authority, and such failure to comply has a
Material Adverse Effect.
"RENTALS" of any Person means, as of any date, the aggregate amount of the
obligations and liabilities, including future obligations and liabilities not
yet due and payable, of such Person to make payments under leases, subleases and
similar arrangements for the use of real, personal or mixed property, other than
leases which are Capital Leases.
"REPORTABLE EVENT" shall have the meaning ascribed to such term in Title IV of
ERISA.
"REQUIREMENTS" means (i) any and all present and future judicial decisions,
statutes, rulings, rules, regulations, orders, permits, certificates or
ordinances of any Governmental Authority in any manner applicable to any Loan
Party or any of their respective properties, and (ii) any and all contracts,
written or oral, of any nature to which any Loan Party or any of their
respective properties may be bound.
"RESPONSIBLE OFFICER" means, with respect to any Person, the chief executive
officer, the president, the chief financial officer or the controller, of such
Person.
"REVOLVING CREDIT ALTERNATE BASE RATE LOAN" means that portion of any Revolving
Credit Loan which bears interest at a rate of interest determined by reference
to the Alternate Base Rate.
"REVOLVING CREDIT COMMITMENT FEE" shall have the meaning set forth in Section
5.19.
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"REVOLVING CREDIT COMMITMENT PERIOD" means the period beginning on the Effective
Date of the Prior Agreement and ending on the earlier of (i) the Commitment
Termination Date, or (ii) the date on which the obligations of the Lenders to
fund Advances hereunder terminates after the occurrence of an Event of Default.
"REVOLVING CREDIT COMMITMENT" means the sum of $10,000,000.00, and with respect
to any Lender, the Revolving Credit Commitment of such Lender as set forth in
Schedule 2.1, as the same may be reduced from time to time pursuant to Section
2.7.
"REVOLVING CREDIT EURODOLLAR LOAN" means that portion of any Revolving Credit
Loan which bears interest at a rate of interest determined by reference to the
Adjusted LIBOR Rate.
"REVOLVING CREDIT LOANS" means the aggregate unpaid principal balance of all
Borrowing made under Section 2.1.
"REVOLVING CREDIT NOTES" means all, and "REVOLVING CREDIT NOTE" means any of the
Notes executed pursuant to the Prior Credit Agreements.
"REVOLVING LOAN CONTRACT RATE" means the rates of interest on the Loans
calculated as set out in Section 5.4.A.
"XXXX" means the Superfund Amendments and Reauthorization Act of 1986, as
amended from time to time, and all regulations and rulings issued thereunder.
"SECURITY AGREEMENT-COLLATERAL ASSIGNMENT OF NOTE" means the first priority
Security Agreement-Collateral Assignment of Note executed pursuant to the Prior
Agreement.
"SECURITY AGREEMENT-PLEDGES" means all, and "SECURITY AGREEMENT-PLEDGE" means
each first priority Security Agreement-Pledge executed pursuant to the Prior
Credit Agreements.
"SECURITY AGREEMENTS" means all, and "SECURITY AGREEMENT" means each first
priority Security Agreement executed pursuant to the Prior Credit Agreements.
"SOLVENT" means, with respect to any Person on a particular date, that on such
date (i) the fair value of the property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent liabilities, of
such Person, (ii) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on the Person's debts as they become absolute and matured, (iii)
such Person is able to realize upon the Person's assets and pay the Person's
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, (iv) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (v) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
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"STATUTORY RESERVES" shall, on any day, mean the difference (expressed as a
decimal) of the number one minus the aggregate of the maximum reserve
percentages (including, without limitation, any basic, marginal, special,
emergency, or supplemental reserves) expressed as a decimal established by the
Board (or any successor governmental body) and any other banking authority to
which any Lender is subject, however:
A. With respect to the Base CD Rate for new negotiable non-personal time
deposits in Dollars of over $100,000.00 and with maturities
approximately equal to three (3) months, the actual reserves
established by the Board; and,
B. With respect to the Adjusted LIBOR Rate for Eurocurrency Liabilities,
as defined in Regu- lation D, such reserve percentages ("EURODOLLAR
RESERVE REQUIREMENT") shall include, with- out limitation, those
imposed under Regulation D or under any similar or successor regula-
tion with respect to Eurocurrency Liabilities or Eurocurrency funding.
Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities
and as such shall be deemed to be subject to such reserve requirements
without benefit of or credit for proration, exceptions or setoffs which
may be available from time to time to any bank under Regulation D. Each
determination by the Agent of the Eurodollar Reserve Requirement shall,
in the absence of manifest error, be conclusive and binding.
C. Statutory Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"STEAM SUPPLY ADVANCES" means all, and "STEAM SUPPLY ADVANCE" means any, of the
disbursements by the Lenders of the sums loaned to the Borrowers pursuant to
this Second Restated Agreement for the purposes of permitting the Borrowers to
make loans to the Steam Supply Group.
"STEAM SUPPLY ALTERNATE BASE RATE LOAN" means that portion of any Steam Supply
Loan which bears interest at a rate of interest determined by reference to the
Alternate Base Rate.
"STEAM SUPPLY AVAILABILITY" means, at any time, with respect to the Steam Supply
Loans, the Steam Supply Commitment (as such amount may be reduced or increased
in accordance with the provisions of this Second Restated Agreement), MINUS the
sum, at such time, of (i) the unpaid principal balance of, and accrued interest
on, the Steam Supply Loans, and (ii) the Steam Supply Reserves established by
the Agent pursuant to Section 4.2.B.
"STEAM SUPPLY BORROWING BASE CERTIFICATE" means any of the certificates attached
to a Steam Supply Certificate of Compliance and delivered by Borrowers to the
Agent calculating the Steam Supply Borrowing Base pursuant to the Steam Supply
Credit Agreement.
"STEAM SUPPLY BORROWING BASE" means the total amounts calculated pursuant to
Section 4.2 to determine the Steam Supply Availability.
"STEAM SUPPLY CASH COLLATERAL ACCOUNT" means the non-interest bearing cash
collateral account maintained by the Steam Supply Group with Texas Commerce in
the names of the Steam Supply Group pursuant to the Steam Supply Credit
Agreement and the Steam Supply Lockbox Agreement.
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"STEAM SUPPLY CERTIFICATE OF COMPLIANCE" means any of the certificates of
compliance delivered by the Steam Supply Group pursuant to the Steam Supply
Credit Agreement.
"STEAM SUPPLY COMMITMENT FEES" shall have the meaning set forth in Section 5.19.
"STEAM SUPPLY COMMITMENT PERIOD" means the period beginning on the Effective
Date of this Second Restated Agreement and ending on the earlier of (i) the
Commitment Termination Date, or (ii) the date on which the obligations of the
Lenders to fund Steam Supply Advances hereunder terminate after the occurrence
of an Event of Default.
"STEAM SUPPLY COMMITMENT" means the sum of $5,000,000.00, and with respect to
any Lender, the obligation of the Lender to extend credit to the Borrowers in an
amount equal to its respective Percentage of the Steam Supply Commitment, as set
forth in Schedule 2.1, and as the same may be reduced from time to time pursuant
to Section 4.6 of this Second Restated Agreement.
"STEAM SUPPLY CONTRACT RATE" means the rates of interest on the Loans calculated
as set out in Section 5.4.A.
"STEAM SUPPLY CREDIT AGREEMENT" means the agreement dated July 28, 1997, among
the Steam Supply Group, as borrowers, and the Borrowers, pursuant to the terms
of which the Borrowers will loan sums to the Steam Supply Group.
"STEAM SUPPLY ELIGIBLE ACCOUNTS" shall have the meaning set therefore in the
Steam Supply Credit Agreement, provided further, the Agent may fix, revise and
modify the standards of eligibility from time to time solely in the Agent's
judgment.
"STEAM SUPPLY ELIGIBLE INVENTORY" shall mean the Eligible Inventory described in
the Steam Supply Credit Agreement, however, there shall be excluded from Steam
Supply Eligible Inventory any item in which the Lenders do not have a perfected
first priority Lien.
"STEAM SUPPLY EURODOLLAR LOAN" means that portion of any Steam Supply Loan which
bears interest at a rate of interest determined by reference to the Adjusted
LIBOR Rate.
"STEAM SUPPLY FUNDING ACCOUNT" means the non-interest bearing account maintained
by the Borrowers at Texas Commerce pursuant to Section 4.4.
"STEAM SUPPLY GROUP" means Invatec, Puget Investments, Inc., Xxxxxxxxxx-Benicia,
Inc, Steam Supply & Rubber Co., Inc., and Xxxxxxxxxx Company.
"STEAM SUPPLY LOAN DOCUMENTS" means the Steam Supply Credit Agreement, the Steam
Supply Note Receivable, including any renewals, extensions and modifications
thereof, the Steam Supply Security Agreement, and any other agreements or
documents executed or delivered pursuant to the terms of the Steam Supply Credit
Agreement and all amendments or supplements thereto or modifications thereof.
"STEAM SUPPLY LOANS" means the aggregate unpaid principal balance of all
Borrowing made under Section 4.1.
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"STEAM SUPPLY NOTE RECEIVABLE" means the promissory note dated July 28, 1997, in
the original principal sum of $5,000,000.00, executed by the Steam Supply Group,
as borrowers, bearing interest and being payable as therein set out to the order
of the Borrowers, and which, pursuant to the terms of this Second Restated
Agreement and the Steam Supply Security Agreement-Collateral Assignment of Note,
has been collaterally assigned and pledged to the Agent for the benefit of the
Lenders.
"STEAM SUPPLY NOTES" means all, and "STEAM SUPPLY NOTE" means any of the Notes
executed pursuant to Section 5.3 of this Second Restated Agreement.
"STEAM SUPPLY PLEDGED STOCK" shall have the meaning ascribed to such term in the
Steam Supply Credit Agreement.
"STEAM SUPPLY SECURITY AGREEMENT-COLLATERAL ASSIGNMENT OF NOTE" means the first
priority Security Agreement-Collateral Assignment of Note executed pursuant to
Section 7.1.I of this Second Restated Agreement.
"STEAM SUPPLY SECURITY AGREEMENTS" means all, and "STEAM SUPPLY SECURITY
AGREEMENT" means any first priority Security Agreement executed pursuant to the
Steam Supply Credit Agreement creating first priority security interests in and
to all of the assets of each member of the Steam Supply Group.
"STEAM SUPPLY SUBORDINATION AGREEMENT" means each subordination agreement
executed pursuant to the Steam Supply Credit Agreement.
"STOCK AND REAL ESTATE PURCHASE AGREEMENT" means the Stock and Real Estate
Purchase Agreement dated May 22, 1997, among Safe Seal, Xxxxx X. Xxxxxx, Xx.,
Xxxxxx X. Xxxxxx, Xxxxxxx Xxxxxx Xxxxxxx, Xxxxx X. Xxxxxx, III, Xxxxxx Xxxx
Xxxxxx, Xxxxx Xxx Xxxxxx and PSI.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement dated December 28,
1996, among Safe Seal, Gene Xxxxx, Xxxxxxx Grounds, Hub Associates and Harley.
"STOCK TRANSFER AGREEMENT" means the Stock Transfer Agreement dated January 24,
1997, among Safe Seal, Xxxx Xxxxxx, Harley, Harley Equipment Corporation and
Xxxxxx Xxxxx.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of a Borrower or Consolidated
Subsidiary which expressly contains in the instruments evidencing the
Indebtedness or in the indenture or other similar instrument under which
Indebtedness is issued (which indenture or other similar instrument shall be
binding on all holders of the Indebtedness), reference to a Subordination
Agreement (in form and substance satisfactory to the Lenders) substantially to
the effect that the holders agree that the Indebtedness evidenced by such
instrument, any renewals or extensions thereof, shall at all times and in all
respects be subject to a Subordination Agreement and subordinate and junior in
right of payment to the Obligations.
"SUBSIDIARY" means, with respect to any Person, the parent of such Person, any
corporation, association or other business entity of which securities or other
ownership interests representing more than fifty (50) per cent of the Voting
Shares or the ordinary voting power are, at the time as of which any
determination is being made, owned or controlled, directly or indirectly, by the
parent or one or more Subsidiaries of the parent.
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"SURVEY" means the ALTA survey of the Land and all improvements located in
Tulsa, Oklahoma, prepared pursuant to the Prior Agreement.
"TANGIBLE NET WORTH" means, with respect to any Person at any time, the sum of
such Person's capital stock, capital in excess of par or stated value of shares
of its capital stock, retained earnings, and any other account which, in
accordance with GAAP constitutes stockholders' equity, LESS treasury stock, LESS
the amount of any write-up subsequent to the Effective Date of the Prior
Agreement in the value of any asset above the cost or depreciated cost thereof
to such Person, LESS the book value of all Intangible Assets which would be
treated as intangibles under GAAP, including, without limitation, good-will,
trademarks, tradenames, patents, copyrights and licenses, covenants not to
compete, and LESS the amounts outstanding on the Pledged Note.
"TEMPORARY CASH INVESTMENT" shall mean any Investment maturing within one (1)
year of the date of acquisition thereof, (i) in direct, readily marketable
obligations of the U.S. or obligations fully guaranteed by the U.S., (ii)
commercial paper rated in the highest grade by Standard & Poor's Corporation or
Xxxxx'x Investor Service, Inc. (collectively, the "RATING AGENCIES"), and (iii)
Dollar time deposits with, and certificates of deposit and banker's acceptances
issued by, Chase, Texas Commerce or any domestic U.S. bank having capital
surplus and undivided profits aggregating at least $5,000,000,000.00 and whose
long-term debt rating is at least investment grade as determined by the Rating
Agencies.
"TERM EURODOLLAR LOAN" means that portion of any Term Loan which bears interest
at a rate of interest determined by reference to the Adjusted LIBOR Rate.
"TERM LOAN COMMITMENT" means with respect to any Lender, the Term Loan
Commitment of such Lender as set forth in Schedule 2.1.
"TERM LOAN CONTRACT RATE" means the rates of interest on the Loans calculated as
set out in Section 5.4.B.
"TERM LOANS" means the aggregate unpaid principal balance of all Borrowing made
under Section 3.1.
"TERM NOTES" means all, and "TERM NOTE" means any of the Term A Notes or the
Term B Notes executed pursuant to the Prior Credit Agreements.
"THREE-MONTH SECONDARY CD RATE" means, for any day, the secondary market rate
for three-month certificates of deposit reported as being in effect on such day
(or, if such day shall not be a Business Day, the next preceding Business Day)
by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York, New York, received at approximately 10:00 a.m., New York, New York,
time, on such day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Agent from three New York, New York negotiable
certificate of deposit dealers of recognized standing selected by it.
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"TITLE COMPANY" means Commonwealth Land Title Insurance Company, whose agent is
Tulsa Abstract & Title Company, Inc.
"TITLE DOCUMENTS" means any all warehouse receipts, bills of lading or similar
documents of title relating to goods in which any of the Borrowers at any time
has an interest, whether now, or at any time or times hereafter, issued to the
Borrowers or the Agent by any Person, and whether covering Inventory or
otherwise.
"TITLE POLICY" means the ALTA title insurance policy issued by the Title Company
pursuant to the Prior Agreement.
"TOTAL COMMITMENT" means the sum of the Revolving Credit Commitment, as the same
may be reduced from time to time pursuant hereto, the Total Term Loan Commitment
and the Steam Supply Commitment.
"TOTAL TERM LOAN COMMITMENT" means the sum of $7,500,000.00 and shall refer to
the Lenders' Term Loan Commitments.
"TRANSACTIONS" shall have the meaning ascribed to such term in Section 11.1.B.
"UCC" means the Uniform Commercial Code in effect in the applicable jurisdiction
in which any of the Collateral is located and includes the Texas Business and
Commerce Code Annotated ss.ss.1.101- 11.108 (Xxxxxx Supp. 1992), as amended.
"UNITED STATES" and "U.S." each means the United States of America.
"VOTING SHARES" of any corporation or limited liability company means shares,
membership certificates or interests of any class or classes, however
designated, having ordinary voting power for the election of at least a majority
of the members of the Board of Directors, or other governing bodies, of such
corporation or limited liability company.
1.2 OTHER DEFINITIONS.
A. All terms defined in this Second Restated Agreement shall have the
above-defined meanings when used in any of the Loan Documents,
certificates, reports or other documents made or delivered pursuant to
this Second Restated Agreement, unless the context therein shall
require otherwise. Defined terms used herein in the singular shall
import the plural and vice versa.
B. As appropriate, terms used herein and defined in the Prior Credit
Agreements will have the meanings ascribed to them in the Prior Credit
Agreements. To the extent required, references to the Effective Dates
of the Prior Credit Agreements shall be the appropriate dates for
performance of the Transactions. References to Exhibits herein include
the Exhibits to the Prior Credit Agreements.
C. As appropriate, terms used herein and defined in the Steam Supply Loan
Documents will have the meanings ascribed to them in the Steam Supply
Loan Documents.
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D. The words "HEREOF", "HEREIN", "HEREUNDER" and similar terms when used
in this Second Restated Agreement shall refer to this Second Restated
Agreement as a whole and not to any particular provision of this Second
Restated Agreement.
E. Unless specifically otherwise noted, references to statutes by Popular
Names are reference to the United States Code Annotated and Vernon's
Annotated Texas Statutes, including the regulations promulgated
thereunder, and all amendments thereof.
F. References to any obligations or liabilities of "THE BORROWERS AND
GUARANTOR" or "THE BORROWERS OR THE GUARANTORS" shall refer to the
joint and several obligations of such Persons.
ARTICLE II
REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
2.1 REVOLVING LOAN COMMITMENTS. Subject to the terms and conditions of the
Prior Credit Agreements, as amended by this Second Restated Agreement, each
Lender agrees, severally, but not jointly, to lend to the Borrowers on a
revolving basis, in one or more Advances from time to time during the Revolving
Credit Commitment Period, an amount equal to such Lender's Percentage set out in
Schedule 2.1 of the amounts requested by the Borrowers in each Notice of
Revolving Credit Advance in the form of Exhibit attached to the Restated
Agreement. The Lenders shall not be obligated to make Advances, however, (i) in
excess of the Lender's Percentage of the Revolving Credit Commitment, (ii) if an
Event of Default or a Default shall exist, and/or, (iii) if the amount of the
Advance exceeds the Availability at such time. Within the limits of this Section
and subject to Section 2.3, the Borrowers may borrow, repay and re-borrow in
accordance with the terms and conditions of this Second Restated Agreement.
2.2 LETTERS OF CREDIT. Subject to the terms and conditions of the Prior
Credit Agreements, as amended by this Second Restated Agreement, each Lender
agrees, severally, but not jointly, to have the Agent issue, from time to time,
during the Revolving Credit Commitment Period, documentary and standby Letters
of Credit on behalf of Safe Seal in amounts equal to the amounts requested by
Safe Seal in a Letter of Credit Agreement. The Agent shall not be obligated to
issue Letters of Credit, however, (i) if the aggregate amount of outstanding
Letters of Credit and the Advances made on the Revolving Credit Loans are in
excess of the lesser of (a) the Availability, or (b) the Revolving Credit
Commitment, (ii) if the total amounts of outstanding Letters of Credit exceed or
would exceed $750,000.00, and/or, (iii) if an Event of Default or a Default
shall exist.
A. The Borrowers shall execute and deliver the Agent's then current form
of Application and Agreement for Letter of Credit ("LETTER OF CREDIT
AGREEMENT"). Stand-by Letters of Credit shall be issued for periods not
in excess of one (1) year and shall have an expiry date not later than
thirty days prior to the Commitment Termination Date. Documentary
Letters of Credit shall have an expiry date not later than one hundred
twenty days after issuance, and in any event not later than thirty days
prior to the Commitment Termination Date.
B. The Borrowers agree to pay or reimburse the Agent the amount paid or to
be paid by the Agent on the date when any draft or draw request is
presented under any Letter of Credit. If the Borrowers have not
reimbursed the Agent for any drafts or draws paid or to be paid within
twenty-four (24) hours following the Agent's demand for reimbursement,
the Agent is irrevocably authorized to fund the Borrowers'
reimbursement obligations as an Advance
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pursuant to Section 2.1 if there is availability and the proceeds of
such Borrowing shall be in payment of the Borrowers' unpaid
reimbursement obligations. If an Advance cannot be made, then the
Borrowers' reimbursement obligation shall constitute a demand
obligation. The Borrowers' obligations under this Section are absolute
and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim, or defense to payment that any Loan Party
may have at any time against the Agent or any of the Lenders. From the
date that a draw has occurred to the date paid, unpaid reimbursement
amounts shall accrue interest as set out in Section 5.4.A.
C. The Agent shall notify the Borrowers of the date and amount of any
draft or draw request presented for honor under any Letter of Credit,
but failure to give notice will not affect the Obligations of the Loan
Parties. The Agent shall pay the requested amount upon present- ment of
a draft or draw request unless presentment on its face does not comply
with the terms of the applicable Letter of Credit. When making payment,
the Agent may disregard (i) any Default or Event of Default that has
occurred, and (ii) obligations under any other agreement that have or
have not been performed by the beneficiary of the Letter of Credit or
any other Person. The Agent is not responsible for, and the Borrowers'
reimbursement obligations for honored drafts and draws will not be
affected by, any matter or event what- soever, including, without
limitation, the validity or genuineness of documents or endorse- ments,
even if the documents should in fact prove to be in any respect
invalid, fraudulent, or forged, or any dispute among a Borrower and the
beneficiary of any Letter of Credit, or any other Person to whom any
Letter of Credit may be transferred, or any claims whatso- ever of a
Borrower against any beneficiary of any Letter of Credit or its
transferee.
D. The Loan Parties acknowledge that each Letter of Credit is deemed
issued upon delivery to the beneficiary or a Borrower. If a Borrower
requests any Letter of Credit be delivered to the Borrower rather than
the beneficiary, and the Borrower subsequently cancels that Letter of
Credit, the Borrower agrees to return the Letter of Credit to Agent
together with the Borrower's certification that the Letter of Credit
has never been delivered to its beneficiary. If any Letter of Credit is
delivered to its beneficiary under a Borrower's instructions, the
Borrower's cancellation shall be ineffective without the Agent's
receipt of the beneficiary's written consent and the Letter of Credit.
E. Although this Second Restated Agreement may be referenced in any Letter
of Credit, the terms of an agreement related thereto or other
obligation to the beneficiary of the Letter of Credit, such other
agreements are not incorporated into this Second Restated Agreement in
any manner.
2.3 BORROWING BASE. The aggregate principal amount at any time remaining
unpaid on the Revolving Credit Loans will not be in excess of the amounts
arrived at by the computation provided for in the following formula not to
exceed, however, the Revolving Credit Commitment.
A. Availability will be computed daily and the aggregate principal amount
at any time remaining unpaid on the Revolving Credit Loans will be the
lesser of the Revolving Credit Commitment and the sum of the following
(the "BORROWING BASE"):
(i) Up to eighty-five (85) per cent of the Eligible Accounts; and,
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(ii) Up to sixty-five (65) per cent of the Loan Value of Eligible
Inventory, not to exceed, however, $4,000,000.00.
B. The Agent retains the right to establish reasonable reserves
("RESERVES") as it deems appropriate under the Revolving Credit
Commitment, based on such factors as the Agent deems appropriate,
including, but not limited to, increases in dilution of Accounts, the
value of Eligible Inventory or if the Borrowers shall fail to obtain
Landlord Agreements. The Borrowers acknowledge that the establishment
of Reserves will have the effect of limiting or restricting Advances.
2.4 LOAN VALUE OF ELIGIBLE INVENTORY. The "LOAN VALUE OF ELIGIBLE INVENTORY"
means the lowest of (i) Harley's or Safe Seal's, as applicable, (and for the
purposes of the term "LOAN VALUE OF ELIGIBLE INVENTORY" as it relates to Harley
shall mean and include Harley and Valve and as it relates to Safe Seal shall
mean and include GSV and PSI) net purchase cost or manufacturing cost of
domestic finished goods Inventory (on a first-in/first-out basis), and (ii) the
lowest bulk market price of Inventory minus estimated expenses for packing,
selling and delivery. The Agent shall have the sole right, in the Agent's
judgment, to determine which Inventory is marketable and saleable at any
particular time for inclusion in the Borrowing Base. Without limiting the
Agent's judgment, work-in-progress, obsolete or out of condition Inventory,
Inventory classified as long term assets, used Inventory, remanufactured
Inventory, returned Inventory, foreign Inventory, Inventory in transit, damaged
Inventory, supplied Inventory and slow moving Inventory shall not be included in
the Borrowing Base. Inventory in the possession of third parties shall not be
included in the Borrowing Base. In the event that Inventory previously included
in an Inventory Designation Report ceases to be Eligible Inventory, the
Borrowers shall promptly pay to the Lenders an amount sufficient to continue to
be in compliance with Section 2.3.
2.5 BORROWING PROCEDURE. The Borrowers will maintain a bank account (the
"FUNDING ACCOUNT") with Texas Commerce into which account all Advances on the
Revolving Credit Loans will be deposited. No other deposits will be made to the
Funding Account.
A. Advances on the Revolving Credit Loan shall be made pursuant to a
Notice of Revolving Credit Advance signed by a Responsible Officer of
Safe Seal, which shall specify (i) the aggregate amount of such
Borrowing, (ii) the requested Borrowing Date of such Borrowing, and
(iii) the Interest Option selected in accordance with Section 5.4. If
Safe Seal shall specify a Eurodollar Loan, the Notice of Revolving
Credit Advance shall also specify the length of the Interest Period
selected by Safe Seal for such Borrowing. Safe Seal shall give the
Agent the Notice of Revolving Credit Advance not later than 12:00 noon
(New York, New York time), (i) at least three (3) Business Days prior
to a proposed Eurodollar Loan Advance or conversion, and (ii) one (1)
Business Day prior to a proposed Alternate Base Rate Loan Advance or
conversion. If no election as to the type of Loan is specified in any
such notice, all such Loans shall be Alternate Base Rate Loans. If no
Interest Period with respect to any Eurodollar Loan is specified in any
such notice, then an Interest Period of three (3) months duration shall
be deemed to have been selected (subject to the provisions of the
definition of "INTEREST PERIOD").
B. The Agent shall be entitled to rely and act upon requests made or
purportedly made by any Responsible Officer of Safe Seal and each
Notice of Revolving Credit Advance shall be irrevocable and binding on
the Borrowers. The Borrowers shall be unconditionally and
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absolutely estopped from denying (i) the authenticity and validity of
any transaction so acted upon by the Agent once the Agent has made an
Advance and has deposited or transferred such funds as requested in any
such Notice of Revolving Credit Advance, and (ii) the Borrowers'
liability and responsibility therefor. The Borrowers covenant and agree
to assume liability for and to protect, indemnify and save the Agent
and the Lenders harmless from any and all liabilities, obligations,
damages, penalties, claims, causes of action, costs, charges and
expenses, including attorneys' fees, which may be imposed upon,
incurred by or asserted against the Agent or any of the Lenders by
reason of any loss, damage or claim howsoever arising or incurred
because of, out of or in connection with the transfer of funds pursuant
to a Notice of Revolving Credit Advance.
C. After receiving a properly completed Notice of Revolving Credit
Advance, the Agent shall promptly notify each Lender by telephone
(confirmed immediately by telex or cable), telex or cable of the terms
of such notice and such Lender's Percentage of such Borrowing. Each
Lender shall, before 12:00 noon (New York, New York time), on the date
a Borrowing is requested as specified in a Notice of Revolving Credit
Advance, deposit with the Agent such Lender's ratable Percentage of
such Borrowing in immediately available funds. The failure of any
Lender to make any Advance required to be made by it hereunder shall
not relieve any other Lender of its obligation to make its Advance
hereunder. Each Lender may fulfill its obligations under this Second
Restated Agreement by causing its Applicable Lending Office to make
such Loan; provided, however, that the exercise of such option shall
not affect the Obligation of the Borrowers to repay such Loan in
accordance with the term of the applicable Note. If any Lender fails to
provide its Percentage of any Borrowing and if all conditions to such
Borrowing have apparently been satisfied, the Agent may make available
to the Borrowers the funds received by it from the other Lenders.
Neither the Agent nor any Lender shall be, however, responsible for the
performance by any other Lender of its obligations hereunder. Upon the
failure of a Lender to make an Advance required to be made by it
hereunder, the Agent shall use reasonable efforts to obtain one or more
financial institutions, acceptable to the Lenders, to replace such
Lender, but neither the Agent nor any other Lender shall have any
liability or obligation whatsoever as a result of the failure to obtain
a replacement for such Lender.
D. After receiving a Notice of Revolving Credit Advance in the manner
provided herein, the fulfillment of all applicable conditions set forth
herein and after receipt by the Agent of such funds, the Agent will, as
soon as practicable, but in no event later than 5:00 p.m. (New York,
New York time) on the third Business Day, in the case of a Eurodollar
Loan, and on the first Business Day, in the case of an Alternate Base
Rate Loan, deposit the Advance in immediately available funds in the
Funding Account. If Loans are not made on such date because any
condition precedent to a Borrowing herein specified is not met, the
Agent will return the amounts so received to the respective Lenders.
E. Unless the Agent shall have received notice from a Lender prior to the
date of any Borrowing that the Lender will not make the Lender's
Percentage of such Advance available to the Agent, the Agent may assume
that the Lender has made such amount available to the Agent on the date
of such Borrowing in accordance with Section 2.5.C and the Agent may,
in reliance upon such assumption, make available a corresponding amount
to or on behalf of the Borrowers on such date. If and to the extent any
Lender shall not have so made its Percentage of any Advance available
to the Agent, the Borrowers agree to repay to the
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Agent forthwith on demand such corresponding amount together with
interest thereon for each day from the date such amount is made
available to or on behalf of the Borrowers until the date such amount
is repaid to the Agent at the rate per annum equal to the applicable
Contract Rate to the Borrowing in question.
F. The initial funding of the Revolving Credit Loans shall be an Alternate
Base Rate Loan. At any time after the Effective Date of the Prior
Agreement, the Borrowers may convert to Alternate Base Rate Loans or
Eurodollar Loans, subject to and pursuant to the provisions of Section
5.4.
G. If the Agent shall receive a Letter of Credit Agreement in the manner
provided herein before 12:00 noon (New York, New York time), the Agent
shall, subject to availability and the limit on the amounts of Letters
of Credit, on the third Business Day after receipt, issue the Letter of
Credit as specified by the Borrowers and deliver same as directed by
the Borrowers.
2.6 USE OF PROCEEDS. All proceeds of each Borrowing under the Revolving
Credit Commitment after the Effective Date of this Second Restated Agreement
shall be solely used to provide for working capital requirements of the
Borrowers.
2.7 REDUCTION OF REVOLVING CREDIT COMMITMENT. The Borrowers may at any time,
or from time to time, upon not less than thirty (30) Business Days' prior notice
to the Agent, in whole permanently and irrevocably terminate, or from time to
time, in part permanently and irrevocably reduce the Revolving Credit Commitment
ratably among the Lenders in accordance with the amounts of their respective
Revolving Credit Commitment. The Revolving Credit Commitment shall not, however,
be reduced at any time to an amount less than the Revolving Credit Loans
outstanding under the Revolving Credit Commitment at such time.
A. Each partial reduction of the Revolving Credit Commitment shall be in a
minimum of $100,000.00, or integral multiples thereof.
B. Each reduction must be accompanied by prepayment of each Revolving
Credit Note to the extent that the aggregate principal amount of the
Revolving Credit Note then outstanding exceeds the Lender's Revolving
Credit Commitment, as so reduced, together with interest on the
principal sum so prepaid.
C. Simultaneously with any termination or reduction of the Revolving
Credit Commitment pursuant to this Section (not including, however,
Section 2.7.D), the Borrowers shall pay to each Lender, through the
Agent, (i) the Revolving Credit Commitment Fee due and owing through
and including the date of such termination or reduction on the amount
of the Re- volving Credit Commitment of such Lender so terminated or
reduced, and (ii) the Prepay- ment Charge on the amount of the
Revolving Credit Commitment of such Lender so termi- nated or reduced.
In any instance, the Borrowers shall pay to each Lender, through the
Agent the Consequential Loss if applicable. No Prepayment Charge shall,
however, be due and owing by the Borrowers pursuant to this Section for
any termination or reduction of the Revolving Credit Commitment after
the second annual anniversary of the Effective Date of the Prior
Agreement.
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D. The Revolving Credit Commitment shall be permanently reduced on each
date that a prepayment of principal of the Revolving Credit Loans is
required pursuant to Section 5.9.E.(2) or Section 5.9.E.(3) by the
amount of each such required prepayment. In any event, the Revolving
Credit Commitment of each Lender shall automatically and permanently
terminate on the Commitment Termination Date, and all Revolving Credit
Loans still outstanding on such date shall be due and payable in full
together with accrued interest thereon.
2.8 REQUIRED PAYMENTS. If any time during the term of this Second Restated
Agreement, the outstanding amount of the Advances made pursuant to Section 2.1
and the amount of Letters of Credit issued pursuant to Section 2.2 shall exceed
the Borrowing Base, the Borrowers will immediately pay to the Agent an amount
equal to the excess, including any unpaid interest on the principal sum paid.
ARTICLE III
TERM LOANS
3.1 TERM LOANS. Each Lender has, severally, but not jointly, lent to the
Borrowers, in one Advance on the Effective Date of the Prior Agreement, an
amount equal to such Lender's Percentage of the amounts requested by the
Borrowers in a Notice of Term Loan Advance for Term A Loans and Term B Loans in
the form of Exhibit attached to the Prior Agreement. Term A Loans are in the
amount of $2,750,000.00, and Term B Loans are in the amount of $4,750,000.00.
3.2 USE OF PROCEEDS. The Borrowers represent and warrant that all proceeds
of the Borrowing under the Total Term Loan Commitment have been used and may be
used solely to pay transaction costs and fees in connection herewith, to pay a
portion of the acquisition costs of the Harley Stock, to payoff and discharge
Liens on portions of the Collateral held by Xxxxxxx'x National Bank of Oklahoma,
to payoff and discharge Liens on portions of the Collateral held by Bank of
Oklahoma National Association, to payoff and discharge Liens on portions of the
Collateral held by Texas Commerce and for no other purposes.
ARTICLE IV
STEAM SUPPLY LOANS
4.1 STEAM SUPPLY LOANS. Subject to the terms and conditions of this Second
Restated Agreement, each Lender agrees, severally, but not jointly, to lend to
the Borrowers on a revolving basis, in one or more Advances from time to time
during the Steam Supply Commitment Period, an amount equal to such Lender's
Percentage set out in Schedule 2.1 of the amounts requested by the Borrowers in
each Notice of Steam Supply Advance in the form of Exhibit 4.1 attached to this
Second Restated Agreement. The Lenders shall not be obligated to make Advances,
however, (i) in excess of the Lender's Percentage of the Steam Supply
Commitment, (ii) if an Event of Default or a Default shall exist, and/or, (iii)
if the amount of the Steam Supply Advance exceeds the Steam Supply Availability
at such time. Within the limits of this Section and subject to Section 4.2, the
Borrowers may borrow, repay and re-borrow in accordance with the terms and
conditions of this Second Restated Agreement.
4.2 BORROWING BASE. The aggregate principal amount at any time remaining
unpaid on the Steam Supply Loans will not be in excess of the amounts arrived at
by the computation provided for in the following formula not to exceed, however,
the Steam Supply Commitment.
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A. Steam Supply Availability will be computed daily and the aggregate
principal amount at any time remaining unpaid on the Steam Supply Loans
will be the lesser of the Steam Supply Commitment and the sum of the
following (the "STEAM SUPPLY BORROWING BASE"):
(i) Up to eighty-five (85) per cent of the Steam Supply Eligible
Accounts; and,
(ii) Up to sixty-five (65) per cent of the Loan Value of the Steam
Supply Eligible Inventory, not to exceed, however, $2,500,000.00.
B. The Agent retains the right to establish reasonable reserves ("STEAM
SUPPLY RESERVES") as it deems appropriate under the Steam Supply
Commitment, based on such factors as the Agent deems appropriate,
including, but not limited to, increases in dilution of Steam Supply
Accounts, the value of Steam Supply Eligible Inventory or if the Steam
Supply Group shall fail to obtain Landlord Agreements. The Borrowers
acknowledge that the establishment of Steam Supply Reserves will have
the effect of limiting or restricting Steam Supply Advances.
4.3 LOAN VALUE OF STEAM SUPPLY ELIGIBLE INVENTORY. The "LOAN VALUE OF STEAM
SUPPLY ELIGIBLE INVENTORY" means the lowest of (i) the Steam Supply Group's net
purchase cost or manufacturing cost of domestic finished goods Inventory (on a
first-in/first-out basis), and (ii) the lowest bulk market price of Inventory
minus estimated expenses for packing, selling and delivery. The Agent shall have
the sole right, in the Agent's judgment, to determine which Inventory is
marketable and saleable at any particular time for inclusion in the Borrowing
Base. Without limiting the Agent's judgment, work-in-progress, obsolete or out
of condition Inventory, Inventory classified as long term assets, used
Inventory, remanufactured Inventory, returned Inventory, foreign Inventory,
Inventory in transit, damaged Inventory, supplied Inventory and slow moving
Inventory shall not be included in the Steam Supply Borrowing Base. Inventory in
the possession of third parties shall not be included in the Steam Supply
Borrowing Base. In the event that Inventory previously included in a Steam
Supply Inventory Designation Report ceases to be Steam Supply Eligible
Inventory, the Borrowers shall promptly pay to the Lenders an amount sufficient
to continue to be in compliance with Section 2.3.
4.4 BORROWING PROCEDURE. The Borrowers will maintain a bank account (the
"STEAM SUPPLY FUNDING ACCOUNT") with Texas Commerce into which account all
Advances on the Steam Supply Loans will be deposited. No other deposits will be
made to the Steam Supply Funding Account.
A. Advances on the Steam Supply Loans shall be made pursuant to a Notice
of Steam Supply Advance signed by a Responsible Officer of Safe Seal,
which shall specify (i) the aggregate amount of such Borrowing, (ii)
the requested Borrowing Date of such Borrowing, and (iii) the Interest
Option selected in accordance with Section 5.4. If Safe Seal shall
specify a Eurodollar Loan, the Notice of Steam Supply Advance shall
also specify the length of the Interest Period selected by Safe Seal
for such Borrowing. Safe Seal shall give the Agent the Notice of Steam
Supply Advance not later than 12:00 noon (New York, New York time), (i)
at least three (3) Business Days prior to a proposed Eurodollar Loan
Advance or conversion, and (ii) one (1) Business Day prior to a
proposed Alternate Base Rate Loan Advance or conversion. If no election
as to the type of Loan is specified in any such notice, all such Loans
shall be Alternate Base Rate Loans. If no Interest Period with respect
to any Eurodollar Loan is specified in any such notice, then an
Interest Period of three (3)
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months duration shall be deemed to have been selected (subject to the
provisions of the definition of "INTEREST PERIOD").
B. The Agent shall be entitled to rely and act upon requests made or
purportedly made by any Responsible Officer of Safe Seal and each
Notice of Steam Supply Advance shall be irrevocable and binding on the
Borrowers. The Borrowers shall be unconditionally and absolutely
estopped from denying (i) the authenticity and validity of any
transaction so acted upon by the Agent once the Agent has made an
Advance and has deposited or transferred such funds as requested in any
such Notice of Steam Supply Advance, and (ii) the Borrowers' liability
and responsibility therefor. The Borrowers covenant and agree to as-
sume liability for and to protect, indemnify and save the Agent and the
Lenders harmless from any and all liabilities, obligations, damages,
penalties, claims, causes of action, costs, charges and expenses,
including attorneys' fees, which may be imposed upon, incurred by or
asserted against the Agent or any of the Lenders by reason of any loss,
damage or claim howsoever arising or incurred because of, out of or in
connection with the transfer of funds pursuant to a Notice of Steam
Supply Advance.
C. After receiving a properly completed Notice of Steam Supply Advance,
the Agent shall promptly notify each Lender by telephone (confirmed
immediately by telex or cable), telex or cable of the terms of such
notice and such Lender's Percentage of such Borrowing. Each Lender
shall, before 12:00 noon (New York, New York time), on the date a
Borrowing is requested as specified in a Notice of Steam Supply
Advance, deposit with the Agent such Lender's ratable Percentage of
such Borrowing in immediately available funds. The failure of any
Lender to make any Advance required to be made by it hereunder shall
not relieve any other Lender of its obligation to make its Advance
hereunder. Each Lender may fulfill its obligations under this Second
Restated Agreement by causing its Applicable Lending Office to make
such Loan; provided, however, that the exercise of such option shall
not affect the Obligation of the Borrowers to repay such Loan in
accordance with the term of the applicable Note. If any Lender fails to
provide its Percentage of any Borrowing and if all conditions to such
Borrowing have apparently been satisfied, the Agent may make available
to the Borrowers the funds received by it from the other Lenders.
Neither the Agent nor any Lender shall be, however, responsible for the
performance by any other Lender of its obligations hereunder. Upon the
failure of a Lender to make an Advance required to be made by it
hereunder, the Agent shall use reasonable efforts to obtain one or more
financial institutions, acceptable to the Lenders, to replace such
Lender, but neither the Agent nor any other Lender shall have any
liability or obligation whatsoever as a result of the failure to obtain
a replacement for such Lender.
D. After receiving a Notice of Steam Supply Advance in the manner provided
herein, the fulfillment of all applicable conditions set forth herein
and after receipt by the Agent of such funds, the Agent will, as soon
as practicable, but in no event later than 5:00 p.m. (New York, New
York time) on the third Business Day, in the case of a Eurodollar Loan,
and on the first Business Day, in the case of an Alternate Base Rate
Loan, deposit the Steam Supply Advance in immediately available funds
in the Steam Supply Funding Account. If Loans are not made on such date
because any condition precedent to a Borrowing herein specified is not
met, the Agent will return the amounts so received to the respective
Lenders.
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E. Unless the Agent shall have received notice from a Lender prior to the
date of any Borrow- ing that the Lender will not make the Lender's
Percentage of such Steam Supply Advance available to the Agent, the
Agent may assume that the Lender has made such amount available to the
Agent on the date of such Borrowing in accordance with Section 4.4.C
and the Agent may, in reliance upon such assumption, make available a
corresponding amount to or on behalf of the Borrowers on such date. If
and to the extent any Lender shall not have so made its Percentage of
any Steam Supply Advance available to the Agent, the Borrowers agree to
repay to the Agent forthwith on demand such corresponding amount
together with interest thereon for each day from the date such amount
is made available to or on behalf of the Borrowers until the date such
amount is repaid to the Agent at the rate per annum equal to the
applicable Contract Rate to the Borrowing in question.
F. The initial funding of the Steam Supply Loans shall be an Alternate
Base Rate Loan. At any time after the Effective Date of this Second
Restated Agreement, the Borrowers may convert to Alternate Base Rate
Loans or Eurodollar Loans, subject to and pursuant to the provisions of
Section 5.4.
4.5 USE OF PROCEEDS. The proceeds, if any, of a Borrowing under the Steam
Supply Commitment on the Effective Date of this Second Restated Agreement shall
be solely used to loan such proceeds to the Steam Supply Group pursuant to the
terms of the Steam Supply Credit Agreement and used by the Steam Supply Group
solely for working capital purposes and to payoff and discharge existing
Indebtedness of Steam Supply & Rubber Co., Inc. All proceeds of each subsequent
Borrowing under the Steam Supply Commitment after the Effective Date of this
Second Restated Agreement shall be solely used to loan such proceeds to the
Steam Supply Group pursuant to the terms of the Steam Supply Credit Agreement
and used by the Steam Supply Group solely for working capital purposes of the
Steam Supply Group.
4.6 REDUCTION OF STEAM SUPPLY COMMITMENT. The Borrowers may at any time, or
from time to time, upon not less than thirty (30) Business Days' prior notice to
the Agent, in whole permanently and irrevocably terminate, or from time to time,
in part permanently and irrevocably reduce the Steam Supply Commitment ratably
among the Lenders in accordance with the amounts of their respective Steam
Supply Commitment. The Steam Supply Commitment shall not, however, be reduced at
any time to an amount less than the Steam Supply Loans outstanding under the
Steam Supply Commitment at such time.
A. Each partial reduction of the Steam Supply Commitment shall be in a
minimum of $100,000.00, or integral multiples thereof.
B. Each reduction must be accompanied by prepayment of each Steam Supply
Note to the extent that the aggregate principal amount of the Steam
Supply Note then outstanding exceeds the Lender's Steam Supply
Commitment, as so reduced, together with interest on the principal sum
so prepaid.
C. Simultaneously with any termination or reduction of the Steam Supply
Commitment pursuant to this Section (not including, however, Section
4.6.D), the Borrowers shall pay to each Lender, through the Agent, (i)
the Steam Supply Commitment Fees due and owing through and including
the date of such termination or reduction on the amount of the Steam
Supply Commitment of such Lender so terminated or reduced, and (ii) the
Prepayment
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Charge on the amount of the Steam Supply Commitment of such Lender so
terminated or reduced. In any instance, the Borrowers shall pay to each
Lender, through the Agent the Consequential Loss if applicable. No
Prepayment Charge shall, however, be due and owing by the Borrowers
pursuant to this Section for any termination or reduction of the Steam
Supply Commitment after the second annual anniversary of the Effective
Date of the Prior Agreement.
D. The Steam Supply Commitment shall be permanently reduced on each date
that a prepayment of principal of the Steam Supply Loans is required
pursuant to Section 5.9.E.(3) or Section 5.9.F by the amount of each
such required prepayment. In any event, the Steam Supply Commitment of
each Lender shall automatically and permanently terminate on the
Commitment Termination Date, and all Steam Supply Loans still out
standing on such date shall be due and payable in full together with
accrued interest thereon.
4.7 REQUIRED PAYMENTS. If any time during the term of this Second Restated
Agreement, the outstanding amount of the Steam Supply Advances made pursuant to
Section 4.1 shall exceed the Steam Supply Borrowing Base, the Borrowers will
immediately pay to the Agent an amount equal to the excess, including any unpaid
interest on the principal sum paid.
ARTICLE V
NOTES
5.1 REVOLVING CREDIT NOTES. The Advances made under Section 2.1 by a Lender
is evidenced by a Revolving Credit Note payable to each such Lender, which (i)
is dated the Effective Date of the Restated Agreement, (ii) is in the amount of
such Lender's Percentage of the Revolving Credit Commitment, (iii) bears
interest in accordance with Section 5.4, and (iv) is substantially in the form
of Exhibit attached to the Restated Agreement with all blanks appropriately
completed in conformity therewith. Notwithstanding the principal amount of any
Revolving Credit Note as stated on the face thereof, the amount of principal
actually owing on a Revolving Credit Note, at any given time, shall be the
aggregate of all Advances made by the Lender to the Borrowers, less all payments
of principal actually received by the Lender. The records of the Lender
evidencing the date and amount of each Advance, as well as the amount of each
payment made by the Borrowers, shall be rebuttably presumptive evidence of the
amounts owing and unpaid on the Revolving Credit Note. The Borrowers shall
repay, and shall pay interest on, the unpaid principal amount of the Revolving
Credit Loans in accordance with the terms of the Revolving Credit Notes and this
Second Restated Agreement.
5.2 TERM NOTES. The Advances made under Section 3.1 by a Lender shall be
evidenced by a Term A Note or a Term B Note payable to each such Lender, which
(i) are dated the Effective Date of the Restated Agreement, (ii) are in the
amount of such Lender's Percentage of the Total Term Loan Commitment, (iii) bear
interest in accordance with Section 5.4, and (iv) are in the form of Exhibit
attached to the to the Restated Agreement in the case of a Term A Note and
Exhibit attached to the Restated Agreement in the case of a Term B Note with all
blanks appropriately completed in conformity therewith. The Borrowers shall
repay, and shall pay interest on, the unpaid principal amount of the Term Loans
in accordance with the terms of the Term Notes, the Prior Credit Agreements and
this Second Restated Agreement.
5.3 STEAM SUPPLY NOTES. The Advances made under Section 4.1 by a Lender
shall be evidenced by a Steam Supply Note payable to each such Lender, which
shall (i) be dated the Effective
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Date of this Second Restated Agreement, (ii) be in the amount of such Lender's
Percentage of the Steam Supply Commitment, (iii) bear interest in accordance
with Section 5.4, and (iv) be substantially in the form of Exhibit 5.3 to this
Second Restated Agreement with all blanks appropriately completed in conformity
herewith. Notwithstanding the principal amount of any Steam Supply Note as
stated on the face thereof, the amount of principal actually owing on a Steam
Supply Note, at any given time, shall be the aggregate of all Steam Supply
Advances made by the Lender to the Borrowers, less all payments of principal
actually received by the Lender. The records of the Lender evidencing the date
and amount of each Advance, as well as the amount of each payment made by the
Borrowers, shall be rebuttably presumptive evidence of the amounts owing and
unpaid on the Steam Supply Note. The Borrowers shall repay, and shall pay
interest on, the unpaid principal amount of the Steam Supply Loans in accordance
with the terms of the Steam Supply Notes and this Second Restated Agreement.
5.4 INTEREST RATE OPTIONS. Subject to the provisions of this Section, the
Borrowers shall elect an option (an "INTEREST OPTION") of having all or any
portion of the Loans bear interest at rates determined as follows:
A. The Borrowers shall elect to have Revolving Credit Loans and Steam
Supply Loans bear interest at a rate based upon the Alternate Base Rate
or at the Adjusted LIBOR Rate. Each change in an Interest Option made
pursuant to this Section shall be deemed both a payment of the
Alternate Base Rate Loan or Adjusted LIBOR Rate Loan from which such
change was made and a Borrowing (notwithstanding that the unpaid
principal amount of the Loan is not thereby changed) as an Alternate
Base Rate Loan or an Adjusted LIBOR Rate Loan into which such change
was made on the Date of such change.
(1) Prior to Default, the unpaid principal of the Revolving Credit
Loans and the Steam Supply Loans shall bear interest from the date of
Advance as follows:
(a) If an Alternate Base Rate Loan is chosen, at a rate per annum
which shall, from day to day, be an amount equal to the lesser of:
(i) The Alternate Base Rate in effect from day to day, plus the
Applicable Margin (a "REVOLVING LOAN CONTRACT RATE" or a "STEAM
SUPPLY CONTRACT RATE"); or, (ii) the Maximum Rate; or,
(b) If an Adjusted LIBOR Rate Loan is chosen, at a rate per annum
which shall, from day to day, be an amount equal to the lesser of:
(i) The Adjusted LIBOR Rate in effect from day to day, plus the
Applicable Margin (also a "REVOLVING LOAN CONTRACT RATE" or a
"STEAM SUPPLY CONTRACT RATE"); or, (ii) the Maximum Rate.
(2) Safe Seal shall, for the Borrowers, in each Notice of Revolving
Credit Advance or Notice of Steam Supply Advance, give the Agent notice
of the Interest Option selected and the term thereof with respect to
each Borrowing made hereunder.
(3) Prior to the termination of each Interest Period with respect to
each Adjusted LIBOR Rate Loan, Safe Seal shall, for the Borrowers, give
notice (a "ROLLOVER NOTICE") to the Agent of the Interest Option which
shall be applicable to such portion of the Loan upon the expiration of
such Interest Period. The Rollover Notice shall be given to the Agent
at least one (1) Business Day, in the case of an Alternate Base Rate
selection, or three (3) Business Days, in the case of an Adjusted LIBOR
Rate selection, prior to the termination of the Interest Period. If the
Borrowers shall specify an Adjusted LIBOR Rate, the Rollover No-
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xxxx shall also specify the length of the succeeding Interest Period
(subject to the provisions of the definitions of such term), selected
by the Borrowers with respect to such portion of the Loan. Each
rollover notice shall be irrevocable and effective upon notification
thereof to the Agent. If the required Rollover Notice shall not have
been timely received by the Agent (in accordance with the above
provisions of this Section) prior to the expiration of the then
relevant Interest Period in effect when such Notice was required to be
given, the Borrowers shall be deemed to have selected the rate set
forth in Section 5.4.A.(1)(a) to be applicable to such portion of the
Loan upon expiration of such Interest Period and the Borrowers shall be
deemed to have given the Agent notice of such selection.
(4) With respect to an Alternate Base Rate Loan, the Borrowers shall
have the right, on any Business Day (a "CONVERSION DATE"), to convert
such Alternate Base Rate Loan to an Adjusted LIBOR Rate Loan by giving
the Agent a Rollover Notice of such election at least three (3)
Business Days prior to such Conversion Date.
(5) Notwithstanding anything in this Section to the contrary, no
Alternate Base Rate Loan may be converted to an Adjusted LIBOR Rate
Loan and no Adjusted LIBOR Rate Loan may be continued as such when any
Default or Event of Default has occurred and is continuing, but each
such Loan shall be automatically converted to an Alternate Base Rate
Loan on the last day of its applicable Interest Period.
B. The Borrowers shall elect to have Term Loans bear interest at a rate
based upon the Alternate Base Rate or at the Adjusted LIBOR Rate. Each
change in an Interest Option made pursuant to this Section shall be
deemed both a payment of the Alternate Base Rate Loan or the Adjusted
LIBOR Rate Loan from which such change was made and a Borrowing
(notwithstanding that the unpaid principal amount of the Loan is not
thereby changed) as an Alternate Base Rate Loan or an Adjusted LIBOR
Rate Loan into which such change was made on the Date of such change.
(1) Prior to Default, the unpaid principal of the Term Loans shall bear
interest from the date of Advance as follows:
(a) If an Alternate Base Rate Loan is chosen at a rate per annum
which shall, from day to day, be an amount equal to the lesser of:
(i) The Alternate Base Rate in effect from day to day, plus the
Applicable Margin (a "TERM LOAN CONTRACT RATE"); or, (ii) the
Maximum Rate; or,
(b) If an Adjusted LIBOR Rate Loan is chosen, at a rate per annum
which shall, from day to day, be an amount equal to the lesser of:
(i) The Adjusted LIBOR Rate in effect from day to day, plus the
Applicable Margin (also a "TERM LOAN CONTRACT RATE"); or, (ii) the
Maximum Rate.
(2) Prior to the termination of each Interest Period with respect to
each Adjusted LIBOR Rate Loan, Safe Seal, for the Borrowers, shall give
notice, also a "ROLLOVER NOTICE," to the Agent of the Interest Option
which shall be applicable to such portion of the Loan upon the
expiration of such Interest Period. Such Rollover Notice shall be given
to the Agent at least one (1) Business Day, in the case of an Alternate
Base Rate selection, or three (3) Business Days, in the case of an
Adjusted LIBOR Rate selection, prior to the termination of such
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Interest Period. If the Borrowers shall specify an Adjusted LIBOR Rate,
such Rollover Notice shall also specify the length of the succeeding
Interest Period (subject to the provisions of the definitions of such
term), selected by the Borrowers with respect to such portion of the
Loan. Each rollover notice shall be irrevocable and effective upon
notification thereof to the Agent. If the required Rollover Notice
shall not have been timely received by the Agent (in accordance with
the above provisions of this Section) prior to the expiration of the
then relevant Interest Period in effect when such Notice was required
to be given, the Borrowers shall be deemed to have selected the rate
set forth in Section 5.4.B.(1)(a) to be applicable to such portion of
the Loan upon expiration of such Interest Period and the Borrowers
shall be deemed to have given the Agent notice of such selection.
(3) With respect to an Alternate Base Rate Loan, the Borrowers shall
have the right, on any Business Day, also a "CONVERSION DATE," to
convert such Alternate Base Rate Loan to an Adjusted LIBOR Rate Loan by
giving the Agent a Rollover Notice of such election at least three (3)
Business Days prior to such Conversion Date.
(4) Notwithstanding anything in this Section to the contrary, no
Alternate Base Rate Loan may be converted to an Adjusted LIBOR Loan and
no Adjusted LIBOR Rate Loan may be continued as such when any Default
or Event of Default has occurred and is continuing, but each such Loan
shall be automatically converted to an Alternate Base Rate Loan on the
last day of each applicable Interest Period.
C. No more than five (5) Eurodollar Loans shall be outstanding and
Eurodollar Loans made on any date shall be in a minimum aggregate
principal amount of $1,000,000.00, and an integral multiples of
$100,000.00 for amounts in excess thereof.
5.5 APPLICABLE MARGIN. With respect to any Loan, the Applicable Margin shall
be determined as a function of the Funded Debt Ratio and shall be calculated as
set forth below.
A. For Revolving Credit Loans and Steam Supply Loans, the Applicable
Margin for Adjusted LIBOR Rate Loans and Alternate Base Rate Loans
shall be as follows:
ADJUSTED LIBOR RATE LOANS ALTERNATE BASE RATE LOANS
FUNDED DEBT RATIO APPLICABLE MARGIN APPLICABLE MARGIN
-------------------- ------------------------- --------------------------
Equal to or greater
than 4.00:1.00 3.00 % 0.50 %
Equal to or greater
than 3.50:1.00, but
less than 4.00:1.00 2.75 % 0.25 %
Equal to or greater
than 2.75:1.00, but
less than 3.50:1.00 2.50 % 0.00 %
Less than 2.75:1.00 2.25 % 0.00 %
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B. For Term A Loans, the Applicable Margin for Adjusted LIBOR Rate Loans
and Alternate Base Rate Loans shall be as follows:
ADJUSTED LIBOR RATE LOANS ALTERNATE BASE RATE LOANS
FUNDED DEBT RATIO APPLICABLE MARGIN APPLICABLE MARGIN
-------------------- ------------------------- --------------------------
Equal to or greater
than 4.00:1.00 3.50 % 1.00 %
Equal to or greater
than 3.50:1.00, but
less than 4.00:1.00 3.25 % 0.75 %
Equal to or greater
than 2.75:1.00, but
less than 3.50:1.00 3.00 % 0.50 %
Less than 2.75:1.00 2.75 % 0.50 %
C. For Term B Loans, the Applicable Margin for Adjusted LIBOR Rate Loans
shall be 1.25 % and for Alternate Base Rate Loans, the Applicable
Margin shall be 0.00 %
D. The Funded Debt Ratio shall be deemed to be 4.00:1.00 from the
Effective Date of the Prior Agreement to and including December 31,
1997. Any change in the Applicable Mar- gin after December 31, 1997,
shall be effective upon the date of delivery of (i) the annual audited
Financial Statements to be delivered pursuant to Section 9.1.A.(1), and
(ii) thereaf- ter shall be determined quarterly from the Financial
Statements of the Borrowers most re- cently delivered pursuant to
Section 9.1.A.(3) at the end of each fiscal quarter for the pre- ceding
consecutive twelve (12) month period; provided, further, for the first
ensuing Fiscal Year, the Funded Debt Ratio will be determined
quarterly, at the end of each fiscal quarter, for the Fiscal Year to
date. If the Borrowers shall fail to deliver any such Financial State-
ments within the times specified in Section 9.1.A.(1) or Section
9.1.A.(3), the Funded Debt Ratio shall be deemed to be 4.00:1.00 until
the Borrowers deliver such Financial Statements to the Agent.
Notwithstanding the foregoing, the Borrowers may, at the Borrowers'
elec- tion, provide to the Agent reviewed Financial Statements as of
June 30, 1997, and have the initial determination of the Applicable
Margin as of such date. The Funded Debt Ratio will be determined by
using actual Funded Debt divided by EBITDA annualized to the end of the
Borrowers' Fiscal Year. Thereafter, the Funded Debt Ratio will be
determined on September 30, 1997, by using actual year to date Funded
Debt divided by EBITDA annual- ized to the end of the Borrowers' Fiscal
Year.
5.6 INTEREST RECAPTURE. Notwithstanding the terms of Section 5.4.A.(1) or
Section 5.4.B.(1), if on any Interest Payment Date, a Lender does not receive
interest on the Loans at the applicable Contract Rate because the applicable
Contract Rate exceeds or has exceeded the Maximum Rate, then the Borrowers
shall, upon the demand of the Lender, pay to the Lender, in addition to interest
otherwise required hereunder on each Interest Payment Date thereafter, interest
at the Maximum Rate until the cumulative interest received by the Lender equals
the interest which would have been received at the applicable Contract Rate. In
no event shall, however, the Borrowers be required to pay, for any
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appropriate computation period, interest at a rate exceeding the Maximum Rate
effective during such period.
5.7 DEFAULT RATE. If a Default or an Event of Default shall occur and be
continuing and not be waived, the Borrowers shall on demand from time to time
pay interest, to the extent permitted by law, on all Loans outstanding up to the
date such Default or Event of Default is cured at a rate per annum equal to two
(2) per cent in excess of the Alternate Base Rate (the "DEFAULT RATE"), but
never in excess of the Maximum Rate.
5.8 MAXIMUM INTEREST. It is the intention of the parties to comply with all
applicable usury laws. Accordingly, it is agreed that notwithstanding any
provision apparently to the contrary in the Loan Documents, no such provision
shall require the payment or permit the collection of interest in excess of the
Maximum Amount or the Maximum Rate. If any excess of interest in such respect is
provided for, or shall be adjudicated to be so provided for, in the Loan
Documents, then in such event the provisions of this Section shall govern and
control and (i) no Loan Party liable for the payment of any sums to become due
under the Loan Documents shall be obligated to pay the amount of such interest
to the extent that it is in excess of the Maximum Amount or the Maximum Rate,
and (ii) any such excess which may have been collected shall be first applied as
a credit against the then unpaid principal amount on the Notes and the excess,
if any, refunded to the Borrowers or the Guarantors and the effective rate of
interest shall be automatically reduced to the Maximum Rate. Without limitation
of the foregoing, all calculations of the rate of interest contracted for,
charged or received under the Loan Documents which are made for the purpose of
determining whether such rate exceeds the Maximum Rate, shall be made, to the
extent permitted by applicable usury laws, by amortizing, prorating, allocating
and spreading in equal parts during the period of the full stated term of the
Loans, all interest at any time contracted for, charged or received by the
holder or holders of the Notes in connection with the Loans.
5.9 PAYMENTS ON THE NOTES. The Notes will be paid and prepaid in accordance
with the terms set out in this Section.
A. The unpaid principal amount of each Revolving Credit Note, together
with all accrued but unpaid interest thereon, unpaid Revolving Credit
Commitment Fees and unpaid Letters of Credit Fees, shall be due and
payable on the Commitment Termination Date. Interest on each Revolving
Credit Note shall be due and payable monthly as it accrues, on the
Interest Payment Dates.
(1) The Borrowers shall make prepayments of the Revolving Credit Loans
from time to time such that the Availability equals or exceeds zero at
all times. Any prepayments required by this Section shall be applied to
outstanding Revolving Credit Alternate Base Rate Loans up to the full
amount thereof before they are applied to outstanding Revolving Credit
Eurodollar Loans. The Borrowers shall not, however, be required to make
any prepayment of any Eurodollar Loan pursuant to this Section until
the last day of the Interest Period with respect thereto so long as an
amount equal to such required prepayment is deposited by the Borrowers
in a cash collateral account with the Agent to be held in such account
on terms satisfactory to the Agent.
(2) On the date of any termination or reduction of the Revolving Credit
Commitment pursuant to Section 2.7, the Borrowers shall pay or prepay
so much of the Revolving Credit
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Loans as shall be necessary in order that the Availability equals or
exceeds zero following such termination or reduction. Any prepayments
required by this Section shall be applied to outstanding Revolving
Credit Alternate Base Rate Loans up to the full amount thereof before
they are applied to outstanding Revolving Credit Eurodollar Loans. The
Borrowers shall not, however, be required to make any prepayment of any
Eurodollar Loan pursuant to this Section until the last day of the
Interest Period with respect thereto so long as an amount equal to such
required prepayment is deposited by the Borrowers in a cash collateral
account with the Agent to be held in such account on terms satisfactory
to the Agent.
B. The unpaid principal amount of each Term Note shall be due and payable
in quarterly in- stallments in the amounts and on the dates set out
below and in one final installment on the Commitment Termination Date,
when the balance of all principal of each Term Note shall be payable in
full. Interest on each Term Note shall be due and payable monthly as
interest accrues on the Interest Payment Dates and in addition to the
installments of principal. No scheduled payment of principal in respect
of a Term Loan shall be made to the extent that a lesser principal
payment would result in the payment in full of the outstanding amount
of the Term Loans, and such lesser amount is paid.
TERM A NOTES
DATE QUARTERLY PRINCIPAL PAYMENTS
April 30, 1997 $375,000.00
July 31, 1997 and October 31, 1997 $250,000.00
On each January 31, April 30,
July 31 and October 31 thereafter $125,000.00
Commitment Termination Date Unpaid balance
TERM B NOTES
DATE QUARTERLY PRINCIPAL PAYMENTS
October 31, 1997, $125,000.00
On each January 31, April 30,
July 31 and October 31 thereafter $250,000.00
Commitment Termination Date Unpaid balance
C. The unpaid principal amount of each Steam Supply Note, together with
all accrued but unpaid interest thereon and unpaid Steam Supply
Commitment Fees, shall be due and payable on the Commitment Termination
Date. Interest on each Steam Supply Note shall be due and payable
monthly as it accrues, on the Interest Payment Dates.
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(1) The Borrowers shall make prepayments of the Steam Supply Loans from
time to time such that the Steam Supply Availability equals or exceeds
zero at all times. Any prepayments required by this Section shall be
applied to outstanding Steam Supply Alternate Base Rate Loans up to the
full amount thereof before they are applied to outstanding Steam Supply
Eurodollar Loans. The Borrowers shall not, however, be required to make
any prepayment of any Eurodollar Loan pursuant to this Section until
the last day of the Interest Period with respect thereto so long as an
amount equal to such required prepayment is deposited by the Borrowers
in a cash collateral account with the Agent to be held in such account
on terms satisfactory to the Agent.
(2) On the date of any termination or reduction of the Steam Supply
Commitment pursuant to Section 4.6, the Borrowers shall pay or prepay
so much of the Steam Supply Loans as shall be necessary in order that
the Steam Supply Availability equals or exceeds zero following such
termination or reduction. Any prepayments required by this Section
shall be applied to outstanding Steam Supply Alternate Base Rate Loans
up to the full amount thereof before they are applied to outstanding
Steam Supply Eurodollar Loans. The Borrowers shall not, however, be
required to make any prepayment of any Eurodollar Loan pursuant to this
Section until the last day of the Interest Period with respect thereto
so long as an amount equal to such required prepayment is deposited by
the Borrowers in a cash collateral account with the Agent to be held in
such account on terms satisfactory to the Agent.
D. On the Commitment Termination Date or upon the occurrence of any
Default, the Borrowers shall provide to the Agent cash collateral in an
amount equal to the then-existing outstanding amounts of Letters of
Credit. The Agent agrees to return the cash collateral to the Borrowers
upon the subsequent payment in full of all Obligations related to such
Letters of Credit.
E. The Borrowers shall make the below enumerated prepayments on the Loans:
(1) Within one hundred twenty (120) days of the end of each Fiscal Year
of the Borrowers, commencing with the Fiscal Year ending December 31,
1997, the Borrowers shall make a prepayment of the Term Loans in an
amount equal to the Mandatory Prepayment for the Fiscal Year then
ended, such prepayment to be applied as set forth in Section 5.11.D.
(2) Within three (3) days of (i) the sale of any assets of the
Borrowers (excluding sales of assets in the ordinary course of business
subject, however, to Section 8.4), (ii) the completion of an IPO; or
(ii) there shall occur a Change of Control, the Borrowers shall make a
mandatory prepayment of the Loans in an amount equal to one hundred
(100) per cent of the proceeds received or realized (net of taxes due
and any expenses of sale) by the Borrowers or in the case of a Change
of Control, by the sellers of any Borrowers' stock, which proceeds
shall be applied as set forth in Section 5.11.D.
(3) Except as provided in Subsection 5.9.E.(3)(a), not later than the
third day following the receipt by the Agent, the Borrowers or any
Subsidiary of a Borrower of (i) any proceeds of any insurance required
to be maintained pursuant to Section 9.1.G on account of each separate
loss, damage or injury in excess of $25,000.00 (or, if there shall be a
Default or an Event of Default shall be continuing, the full amount of
proceeds) to any asset of the Bor-
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rowers or such Subsidiary of a Borrower (including, without limitation,
any Collateral), or (ii) any proceeds of any business interruption
insurance required to be maintained pursuant to Section 9.1.G in excess
of $50,000.00 (or, if there shall be a Default or a continuing Event of
Default, the full amount of proceeds), the Borrowers or the Subsidiary
shall notify the Agent of such receipt, in writing or by telephone,
promptly confirmed in writing. Not later than the day following receipt
by the Agent, the Borrowers or the Subsidiary of any such proceeds,
there shall become due and payable a prepayment of the Loans in an
amount equal to one hundred (100) per cent of such proceeds, and
prepayments from such proceeds shall be applied as set forth in Section
5.11.D.
(a) In the case of the receipt of proceeds described above with
respect to the loss, damage or injury to any asset of the
Borrowers or any Subsidiary of a Borrower (other than proceeds of
any business interruption insurance), the Borrowers may elect, by
written notice delivered to the Agent not later than the day on
which a prepayment would otherwise be required as above set out,
to apply all or a portion of such proceeds for the purpose of
replacing, repairing, restoring or rebuilding the relevant
tangible property, and, in such event, any required prepayment as
set out above shall be reduced Dollar for Dollar by the amount of
such election. An election under this Subsection shall not be
effective unless: (i) at the time of such election there is no
Default or continuing Event of Default; (ii) the Borrowers shall
have certified to the Agent that: {1} the proceeds of the
insurance adjustment for such loss, damage or injury, together
with other funds available to the Borrowers, shall be sufficient
to complete such replacement, repair, restoration or rebuilding in
accordance with all applicable laws, regulations and ordinances;
and, {2} to the best knowledge of the Borrowers, no Default or
Event of Default has arisen or will arise as a result of such
loss, damage, injury, replacement, repair or rebuilding; and,
(iii) if the amount of proceeds in question exceeds $250,000.00,
the Borrowers shall have obtained the written consent of the
Lenders to such election.
(b) In the event of an election under Subsection 5.9.E.(3)(a),
pending application of the proceeds to the required replacement,
repairs, restoration or rebuilding, the Borrowers shall, not later
than the time at which prepayment would have been in the absence
of such election required as set out above, apply such proceeds to
the prepayment of the outstanding principal balance, if any, of
the Revolving Credit Loans (not in permanent reduction of the
Revolving Credit Commitment), and deposit (the "SPECIAL DEPOSIT")
with the Agent, the balance, if any, of such proceeds remaining
after such application, pursuant to agreements in form, scope and
substance satisfactory to the Agent. The Special Deposit, together
with all earnings on such Special Deposit, shall be available to
the Borrowers solely for the replacement, repair, rebuilding or
restoration of the tangible property suffering the injury, loss or
damage in respect of which such prepayment and Special Deposit
were made or to such other purpose as to which the Lenders may
consent in writing. If a Default or Event of Default shall
thereafter occur, the balance of the Special Deposit and earnings
thereon may be applied by the Agent to repay the Obligations in
such order as the Agent shall elect. The Agent shall be entitled
to require proof, as a condition to the making of any withdrawal
from the Special Deposit, that the proceeds of such withdrawal are
being applied for the purposes permitted hereunder.
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F. If, the Borrowers shall receive or become entitled to receive any
prepayments on the Steam Supply Loans, the Borrowers shall pay all such
prepayments over the Agent for the benefit of the Lenders.
G. The Agent may charge, when due and payable, any Borrowers' account with
the Agent for all interest, principal and Revolving Credit Commitment
Fees or other fees owing to the Agent or any of the Lenders on or with
respect to this Second Restated Agreement and/or the Loans and other
Loan Documents.
5.10 CALCULATION OF INTEREST RATES. Interest on the unpaid principal of the
Notes and the Revolving Credit Commitment Fees shall be calculated on the basis
of the actual days elapsed in a year consisting of three hundred sixty (360)
days. The Agent shall determine each Contract Rate applicable to the Loans and
shall promptly advise the Borrowers and the Lenders of the Contract Rates so
determined.
5.11 PREPAYMENTS. Subject to the terms and conditions contained in this
Section and elsewhere in this Second Restated Agreement and upon five (5)
Business Days prior notice to the Agent, the Borrowers shall have the right to
prepay any Loan at any time in whole or from time to time in part (except in the
case of a Eurodollar Loan which may be prepaid only on the last day the Interest
Period applicable to such Eurodollar Loan) without penalty, except as otherwise
provided for herein.
A. Partial prepayments shall be in an aggregate principal amount of
$2,000,000.00, or a greater integral multiple of $500,000.00.
B. Simultaneously with any optional prepayment of any Loan, the Borrowers
shall pay to the Agent for the pro rata benefit of the Lenders in
accordance with their respective Revolving Loan Commitments, Total Term
Loan Commitments or Steam Supply Commitments, as applicable, the
Prepayment Charge.
C. Each Contract Rate has been determined, in part, based on the
respective Lender's cost of funds. Therefore, the Borrowers shall pay a
prepayment charge in an amount equal to the Consequential Loss if the
Borrowers shall, in any manner, prepay any Adjusted LIBOR Rate Loan.
Additionally, the Borrowers indemnify and agree to hold the Lenders
harmless against, and reimburse the Lenders on demand for, any loss,
cost or expense incurred or sustained by any Lender (including without
limitation any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by a
Lender to fund or maintain an Adjusted LIBOR Rate Loan) as a result of:
(i) Any payment or prepayment, whether required hereunder or otherwise,
of any Adjusted LIBOR Rate Loan made after the delivery of a Notice of
Revolving Credit Advance, Notice of Term Loan Advance or Notice of
Steam Supply Advance, as applicable, but before the applicable
Borrowing Date if such payment or prepayment prevents the proposed Loan
from becoming fully effective; or, (ii) the failure of any Adjusted
LIBOR Rate Loan to be made by a Lender due to any action or inaction of
the Borrowers. A certificate of a Lender setting forth any amount or
amounts which the Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrowers and shall be conclusive, if
made in good faith, absent manifest error. Notwithstanding the
foregoing, in no event shall any Lender be permitted to receive any
compensation hereunder constituting interest in excess of the Maximum
Rate or the Maximum Amount. Without prejudice to the survival of any
other obligations of the
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Borrowers hereunder, the obligations of the Borrowers under this
Section shall survive the payment of the Loans.
D. If no Default shall have occurred, prepayments shall be applied (i)
first to the discharge of any expenses for which the Agent or any of
the Lenders may be entitled to receive xxxx- bursement under any
agreement with any of the Borrowers, (ii) next, to the Prepayment
Charge, (iii) next, to the Consequential Loss, if applicable, (iv)
next, to accrued interest on the Notes, (v) next, to the reduction of
principal installments, in the inverse order of matu- rity, on Term A
Notes up to $1,000,000.00, and in such instance first to the Alternate
Base Rate Loans, and secondly to the Eurodollar Loans, and (vi) the
balance remaining, if any, shall be applied equally to the reduction of
principal installments, in the inverse order of maturity, on Term A
Notes and Term B Notes, and in such instance first to the Alternate
Base Rate Loans, and secondly to the Eurodollar Loans. Prepayments
shall be applied to the Eurodollar Loans as the Borrowers shall select;
provided, however, the Borrowers shall select Eurodollar Loans to be
prepaid in a manner designed to minimize the Consequential Loss
resulting from such prepayments. If, however, the Borrowers shall fail
to select the Eurodollar Loan to which such prepayments are to be
applied, the Lenders shall be entitled to apply the prepayment in any
manner the Lenders shall deem appropriate.
E. If, however, a Default has occurred and is continuing at the time of a
prepayment, the Lenders shall be entitled to apply the prepayment in
any manner the Lenders shall deem appropriate.
5.12 MANNER OF PAYMENTS. All payments and prepayments of principal of, and
interest on, the Notes shall be made by the Borrowers to the Agent before 12:00
noon (New York, New York time) in lawful money of the U.S. in immediately
available funds at the office of the Agent set forth in Section 14.1. Any
payment or prepayment received by the Agent after 12:00 noon (New York, New York
time), shall be deemed to have been received by the Agent on the next succeeding
Business Day. Should the principal of or interest on the Notes or any fee or
other amount payable hereunder become due and payable on other than a Business
Day, payment in respect thereof may be made on the next succeeding Business Day
(except as otherwise specified in the definition of "INTEREST PERIOD"), and such
extension of time shall in such case be included in computing interest, if any,
in connection with such payment.
5.13 PRO RATA TREATMENT. Except as permitted under Section 5.22 or Section
6.2, or as specified in Section 8.2, each Borrowing, each payment and each
prepayment of principal of the Notes, each payment of interest on the Notes,
each payment of any fee or other amount payable hereunder and each reduction of
the Revolving Credit Commitment, Total Term Loan Commitment and Steam Supply
Commitment shall be made pro rata among the Lenders in the proportions that
their Revolving Credit Commitment bears to the total Revolving Credit
Commitment, that their Term Loan Commitment bears to the Total Term Loan
Commitment, or that their Steam Supply Commitment bears to the total Steam
Supply Commitment, as the case may be. Unless the Agent shall have received
notice from the Borrowers prior to the date on which any payment is due to the
Lenders that the Borrowers will not make such payment in full, the Agent may
assume that the Borrowers have made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent the Borrowers shall not have so made such
payment in full to the Agent, each Lender shall repay to the Agent forthwith, on
demand, such amount distributed to such Lender together with inter-
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est thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Agent, at the
applicable Contract Rate to such portion of the Revolving Credit Loans, the Term
Loans, or the Steam Supply Loans, as appropriate.
5.14 LENDING OFFICE. Each Lender may (i) designate its principal office or a
foreign branch, subsidiary or affiliate of such Lender as its lending office
(and the office to whose accounts payments are to be credited) for Eurodollar
Loans, (ii) designate its principal office or a domestic branch, subsidiary or
affiliate as its lending office (and the office to whose account payments are to
be credited) for any Alternate Base Rate Loan, and (iii) change its lending
offices from time to time by notice to the Agent and the Borrowers. In such
event, such Lender shall continue to hold each Note evidencing its Loans for the
benefit and account of such foreign branch, subsidiary or affiliate. Each Lender
shall be entitled to fund all or any portion of its Revolving Credit Loans, Term
Loans or Steam Supply Loans in any manner that it deems appropriate, but for the
purposes of this Second Restated Agreement such Lender shall, regardless of such
Lender's actual means of funding, be deemed to have funded its portion of the
Loan in accordance with the Interest Option from time to time selected by
Borrowers.
5.15 RENEWALS OF NOTES. All renewals and rearrangements, if any, of the
Notes shall be deemed to be made pursuant to the Prior Credit Agreements and
this Second Restated Agreement, and accordingly, shall be subject to the terms
and provisions thereof and hereof. The Borrowers shall be deemed to have
ratified, as of the date of such renewal or rearrangement, all of the
representations, covenants and agreements set forth in the Loan Documents.
5.16 TAXES.
A. Any and all payments by Borrowers hereunder or under the Notes shall be
made free and clear of, and without deduction for, any and all present
or future taxes (including, but not limited to, excise taxes), levies,
imposts, deductions, charges or withholdings, and all liabil- ities
with respect thereto ("TAXES"), imposed by any Governmental Authority,
excluding in the case of each Lender and the Agent, taxes imposed upon
its income, assets or operations, and franchise taxes imposed upon it
by any Governmental Authority. If the Borrowers shall be required by
law to deduct any Taxes for which the Borrowers are responsible under
the preceding sentence from or in respect of any sum payable hereunder
or under any Note to any Lender or Agent, (i) the sum payable shall be
increased as may be necessary so that af- ter making all required
deductions (including deductions applicable to additional sums pay-
able under this Section) each Lender and the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrow- ers shall make such deductions,
and (iii) the Borrowers shall pay the full amount deducted to the
relevant Governmental Authority or other authority in ac cordance with
applicable law.
B. The Borrowers shall 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 hereunder or under the Loan Documents
or from the execution, delivery or registration of, or otherwise with
respect to, this Second Restated Agreement or the other Loan Documents
("OTHER TAXES").
C. The Borrowers and the Guarantors indemnify and agree to hold the Agent
and the Lenders harmless for the full amount of Taxes and Other Taxes
paid by the Agent or any of the
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Lenders or any liability, including penalties and interest, arising
therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted.
D. Without prejudice to the survival of any other agreement, the
agreements and obligations of the Borrowers and the Guarantors
contained in this Section shall survive the payment in full of the
Obligations.
E. Each Lender and the Agent shall use reasonable efforts to avoid or
minimize any amounts which might otherwise be payable pursuant to this
Section (including seeking refunds of any amounts that are reasonably
believed not to have been correctly or legally asserted). Such efforts
shall not, however, require or include the taking of any actions by
such Lender or the Agent that would result in any tax, costs or other
expense to such Lender or the Agent (other than a tax, cost or other
expense for which such Lender or the Agent shall have been reimbursed
or indemnified by the Borrowers pursuant to this Second Restated
Agreement or otherwise) or any action which would or might in the
opinion of such Lender or the Agent have an adverse effect upon its
business, operations or financial condition or otherwise be
disadvantageous to such Lender or the Agent.
5.17 SHARING OF PAYMENTS. If any Lender shall obtain any payment (whether
voluntary or involuntary) in excess of such Lender's Percentage of payments
shared pro rata by all Lenders, such Lender shall forthwith purchase from the
other Lenders such participations in the Loans made by them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them. If all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from the other Lenders
shall be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery, together with an amount equal
to such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment, to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount recovered. The Borrowers agree
that any Lender purchasing a participation from another Lender pursuant to this
Section may, to the fullest extent permitted by law, exercise all of its rights
of payment (including the right of setoff) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrowers in the amount
of such participation.
5.18 SHARING OF SETOFFS. Each Lender agrees that if it shall, through the
exercise of a right of lien, setoff or counterclaim against the Borrowers,
including, but not limited to, a secured claim under ss.506 of Title 11 of the
U.S. Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Lender under any applicable Debtor Law or
otherwise, obtain payment (voluntary or involuntary) in respect of a Note held
by it as a result of which the unpaid principal portion of the Notes held by it
shall be proportionately less than the unpaid principal portion of the Notes
held by any other Lender, it shall be deemed to have simultaneously purchased
from such other Lender a participation in the Notes held by such other Lender,
so that the aggregate unpaid principal amount of the Notes and participations in
Notes held by it shall be in the same proportion to the aggregate unpaid
principal amount of all Notes then outstanding as the principal amount of the
Notes held by it prior to such exercise of lien, setoff or counterclaim was to
the principal amount of all Notes outstanding prior to such exercise of lien,
setoff or counterclaim. If any such purchase or purchases or adjustments shall
be made pursuant to this Section and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustments restored without interest. The Borrowers expressly consent to
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the foregoing arrangements and agree that any Lender holding a participation in
a Note deemed to have been so purchased may exercise any and all rights of lien,
setoff or counterclaim with respect to any and all moneys owing by the Borrowers
to such Lender as fully as if such Lender held a Note in the amount of such
participation.
5.19 COMMITMENT FEES. The Borrowers agree to pay to the Agent for the
account of the Lenders a commitment fee (the "REVOLVING CREDIT COMMITMENT FEE")
for the granting of the Loans computed at a rate per annum equal to one-fourth
(1/4) of one (1) per cent on the average daily un-borrowed amount of the
Revolving Credit Commitment in effect during the period for which payment is
made. Commencing on March 31, 1997, the Revolving Credit Commitment Fee shall be
payable quarterly, in arrears, on (i) the last day of each March, June,
September and December during the Revolving Credit Commitment Period, (ii) the
date of each reduction or termination of the Revolving Credit Commitment of
Lenders hereunder, and (iii) the Commitment Termination Date. After any
reduction of the Revolving Credit Commitment pursuant to Section 2.7, the
Revolving Credit Commitment Fee shall be computed on the Revolving Credit
Commitment of Lenders as so reduced. The Borrowers shall pay to the Agent, for
its sole benefit, a collateral monitoring and administration fee in the amount
of $51,000.00 for the year 1997, of which sum the amount of $35,000.00 was paid
on the Effective Date of the Prior Agreement and there shall be due the amount
of $16,000.00 on the Effective Date of this Second Restated Agreement.
Thereafter, the collateral monitoring and administration fee shall be in the
amount of $60,000.00 per annum payable in advance, on the annual anniversary of
the Effective Date of the Prior Agreement. The Borrowers have paid to the Agent
for the benefit of the Lenders the fees set out and described in the letter
agreement dated January 17, 1997, among Lenders, Safe Seal and Allwaste. For the
entering into of this Second Restated Agreement and the permitting the loans to
the Steam Supply Group, the Borrowers shall pay to the Agent, for the benefit of
the Lenders a commitment fee of $50,000.00 one half of which shall be due and
payable on the Effective Date of this Second Restated Agreement and the balance
of which will be due and payable on the earlier of the IPO and October 31, 1997.
Additionally, the Borrowers agree to pay to the Agent for the account of the
Lenders a commitment fee (the "STEAM SUPPLY COMMITMENT FEE") for the granting of
the Steam Supply Loans computed at a rate per annum equal to one-fourth (1/4) of
one (1) per cent on the average daily un-borrowed amount of the Steam Supply
Commitment in effect during the period for which payment is made. Commencing on
September 30, 1997, the Steam Supply Commitment Fee shall be payable quarterly,
in arrears, on (i) the last day of each March, June, September and December
during the Steam Supply Commitment Period, (ii) the date of each reduction or
termination of the Steam Supply Commitment of Lenders hereunder, and (iii) the
Commitment Termination Date. After any reduction of the Steam Supply Commitment
pursuant to Section 4.6, the Steam Supply Commitment Fee shall be computed on
the Steam Supply Commitment of Lenders as so reduced.
5.20 LETTERS OF CREDIT FEES. At the time a Letter of Credit is issued, the
Borrowers agree to pay to the Agent, for the benefit of the Lenders, Letter of
Credit fees equal to the Applicable Margin for Adjusted LIBOR Rate Loans set out
in Section 5.5.A for the issuing of Letters of Credit. The Borrowers
additionally agree to pay promptly upon demand the amount of any customary fees
and expenses Agent charges for amending Letter of Credit Agreements, for
honoring drafts and draw requests, and taking similar action in connection with
letters of credit.
5.21 CONSEQUENTIAL LOSS. The Borrowers agree to reimburse each Lender for
and against any loss or reasonable expense (including, but not limited to, any
loss or expense sustained or incurred or to be sustained or incurred in
liquidating or employing deposits from third parties acquired to affect or
maintain any Loan or part thereof as a Eurodollar Loan) which such Lender may
sustain or incur as a consequence of any of the following events (regardless of
whether such events occur as a result of the
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occurrence of an Event of Default or the exercise of any right or remedy of the
Agent or the Lenders under this Second Restated Agreement or any other Loan
Document, or at law): (i) any failure of the Borrowers to fulfill on the date of
any Borrowing hereunder the applicable conditions set forth in Article X
applicable to it; (ii) any failure of the Borrowers to borrow hereunder after an
irrevocable Notice of Revolving Credit Advance or Notice of Steam Supply Advance
has been given; (iii) any payment, prepayment or conversion of a Eurodollar Loan
on a date other than the last day of the relevant Interest Period; (iv) any
default in payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, by notice of prepayment or otherwise); or, (v) the occurrence of
an Event of Default (collectively, "CONSEQUENTIAL LOSS"). Such loss or expense
shall include, without limitation, an amount equal to the excess, if any, of (i)
the amount of interest which would have accrued on the principal amount so paid,
prepaid or converted or not borrowed for the period from the date of such
payment, prepayment or conversion or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date of such
failure to borrow), at the applicable rate of interest for such Loan provided
for herein over (ii) the amount of interest (as determined by such Lender) that
would be realized by such Lender in reemploying the funds so paid, prepaid or
converted or not borrowed in U.S. Treasury obligations with comparable
maturities for comparable periods. Any such Lender shall provide to the
Borrowers a statement, signed by an officer of such Lender, explaining any loss
or expense and setting forth, if applicable, the computation pursuant to the
preceding sentence, and such statement shall be conclusive absent manifest
error. The Borrowers shall pay such Lender the amount shown as due on any such
statement within ten (10) days after the receipt of the same.
5.22 PAYMENTS IN RESPECT OF INCREASED COSTS.
A. Notwithstanding any other provision hereof, if after the Effective Date
of this Second Restated Agreement any change in applicable law or
regulation or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) or any
change in GAAP or regulatory accounting principles applicable to the
Agent or any Lender shall (i) impose, modify or make applicable to the
Agent or any Lender any reserve, special deposit or similar requirement
with respect to its obligations hereunder, (ii) impose on the Agent or
any Lender any other condition with respect to its obligations
hereunder, or (iii) subject the Agent or any Lender to any tax (other
than {a} taxes imposed on the overall net income of the Agent or such
Lender, and {b} franchise taxes imposed on the Agent or such Lender, in
either case by the jurisdiction in which the Agent or such Lender has
its principal office or lending office or any political subdivision or
taxing authority of any such jurisdiction), charge, fee, deduction or
withholding of any kind whatsoever, and the result of any of the
foregoing shall be to increase the cost to the Agent hereunder or to
reduce the amount of principal, interest or any fee or compensation
receivable by the Agent or such Lender hereunder, then such additional
amount or amounts as will compensate the Agent or such Lender for such
additional costs or reduction shall be paid to the Agent or such Lender
by the Borrowers. Each Lender agrees to give notice to the Borrowers
and the Agent of any such change in law, regulation, interpretation or
administration with promptness after becoming actually aware thereof
and of the applicability thereof to the Transactions.
B. If, after the Effective Date of this Second Restated Agreement, any
Lender shall have determined that the adoption of any applicable law,
rule, regulation or guideline regarding
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capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its lending
office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental
Authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder to a level below that which
such Lender could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's policies with
respect to capital adequacy) then from time to time, the Borrowers
shall pay to such Lender such additional amount or amounts as will
compensate the Agent or such Lender for such reduction. Each Lender
agrees to give notice to the Borrowers and the Agent of any adoption
of, change in, or change in interpretation or administration of, any
such law, rule, regulation or guideline with promptness after becoming
actually aware thereof and of the applicability thereof to the
Transactions.
C. A certificate of the Agent or a Lender setting forth such amount or
amounts, supported by calculations as shall be necessary to compensate
the Agent or such Lender as specified in Section 5.22.A and Section
5.22.B shall be delivered to the Borrowers and shall be conclusive and
binding upon the Borrowers absent manifest error. The Borrowers shall
pay the Agent or such Lender the amount shown as due on any such
certificate within ten (10) Business Days after its receipt of the
same.
D. Failure on the part of any Lender or the Agent to demand compensation
for any increased costs, reduction in amounts received or receivable
hereunder or reduction in the rate of return earned on such Lender's
capital, in each case pursuant to Section 5.22.A or Section 5.22.B,
shall not constitute a waiver of the Agent's or such Lender's rights to
demand com- pensation for any increased costs or reduction in amounts
received or receivable or reduc- tion in rate of return pursuant to
Section 5.22.A and Section 5.22.B. The protection under this Section
shall be available to each Lender and the Agent regardless of any
possible con- tention of the invalidity or inapplicability of any law,
regulation or other condition which shall give rise to any demand by
such Lender or the Agent for compensation (but if such law, regulation
or other condition is finally determined to be invalid or inapplicable,
the Agent or Lenders shall promptly refund (without interest) all
amounts paid under this Sec- tion arising from such invalid or
inapplicable law, regulation or other condition).
ARTICLE VI
SPECIAL PROVISIONS FOR EURODOLLAR LOANS
6.1 INADEQUACY OF EURODOLLAR LOAN PRICING. If with respect to any Interest
Period for any Euro- dollar Loan:
A. A Lender determines in good faith (which determination shall be
conclusive absent manifest error) that, by reason of circumstances
affecting the Eurodollar interbank market generally, deposits in
Dollars (in the applicable amounts) are not being offered to the Lender
in the Eurodollar interbank market for such Interest Period; or,
B. A Lender determines in good faith (which determination shall be
conclusive absent manifest error) that (i) the Adjusted LIBOR Rate will
not adequately and fairly reflect the cost to the
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Lender of maintaining or funding such Eurodollar Loan for such Interest
Period, or (ii) reasonable means do not exist for ascertaining the
Adjusted LIBOR Rate, then, such Lender shall so notify the Agent and
the Agent shall forthwith give notice thereof to the Lenders and the
Borrowers. Thereafter, until the Agent notifies the Borrowers that the
circumstances giving rise to such suspension no longer exist, (i) the
obligation of the Lender to make Eurodollar Loans shall be suspended,
and (ii) the Borrowers shall either (a) repay in full the then
outstanding principal amount of the Eurodollar Loans, together with
accrued interest thereon on the last day of the then current Interest
Period applicable to such Eurodollar Loans, or (b) convert such
Eurodollar Loans to Alternate Base Rate Loans in accordance with
Section 5.4.A.(3) and Section 5.4.B.(2) on the last day of the then
current Interest Period applicable to each such Eurodollar Loan.
6.2 ILLEGALITY. If with respect to any Interest Period for any Eurodollar
Loan:
A. A Lender determines in good faith (which determination shall be
conclusive absent manifest error) that any change in any applicable
law, rule or regulation or in the interpretation, application or
administration thereof makes it unlawful, or any central bank or other
Gov- ernmental Authority asserts that it is unlawful for the Lender to
maintain or fund any Loan by means of Dollar deposits obtained in any
Eurodollar interbank market (any of the above being described as a
"EURODOLLAR EVENT"), then, such Lender shall so notify the Agent and
the Agent shall forthwith give notice thereof to the Lenders and the
Borrowers. Upon re- ceipt of such notice, the Borrowers shall either
(i) prepay in full the then outstanding princi- pal amount of the
affected Eurodollar Loans, together with accrued interest thereon, or
(ii) convert the affected Eurodollar Loans to Alternate Base Rate Loans
on either (a) the last day of the then current Interest Period
applicable to each affected Eurodollar Loan if such Lend- er may
lawfully continue to maintain and fund such Eurodollar Loan to such
day, or (b) immediately, if such Lender may not lawfully continue to
fund and maintain such Eurodollar Loans to such day. Upon the
occurrence of any Eurodollar Event, and at any time thereaf- ter so
long as such Eurodollar Event shall continue, the Lender may exercise
the aforesaid option by giving notice thereof to the Agent and the
Borrowers.
B. Any prepayment of any Eurodollar Loan which is required under the
preceding Section shall be made, together with accrued and unpaid
interest and all other amounts payable to the Lender under this Second
Restated Agreement with respect to such prepaid Eurodollar Loan on the
date stated in the notice to the Borrowers referred to above, which
date ("REQUIRED PREPAYMENT DATE") shall be not less than fifteen (15)
days from the date of such notice.
6.3 EFFECT ON INTEREST OPTIONS. If notice has been given pursuant to Section
6.1 or Section 6.2 requiring a type of Eurodollar Loan to be repaid or
converted, then unless and until the Agent notifies the Borrowers that the
circumstances giving rise to such repayment no longer apply requiring such
repayment or conversion, all Loans shall thereafter be Alternate Base Rate
Loans. If the Agent notifies the Borrowers that the circumstances giving rise to
such repayment no longer apply, the Borrowers may thereafter select Loans to be
Eurodollar Loans in accordance with Section 5.4.A.(1) or Section 5.4.B.(1).
6.4 PAYMENTS NOT AT END OF INTEREST PERIOD. If the Borrowers make any
payment of principal with respect to any Adjusted LIBOR Rate Loan on any day
other than the last day of the Interest Period applicable to such Adjusted LIBOR
Rate Loan, the Borrowers shall reimburse the Lenders on
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demand the Consequential Loss incurred by the Lenders as a result of the timing
of such payment. A certificate of a Lender setting forth the basis for the
determination of the amount of Consequential Loss shall be delivered to the
Borrowers and shall, in the absence of manifest error, be conclusive and
binding. Any conversion of an Adjusted LIBOR Rate Loan to a different Interest
Option on any day other than the last day of the Interest Period for such
Adjusted LIBOR Rate shall be deemed a payment for purposes of this Section.
6.5 SURVIVAL OF OBLIGATIONS. Failure on the part of any Lender or the Agent
to demand compensation pursuant to this Article for any increased costs or
reduction in amounts received or receivable with respect to any Interest Period,
shall not constitute a waiver of such Lender's or the Agent's rights to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in rate of return in such Interest Period or in any
other Interest Period. The protection under this Article shall be available to
each Lender and the Agent regardless of any possible contention of the
invalidity or inapplicability of any law, regulation or other condition which
shall give rise to any demand by such Lender or the Agent for compensation. Any
Lender claiming any additional amounts payable pursuant to this Section agrees
to use reasonable efforts (consistent with 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, any such
additional amounts and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.
ARTICLE VII
COLLATERAL FOR LOANS
7.1 COLLATERAL FOR LOANS. The Loans are and shall continue to be secured by
the following property (collectively, the "COLLATERAL") and Liens in the
Collateral shall be created by or in the Collateral Documents, including, but
not limited to, those described as follows:
A. Security Agreement in the form of Exhibit attached to the Prior
Agreement duly executed by each Borrower, creating a first priority
lien, mortgage and security interest in and upon all of the Borrower's
present and future Accounts, Inventory, Equipment, furniture, Goods,
Fixtures, General Intangibles, Instruments, margin accounts, tax
refunds, Chattel Paper, drafts, acceptances, Contracts and Contract
Rights, Documents, Title Documents, notes, re- turned and repossessed
Goods and all other personal property or interests in personal prop-
erty, together with all accessions to, substitutions for, and all
replacements, products and proceeds of the foregoing (including,
without limitation, proceeds of insurance policies in- suring any of
the foregoing), all books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and other
computer materials and records) pertaining to any of the foregoing, and
all insurance policies insuring any of the foregoing, whether now owned
or hereafter acquired, and wherever located.
B. Security Agreement-Pledge in the form of Exhibit attached to the Prior
Credit Agreements duly executed by Safe Seal and Harley, as applicable,
creating a first priority lien, mortgage and security interest in and
upon all of the outstanding and issued capital stock of Harley, Valve,
Spinsafe, Safe Seal Canada, GSV and PSI (collectively, the "PLEDGED
STOCK").
C. Security Agreement-Collateral Assignment of Note in the form of Exhibit
attached to the Prior Agreement, creating a first priority lien,
mortgage and security interest in the promissory note (the "PLEDGED
NOTE") in the original principal sum of $1,254,566.00, dated
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January 31, 1997, executed by Xxxx Xxxxxx payable to the order of
Harley, and all of the Lien Documents described therein.
D. The Oklahoma Mortgage in the form of Exhibit attached to the Prior
Agreement, creating a first priority lien in and upon all interests in
the Mortgaged Property in the State of Oklahoma.
E. Assignment of Leases in the form of Exhibit attached to the Prior
Agreement, creating a first priority lien in and upon all interests in
the Leases in the State of Oklahoma.
F. Act of Collateral Mortgage in the form of Exhibit attached to the Prior
Agreement, creating a first priority lien in and upon all interests in
the Mortgaged Property in the State of Louisiana.
G. Collateral Assignment of Leases and Rents in the form of Exhibit
attached to the Prior Agreement, creating a first priority lien in and
upon all interests in the Leases in the State of Louisiana.
H. Collateral Pledge and Security Agreement in the form of Exhibit
attached to the Prior Agreement, creating a first priority lien in and
upon all interests in the Collateral Mortgage Note.
I. Steam Supply Security Agreement-Collateral Assignment of Note in the
form of Exhibit 7.1.I to this Second Restated Agreement, creating a
first priority lien in and upon all interests in the Steam Supply Note
Receivable and the Steam Supply Loan Documents.
7.2 COLLATERAL DOCUMENTS. Each of the Collateral Documents will be duly
executed by the parties thereto. Each document, including, without limitation,
any Financing Statement, required by the Collateral Documents, under law or
requested by the Agent to be filed, registered or recorded in order to create,
in favor of the Agent for the benefit of the Lenders, a perfected first Lien on
the Collateral described therein, shall be properly filed, registered or
recorded in each jurisdiction in which the filing, registration or recordation
thereof is so required or requested. The Agent shall receive an acknowledgment
copy, or other evidence satisfactory to the Agent, of each such filing,
registration or recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto.
7.3 FURTHER ASSURANCES. The Collateral Documents will contain a description
of the Collateral sufficient to grant to the Agent for the benefit of the
Lenders perfected Liens pursuant to applicable law in all Collateral. Upon the
filing by the Agent of the Financing Statements, the recording of the Mortgages,
and the delivery to the Agent of the Pledged Note and the Pledged Stock, the
Agent will have, for the benefit of the Lenders, perfected first priority Liens
in all Collateral. The Borrowers shall make, execute or endorse, and acknowledge
and deliver or file or cause the same to be done, all vouchers, invoices,
notices, certifications and additional agreements, undertakings, conveyances,
transfers, assignments, Financing Statements or other assurances, and take any
and all such other action, as the Agent may, from time to time, deem necessary
or proper in connection with any of the Loan Documents, or for better assuring
and confirming unto the Agent for the benefit of the Lenders creation of Liens
in all Collateral, or for granting to the Agent for the benefit of the Lenders
any security for the Obligations which the Agent may reasonably request from
time to time.
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7.4 OTHER LOANS. It is agreed that the Collateral and the Collateral
Documents given to secure the Loans shall secure all Obligations, regardless of
how same may arise and all collateral given to secure any other obligations of
any of the Borrowers shall additionally secure the Obligations. Any Default
shall constitute an event of default in all Obligations and the collateral
documents securing the payment of same.
ARTICLE VIII
CUSTODY, INSPECTION, COLLECTION
AND MAINTENANCE OF COLLATERAL
8.1 CASH COLLATERAL ACCOUNT. The Borrowers will maintain the collection
account (the "CASH COLLATERAL ACCOUNT") with Texas Commerce into which account
all payments made on Safe Seal's Accounts will be deposited. The Cash Collateral
Account will be maintained pursuant to the terms of this Second Restated
Agreement and the Lockbox Agreement in the form of Exhibit attached to the Prior
Agreement among the Borrowers, the Agent and Texas Commerce. The Borrowers will
provide written notification to each Account Debtor to remit all payments to the
Cash Collateral Account.
8.2 COLLECTION OF ACCOUNTS. So long as the procedures set forth in this
Article remain in effect, the arrangements between the Agent and the Lenders
with respect to making of Revolving Credit Loans shall be handled in the manner
set out herein.
A. The Borrowers will, at Borrowers' cost and expense, (i) arrange for
remittances on Ac- counts to be made directly to the Cash Collateral
Account or in such other manner as the Agent may direct, (ii) except
for disputed items, promptly deposit all payments received by the
Borrowers on account of Accounts, whether in the form of cash, checks,
notes, drafts, bills of exchange, money orders or otherwise, into the
Cash Collateral Account in original form received (but with any
endorsements of the Borrowers necessary for deposit or collec- tion),
and on the date of receipt thereof, and (iii) deposit or cause to be
deposited into the Cash Collateral Account all other sums paid or
payable to the Borrowers from any source, including, but not limited
to, insurance proceeds and condemnation awards. The deposits into the
Cash Collateral Account will be subject to withdrawal only by the Agent
as herein- after provided. Until such payments are deposited, such
payments shall be deemed to be held in trust by the Borrowers for and
as the Lenders' property and shall not be commingled with the
Borrowers' other accounts, all of which will be maintained in
accordance with Section 9.1.O.
B. All remittances and payments that are deposited in accordance with the
foregoing will be immediately applied by the Agent to reduce the
outstanding balance of the Revolving Credit Loans, subject to the
continued accrual of interest on such remittances and payments for two
(2) Business Days (or three {3} Business Days in the case of
remittances and payments received after 12:00 noon, New York, New York
time) and in any event subject to final collection in cash of the item
deposited.
C. The Agent shall not, however, be required to credit Borrowers' account
for the amount of any instrument which is unsatisfactory to the Agent
and the Agent may charge the Borrowers' account for the amount of any
instrument which is returned to the Agent unpaid.
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D. On each Wednesday that is a Business Day (or on the next Business Day
if a Wednesday is not a Business Day) during the term of this Second
Restated Agreement, the Agent will provide each Lender with a weekly
statement setting out, for the period since the last statement, the
aggregate principal amount of new Revolving Credit Loans made to the
Borrowers, the amount of remittances and payments actually collected
and applied by the Agent to reduce the outstanding principal balance of
the Revolving Credit Loans during such period and the outstanding
principal balance of the Revolving Credit Loans at the end of such
period. If a Lender's pro rata share (based on such Lender's Revolving
Credit Commitment) of Revolving Credit Loans made during such weekly
period exceeds such Lender's pro rata share of remittances and payments
applied to reduce the Revolving Credit Loans during such weekly period,
the difference will be paid in same day funds by such Lender to the
Agent, and if such Lender's pro rata share of remittances and payments
applied to reduce the Revolving Credit Loans during such weekly period
exceeds such Lender's pro rata share of Revolving Credit Loans made
during such period, the difference will be paid in same day funds by
the Agent to such Lender. Payments required hereunder will be due and
payable on the same Business Day.
E. Each month the Agent shall render to the Borrowers a statement of the
Borrowers' account, which shall constitute an account stated and shall
be deemed to be correct and accepted by and be binding upon the
Borrowers unless the Agent receives a written statement of the
Borrowers' exceptions within thirty (30) days after such statement was
rendered to the Borrowers.
F. The Borrowers shall not, without the Agent's prior written consent,
which the Agent may withhold in the Agent's business judgment, with
respect to any single Account in excess of $2,500.00 or any combination
of Accounts in excess of $50,000.00 in any Fiscal Year, grant any
extension of the time of payment of any Accounts, compromise, adjust or
settle any Accounts for less than the full amount thereof, release, in
whole or in part, any Person or property liable for the payment
thereof, extend the time for payment thereof, or allow any credit or
discount whatsoever thereon except as permitted under Section 9.3.P.
G. If at anytime during the term of this Second Restated Agreement, the
Agent permits the Borrowers to collect any of the proceeds of the
Collateral, then until the authority of the Borrowers to collect the
proceeds of the Collateral is terminated by the Agent, the Borrowers
will, at the Borrowers' sole cost and expense, but on the Agent's
behalf and for the Agent's account, collect as the Lenders' property
and hold in trust for the Lenders, all amounts unpaid on Collateral,
and shall not commingle such collections with funds of the Borrowers,
except to pay the Obligations.
H. Upon the occurrence and continuance of an Event of Default, the Agent
may (and upon the determination of the Lenders, shall) send a notice of
assignment and/or notice of the Lenders' security interest to any and
all Account Debtors or any third party holding or otherwise concerned
with any of the Collateral, and thereafter the Agent shall have the
sole right to collect the Accounts and/or take possession of the
Collateral and the books and records relating thereto.
I. At any time after the occurrence and during the continuance of an Event
of Default, the Agent may, without notice to or consent from the
Borrowers xxx upon or otherwise collect,
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extend the time of payment of, or compromise or settle for cash, credit
or otherwise upon any terms, any of the Accounts or any securities,
instruments or insurance applicable thereto and/or release the Account
Debtor thereon. The Agent is authorized and empowered to accept the
return of the goods represented by any of the Accounts. The Agent and
the Lenders shall not, under any circumstances or in any event
whatsoever, have any liability for any error, omission or delay of any
kind occurring in the settlement, collection or payment of any of the
Accounts or any instrument received in payment thereof, or for any
damage resulting therefrom.
8.3 VERIFICATION OF ACCOUNTS. At the Agent's request, the Borrowers will,
upon the creation of Accounts, or at such intervals as the Agent may require,
provide the Agent with (i) confirmatory assignment schedules, (ii) copies of
Account Debtor's invoices, (iii) evidence of shipment or delivery, and (iv) such
further schedules, documents and/or information regarding the Accounts as the
Agent may reasonably require. The Agent shall have the right to confirm and
verify all Accounts and do whatever the Agent may reasonably deem necessary to
protect the Lenders' interests. The items to be provided under this Section are
to be in forms satisfactory to the Agent and executed by the Borrowers and
delivered to the Agent, from time to time, solely for the Agent's convenience in
maintaining records of the Collateral. The failure to deliver any of such items
to the Agent shall not affect, terminate, modify or otherwise limit the Liens in
favor of the Agent for the benefit of the Lenders.
8.4 SALES OF INVENTORY. So long as there exists no Default, Inventory
subject to the Liens in favor of the Agent for the benefit of the Lenders may be
sold by the Borrowers in the ordinary course of business, but shall not
otherwise be taken or removed from the Premises or the Mortgaged Property. If
there shall occur a Default, the then Inventory shall not be sold, taken or
removed, except with the Agent's prior consent and upon substitution of other
Collateral in form and amount satisfactory to the Agent, in the Agent's business
judgment or upon payment of an amount satisfactory to the Agent to be applied to
the Obligations in such order as the Agent, in the Agent's sole discretion, may
determine.
8.5 INSPECTIONS AND FIELD EXAMINATIONS. At all times, the Agent and any of
the Lenders shall have full access to, and the right to examine, check, inspect
and make abstracts and copies from the books, records, audits, correspondence
and all other papers relating to the Collateral. The Agent or any of the
Lenders, and their respective agents, may enter upon any of the Premises or the
Mortgaged Property at any time during business hours and at any other reasonable
time, and from time to time, for the purpose of inspecting the Collateral and
any and all records pertaining thereto. The Agent shall have the right to make
field examinations, as often as it may request (but initially scheduled for
three (3) times in each Fiscal Year) the existence and condition of the
Accounts, Inventory, books and records of the Borrowers and to review compliance
with the terms and conditions of this Second Restated Agreement and the other
Loan Documents. If there shall occur an Event of Default, the Agent is
authorized to make as many field examinations, as it may reasonably require. The
Borrowers shall permit any authorized representative designated by the Agent to
discuss the affairs, finances and condition of the Borrowers with the
appropriate Financial Officer and such other officers of the Borrowers as the
Agent shall deem appropriate and the Borrowers' independent public accountants,
as applicable. The Agent agrees that it shall schedule any meeting with any such
independent public accountant through a Responsible Officer of Safe Seal who
shall have the right to be present at any such meeting. The Borrowers
irrevocably authorize and direct all accountants and auditors employed by the
Borrowers to exhibit and deliver to the Agent at any time during the term of
this Second Restated Agreement copies of any of the Financial Statements, trial
balances or other accounting
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records of any sort of the Borrowers in the accountant's or auditor's
possession, and to disclose to the Agent any information they may have
concerning the financial status and business operations. The Borrowers authorize
all Governmental Authority to furnish to the Agent copies of reports or
examinations relating to a Borrower, whether made by the Borrowers or otherwise.
8.6 REPORTS. The Borrowers will, daily on each Business Day, deliver to the
Agent, in form and detail satisfactory to the Agent, (i) confirmatory assignment
schedules, (ii) the Borrowers' daily invoice register with respect to sales for
the preceding day, (iii) a collections report for the preceding day, (iv) the
Borrowers' daily debit and credit adjustments journal, and (v) with any
supporting documentation reasonably requested by the Agent relating to the
foregoing. The Borrowers will, immediately upon learning thereof, report to the
Agent all matters materially affecting the value, enforceability or
collectibility of any of the Collateral such as the reclamation, repossession or
return to the Borrowers of goods and claims or disputes asserted by any Account
Debtor. In addition, the Borrowers shall notify the Agent of any noncompliance
in respect of the representations, warranties and covenants contained in Section
11.3.
8.7 COMPLIANCE WITH LAW. The Borrowers shall comply with all actions, rules,
regulations and orders of any Governmental Authority applicable to the
Collateral or any part thereof or to the operation of the businesses of the
Borrowers. The Borrowers may, however, contest or dispute any actions, rules,
regulations, orders and directions of a Governmental Authority in any reasonable
manner, provided the Agent is satisfied that the contest or dispute does not
affect the Agent's Liens or have a Material Adverse Effect. Upon the occurrence
and during the continuance of an Event of Default: (i) if any of the Accounts
includes a charge for any Tax, the Agent is hereby authorized (but in no event
obligated) in its discretion to pay the amount thereof to the Governmental
Authority for the account of the Borrowers and to charge the Borrowers' account
therefor; and, (ii) the Borrowers shall notify the Agent if any Accounts include
any Tax and, in the absence of such notice, the Agent shall have the right to
retain the full proceeds of such Accounts and shall not be liable for any taxes
that may be due from the Borrowers by reason of the sale and delivery creating
such Accounts.
8.8 ACCESS. So long as amounts are owing under the Obligations, the Agent:
A. May use any owned or leased lifts, hoists, trucks and other facilities
or equipment for han- dling or removing the Collateral; and,
B. Shall have, and is hereby granted, a right of ingress and egress to and
through any owned or leased property, including the Premises and the
Mortgaged Property.
8.9 PROTECTION. At any time there shall be an Event of Default, the Agent
may, at any time, take such steps as the Agent deems necessary to protect the
Agent's interest in and to preserve the Collateral, including the hiring of
security guards or the placing of other security protection measures as the
Agent may deem appropriate. The Agent may elect to employ and maintain at the
Premises or the Mortgaged Property a custodian who shall have full authority to
do all acts necessary to protect the Agent's interest in the Collateral. The
Agent may lease warehouse facilities to which the Agent may move all or part of
the Collateral. The Borrowers agree to cooperate fully with all of the Agent's
efforts to preserve the Collateral and will take such actions necessary to
preserve the Collateral as the Agent may direct. All of the Agent's reasonable
expenses of preserving the Collateral, including any expenses relating to the
bonding of a custodian, shall be charged to the Borrowers' account and added to
the Obligations. The Agent shall not be responsible or liable for any shortage,
discrepancy, dam-
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age, loss or destruction of any part of the Collateral wherever the same may be
located and regardless of the cause thereof.
8.10 RIGHT TO RECEIVE. The Agent shall have the right to receive, endorse,
assign and/or deliver in the names of the Agent and the Borrowers, any and all
checks, drafts and other instruments for the payment of money relating to the
Accounts. The Borrowers waive notice of presentment, protest and of non-payment
of any instrument so endorsed. The Borrowers constitute the Agent or the Agent's
designee as Borrowers' attorney-in-fact with power to: (i) endorse Borrowers'
names upon any notes, acceptances, checks, drafts, money orders or other
evidences of payment or Collateral that may come into its possession; (ii) sign
Borrowers' names on any invoice or xxxx of lading relating to any Accounts,
drafts against Account Debtors, assignments and verifications of Accounts and
notices to Account Debtors; (iii) send verifications of Accounts to any Account
Debtor; (iv) upon the occurrence of an Event of Default, notify the U.S. Postal
Service to change the address for delivery of mail addressed to the Borrowers to
such address as the Agent may designate; and, (v) do all other acts and things
necessary to preserve, collect, or perfect the Agent's interest in the
Collateral and carry out this Second Restated Agreement. All acts of said
attorney or designee are hereby ratified and approved and said attorney or
designee shall not be liable for any acts of omission or commission, for any
error of judgment or for any mistake of fact or law. This power of attorney is
coupled with an interest and is irrevocable until all of the Obligations are
paid in full and this Second Restated Agreement and the Total Commitment is
terminated.
8.11 STEAM SUPPLY CASH COLLATERAL ACCOUNT. The Borrowers will cause the
Steam Supply Group to maintain a collection account (the "STEAM SUPPLY CASH
COLLATERAL ACCOUNT") with Texas Commerce into which account all payments made on
the Steam Supply Group's Accounts will be deposited. The Steam Supply Cash
Collateral Account will be maintained pursuant to the terms of the Steam Supply
Credit Agreement and the Steam Supply Lockbox Agreement as set out in the Steam
Supply Credit Agreement. The Borrowers will cause the Steam Supply Group to
provide written notification to each Account Debtor of the Steam Supply Group to
remit all payments to the Steam Supply Cash Collateral Account. The Borrowers
will comply and cause the Steam Supply Group to comply with all provisions of
the Steam Supply Credit Agreement.
ARTICLE IX
COVENANTS
9.1 AFFIRMATIVE COVENANTS. Until the fulfillment of all Obligations, unless
the Agent and the Lenders shall otherwise consent in writing, the Borrowers will
perform and comply with the following covenants:
A. The Borrowers shall furnish to the Agent and each of the Lenders:
(1) As soon as possible, but in any event within one hundred twenty
(120) days after the end of each Fiscal Year, audited, consolidated
Financial Statements of the Borrowers and the Consolidated Subsidiaries
consisting of statements of income, stockholder's equity and cash flow
for such Fiscal Year and a balance sheet as of the end of such Fiscal
Year, setting forth, in each case, in comparative form, corresponding
figures from the immediately preceding annual audit, accompanied by
supporting schedules required by GAAP, all in reasonable detail and
satisfactory in scope to the Agent, as fairly presenting the financial
position of the Borrowers and the Consolidated Subsidiaries as of the
dates indicated in accordance
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with GAAP, together with an opinion thereon, without material
qualifications or exceptions certified by independent certified public
accountants selected by the Borrowers and satisfactory to the Agent,
and the consolidating Financial Statements of each Consolidated
Subsidiary;
(2) As soon as possible, but in any event within one hundred twenty
(120) days after the end of each Fiscal Year, the auditors' management
report, and promptly upon receipt thereof, each written report
submitted to the Borrowers by independent accountants made in any
annual, quarterly or special audit.
(3) Within thirty (30) days after the end of each calendar month, an
unaudited balance sheet as of the end of such calendar month and the
related statements of income, and stockholder's equity and setting
forth, the amounts for such calendar month and the Fiscal Year to date,
prepared in accordance with GAAP, and certified by the Financial
Officer of Safe Seal as fairly presenting the financial position of the
Borrowers as of the dates indicated, subject to changes resulting from
audit and normal year-end adjustment, and (i) commencing on September
30, 1997, and for each quarter-annual period thereafter until the
anniversary date of the Effective Date of the Prior Agreement and
monthly after such date, the Financial Statements shall include
statements of cash flows, and (ii) commencing on the anniversary date
of the Effective Date of the Prior Agreement, the Financial Statements
shall set forth amounts for the corresponding periods in the prior
Fiscal Year, in comparative form;
(4) As soon as possible, but in any event within fifteen (15) days
after the end of each calendar month, a consolidated aging and listing
of all Accounts, Eligible Accounts and all accounts payable for such
month certified as being true and correct by the Financial Officer of
Safe Seal.
(5) Within fifteen (15) days after the end of each calendar month, an
Inventory Designation Report;
(6) On the Effective Date of the Prior Agreement and within thirty (30)
days after the end of each calendar month, Safe Seal will provide to
the Agent (i) a Certificate of Compliance (with an attached Borrowing
Base Certificate) in the form of Exhibit attached to the Restated
Agreement, signed by the Financial Officer of Safe Seal certifying that
no Events of Default have occurred and the Borrowers are in compliance
with the covenants set out in Section 9.2 (which annual Certificate of
Compliance with respect to the calculation of the covenants set out in
Section 9.2 shall be signed by the Borrowers' accountants), calculating
the Borrowing Base and demonstrating compliance as at the end of such
month with the Availability requirements, and (ii) together with such
payment, if any, as may be necessary to bring the Availability to zero;
(7) Within thirty (30) days prior to the end of each Fiscal Year, a
summary of business plans and financial operation projections
(including, without limitation, with respect to Capital Expenditures)
for the Borrowers for the next Fiscal Year (including quarterly balance
sheets, statements of income and of cash flow) and annual projections
for the next following Fiscal Year prepared by management and in form,
substance and detail (including, without limitation, principal
assumptions) satisfactory to the Agent;
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(8) As soon as practicable, copies of all reports, forms, filings,
documents and financial information submitted to any Governmental
Authority and/or the Borrowers' shareholders;
(9) As soon as possible, copies of the Federal income tax return and
all extensions thereof of the Borrowers for the current Fiscal Year
then ended, certified as being true and correct by the Financial
Officer of Safe Seal; and,
(10) From time to time, such further information regarding the
business, affairs and financial condition of the Borrowers as the Agent
may reasonably request.
B. The Borrowers shall cause the Steam Supply Group to comply with the
reporting requirements set out in the Steam Supply Credit Agreement
comparable to the provisions of Section 9.1.A, and the Borrowers will
deliver all of same to the Agent within the time periods required
therein.
C. The Borrowers shall, promptly upon learning thereof: (i) inform the
Agent, in writing, of any material delay in the Borrowers' performance
of any Borrowers' obligations to any Account Debtor or of any assertion
of any claims, setoffs or counterclaims by any Account Debtor; and,
(ii) furnish to and inform the Agent of all material adverse
information relating to the financial condition of any Account Debtor.
D. The Borrowers shall comply with all Requirements of any Governmental
Authority, including, but expressly not limited to Environmental Laws
applicable to the Premises, the Mortgaged Property, any other property
owned by the Borrowers, or any parts thereof, and the Occupational
Safety and Health Act of 1970 ("OSHA"), if the failure to be in
compliance would have a Material Adverse Effect.
E. Each Borrowers will, at all times, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect, all
Permits, franchises, patents, copyrights, trademarks and trade names
material to the conduct of their businesses.
F. The Borrowers shall act prudently and in accordance with customary
industry standards in managing or operating any Borrowers' assets,
properties, business and investments. The Borrowers shall keep in good
working order and condition, ordinary wear and tear excepted, all of
their assets and properties which are necessary to the conduct of their
businesses. The Borrowers shall maintain and operate their business in
the same general manner in which presently conducted and operated.
G. The Borrowers will maintain with financially sound, responsible and
reputable insurance companies insurance against such risks, and in such
amounts and with co-insurance and deductibles as are satisfactory to
the Agent and as otherwise are usually carried by owners of similar
businesses and properties in the same general areas in which a Borrower
operates, and at least in the amounts and types presently carried by
the Borrowers. All insurance covering tangible personal property
subject to Liens in favor of the Agent for the benefit of the Lenders
granted pursuant to the Collateral Documents shall provide that, in the
case of each separate loss, the full amount of insurance proceeds shall
be payable to the Agent and shall further provide for at least thirty
(30) days prior written notice to the Agent of the cancellation or
substantial modification thereof. The Borrowers shall cause the
insurance
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policies or proper certificates evidencing the same to be delivered to
the Agent. If the Borrowers shall fail to obtain insurance as herein
provided, or to keep the same in force, the Agent may obtain such
insurance and pay the premiums therefor and charge the Borrowers'
accounts therefor, and such expenses so paid shall be part of the
Obligations.
H. Each Borrower will continue to be a corporation duly incorporated and
existing in good standing under the laws of the state of its
incorporation and will continue to be duly licensed or qualified in all
jurisdictions wherein the character of the property owned or leased by
it or the nature of the business transacted by it makes licensing or
qualification necessary, and the failure to do so would have a Material
Adverse Effect.
I. Each Borrower will promptly inform the Agent of the creation or
acquisition of any direct or indirect Subsidiary. The Borrowers shall
cause each (i) Subsidiary not in existence on the Effective Date of the
Prior Agreement, or (ii) inactive Subsidiary existing on the Effec-
tive Date of the Prior Agreement which becomes active with the consent
of the Lenders, to become a Borrower or a Guarantor, and to execute the
Collateral Documents or execute a Guaranty Agreement, as applicable,
and cause the direct parent of each such Subsidiary to pledge all of
the capital stock of such Subsidiary pursuant to a Security
Agreement-Pledge in the form attached to the Restated Agreement and
cause each such Subsidiary to pledge its accounts receivable and all
other assets pursuant to the Collateral Documents.
J. The Borrowers shall pay and discharge all taxes, assessments and
governmental charges or levies including, but expressly not limited to,
Taxes, prior to the date on which penalties or liens attach thereto and
become of public record, except such Taxes, if any, as are being
contested in good faith and as to which adequate reserves have been
provided. The Borrowers shall pay all lawful claims for labor,
materials and supplies, unless such claims are being contested in good
faith, and which, if unpaid and in excess of $25,000.00 in the
aggregate, might become a Lien or charge on such Person's properties.
K. The Borrowers shall give the Agent prompt written notice of (i) any IRS
audit of any of the Borrowers, (ii) of the filing or commencement of
any action, suit, or administrative pro- ceeding against any of the
Borrowers, whether at law or in equity or by or before any Gov-
ernmental Authority, (iii) any Reportable Event, or (iv) violations of
any Requirement (any of which (a) is material and is brought by or on
behalf of any Person, or in which injunctive or other equitable relief
is sought, and (b) it is probable (within the meaning of Statement of
Financial Accounting Standards No. 5 promulgated by FASB) that there
will be an adverse determination and which, if adversely determined,
would (x) reasonably be expected to result in liability in an aggregate
amount of $25,000.00 or more, not reimbursable by insur- ance, or (y)
materially impair the ability of such Person to perform its obligations
under any of the Loan Documents to which it is a party.
L. The Borrowers will furnish to the Agent prompt notice of any
development in the business, affairs or financial condition of the
Borrowers which has had or which is likely, in the judgment of any
Responsible Officer of the Borrowers, to have, a Material Adverse
Effect.
M. The Borrowers will, within one hundred twenty (120) days of the
Effective Date of the Prior Agreement, enter into an Interest Rate
Protection Agreement for no less than
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$6,500,000.00 for a tenure and at a spread on the Adjusted LIBOR Rate,
on terms and conditions and within a party acceptable to the Agent.
N. The Borrowers will furnish to the Agent prompt notice of the issuance
by any Governmental Authority of any injunction, order, decision or
other restraint prohibiting, or having the effect of prohibiting, the
making of the Loans or occurrence of other Advances, or invalidating,
or having the effect of invalidating, any provision of the Loan
Documents, or the initiation of any litigation or similar proceeding
seeking any such injunction, order, decision or other restraint.
O. The Borrowers will maintain all operating accounts (other than accounts
maintained at other business locations provided that aggregate balances
in all such other accounts do not exceed $25,000.00 at any time
outstanding but no more than $10,000.00 in any one account) and cash
management arrangements with the Agent or Texas Commerce.
P. The Borrowers will pay in full all reasonable and necessary expenses,
including legal expenses and attorney's fees, of the Agent or any of
the Lenders which have been or may be incurred by the Agent or any of
the Lenders in connection with the preparation of the Loan Documents,
the lending hereunder, the collection or enforcement of the Obligations
and the recording and filing and re-recording and re-filing of any such
document and the release of any of the Collateral.
Q. Except for the filing of continuation statements and the making of
other filings by the Agent as secured party or assignee, at all times
take all actions necessary to maintain the Liens and security interests
provided for under or pursuant to this Second Restated Agreement and
the Collateral Documents as valid and perfected first priority Liens on
the Collateral intended to be covered thereby (subject only to the
Permitted Liens) and supply all information to the Agent necessary for
such maintenance.
R. The Borrowers will make full and timely payment of the Obligations
whether now existing or hereafter arising, and duly comply with all the
terms and covenants contained in this Second Restated Agreement
(including, without limitation, the Borrowing limitations and Mandatory
Prepayments) and in each of the other Loan Documents, all at the times
and places and in the manner set forth therein.
S. The Borrowers confirm the obligations of the Borrowers contained in the
Hazardous Materials Indemnification Agreement pursuant to the Prior
Agreement.
T. Harley confirms that it has entered into an Operations and Maintenance
Plan, a true and correct copy of which has been provided to the Agent,
as required by the Prior Agreement and that Harley has and is
continuing to perform the terms and conditions of the Operations and
Maintenance Plan.
9.2 FINANCIAL COVENANTS. Until the fulfillment of all Obligations unless the
Lenders shall otherwise consent in writing, Borrowers shall maintain the
following financial covenants.
A. The Borrowers shall have on a consolidated basis, and shall maintain a
Net Worth in the following amounts during the following periods:
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PERIOD AMOUNT
------ ------
Effective Date through December 30, 1997 $2,300,000.00
December 31, 1997 through June 29, 1998 $4,130,000.00
June 30, 1998 through December 30, 1998 $4,830,000.00
December 31, 1999 through June 29, 1999 $5,730,000.00
June 30, 1999 through December 30, 1999 $6,930,000.00
On and after December 31, 1999 $8,230,000.00
It is understood that Safe Seal has granted to certain employees
warrants and options to purchase shares in Safe Seal. Safe Seal has
proposed to redeem the warrants and options and in connection
therewith, will have to take a current charge on Net Income.
Notwithstanding the foregoing Net Worth requirements, Safe Seal may
redeem the warrants and options provided that the charge is not in
excess of $1,500,000.00 in the aggregate, and further expressly
provided that Safe Seal's obligations to fund the redemption is
contingent upon a successful initial public offering of Safe Seal's
stock. If Safe Seal enters into agreements to redeem its stock as
herein provided, the Net Worth requirements will be reduced by the
amount of the current charge required to be recognized, not to exceed
however, $1,500,000.00. If at any time all or any portion of the charge
is reversed, the Net Worth requirements will be increased by the amount
of the current charge which is reversed. Defaults, if any, of the
Borrowers in the foregoing covenant required in the Prior Credit
Agreements are waived by the Lenders.
B. The Borrowers shall not permit the ratio ("DEBT SERVICE COVERAGE
RATIO") of (i) Funds Flow From Operations MINUS Capital Expenditures
for each period consisting of four (4) ----- consecutive fiscal
quarters to (ii) the sum of (a) the aggregate payments made or
scheduled to be made during such period on Indebtedness, (b) the
aggregate payments made or scheduled to be made during such period on
Capital Leases, and (c) Dividends, to be less 1.25:1.00 for any fiscal
quarter period. The Debt Service Coverage Ratio will be determined
quarterly from the Financial Statements of the Borrowers most recently
delivered pursuant to Section 9.1.A.(3) at the end of each fiscal
quarter for the preceding consecutive twelve (12) month period;
provided, further, for the first Fiscal Year, the Debt Service Coverage
Ratio will be determined quarterly, at the end of each fiscal quarter,
for the Fiscal Year to date.
C. Each of the Borrowers shall not permit Availability to be less than zero
at any time.
9.3 OTHER COVENANTS. Until the fulfillment of all Obligations, unless the
Agent and the Lenders shall otherwise consent in writing, Borrowers will perform
and comply with the following covenants:
A. The Borrowers will not create, incur, assume or suffer to exist
Indebtedness, except (i) the Indebtedness ("SCHEDULED INDEBTEDNESS")
described in the Restated Agreement, (ii) the Loans; (iii) current
accounts payable and other current obligations (other than for borrowed
money) arising out of transactions in the ordinary course of business;
and, (iv) subject to Section 9.3.D and Section 8.3.E, (a) Indebtedness
incurred in connection with the acquisition of Equipment or other
assets, or (b) Rentals.
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B. The Borrowers will not incur, create, assume or permit to exist any
Lien on any of its property or assets (including the stock of any
direct or indirect Subsidiary), whether owned at the date hereof or
hereafter acquired, or assign or convey any rights to or security
interests in any future revenues, except for (i) the Liens ("SCHEDULED
LIENS") described in Schedule 9.3.B and Section 9.3.E, and (ii) the
Permitted Liens.
C. The Borrowers will not (i) pay or modify, amend or otherwise alter the
terms and provisions of any Subordinated Indebtedness, (ii) directly or
indirectly prepay, redeem, purchase or retire any Indebtedness other
than Indebtedness incurred hereunder and Scheduled Indebtedness (except
as otherwise permitted hereunder), (iii) execute a Guaranty (except in
favor of the Lenders), or (iv) otherwise in any manner directly or
indirectly become or be responsible for Indebtedness (including, but
not limited to, working capital maintenance and take or pay contracts)
of any other Person.
D. For each Fiscal Year, the Borrowers will not expend or enter into the
commitment to expend, whether by Capital Lease (but only with respect
to the obligations under the Capital Lease accruing in such Fiscal
Year) or Capital Expenditure, an amount in the aggregate exceeding
$800,000.00.
E. For each Fiscal Year, the Borrowers will not expend or enter into the
commitment to expend by Capital Lease an amount in the aggregate
exceeding $100,000.00.
F. The Borrowers will not (i) lend or advance any money, credit or
property to any Person, or (ii) make or have outstanding any
Investments in any Person, except Temporary Cash Investments and such
other "CASH EQUIVALENT" investments as the Lenders may, from time to
time, approve.
G. The Borrowers will not, and will not permit any Subsidiary to, (i)
declare or pay any Dividends, (ii) dissolve or liquidate, or (iii)
become a party of any merger or consolidation, or purchase, lease or
otherwise acquire all or substantially all of the assets or capital
stock of any Person, except that Safe Seal may pay to Allwaste a
Dividend on preferred stock of Safe Seal owned by Allwaste in amounts
not exceeding $50,000.00 per fiscal quarter of Safe Seal and in any
Fiscal Year, a total of $200,000.00.
H. None of the Borrowers will issue, sell or otherwise dispose of any
shares of its capital stock or other securities, or rights, warrants or
options to purchase or acquire any shares or securities.
I. None of the Borrowers will amend its organizational documents,
including but not limited to, Articles or Certificate of Incorporation
and bylaws.
J. None of the Borrowers will change its name, fiscal year (except to the
Fiscal Year), current tax status or method of accounting except as
required by GAAP. A Borrower may change its name if the Borrowers have
given the Agent sixty (60) days prior notice of such name change and
there shall have been taken such action as the Agent deems necessary to
continue the perfection of the Liens securing payment of the
Obligations.
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K. None of the Borrowers will pay any management fees to or enter into any
transaction with any Affiliates, other than transactions in the
ordinary course of business and upon fair and reasonable terms not
materially less favorable than could be obtained in an arm's-length
transaction with a Person that was not an Affiliate.
L. None of the Borrowers will engage in any other line of business or
business venture, including, but expressly not limited to, any joint
ventures, partnerships or other ventures, other than those presently
engaged or those which are directly related thereto, or change any
method of operation or manner of doing business in any material
respect.
M. None of the Borrowers will (i) use proceeds of any Loan to acquire any
security in any transaction which is subject to ss.13 or ss.14 of the
Securities Exchange Act of 1934, including particularly (but without
limitation) ss.13(d) and ss.14(d) thereof, or (ii) permit the proceeds
of any Advance to be used for any purpose which is or could become a
violation of, or is inconsistent with, Regulation G, T, U or X of the
Board.
N. None of the Borrowers will sell, assign, convey, exchange, lease or
otherwise dispose of any of its properties, rights, assets or business,
whether now owned or hereafter acquired, except in the ordinary course
of business and for a fair consideration.
O. None of the Borrowers will enter into any arrangement, directly or
indirectly, with any Person whereby the Borrowers shall sell or
transfer any property, real or personal, and used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent
or lease such property or other property which the Borrowers intends to
use for substantially the same purpose or purposes as the property
being sold or transferred.
P. None of the Borrowers will sell, assign, discount, transfer, or
otherwise dispose of any Accounts, promissory notes, drafts or trade
acceptances or other rights to receive payment held by it, with or
without recourse, except (i) for the purpose of collection or
settlement in the ordinary course of business, or (ii) the sale of any
such accounts to the Agent or any of the Lenders.
9.4 ERISA COMPLIANCE. Borrowers shall, and shall cause each ERISA Affiliate
to:
A. At all times, make prompt payment of all contributions required under
all Employee Plans and required to meet the minimum funding standard
set forth in ERISA with respect to all Employee Plans;
B. With respect to any Pension Plan, not permit to exist any material
"ACCUMULATED FUNDING DEFICIENCY" (within the meaning of ss.302 of ERISA
and ss.412 of the Code), whether or not waived, with respect thereto;
C. Not engage in any transaction in connection with which the Borrowers or
any ERISA Affiliate could be subject to either a material civil penalty
assessed pursuant to the provisions of ss.502 of ERISA or a material
tax imposed under the provisions of ss.4975 of the Code;
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D. Not terminate any Pension Plan in a "DISTRESS TERMINATION" under
ss.4041 of ERISA, or take any other action which could result in a
material liability of the Borrowers or any ERISA Affiliate to the PBGC;
E. Not adopt an amendment to any Pension Plan requiring the provision of
security under ss.307 of ERISA or ss.40(a)(29) of the Code;
F. Within thirty (30) days after the filing thereof, furnish to the Agent
each annual report/return (Form 5500 Series), as well as all schedules
and attachments required to be filed with the Department of Labor
and/or the IRS pursuant to ERISA, and the regulations promulgated
thereunder, in connection with each Employee Plan for each Employee
Plan year;
G. Notify the Agent immediately of any fact, including, but not limited
to, any Reportable Event arising in connection with any Employee Plan,
which might constitute grounds for termination thereof by the PBGC or
for the appointment by the appropriate U.S. District Court of a trustee
to administer an Employee Plan, together with a statement, if requested
by the Agent, as to the reason therefor and the action, if any,
proposed to be taken with respect thereto; and,
H. Furnish to the Agent, upon request, such additional information
concerning any Employee Plan as may be requested.
9.5 INDEMNITY. EACH LOAN PARTY, JOINTLY AND SEVERALLY, INDEMNIFY AND SHALL
SAVE, AND HOLD THE AGENT AND THE LENDERS (INDIVIDUALLY, AN "INDEMNITEE" AND
COLLECTIVELY, THE "INDEMNITEES") FROM AND AGAINST THE FOLLOWING (EACH A
"CLAIM"): (I) ANY AND ALL CLAIMS, DEMANDS, ACTIONS, OR CAUSES OF ACTION THAT ARE
ASSERTED AGAINST ANY INDEMNITEE BY ANY PERSON IF THE CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION DIRECTLY OR INDIRECTLY RELATES TO A CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION THAT THE PERSON ASSERTS OR MAY ASSERT AGAINST A LOAN PARTY (II)
ANY AND ALL CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTION THAT ARE ASSERTED
AGAINST ANY INDEMNITEE IF THE CLAIM, DEMAND, ACTION OR CAUSE OF ACTION DIRECTLY
OR INDIRECTLY RELATES TO THE COMMITMENT, THE USE OF PROCEEDS OF THE LOANS, OR
THE RELATIONSHIP OF A LOAN PARTY AND THE AGENT OR ANY OF THE LENDERS UNDER THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED PURSUANT TO THIS AGREEMENT; (III) ANY
ADMINISTRATIVE OR INVESTIGATIVE PROCEEDING BY ANY GOVERNMENTAL AUTHORITY
DIRECTLY OR INDIRECTLY RELATED TO A CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
DESCRIBED IN CLAUSES (I) OR (II) ABOVE; AND, (IV) ANY AND ALL LIABILITIES,
LOSSES, REASONABLE AND NECESSARY COSTS OR EXPENSES (INCLUDING ATTORNEYS' FEES
AND DISBURSEMENTS) THAT ANY INDEMNITEE SUFFERS OR INCURS AS A RESULT OF ANY OF
THE FOREGOING. If any claim is asserted against any Indemnitee, the Indemnitee
shall promptly notify the Borrowers, but the failure to so promptly notify the
Borrowers shall not affect the Loan Parties' obligations under this Section
unless such failure materially prejudices the Loan Parties' right to participate
in the contest of the Claim. The obligations and liabilities of the Loan Parties
to any Indemnitee under this Section shall survive the expiration or termination
of this Second Restated Agreement and the repayment of the Obligations.
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ARTICLE X
CONDITIONS PRECEDENT
10.1 INITIAL ADVANCES OF LOANS. The obligation of each Lender to make any
Advance or continue the Loans after the Effective Date of this Second Restated
Agreement is subject to the conditions precedent that, on or before the date of
the initial Advance after the Effective Date of this Second Restated Agreement,
the Agent shall have received for each Lender the following:
A. As to the Steam Supply Loans, the Borrowers shall have delivered to the
Agent, the following items or performed the following matters to the
satisfaction of the Agent:
(1) Each Lender shall have received its duly executed Steam Supply
Note;
(2) A duly executed Notice of Steam Supply Advance;
(3) The Steam Supply Security Agreement-Collateral Assignment of Note,
duly executed by the Borrowers;
(4) A true and correct copy of the Steam Supply Credit Agreement, duly
executed by all parties thereto, together with all supporting documents
executed, delivered or required thereunder;
(5) The Steam Supply Note Receivable, duly executed by the Steam Supply
Group, endorsed "PAY TO THE ORDER OF THE CHASE MANHATTAN BANK, AGENT,
AS AGENT FOR THE CHASE MANHATTAN BANK AND TEXAS COMMERCE BANK NATIONAL
ASSOCIATION";
(6) A true and correct copy of the final, duly executed copy of the
Invatec Stock Purchase Agreement;
(7) The Borrowers must evidence in a manner satisfactory to the Agent
that Invatec shall have successfully completed the acquisition of the
stock of all members of the Steam Supply Group (other than Invatec),
that Invatec owns all of the capital stock of all of the members of the
Steam Supply Group (other than Invatec), that no more than
$10,700,000.00 was paid therefor, and that existing Indebtedness of the
Steam Supply Group (other than Scheduled Indebtedness) has been paid;
(8) Each of the seller parties to the Invatec Stock Purchase Agreement
shall have executed and delivered a Steam Supply Subordination
Agreement in form satisfactory to the Agent in favor of the Borrowers
and on which the Lenders are entitled to the benefits and rights
thereunder;
(9) True and correct copies of all final documentation with respect to
the Invatec Stock Purchase Agreement;
(10) Evidence satisfactory to the Agent that the Steam Supply Group has
a minimum net worth of $10,000,000.00 as of the Effective Date of this
Second Restated Agreement;
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(11) Evidence satisfactory to the Agent of the Solvency of each member
of the Steam Supply Group; and,
(12) All material contracts of the Steam Supply Group shall be
satisfactory to the Agent.
B. Each of the Collateral Documents duly executed by the parties thereto.
Each document, including, without limitation, any Mortgages and
Financing Statements, required by the Collateral Documents, under law
or requested by the Agent to be filed, registered or re- corded in
order to create, in favor of the Agent for the benefit of the Lenders,
a perfected first priority Lien on the Collateral described therein
shall have been properly filed, regis- tered or recorded in each
jurisdiction in which the filing, registration or recordation thereof
is so required or requested, the Agent shall have received an
acknowledgment copy, or other evidence satisfactory to the Agent, of
each such filing, registration or recordation and satisfactory evidence
of the payment of any necessary fee, tax or expense relating thereto.
The Agent shall have received the possession of the certificates
representing all of the Pledged Stock, together with undated stock
powers executed in blank.
C. The Landlord Agreements in the form prescribed under the Prior
Agreement, duly executed by each landlord under each Leasehold pursuant
to which any of the Borrowers possess any leasehold interest in real
property on which any portion of that Borrower's business is operated.
All of the Leaseholds are described in the Restated Agreement.
Notwithstanding the foregoing, Borrowers did not obtain all Landlord
Agreements on or before the Effective Date of the Prior Agreement, and
the condition was waived as to the initial fundings of the Loans,
however, the Borrowers covenant to obtain the Landlord Agreements. To
the extent that the Borrowers have not obtained all Landlord
Agreements, there will be established a Reserve equal to the rental
which will accrue over a ninety (90) day period for each of the
Leaseholds for which a Landlord Agreement has not been obtained.
D. A Guaranty Confirmation Letter duly executed by Allwaste in the form of
Exhibit 10.1.D to this Second Restated Agreement that the Allwaste
Guaranty Agreement executed pursuant to the Prior Credit Agreements in
favor of each Lender is in full force and effect and has not been and
will not be affected or impaired by this Second Restated Agreement or
the Loan Documents executed and delivered in connection herewith.
E. A Guaranty Agreement in the form of Exhibit attached to the Prior
Credit Agreements, if and to the extent, any Consolidated Subsidiary is
designated by the Agent to be a Guarantor.
F. Favorable opinions of legal counsel for the Borrowers in form and
substance satisfactory to the Agent subject to reasonable assumptions,
qualifications and limitations, together with copies of the legal
opinions rendered by legal counsel for the sellers in the Invatec Stock
Purchase Agreement, and letter from each such legal counsel stating
that the Agent and the Lenders are entitled to rely thereon.
G. The Agent shall have received and determined to be in form and
substance satisfactory to the Agent:
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(1) The most recent, dated not earlier than thirty (30) days prior
to the Effective Date of this Second Restated Agreement, schedule and
aging of accounts receivable of the Borrowers;
(2) Evidence that the Borrowers have not less than $350,000.00 of
Availability on the Effective Date of this Second Restated Agreement;
(3) Copies of a field examinations of the books and records of the
Steam Supply Group and the results of such field examinations shall be
satisfactory to the Agent in all respects;
(4) The Financial Statements described in Section 11.1.D, together
with management letters received for the last Fiscal Year;
(5) Evidence that Safe Seal's tax loss carry forward can be
applied to the Borrowers' consolidated total Net Income and Net Loss.
(6) Evidence that the Transactions are in compliance with all
Requirements;
(7) Evidence that all requisite third party consents (including,
without limitation, consents with respect to the Borrowers) to the
Transactions have been received;
(8) Copies of all contracts between the Borrowers and Borrowers'
major customers and suppliers and all material leases and franchise
agreements of the Borrowers;
(9) Copies of all contracts between each member of the Steam
Supply Group and each member of the Steam Supply Group's major
customers and suppliers and all material leases and franchise
agreements of each member of the Steam Supply Group.
(10) Evidence that the Borrowers and the Steam Supply Group have
cash management and management information systems satisfactory to the
Agent;
(11) Evidence that there has occurred no event which would have a
Material Adverse Effect on the business, assets, operations or
financial condition of the Borrowers or any member of the Steam Supply
Group since the date of the last Financial Statements provided to the
Agent; and,
(12) Evidence that there are no actions, suits or proceedings at
law or in equity or by or before any Governmental Authority now pending
or threatened against or affecting any of the Borrowers, and of the
members of the Steam Supply Group or of their respective businesses,
assets or rights which involve any of the Transactions.
H. The Agent shall have had the opportunity, if the Agent so chooses, to
examine the books of account and other records and files of the
Borrowers and the Steam Supply Group and to make copies thereof, and to
conduct a pre-closing field examination which shall include, without
limitation, verification of Eligible Accounts, Steam Supply Eligible
Accounts, payment of payroll taxes and accounts payable and formulation
of an opening Steam Supply
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Borrowing Base, and the results of such examinations and audits shall
have been satisfactory to the Agent in all respects.
I. The corporate structure and capitalization of the Borrowers and the
Steam Supply Group shall be satisfactory to the Lenders in all
respects.
J. All legal matters in connection with the Transactions shall be
satisfactory to the Agent, the Lenders and their respective counsel, in
their sole discretion.
K. Safe Seal, for and on behalf of the Borrowers, shall have executed and
delivered to the Agent a disbursement authorization letter with respect
to the disbursement of the proceeds of the Advances made on the
Effective Date of this Second Restated Agreement, in form and substance
satisfactory to the Agent, and Invatec, for and on behalf of the Steam
Supply Group, shall have executed and delivered to the Borrowers a
disbursement authorization letter with respect to the disbursement of
the proceeds of the Steam Supply Advances made on the Effective Date of
this Second Restated Agreement, in form and substance satisfactory to
the Agent.
L. The Agent and the Lenders shall have received from the Borrowers and
the Steam Supply Group, and their respective counsel where appropriate,
a letter stating that there are no material violations of ERISA, OSHA
or Environmental Laws which would have a Material Adverse Effect.
M. The Agent and the Lenders shall have received from the Borrowers and
shall be satisfied with management prepared income statements, balance
sheets and cash flow projections for the Borrowers for Fiscal Years
1997, 1998, and 1999, including a pro forma balance sheet as of the
Effective Date of this Second Restated Agreement.
N. Evidence satisfactory to the Agent that the insurance policies required
by this Second Restated Agreement, the Collateral Documents and the
Steam Supply Credit Agreement are in force and effect, the originals of
all such policies, or copies of the policies with certificates of
insurance, where required, and receipts showing that the premiums
therefor have been paid.
O. The Borrowers shall have paid in full (i) all fees owed to the Agent
and the Lenders by the Borrowers under this Second Restated Agreement,
the Commitment Letter or otherwise; and, (ii) all legal fees charged,
and all costs and expenses incurred, by legal counsel to the Agent
through the Effective Date of this Second Restated Agreement in
connection with the Transactions.
P. Upon the fulfillment of all applicable conditions set forth herein, the
Agent will, as soon as practicable, but in no event later than 5:00
p.m. (New York, New York time) on the first Business Day after the
Effective Date of this Second Restated Agreement, fund the proceeds of
the Steam Supply Loan Advance to Union Bank of California to payoff and
discharge Liens held by it on the assets of one or more members of the
Steam Supply Group, and upon receipt of and such other instruments as
the Agent shall require. The balance, if any, of the proceeds of the
Steam Supply Loan Advance, if any, will be deposited in the Steam
Supply Funding Account. If Loans are not to be made on such date
because any condition
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precedent to the Steam Supply Advance herein specified is not met, the
Agent will return the amounts received to the respective Lenders.
10.2 SUBSEQUENT ADVANCES. The obligation of any Lender to make any
subsequent Advance or to issue Letters of Credit under this Second Restated
Agreement shall be subject to the following additional conditions precedent:
A. As of the date of the making of such Advance or the issuing of a Letter
of Credit, there shall not exist any Default or Event of Default.
B. Borrowers and the Guarantors shall have performed and complied with all
agreements and conditions contained herein and in each of the Loan
Documents which are required to be performed or complied with before or
on the date of such Advance.
C. As of the date of making such Advance or the issuing of a Letter of
Credit, no change that would cause a Material Adverse Effect shall have
occurred.
D. In the case of any Borrowing representing Revolving Credit Loans, the
Agent shall have received an appropriate Notice of Revolving Credit
Advance or Letter of Credit Agreement dated as of the date of a
Borrowing signed by a Responsible Officer of Borrowers. All of the
statements contained in such Notice of Revolving Credit Advance shall
be true and correct, and such Notice of Revolving Credit Advance shall
contain a certification by such officer that, as of the date thereof,
(i) all of the representations and warranties of Borrowers contained in
this Second Restated Agreement and each of the Loan Documents executed
by Borrowers are true and correct, (ii) no event has occurred and is
continuing, or would result from the Borrowing, which constitutes a
Default or an Event of Default, and (iii) such other facts as Lenders
may request. As to Advances of Steam Supply Loans after the Effective
Date of this Second Restated Agreement, a duly executed Notice of Steam
Supply Advance dated as of the date of a Borrowing signed by a
Responsible Officer of Borrowers, together with all supporting
documents executed, delivered or required under the terms of the Steam
Supply Credit Agreement for the Borrowers to fund the Steam Supply
Loans to the Steam Supply Group. All of the statements contained in
such Notice of Steam Supply Advance shall be true and correct, and such
Notice of Steam Supply Advance shall contain a certification by such
officer that, as of the date thereof, (i) all of the representations
and warranties of Borrowers contained in this Second Restated Agreement
and each of the Loan Documents executed by Borrowers are true and
correct, (ii) no event has occurred and is continuing, or would result
from the Borrowing, which constitutes a Default or an Event of Default,
and (iii) such other facts as Lenders may request.
E. The representations and warranties contained in each of the Loan
Documents shall be true in all material respects on the date of making
of such Advance or the issuing of a Letter of Credit, with the same
force and effect as though made on and as of that date.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1 REPRESENTATIONS AND WARRANTIES CONCERNING THE BORROWERS. The Borrowers
represent and warrant to the Agent and each of the Lenders the following matters
concerning the Borrowers.
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A. Each Borrower is a corporation duly incorporated and existing in good
standing under the laws of the State shown in its Certificate of
Resolution. Each Borrower is duly licensed or qualified in all
jurisdictions wherein the character of the property owned or leased by
it or the nature of the business transacted by it makes licensing or
qualification necessary by foreign corporations and where failure to
become so licensed or qualified would have a Material Adverse Effect.
B. Each Borrower has the corporate power and requisite authority to
execute, deliver and perform the Loan Documents executed or to be
executed by it. The execution, delivery and performance by each
Borrower of this Second Restated Agreement and each of the other Loan
Documents to which it is a party, the Borrowing hereunder by the
Borrower, the execution and delivery by the Borrower of the Prior
Credit Agreements, Notes, the grant of security interests in the
Collateral created by the Collateral Documents, the making of the loans
to the Steam Supply Group and the performance by the Borrower of the
Obligations hereunder and thereunder (collectively, the "TRANSACTIONS")
have been duly authorized by all necessary corporate action. Such
actions will not (i) violate any provision of law, the Borrower's
Articles of Incorporation or bylaws, or (ii) except for the failure of
the Borrower to obtain the consent of all of the owners of the Premises
to the transfer of the Leaseholds, result in the breach of or
constitute a default under other agreement or instru- ment to which the
Borrower is a party. No consent of the Borrower's shareholders or any
holder of Indebtedness of the Borrower is required as a condition to
the validity of the Transactions.
C. The Loan Documents, when duly executed and delivered in accordance with
the Prior Credit Agreements and this Second Restated Agreement, were
and will constitute legal, valid and binding obligations of each
Borrower in accordance with their respective terms.
D. Safe Seal has furnished to the Agent and each of the Lenders (i) an
audited Fiscal Year-end balance sheet and the income and surplus
statements as of December 31, 1995, and related statements of income,
retained earnings and changes in financial condition as of such date,
and an interim, year-to-date balance sheet and the income and surplus
statements as of May 31, 1997, and related statements of income,
retained earnings and changes in financial con- dition as of such date,
as to Safe Seal and each of the Consolidated Subsidiaries. The Fi-
nancial Statements are true and correct and have been prepared in
accordance with GAAP throughout the periods involved. The balance
sheets fairly present the financial condition of Safe Seal and the
Consolidated Subsidiaries as of the dates thereof, and the income and
sur- plus statements fairly present the results of the operations of
Safe Seal and the Consolidated Subsidiaries for the periods indicated.
There have been no changes in the condition, xxxxx- cial or otherwise,
of any of the Borrowers since the dates of such Financial Statements
which would have a Material Adverse Effect.
E. Except as disclosed in the Financial Statements referenced in Section
11.1.D, none of the Borrowers has any (i) Investment in any other
Person, or (ii) agreements in effect providing for or relating to
extensions of credit in respect of which it is or may become directly
or contingently obligated.
F. There is no material fact that Borrowers have failed to disclose to the
Agent or the Lenders which could have a Material Adverse Effect.
Neither the Financial Statements referenced in
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Section 11.1.D, nor any certificate or statement delivered herewith or
heretofore by Borrowers to the Agent or any of the Lenders in
connection with negotiations of the Loan Documents, contains any untrue
statement of a material fact or omits to state any material fact
necessary to keep the statements contained herein or therein from being
misleading.
G. The Borrowers have good title to the assets pledged or given as
Collateral to secure the Loans, free and clear of all Liens except the
Permitted Liens. None of the Borrowers is aware of any reason why each
of the Collateral Documents to which it is a party would not create and
grant to the Agent, for the benefit of the Lenders, a legal, valid and
perfected first priority security interest in the Collateral identified
therein, subject to the Permitted Liens.
H. Each Borrower has good and marketable title to, or valid leasehold
interest in, all of its respective properties and assets shown on the
most recent balance sheet referred to in Sec- tion 11.1.D and all
assets and properties acquired since the date of such balance sheet,
except for (i) such properties as are no longer used or useful in the
conduct of its business or as have been disposed of in the ordinary
course of business, (ii) the payment of the bonus set out in the Stock
Purchase Agreement, (iii) the conveyance of the stock in Harley Equip-
ment Corporation and the transfer of assets to Harley Equipment
Corporation as set out and described in the Stock Transfer Agreement,
and (iv) minor defects in title that do not inter- fere with the
ability of the Borrower to conduct its business as now conducted. All
such assets and properties are free and clear of all Liens other than
Permitted Liens.
I. The Stock and Real Estate Purchase Agreement delivered to the Agent are
true and correct copies of the Stock and Real Estate Purchase
Agreement, and it includes all exhibits, schedules and addenda
referenced therein.
J. The Invatec Stock Purchase Agreement delivered to the Agent are true
and correct copies of the Invatec Stock Purchase Agreement, and it
includes all exhibits, schedules and addenda referenced therein.
K. Each Borrower has complied in all material respects with all
obligations under all Leaseholds to which it is a party and under which
it is in occupancy, except for the failure of the Borrower to obtain
the consent of all of the owners of the Premises to the transfer of the
Leaseholds or where noncompliance does not affect the Borrower's use or
occupancy, and all such leases are in full force and effect and the
Borrower enjoys peaceful and undisturbed possession under all such
leases.
L. Each Borrower owns or controls or has the right to use all material
trademarks, trademark rights, trade names, trade name rights,
copyrights, patents, patent rights and licenses which are necessary for
the conduct of its business. No Borrower is infringing upon or
otherwise acting adversely to any of such trademarks, trademark rights,
trade names, trade name rights, copyrights, patent rights or licenses
owned by any other Person or Persons. There is no claim or action by
any such other Person pending, or to the knowledge of any Responsi- ble
Officer of any of the Borrowers, threatened, against any of the
Borrowers with respect to any of the rights or property referred to in
this Section.
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M. Safe Seal is the sole shareholder of Harley, Spinsafe, Safe Seal
Canada, GSV and PSI. Harley is the sole shareholder of Valve. The sole
shareholders of Safe Seal as set out in the Schedule attached to the
Restated Agreement, which sets out the authorized and the issued
capital stock of Safe Seal. There are no outstanding warrants or
options to purchase any of the capital stock of any of Borrowers except
as disclosed to the Lenders with respect to options granted to certain
employees of Safe Seal. All outstanding capital stock of each Borrower
has been validly issued, is fully paid and non-assessable and is owned
by the shareholder free and clear of all Liens, except for the Liens in
favor of the Lenders.
N. Each of Harley and Safe Seal is and, after consummation of this Second
Restated Agreement and after giving effect to all Indebtedness incurred
and the Liens in connection herewith, will be Solvent.
O. Except as disclosed in writing to the Agent and the Lenders, no
Borrower is a party to a transaction with any Affiliate. All such
transactions are in the ordinary course of business and upon fair and
reasonable terms not materially less favorable than could be obtained
in an arm's-length transaction with a Person that was not an Affiliate.
P. None of the Borrowers is in default in any material respect under any
contract, lease, loan agreement, indenture, mortgage, security
agreement or other material agreement or obligation to which the
Borrower is a party or by which any of the Borrower's property is bound
except for the failure of the Borrower to obtain the consent of all of
the owners of the Premises to the transfer of the Leaseholds.
Q. Neither the business nor the property of any Borrower are, affected by
any fire, explosion, accident, strike, lockout or other labor dispute,
storm, hail, earthquake, embargo, act of God or other casualty (whether
or not covered by insurance), which could have a Material Adverse
Effect.
R. The proceeds of the Revolving Credit Loans and the Steam Supply Loans
will be used and proceeds of the Term Loans have been used by the
Borrowers solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
"MARGIN STOCK" as defined in Regulation U, Regulation X, or Regulation
G, or for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry margin stock or for any
other purpose which might constitute this transaction a "PURPOSE
CREDIT" within the meaning of such Regulation U, Regulation X, or
Regulation G. No Borrower is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock. Neither
any of the Borrowers nor any Person acting on behalf of any Borrower
has taken or will take any action which might cause the Notes or any of
the other Loan Documents, including this Second Restated Agreement, to
violate Regulation U, Regulation X, or Regulation G or any other
regulations of the Board or to violatess.8 of the Securities Exchange
Act of 1934 or any rule or regulation thereunder, in each case as now
in effect or as the same may hereinafter be in effect. No Borrower owns
margin stock except for that described in the Financial Statements
referred to in Section 11.1.D and, as of the Effective Date of this
Second Restated Agreement, the aggregate value of all margin stock
owned by any Borrower does not exceed twenty-five (25) per cent of the
value of all of the Borrower's assets. If requested by any Lender, each
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Borrower shall furnish to such Lender a statement on Federal Reserve
Form U-1 referred to in Regulation U.
S. No Borrower owns any Subsidiary, except as set out in the Restated
Agreement.
T. No Borrower has during the preceding five (5) years, been known as or
used any fictitious, assumed or trade names except for the assumed
names enumerated in the Restated Agreement, or as otherwise disclosed
in writing to the Agent. The principal office, chief executive office
and principal place of business of each Borrower is at the address set
out in Section 14.1. Each Borrower maintains its principal records and
books at such address.
U. Each Borrower possesses all licenses, permits, approvals and consents,
including, without limitation, all environmental, health and safety
licenses and permits, approvals and consents (collectively, the
"PERMITS") of all Governmental Authority as required to conduct its
business. Each such Permit is and will be in full force and effect.
Each Borrower is in compliance in all material respects with all
Permits, and to its knowledge no event, including, without limitation,
any violation of any law, rule or regulation, has occurred which allows
the revocation or termination of any Permit or any restriction thereon.
V. All employment agreements, compensation agreements or management
agreements of any of the Borrowers is terminable with not more than
thirty (30) days notice.
11.2 REGULATORY MATTERS. Borrowers represent and warrant that as of the
Effective Dates of the Prior Credit Agreements and the Effective Date of this
Second Restated Agreement, no Regulatory Defects exist, and specifically the
following matters.
A. No Borrower or any Person having "CONTROL" (as that term is defined in
12 U.S.C. ss.375(b)(5) or in regulations promulgated pursuant thereto)
of any Borrower, is an "EXEC- UTIVE OFFICER", "DIRECTOR", or "PRINCIPAL
SHAREHOLDER" (as those terms are defined in 12 U.S.C.ss.375(b) or in
regulations promulgated pursuant thereto) of any of the Lenders, of a
bank holding company of which any of the Lenders is a subsidiary, or of
any subsidiary of a bank holding company of which any of the Lenders is
a subsidiary, or of any bank at which any of the Lenders maintains a
"CORRESPONDENT ACCOUNT" (as such term is defined in such statute or
regulations), or of any bank which maintains a correspondent account
with any of the Lenders.
B. Except as disclosed in the Financial Statements of the Borrowers and
the summary and analysis of litigation in which the Borrowers are
involved, there are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to
the knowledge of any Responsible Officer of any of the Borrowers
threatened against or affecting any Borrower or the business, assets or
rights of any of the Borrowers (i) which involve any of the
Transactions, or (ii) as to which it is probable (within the meaning of
Statement of Financial Accounting Standards No. 5 promulgated by FASB)
that there will be an adverse determination and which, if adversely
determined, would, individually or in the aggregate, materially impair
the ability of any Borrower to conduct business substantial- ly as now
conducted, or have a Material Adverse Effect.
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C. The Borrowers have filed all U.S. tax returns and all state and foreign
tax returns which are required to be filed. The returns properly
reflect the U.S. income tax, foreign tax and/or state taxes of each
Borrower for the period covered thereby. The Borrowers have paid, or
made provisions for the payment of, all Taxes which have become due
pursuant to the re- turns or pursuant to any assessment received by the
Borrower, except such Taxes, if any, as are being contested in good
faith and as to which, adequate cash reserves have been provid- ed. No
Federal income tax returns of any Borrower have been audited by the
IRS. None of the Borrowers has, as of the Effective Date of this Second
Restated Agreement, requested or been granted any extension of time to
file any Federal, state, local or foreign tax return. None of the
Borrowers is a party to or has any obligation under any tax sharing
agreement.
D. (i) No Reportable Event has occurred and is continuing with respect to
any Employee Plan; (ii) PBGC has not instituted proceedings to
terminate any Employee Plan; (iii) neither the Borrowers, any ERISA
Affiliate, any member of the Controlled Group, nor any duly-ap- pointed
administrator of an Employee Plan has (a) incurred any liability to
PBGC with respect to any Employee Plan other than for premiums not yet
due or payable, or (b) insti- tuted or intends to institute proceedings
to terminate any Employee Plan underss.4041 or ss.4041A of ERISA or
withdraw from any Multi-Employer Plan (as that term is defined in
ss.3(37) of ERISA); and, (iv) each Employee Plan has been maintained
and funded in all material respects in accordance with its terms and
with all provisions of ERISA applicable thereto.
E. No Borrower is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940, the Interstate Commerce Act (as any of the preceding acts have
been amended), or any other law (other than Regulation X) which
regulates the incurring by Borrowers of Indebtedness, including but not
limited to laws relating to common contract carriers or the sale of
electricity, gas, steam, water, or other public utility services.
F. The Borrowers have complied with, and will continue to comply with, the
provisions of the Fair Labor Standards Act of 1938, 29 U.S.C.ss.ss.200
et.seq., as amended from time to time (the "FLSA"), including
specifically, but without limitation, 29 U.S.C.ss.215(a). This repre-
sentation and warranty, and each re-confirmation thereof, shall
constitute assurance from Borrowers, given as of the Effective Dates of
the Prior Credit Agreements, as of the Effective Date of this Second
Restated Agreement and as of the date of each re- confirmation, that
Borrowers have complied with the requirements of the FLSA, in general,
and 29 U.S.C.ss.215(a)(1), thereof, in particular.
G. Except as disclosed to the Lenders in writing, the Borrowers are
compliance with all laws, rules, regulations, orders and decrees which
are applicable to the Borrowers or their properties.
H. None of the Borrowers has been accused of being in violation of Title
IX, of the Organized Crime Control Act of 1970, entitled "RACKETEER
INFLUENCED AND CORRUPT ORGANIZATIONS" (RICO), 18 U.S.C. ss.ss.1961
et.seq.
I. The operations of the Borrowers comply in all material respects with
all applicable Environ- mental Laws (except as disclosed in writing to
the Lenders) and with OSHA. The Borrow-
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ers and all of Borrowers' present facilities or operations, as well as,
to the knowledge of the Borrowers, Borrowers' past facilities or
operations, are not subject to any judicial or administrative
proceeding or any outstanding written order or agreement with any
Governmental Authority or private party respecting (i) Environmental
Laws, (ii) any remedial work (except as disclosed in writing to the
Lenders), or (iii) any environmental claims arising from the release of
Hazardous Materials into the environment. To the best of the knowledge
of the Borrowers, none of Borrowers' operations is the subject of any
Federal or state investigation evaluating whether any remedial work is
needed to respond to a release of any Hazardous Materials into the
environment in violation of Environmental Laws. Borrowers have not
filed any notice under Environmental Laws indicating past or present
treatment, storage, or disposal of Hazardous Materials or reporting a
spill or release of Hazardous Materials into the environment in
violation of Environmental Laws. To the best of the knowledge of the
Borrowers, Borrowers do not have any contingent liability in connection
with any release of any Hazardous Materials and none of Borrowers'
operations involve the generation, transportation, treatment or
disposal of Hazardous Materials.
11.3 REPRESENTATIONS REGARDING ACCOUNTS. The Borrowers make the following
representations and warranties which shall be deemed to be incorporated by
reference in each Notice of Revolving Credit Advance and shall be deemed
repeated and confirmed with respect to each item of the Accounts as it is
created or otherwise acquired by the Borrowers.
A. Each Account Debtor named in an Eligible Account or on an invoice is,
to the best of Borrowers' knowledge, Solvent and will continue to be
fully able to pay in full when due all Accounts on which the Account
Debtor is obligated in full when due.
B. Each Eligible Account shall be a good and valid account representing an
undisputed bona fide indebtedness incurred or an amount indisputably
owed by the Account Debtor therein named, for a fixed sum as set forth
in the invoice relating thereto with respect to an absolute sale and
delivery upon the specified terms of goods sold by the Borrowers, or
work, labor and/or services theretofore rendered by the Borrowers.
C. No Eligible Account is or shall be subject to any defense, setoff,
counterclaim, discount or allowances except as may be stated in the
copy of the invoice delivered to the Agent.
D. No note, trade acceptance, draft or other instrument or chattel paper
has been or will be received with respect to merchandise giving rise to
any Eligible Account unless the same is assigned and delivered to the
Agent.
E. There has been no material change in credit criteria or collection
policies concerning Accounts of the Borrowers since October 30, 1995.
F. A Borrowers shall be the sole owner, free and clear of all Liens except
in favor of the Agent or otherwise permitted hereunder, of and fully
authorized to sell, transfer, pledge and/or grant a security interest
in each and every item of Collateral owned by it;
G. To the best of Borrowers' knowledge, none of the transactions
underlying or giving rise to any Eligible Accounts shall violate any
applicable state or federal laws or regulations, and all documents
relating to any Accounts shall be legally sufficient under such laws or
regula-
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tions and shall be legally enforceable in accordance with their terms,
subject, as to enforceability, to the effect of applicable Debtor Laws.
H. All documents and agreements relating to Eligible Accounts shall be
true and correct and in all respects what they purport to be.
I. To the best of Borrowers' knowledge, all signatures and endorsements
that appear on all documents and agreements relating to Eligible
Accounts shall be genuine and all signatories and endorsers with
respect thereto shall have full capacity to contract.
J. Borrowers shall maintain books and records pertaining to the Accounts
in such detail, form and scope as the Agent shall require.
K. Borrowers will immediately notify the Agent if any Accounts arise out
of contracts with any Governmental Authority, and will execute any
instruments and take any steps required by the Agent in order that all
monies due or to become due under any such contract shall be assigned
to the Agent and notice thereof given to the Governmental Authority
under the Assignment of Claims Act.
L. Borrowers shall not redate any invoice or sale or make sales on
extended dating beyond that customary in the industry.
11.4 REPRESENTATIONS REGARDING INVENTORY. The Borrowers make the following
representations and warranties regarding the Inventory which shall be deemed to
be incorporated by reference in each Notice of Revolving Credit Advance and
shall be deemed repeated and confirmed with respect to each item of Inventory as
it is acquired by Borrowers.
A. No part of the Inventory is subject to any Lien or security interest
whatsoever except for the security interest granted to the Agent in the
Loan Documents.
B. All Inventory is located on the Mortgaged Property, other property
owned by the Borrowers or the Premises.
C. Except as promptly disclosed to the Agent from time to time in writing,
all Inventory shall be of good merchantable quality, free from any
defects which would affect the market value of the Inventory.
D. Borrowers will, immediately upon learning thereof, report to the Agent
any material loss or destruction of, or substantial damage to, any of
the Inventory, and any other matters affect ing the value of the
Inventory.
E. Borrowers shall conduct a physical count of the Inventory at such
intervals as the Agent may request and promptly supply the Agent with a
copy of such counts accompanied by a report of the value (based on the
lower of cost {on a FIFO basis} or market value) of such Inventory.
11.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties by Borrowers shall survive delivery of the Loan Documents and the
making of the Loans. Any investigation at
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any time made by or on behalf of the Agent or any of the Lenders shall not
diminish the Agent's or any Lender's right to rely on the representations and
warranties made by Borrowers.
ARTICLE XII
DEFAULTS AND REMEDIES
12.1 EVENTS OF DEFAULT. The Borrowers shall be in Default hereunder if any
one of the following shall occur:
A. If any installment of principal on any of the Notes shall not be paid
when and as due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or by acceleration thereof or
otherwise;
B. If there shall occur any default under the terms of any of the Steam
Supply Loan Documents, including, but specifically not limited to, a
termination of all or any portion of any Material Contract, as defined
therein.
C. If any installment of interest on any of the Notes, any fee or any
other amounts payable hereunder, or any other Loan Document or in
connection with any Advance or the Transactions shall not be paid when
and as due and payable, or if there shall occur a failure to pay any
Obligations owed to the Lenders when and as the same shall become due
and payable;
D. If any representation, statement, warranty or certification made by any
Loan Party in the Loan Documents, or furnished to the Agent or any of
the Lenders in connection with the Loans, shall prove to have been
incorrect in any material respect at the time of making or issuance
thereof.
E. If there shall occur any one of the following events (an "EVENT OF
DEFAULT"), and if the event can be cured by affirmative action on the
part of Borrowers but shall continue uncured after five (5) days from
the earlier to occur of (i) the date such event becomes known to a Loan
Party, or (ii) the date the Agent shall have given notice to Borrowers
that such event has occurred; provided, however, the Agent shall not be
required to give notice of any such failure or event; provided,
further, if an Event of Default cannot be cured within time above
specified because of causes beyond Borrowers' control, Borrowers must
timely commence and continue the curing of the Event of Default with
due diligence to completion:
(1) If the Borrowers or the Guarantors shall fail to comply with any of
the covenants and agreements set forth in Section 9.1.A.(3) or Section
9.1.A.(7); and/or,
(2) Both the following events shall occur: (i) Either (a) process shall
have been instituted to terminate, or a notice of termination shall
have been filed with respect to, any Employee Plan (other than a
Multi-Employer Plan as that term is defined in ss.3(37) of ERISA) by
Borrowers, any ERISA Affiliate, any Subsidiary, any member of the
Controlled Group, PBGC or any representative of any thereof, or any
such Employee Plan shall be terminated in any such case under ss.4041
or ss.4042 of ERISA, or (b) a Reportable Event, the occurrence of which
would cause the imposition of a lien under ss.4068 of ERISA, shall have
occurred with respect to any Employee Plan (other than a Multi-Employer
Plan as that term is defined in ss.3(37) of ERISA) and be continuing
for a period of sixty (60) days; and, (ii) the sum of the
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estimated liability to PBGC under ss.4062 of ERISA and the currently
payable obligations of Borrowers or any ERISA Affiliate to fund
liabilities (in excess of amounts required to be paid to satisfy the
minimum funding standard of ss.412 of the Code) under the Employee Plan
or Employee Plans subject to such event shall exceed ten (10) per cent
of Tangible Net Worth at such time; and/or,
(3) Any or all of the following events shall occur with respect to any
Multi-Employer Plan (as that term is defined in ss.3(37) of ERISA) to
which Borrowers or any ERISA Affiliate contributes or contributed on
behalf of its employees: (i) Borrowers or any ERISA Affiliate incurs a
withdrawal liability under ss.4201 of ERISA; (ii) any such plan is "IN
REORGANIZATION" as that term is defined in ss.4241 of ERISA; or, (iii)
any such Employee Plan iS terminated under ss.4041A of ERISA and the
Agent determines in good faith that the aggregate liability likely to
be incurred by Borrowers or any ERISA Affiliate, as a result of all or
any of the events specified in subsections (i), (ii) and (iii) above
occurring, shall have a Material Adverse Effect.
F. If there shall occur any change in the condition (financial or
otherwise) of the Borrowers, the Guarantors, Allwaste or the Steam
Supply Group which, in the opinion of the Agent or the Lenders, has a
Material Adverse Effect.
G. If the Borrowers shall not complete an IPO by October 31, 1997, from
which the Borrowers derive not less than $45,000,000.00 in net proceeds
available to the Borrowers.
H. If any of the Loan Documents shall, for any reason, (i) cease to be, or
shall be asserted by the Borrowers or Guarantors not to be, legal,
valid and binding agreements enforceable against the Borrowers or the
Guarantors executing the same in accordance with the respective terms
thereof, (ii) in any manner be terminated or become or be declared
ineffective or inoperative, or (iii) in any manner whatsoever cease to
give or provide the Liens, security interests, rights, titles,
interests, remedies, powers or privileges intended to be created
thereby.
I. If there shall occur a failure by the Borrowers or the Guarantors in
the observance or performance of any other provision of the Loan
Documents. The provisions of this Second Restated Agreement shall
control in the event that any provision of any other Loan Document is
in conflict with the provisions of any other instrument executed
pursuant hereto and all of such provisions in such other instruments
shall be deemed to be cumulative of the provisions hereof to the extent
such provisions are not inconsistent herewith.
J. If there shall occur a failure beyond any period of grace, if any, by
the Borrowers, the Guarantors or Allwaste in the payment, when due, of
(i) the interest on or the principal of any Indebtedness in excess of
$10,000.00, other than accounts payable incurred in the ordinary course
of business, or (ii) any other Indebtedness and if the effect of any
such default shall be to accelerate, or to permit the holder or obligee
of any such Indebtedness, at its option to accelerate, the maturity of
such Indebtedness.
K. If a judgment (not reimbursed by insurance) or decree for the payment
of money, a fine or penalty which when taken together with all other
such judgments, decrees, fines and penalties shall exceed $10,000.00
shall be rendered by a court or other tribunal against a Loan Party,
and (i) shall remain undischarged or un-bonded for a period of thirty
(30) consecutive
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days during which the execution of such judgment, decree, fine or
penalty shall not have been stayed effectively, or (ii) any judgment
creditor or other Person shall legally commence actions to collect on
or enforce such judgment, decree, fine or penalty.
L. If there shall be any Change of Control of any of the Borrowers, any
Guarantor or any of the members of Steam Supply Group.
M. If a Lien in excess of $10,000.00 arising from unpaid Taxes shall be
filed against any of the Borrowers' or Guarantors' properties or
assets.
N. If any Borrower, Guarantor, Allwaste or any member of the Steam Supply
Group shall:
(1) Apply for, consent to or acquiesce in the appointment of a
receiver, trustee or liquidator of such Person, or of such Person's
property; and/or,
(2) Admit in writing such Person's inability to pay debts as they
mature; and/or,
(3) Make a general assignment for the benefit of creditors; and/or,
(4) Be adjudicated to be bankrupt or insolvent by any court having
jurisdiction; and/or,
(5) File a voluntary petition in bankruptcy or a petition or answer
seeking reorganization, composition, readjustment, an arrangement or
similar relief with creditors under any present or future Debtor Laws
or file an answer admitting the material allegations of a petition
filed against such Person in bankruptcy, reorganization or insolvency
proceeding, or corporate action shall be taken for the purpose of
effecting any of the foregoing; and/or,
(6) Have a receiver or trustee or assignee in bankruptcy or insolvency
appointed for such Person or such Person's property without such
Person's application or consent.
O. If an involuntary petition or complaint shall be filed against any of
the Borrowers, Guar- antors or Allwaste seeking bankruptcy or
reorganization of such Person or the appointment of a receiver,
custodian, trustee, intervenor or liquidator of such Person, or of all
or sub- stantially all of such Person's assets, and such petition or
complaint shall not have been dismissed within thirty (30) days of the
filing thereof; or, if an order, order for relief, judg- ment or decree
shall be entered by any court of competent jurisdiction or other
competent authority approving a petition or complaint seeking
reorganization of any of the Borrowers or the Guarantors or appointing
a receiver, custodian, trustee, intervenor or liquidator of such
Person, or of all or substantially all of such Person's assets.
P. If Agent or any Lender is served with, or becomes subject to, a court
order, injunction or other process or decree restraining or seeking to
restrain the Agent or any Lender from paying any amount under any
Letter of Credit and (i) either (a) a drawing has occurred under the
Letter of Credit for which any of the Borrowers has refused to
reimburse the Agent for payment, or (b) the expiration date of the
Letter of Credit has occurred but the right of any beneficiary
thereunder to draw under the Letter of Credit has been extended past
the expiration date in connection with the pendency of the related
court action or pro- ceeding, and (ii) Borrowers have failed to deposit
with the Agent cash collateral in an amount equal to the Agent's and
the Lenders' obligations under the Letter of Credit.
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12.2 REMEDIES. Upon the occurrence of an Event of Default, the obligation of
the Lenders to extend Advances to Borrowers pursuant hereto shall immediately
terminate. If a Default shall occur, the Lenders may, at their option, without
notice to any Person, declare the principal of and interest accrued on the
Obligations to be forthwith due and payable, whereupon the same shall become due
and payable without any presentment, demand, protest, notice of protest, notice
of intent to accelerate the maturity of the Obligations, notice of acceleration
of the maturity of the Obligations or notice of any kind, all of which are
hereby waived. Notwithstanding the foregoing, if the Default is a default set
out in Section 12.1.N or Section 12.1.O, the Total Commitment shall
automatically terminate and the principal of the Notes, together with accrued
interest and fees thereon and any other liabilities of the Borrowers accrued
hereunder shall automatically become due and payable, both as to principal and
interest, without any presentment, demand, protest, notice of protest, notice of
intent to accelerate the maturity of the Obligations, notice of acceleration of
the maturity of the Obligations or notice of any kind, all of which are hereby
waived. Thereafter, the Agent, for and on behalf of the Lenders, may exercise
all remedies available to the Agent as provided in any of the Loan Documents,
and at law or in equity. None of the provisions contained in any of the Loan
Documents shall, or shall be deemed to, give the Agent or any of the Lenders the
right to exercise control over the assets, including, without limitation, real
property, affairs, or management of Borrowers or Guarantors. The rights of the
Agent and the Lenders are limited to the exercise the remedies provided in this
Second Restated Agreement and the other Loan Documents.
12.3 NOTICES OF DEFAULT. Upon becoming aware of the existence of any
condition or event which constitutes a Default or an Event of Default, the
Borrowers and the Guarantors shall immediately furnish to the Agent notice
specifying the nature and period of existence thereof and the action taken or
proposed to be taken with respect thereto.
ARTICLE XIII
AGENT
13.1 APPOINTMENT. In order to expedite the transactions contemplated by this
Second Restated Agreement, the Agent is appointed to act as agent on behalf of
the Lenders. Each of the Lenders (which term "LENDER" or "LENDERS" shall, unless
otherwise expressly indicated, include the Agent in its capacity as a Lender)
and each subsequent holder of any Note, by its acceptance thereof, irrevocably
authorizes the Agent to take such action on its behalf and to exercise such
powers hereunder and under the other Loan Documents as are specifically
delegated to or required of the Agent by the terms hereof and the terms thereof
together with such powers as are reasonably incidental thereto. No other agent
or co-agent will be appointed without to consent of Chase.
13.2 AUTHORIZATION. The Agent is hereby expressly authorized on behalf of
the Lenders, without hereby limiting any implied authority to:
A. Receive on behalf of each of the Lenders any payment of principal of or
interest on the Notes outstanding hereunder and all other amounts
accrued hereunder paid to the Agent and, pursuant to the terms hereof,
distribute to each Lender its proper share of all payments so received;
B. Give notice to the Lenders of the receipt or sending of any notice,
schedule, report, projection, financial statement or other document or
information pursuant to this Second Restated Agreement or any of the
other Loan Documents and shall promptly forward a copy thereof to each
Lender;
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C. Take all actions with respect to this Second Restated Agreement and the
other Loan Documents as are specifically delegated to the Agent; and,
D. In the event that (i) the Borrowers fail to pay any of the Obligations
when due, or (ii) the Agent receives written notice of the occurrence
of a Default or an Event of Default, the Agent shall, within a
reasonable time, give written notice thereof to the Lenders, and shall
take such action with respect to such Default, Event of Default or
other condition or event as it shall be directed to take by the
Lenders; provided, however, that, unless and until the Agent shall have
received such directions, the Agent may take such action or refrain
from taking such action under the Loan Documents with respect to a
Default or Event of Default as it shall deem advisable in the best
interests of all of the Lenders.
13.3 RESPONSIBILITIES OF AGENT. It is expressly understood and agreed that
the obligations of the Agent under the Loan Documents are only those expressly
set forth in the Loan Documents.
A. The Agent shall be entitled to assume that no Default or Event of
Default has occurred and is continuing, unless the Agent has actual
knowledge of such fact or has received notice from a Lender that such
Lender considers that a Default or an Event of Default has occurred and
is continuing and specifying the nature thereof.
B. In the event that the Agent shall acquire actual knowledge of any Event
of Default or of an event which, with the giving of notice or the lapse
of time, or both, would constitute an Event of Default, the Agent shall
promptly give notice thereof to the Lenders.
C. Lenders recognize and agree, that for purposes of Section 2.1 hereof,
the Agent shall not be required to independently determine whether the
conditions described in Section 10.2 have been satisfied and, in
disbursing funds to the Borrowers, may rely fully upon statements
contained in the relevant Notice of Revolving Credit Advance.
D. Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted to be
taken by it or them hereunder or under any of the other Loan Documents
or in connection herewith or therewith at the request or with the
approval of the Lenders (or, if otherwise specifically required
hereunder or thereunder, the consent of all the Lenders).
E. Neither the Agent nor any of its directors, officers, employees or
agents shall have any responsibility to the Borrowers on account of the
failure or delay in performance or breach by any Lender, other than the
Agent, of any of its obligations hereunder or to any Lender on account
of the failure of or delay in performance or breach by any other Lender
or the Borrowers of any of their respective obligations hereunder or in
connection herewith.
F. The Agent shall, in the absence of knowledge to the contrary, be
entitled to accept any certificate furnished pursuant to this Second
Restated Agreement or any of the other Loan Documents as conclusive
evidence of the facts stated therein. The Agent shall incur no
liability under or in respect of any of the Loan Documents by acting
upon any such notice, consent, certificate, warranty or other paper or
instrument believed by it to be genuine or authentic or to be signed by
the proper party or parties, or with respect to anything which it may
do or refrain from doing in the exercise of its judgment, or which may
appear to it to be necessary or desirable in the circumstances.
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G. The Agent shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Second
Restated Agreement, or in any certificate or other document referred to
or provided for in, or received by any Lender under, this Second
Restated Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Second Restated
Agreement or any document referred to or provided for herein or for any
failure by Borrowers to perform any of its obligations hereunder.
H. Agent may employ agents and attorneys-in-fact and shall not be
answerable, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it.
I. The relationship between the Agent and each of the Lenders is only that
of principal and agent and has no fiduciary aspects, and the Agent's
duties hereunder are acknowledged to be only ministerial and not
involving the exercise of discretion on its part. Nothing in this
Second Restated Agreement or elsewhere contained shall be construed to
impose on the Agent any duties or responsibilities other than those for
which express provision is herein made. In performing its duties and
functions hereunder, the Agent does not assume and shall not be deemed
to have assumed, and hereby expressly disclaims, any obligation or
responsibility toward or any relationship of agency or trust with or
for the Borrowers. As to any matters not expressly provided for by this
Second Restated Agreement (including, without limitation, enforcement
or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Lenders
and such instructions shall be binding upon all the Lenders and all
holders of Notes; provided, however, that Agent shall not be required
to take any action which exposes Agent to personal liability or which
is contrary to this Second Restated Agreement or applicable law.
13.4 RESIGNATION AND SUCCESSOR. Subject to the appointment and acceptance of
a successor Agent as provided below, the Agent may resign at any time by giving
written notice thereof to the Lenders and Borrowers and the Agent may be removed
at any time with or without cause by the Lenders. Upon any such resignation or
removal, the Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation or the Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent. Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder and
under each of the other Loan Documents. After any retiring Agent's resignation
or removal hereunder as Agent, the provisions of this Article shall continue in
effect for its benefit in respect to any actions taken or omitted to be taken by
it while it was acting as the Agent.
13.5 NOTEHOLDERS. The Agent may treat the payee of any Note as the holder
thereof until written notice of transfer shall have been filed with it signed by
such payee and in form satisfactory to the Agent.
13.6 CONSULTATION WITH COUNSEL. The Agent may consult with legal counsel
selected by it in connection with matters arising under this Second Restated
Agreement or any of the other Loan
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Documents and any action taken or suffered in good faith by it in accordance
with the opinion of such counsel shall be full justification and protection to
it.
13.7 INDEPENDENT INVESTIGATION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Second Restated Agreement and
any other Loan Document to which such Lender is party. Each Lender also
acknowledges that it will, independently and without reliance on the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under or based upon this Second Restated Agreement, any other Loan
Document, any related agreement or any document furnished hereunder.
13.8 EXPENSES AND INDEMNIFICATION. Each Lender agrees to reimburse the Agent
in the amount of such Lender's pro rata share (based on its Total Commitment
hereunder) of any expenses incurred for the benefit of the Lenders by the Agent,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, not reimbursed by the Borrowers.
Each Lender agrees to indemnify and hold harmless the Agent and any of its
directors, officers, employees or agents, on demand, in the amount of its pro
rata share, 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 it in its capacity as the Agent or any of them in any manner
relating to or arising out of this Second Restated Agreement or any of the other
Loan Documents or any action taken or omitted by it or any of them under this
Second Restated Agreement or any of the other Loan Documents, to the extent not
reimbursed by the Borrowers. No Lender shall, however, be liable to the Agent
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or willful misconduct of the Agent or any of its directors,
officers, employees or agents.
13.9 INDEPENDENT STATUS. With respect to the Loans made hereunder, the Notes
issued to it and any other Advance applicable to it, the Agent, in its
individual capacity and not as an Agent, shall have the same rights, powers and
duties hereunder and under any other Agreement executed in connection herewith
as any other Lender and may exercise the same as though it were not the Agent.
The Agent and its Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any manner of business
with, the Borrowers, and any Person which may do business with the Borrowers,
all as if the Agent were not the Agent hereunder and without any duty to account
therefor to the Lenders.
13.10 BENEFIT AND APPLICABILITY OF ARTICLE. The agreements contained in this
Article are applicable to and solely for the benefit of the Agent and the
Lenders, and are not applicable to or for the benefit of, or shall the
provisions of this Article be relied upon by the Borrowers, the Guarantors or
any other Person, and no Loan Party assumes or shall have any duties, covenants,
obligations or other liabilities of any kind whatever by reason or in
consequence of any provisions contained in this Article.
ARTICLE XIV
MISCELLANEOUS
14.1 NOTICES. All notices and other communications given to any party hereto
in accordance with the provisions of this Second Restated Agreement shall be
deemed to have been given (i) on the date of receipt, if hand delivered, (ii)
three (3) days after being deposited with the U.S. Postal Service,
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postage prepaid, certified mail, return receipt requested, or (iii) upon receipt
(promptly confirmed in writing) if by any telex, facsimile or other
telecommunications equipment, in each case addressed to such party as provided
in this Section or in accordance with the latest revoked direction from such
party. Notices to be provided to any of the Borrowers shall be given to Safe
Seal. Notices, consents and other communications provided for herein shall be in
writing and shall be addressed:
If to any of the Borrowers: THE SAFE SEAL COMPANY, INC.
00000 Xxxxxxx Xxxxx, X-000
Xxxxxxx, Xxxxx 00000
If to the Agent: THE CHASE MANHATTAN BANK
Asset Based Lending
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Credit Deputy
If to any Lender: At the Domestic Lending Office
address set forth beside its name in Schedule
5.14 to the Restated Agreement.
14.2 SEVERABILITY. In the event any one or more of the provisions contained
in the Loan Documents should be held to be invalid, illegal or unenforceable in
any respect, the validity, enforceability and legality of the remaining
provisions contained in the Loan Documents shall not in any manner be affected
thereby and shall be enforceable in accordance with their terms. The parties
shall endeavor, in good faith negotiation, to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as nearly as possible to that of the invalid, illegal or unenforceable
provision.
14.3 CAPTIONS. The Article, Section, Subsection captions, headings, and
arrangements, the Schedules, Exhibits and the Table of Contents used in this
Second Restated Agreement are for convenience of reference only and do not in
any manner affect, limit, amplify, or modify the terms and provisions hereof.
14.4 SUCCESSORS AND ASSIGNS. This Second Restated Agreement shall be binding
upon Borrowers, any Subsidiary of Borrowers, Guarantors, any ERISA Affiliate,
the Agent and the Lenders and shall inure to the benefit of Borrowers, any
Subsidiary of Borrowers, Guarantors, any ERISA Affiliate, Agent, Lenders and the
successors and assigns of the Agent and the Lenders. No Loan Party may, without
the prior consent of the Lenders, assign any rights, powers, duties or
obligations hereunder. Without limiting the generality of the foregoing, the
Borrowers specifically confirms that any Lender may at any time and from time to
time pledge or otherwise grant a security interest in any Loan or any Note (or
any part thereof) to any Federal Reserve Bank.
14.5 SYNDICATIONS. In the event that Chase shall elect to further syndicate
the credit facility provided under this Second Restated Agreement, the Borrowers
agree to use their best efforts to assist Chase in same, including, but not
limited to, the providing of such information and confirmations of the
Obligations to proposed syndicate members as shall be necessary to permit the
proposed syndicate members to evaluate the credit facility provided hereunder.
14.6 PARTICIPATIONS. Each Lender may sell participations to one or more
financial institutions in all or any portion of its rights and obligations under
this Second Restated Agreement, including,
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without limitation, all or a portion of its Revolving Credit Commitment or Term
Loan Commitment) and the Loans owing to it and the Notes held by it. Neither the
Agent nor any Lender, without prior written consent of the Borrowers, may
syndicate all or any portion of its rights and obligations under this Second
Restated Agreement, including, without limitation, all or a portion of its
Revolving Credit Commitment or Term Loan Commitment) and the Loans owing to it
and the Notes held by it.
A. Notwithstanding the foregoing, (i) such assigning Lender's obligations
under this Second Restated Agreement (including, without limitation,
its Revolving Credit Commitment and Term Loan Commitment shall remain
unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
Person or Persons buying participations or syndications shall be
entitled to the cost protection provisions contained in Section 5.22.A
(except to the extent that application of such Section to such Persons
would cause the Borrowers to make duplicate payments thereunder),
Section 5.22.B and Section 6.2, but only to the extent any of such
Sections would be available to the Lender which sold such
participations or syndications, and (iv) the Borrowers, the Agent and
the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under
this Second Restated Agreement. Each Lender shall, however, retain the
sole right and responsibility to enforce the obligations of the
Borrowers and the Guarantors relating to the Loans, including, without
limitation, the right to approve any amendment, modification or waiver
of any provision of this Second Restated Agreement, other than
amendments, modifications or waivers with respect to any fees payable
hereunder or the amount of principal or the rate of interest payable
on, or the dates fixed for any payment of principal of or interest on,
the Loans or the release of all Collateral.
B. By executing and delivering an Assignment and Acceptance, the Lender
which is the as- xxxxxx thereunder and the assignee thereunder confirm
to, and agree with, each other and the other parties hereto as follows:
(i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereunder free and
clear of any adverse claim, such Lender makes no representation or
warranty and assumes no responsi- bility with respect to any
statements, warranties or representations made in or in connection with
this Second Restated Agreement or the execution, legality, validity,
enforceability, perfection, genuineness, sufficiency or value of this
Second Restated Agreement, the other Loan Documents or any Collateral
or any other instrument or document furnished pursuant hereto or
thereto; (ii) such Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
the Borrowers, or Guarantors or the performance or observance by the
Borrowers or the Guarantors of any of their respective obligations
under this Second Restated Agreement, any Guaranty Agreement or any of
the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee confirms that it has
received a copy of this Second Restated Agreement, any Guaranty
Agreement and of the other Loan Documents, together with copies of
Financial Statements and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such Lender or any
other Lender 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 Second Restated Agreement;
(v) such assignee appoints and authorizes the Agent to take such action
as the Agent on its behalf and to exercise such powers under this
Second Restated Agreement as are delegated to the Agent by the terms
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hereof, together with such powers as are reasonably incidental thereto;
and, (vi) such assignee agrees that it will perform, in accordance with
their terms, all of the obligations which by the terms of this Second
Restated Agreement are required to be performed by it as a Lender.
C. The Agent shall maintain at its address referred to in Section 14.1 a
copy of each Assign- ment and Acceptance delivered to it and a register
(the "REGISTER") for the recordation of the names and addresses of the
Lenders and the Revolving Credit Commitment or Term Loan Commitment, as
the case may be, of, and principal amount of the Loans owing to, each
Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error. The Borrowers, the Agent
and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Second Restated
Agreement. The Register shall be available for inspection by the
Borrowers or any Lender at any reasonable time and from time to time
upon prior notice.
D. Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee together with any Note or Notes
subject to such assignment and the written consent to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed
and is in the form of Exhibit attached to the Restated Agreement, (i)
accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register, and (iii) give prompt notice thereof
to the Lenders and the Borrowers. Within five (5) Business Days after
receipt of such notice, the Borrowers, at Borrowers' own expense,
shall, if the assignment is an assignment of a syndicated portion of
the Loans, execute and deliver to the Agent in exchange for each
surrendered Note or Notes, a new Note or Notes to the order of such
assignee in an amount equal to its portion of the Term Loan Commitment
and/or Revolving Credit Commitment, as the case may be, assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained any Term Loan Commitment or Revolving Credit Commitment
hereunder, a new Note or Notes to the order of the assigning Lender in
an amount equal to the Term Loan Commitment and/or Revolving Credit
Commitment, as the case may be, retained by it hereunder. Such new Note
or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be
dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit referenced above.
Notes surrendered to the Borrowers shall be canceled by the Borrowers.
E. Notwithstanding any other provision herein, any Lender may, in
connection with any assignment or participation or proposed assignment
or participation pursuant to this Section, disclose to the assignee or
participant or proposed assignee or participant, any information,
including, without limitation, any information furnished to such Lender
by or on behalf of the Borrowers in connection with this Second
Restated Agreement.
F. Borrowers agree to provide promptly to each Lender copies of any and
all documents, reports, information and other such matters as are
provided to Agent pursuant to the terms hereof upon the request of any
such Lender.
14.7 NON-LIABILITY OF THE AGENT AND THE LENDERS. The relationship among the
Borrowers, the Guarantors, the Agent and the Lenders is, and shall at all times
remain, solely that of debtors and creditors. Neither the Agent nor any of the
Lenders undertakes or assumes any responsibility or duty to any Person to
review, inspect, supervise, pass judgment upon, or inform any Person of any
matter
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in connection with any phase of such Person's business, operations, or
condition, financial or otherwise. Each Person shall rely entirely upon such
Person's own judgment with respect to such matters. Any review, inspection,
supervision, exercise of judgment, or information supplied to any Person by the
Agent or any of the Lenders in connection with any such matter is for the
protection of the Agent and the Lenders, and no Person is entitled to rely
thereon.
14.8 FINANCING STATEMENTS. Any carbon, photographic or other reproduction of
any Financing Statement signed by the Borrowers or the Guarantors is sufficient
as a financing statement for all purposes, including, without limitation, filing
in any state pursuant to the provisions of the UCC.
14.9 LIST OF EXHIBITS AND SCHEDULES. The following Exhibits and Schedules
are attached to this Second Restated Agreement and made a part hereof for all
purposes:
Exhibit 4.1 Notice of Steam Supply Advance
Exhibit 5.3 Steam Supply Note
Exhibit 7.1.I Steam Supply Security Agreement-Collateral
Assignment of Note
Exhibit 10.1.D Allwaste Guaranty Confirmation Letter
Schedule 2.1 Lender's Percentages
14.10 MODIFICATION. All modifications, consents, amendments or waivers of
any provision of any Loan Document, or consent to any departure by the Borrowers
or the Guarantors therefrom, shall be effective only if the same shall be in
writing and agreed to by the Lenders and then shall be effective only in the
specific instance and for the purpose for which given.
14.11 WAIVER. The acceptance by the Agent or any of the Lenders of any
partial payment on the Obligations shall not be deemed to be a waiver of any
Event of Default then existing. No waiver by the Agent or any of the Lenders of
any Event of Default shall be deemed to be a waiver of any other then existing
or subsequent Event of Default, or Default. No delay or omission by the Agent or
any of the Lenders in exercising any right under the Loan Documents shall impair
that right or be construed as a waiver thereof or any acquiescence therein, or
shall any single or partial exercise of any right preclude other or further
exercise thereof or the exercise of any other right under the Loan Documents or
otherwise. Any waiver of any provision of this Second Restated Agreement or the
Notes or consent to any departure by the Borrowers therefrom must be authorized
as provided in Section 13.2, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice to
or demand on the Borrowers in any case shall entitle it to any other or further
notice or demand in similar or other circumstances. Each holder of any of the
Notes shall be bound by any amendment, modification, waiver or consent
authorized as provided herein, whether or not such Note shall have been marked
to indicate such amendment, modification, waiver or consent. The rights of the
Agent and the Lenders hereunder and under the Loan Documents shall be in
addition to all other rights provided by law.
14.12 GOVERNING LAW. THIS AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN
NEGOTIATED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED IN THE STATE OF NEW
YORK, AND THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT
TO THE CONFLICTS-OF-LAW RULES AND PRINCIPALS OF THE STATE OF NEW YORK, AND THE
APPLICABLE LAWS OF THE U.S. SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT
AND INTERPRETATION OF THIS AGREEMENT AND ALL OF THE LOAN DOCUMENTS EXCEPT AS
SPECIFICALLY SET OUT IN ANY SUCH LOAN DOCUMENT.
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14.13 CHOICE OF FORUM, SERVICE OF PROCESS AND JURISDICTION. Any suit, action
or proceeding against any Loan Party with respect to the Loan Documents, or the
enforcement of any judgment entered by any court in respect thereof, shall be
brought in the courts of the State of New York, or in the U.S. courts located in
State of New York, as the Agent, in the Agent's sole discretion, may elect. The
Agent, each Lender, and each Loan Party submit to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action or proceeding.
A. All parties irrevocably waive, in connection with any such suit,
action or proceeding, any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions.
B. All parties irrevocably consent to the service of process of any of
the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, to each such Person, as the case may be, at its address set
forth in Section 14.1.
C. Nothing herein shall affect the right of any party to serve process
in any other manner permitted by law.
14.14 WAIVER OF JURY TRIAL. Each party hereto hereby waives any right it may
have to a trial by jury in respect of any in any legal proceeding directly or
indirectly arising out of, under or in connection with or relating to any of the
Loan Documents or the Transactions. Except as prohibited by law, each party
hereto hereby waives any right it may have to claim or recover in any litigation
referred to in this Section any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages. Each party
hereto (i) certifies that no representative, agent or attorney of the Agent or
any Lender has represented, expressly or otherwise, that such Lender would not,
in the event of litigation, seek to enforce the foregoing waivers, and (ii)
acknowledges that it has been induced to enter into this Second Restated
Agreement, the Notes and the other Loan Documents, as applicable, by, among
other things, the mutual waivers and certifications herein.
14.15 NO THIRD PARTY BENEFICIARY. Except as otherwise expressly set out
herein, the parties do not intend for the this Second Restated Agreement to
inure to the benefit of any third party, or for this Second Restated Agreement
to be construed to make or render the Agent or any of the Lenders liable to any
mechanic, materialman, supplier, contractor, subcontractor, purchaser or lessee
of any property owned by Borrowers or the Guarantors for debts or claims
accruing to any such Persons against Borrowers or the Guarantors. Neither the
Agent nor any of the Lenders, by anything herein or in any of the other Loan
Documents, assumes any Indebtedness of Borrowers or the Guarantors under any
contract or agreement assigned to the Agent or any of the Lenders, and neither
the Agent nor any of the Lenders shall be responsible in any manner for the
performance by the Borrowers or the Guarantors of any of the terms and
conditions thereof.
14.16 PAYMENT OF EXPENSES. The Borrowers shall pay all necessary and
reasonable expenses, charges, costs and fees provided for in this Second
Restated Agreement or relating to the Loans or the Collateral, including fees,
charges, and taxes in connection with recording or filing any of the Loan
Documents, charges, fees of any consultants, fees and expenses of the Agent's
counsel (which attorneys may be employees of the Agent), fees and expenses of
the Agent's special counsel, which may include fees billed for law clerks,
paralegals and other persons not admitted to the Bar but performing services
under the supervision of an attorney, printing, photocopying and duplicating
expenses, air
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freight charges, escrow fees, costs of surveys, premiums of insurance policies
and surety bonds, fees for any appraisal, market or feasibility study required
by the Agent fees for the preparation or review of any releases of any of the
Liens. All such expenses, charges, costs and fees shall be the Borrowers'
obligations regardless of whether or not the Borrowers have requested and met
the conditions for the Loans. This obligation on the part of the Borrowers shall
survive the execution and delivery of the Loan Documents and the repayment of
the Obligations. The Borrowers authorize the Agent to pay such expenses,
charges, costs and fees at any time by a disbursement of the Loans.
14.17 CONFLICTS. If there shall exist any conflict among this Second
Restated Agreement and any of the other Loan Documents, the provisions of this
Second Restated Agreement shall control.
14.18 ENTIRETY. The Loan Documents embody the entire agreement among the
parties and, except as expressly set out herein, supersede all prior agreements
and understandings, if any, relating to the subject matter hereof and thereof.
Except as expressly provided herein or the Loan Documents (other than this
Second Restated Agreement), nothing in this Second Restated Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any
party, other than the parties hereto, any rights, remedies, obligations or
liabilities under or by reason of this Second Restated Agreement or the other
Loan Documents. Notwithstanding the foregoing provisions, this Second Restated
Agreement amends, modifies, supplements and extends the provisions of the prior
Credit Agreement. The Borrowers and the Agent, for the benefit of the Lenders,
agree that the Loan Documents, as amended pursuant hereto and hereby, shall
continue to be legal, valid, binding and enforceable in accordance with their
respective terms. The Borrowers agree with the Agent, for the benefit of the
Lenders, that the extension of the Obligations pursuant to this Second Restated
Agreement do not constitute a novation or discharge of the prior Obligations
described in the prior Credit Agreement, and all Liens, security interests,
claims, conveyances, rights, and privileges described, granted, or made to or
for the Agent, for the benefit of the Lenders, by the Borrowers, or any of them,
shall be carried forward and shall continue in full force and effect to secure
the payment of all Obligations under the Loan Documents, as amended hereby. Any
and all other agreements to pay, secure or guarantee payment of the Obligations
by the Borrowers, or any of them, shall remain in full force and effect and
shall be carried forward to secure payment of the Obligations, as they have been
modified pursuant hereto.
14.19 RIGHT OF SETOFF. If an Event of Default shall have occurred and be
continuing, upon the request of the Lenders each Lender shall and is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to setoff and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender to or for the credit or the account of the Borrowers
against any and all of the obligations of the Borrowers now or hereafter
existing under this Second Restated Agreement and the Notes held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Second Restated Agreement or the Notes and although such obligations may be
unmatured. Each Lender agrees to notify promptly the Agent and the Borrowers
after any such setoff and application made by such Lender, but the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of each Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which may be
available to such Lender.
14.20 JOINT AND SEVERAL OBLIGATIONS. The Borrowers and the Guarantors are
jointly and severally responsible for their respective agreements, covenants,
representations and warranties and obligations contained in this Second Restated
Agreement.
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14.21 MULTIPLE COUNTERPARTS. This Second Restated Agreement may be executed
in any number of counterparts, all of which taken together shall constitute one
and the same agreement, and any of the parties hereto may execute this Second
Restated Agreement by signing any such counterpart.
THIS WRITTEN CREDIT AGREEMENT AND THE LOAN DOCUMENTS DESCRIBED HEREIN REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
In witness whereof, the parties have duly executed this Second Restated
Agreement on the day and year hereinabove first set forth.
HARLEY INDUSTRIES, INC. THE SAFE SEAL COMPANY, INC.
BY:/s/XXXXXXX X. XXXXXXXX BY:/s/XXXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX XXXXXXX X. XXXXXXXX
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
VALVE REPAIR OF SOUTH SPINSAFE CORPORATION
CAROLINA, INC.
BY:/s/XXXXXXX X. XXXXXXXX BY:/s/XXXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX XXXXXXX X. XXXXXXXX
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
THE SAFE SEAL COMPANY GSV, INC.
(CANADA), INC.
BY:/s/XXXXXXX X. XXXXXXXX BY:/s/XXXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX XXXXXXX X. XXXXXXXX
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
PLANT SPECIALTIES, INC.
BY:/s/XXXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX
SENIOR VICE PRESIDENT
THE CHASE MANHATTAN BANK, AGENT
BY:/s/XXXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX
VICE PRESIDENT
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Exhibit 10.1.D
Allwaste Guaranty Confirmation Letter
Allwaste Guaranty Agreement
July 28, 1997
The Chase Manhattan Bank, Agent for
The Chase Manhattan Bank and
Texas Commerce Bank National Association
New York, New York
Re: Guaranty Agreement (the "Guaranty Agreement") dated January 31, 1997,
executed by ALLWASTE, INC. to The Chase Manhattan Bank, as Agent for
The Chase Manhattan Bank and Texas Commerce Bank National Association
(the "Lenders") of loans (the "Loans") by the Lenders to The Safe Seal
Company, Inc., ET.EL. (the "Borrowers")
Gentlemen:
Reference is made to the Guaranty Agreement pursuant to which the Guarantor
guaranteed the performance and payment of certain of the Obligations therein
described. It is understood and agreed that the Borrowers, the Agent and the
Lenders are entering into a Second Amended and Restated Credit Agreement (the
"Second Restated Agreement").
The Borrowers have executed and delivered to the Lenders and, the Agent and the
Lenders, in reliance upon the terms of the Guaranty Agreement, have accepted
promissory notes (the "Steam Supply Notes") dated July 28, 1997. Pursuant to and
in accordance with the terms of the Guaranty Agreement, ALLWASTE, INC. confirms
and agrees that the Guaranty Agreement applies and shall continue to apply to
all Obligations of the Borrowers in connection with the Loans, as modified in
the Second Restated Agreement and the Steam Supply Notes, limited only as set
out in the Guaranty Agreement.
Respectfully,
ALLWASTE, INC.
BY:
XXXXXXX X. XXXXXXX
VICE PRESIDENT
Schedule 2.1
Lenders' Percentages,
Lenders' Revolving Credit Commitment,
Lenders' Term Loan Commitment
Lenders' Steam Supply Commitment
NAME OF LENDER PERCENTAGE
The Chase Manhattan Bank 50.00 %
Texas Commerce Bank National Association 50.00 %
****************************************
LENDERS' RESPECTIVE REVOLVING CREDIT COMMITMENT
$10,000,000.00 Total Revolving Credit Commitment
NAME OF LENDER REVOLVING CREDIT COMMITMENT
The Chase Manhattan Bank $5,000,000.00
Texas Commerce Bank National Association $5,000,000.00
****************************************
LENDERS' RESPECTIVE TERM A LOAN COMMITMENT
$2,750,000.00 Total Term A Loan Commitment
NAME OF LENDER TERM A LOAN COMMITMENT
The Chase Manhattan Bank $1,350,000.00
Texas Commerce Bank National Association $1,350,000.00
****************************************
LENDERS' RESPECTIVE TERM B LOAN COMMITMENT
$4,750,000.00 Total Term B Loan Commitment
NAME OF LENDER TERM A LOAN COMMITMENT
The Chase Manhattan Bank $2,375,000.00
Texas Commerce Bank National Association $2,375,000.00
****************************************
LENDERS' RESPECTIVE STEAM SUPPLY COMMITMENT
$5,000,000.00 Total Steam Supply Commitment
NAME OF LENDER REVOLVING CREDIT COMMITMENT
The Chase Manhattan Bank $2,500,000.00
Texas Commerce Bank National Association $2,500,000.00
CREDIT AGREEMENT
INNOVATIVE VALVE TECHNOLOGIES, INC.
("INVATEC"), PUGET INVESTMENTS, INC.,
XXXXXXXXXX-BENICIA, INC., STEAM SUPPLY &
RUBBER CO., INC., AND XXXXXXXXXX COMPANY
BORROWERS
THE SAFE SEAL COMPANY, INC.
AGENT FOR
THE SAFE SEAL COMPANY, INC., HARLEY
INDUSTRIES, INC., VALVE REPAIR OF SOUTH
CAROLINA, INC., SPINSAFE CORPORATION,
THE SAFE SEAL COMPANY (CANADA), INC.,
GSV, INC. and PLANT SPECIALTIES, INC.
LENDERS
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................. 1
1.1 DEFINITIONS.................................................. 1
1.2 OTHER DEFINITIONS............................................ 16
ARTICLE II LOANS........................................................ 17
2.1 REVOLVING COMMITMENTS........................................ 17
2.2 BORROWING BASE............................................... 17
2.3 LOAN VALUE OF ELIGIBLE INVENTORY............................. 18
2.4 BORROWING PROCEDURE.......................................... 18
2.5 USE OF PROCEEDS.............................................. 19
2.6 REDUCTION OF COMMITMENT...................................... 19
2.7 REQUIRED PAYMENTS............................................ 20
ARTICLE III NOTE......................................................... 20
3.1 NOTE......................................................... 20
3.2 INTEREST RATE OPTIONS........................................ 20
3.3 APPLICABLE MARGIN............................................ 21
3.4 INTEREST RECAPTURE........................................... 22
3.5 DEFAULT RATE................................................. 22
3.6 MAXIMUM INTEREST............................................. 22
3.7 PAYMENTS ON THE NOTE......................................... 23
3.8 CALCULATION OF INTEREST RATES................................ 25
3.9 PREPAYMENTS.................................................. 25
3.10 MANNER OF PAYMENTS........................................... 26
3.11 RENEWALS OF NOTE............................................. 26
3.12 TAXES........................................................ 26
3.13 COMMITMENT FEES.............................................. 27
3.14 CONSEQUENTIAL LOSS........................................... 27
3.15 PAYMENTS IN RESPECT OF INCREASED COSTS....................... 28
ARTICLE IV SPECIAL PROVISIONS FOR EURODOLLAR LOANS...................... 29
4.1 INADEQUACY OF EURODOLLAR LOAN PRICING........................ 29
4.2 ILLEGALITY................................................... 29
4.3 EFFECT ON INTEREST OPTIONS................................... 30
4.4 PAYMENTS NOT AT END OF INTEREST PERIOD....................... 30
4.5 SURVIVAL OF OBLIGATIONS...................................... 30
ARTICLE V COLLATERAL FOR LOANS......................................... 30
5.1 COLLATERAL FOR LOANS......................................... 30
5.2 COLLATERAL DOCUMENTS......................................... 31
5.3 FURTHER ASSURANCES........................................... 31
5.4 OTHER LOANS.................................................. 31
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ARTICLE VI CUSTODY, INSPECTION, COLLECTION AND MAINTENANCE OF
COLLATERAL................................................... 31
6.1 CASH COLLATERAL ACCOUNT...................................... 31
6.2 COLLECTION OF ACCOUNTS....................................... 32
6.3 VERIFICATION OF ACCOUNTS..................................... 33
6.4 SALES OF INVENTORY........................................... 33
6.5 INSPECTIONS AND FIELD EXAMINATIONS........................... 33
6.6 REPORTS...................................................... 34
6.7 MATERIAL CONTRACTS........................................... 34
6.8 COMPLIANCE WITH LAW.......................................... 34
6.9 ACCESS....................................................... 35
6.10 PROTECTION................................................... 35
6.11 RIGHT TO RECEIVE............................................. 35
ARTICLE VII COVENANTS.................................................... 35
7.1 AFFIRMATIVE COVENANTS........................................ 35
7.2 FINANCIAL COVENANTS.......................................... 39
7.3 OTHER COVENANTS.............................................. 39
7.4 ERISA COMPLIANCE............................................. 41
7.5 INDEMNITY.................................................... 42
ARTICLE VIII CONDITIONS PRECEDENT......................................... 43
8.1 INITIAL ADVANCES............................................. 43
8.2 SUBSEQUENT ADVANCES.......................................... 46
ARTICLE IX REPRESENTATIONS AND WARRANTIES............................... 47
9.1 REPRESENTATIONS AND WARRANTIES CONCERNING THE BORROWERS...... 47
9.2 REGULATORY MATTERS........................................... 50
9.3 REPRESENTATIONS REGARDING ACCOUNTS........................... 52
9.4 REPRESENTATIONS REGARDING INVENTORY.......................... 53
9.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES................... 53
ARTICLE X DEFAULTS AND REMEDIES........................................ 53
10.1 EVENTS OF DEFAULT............................................ 53
10.2 REMEDIES..................................................... 56
10.3 NOTICES OF DEFAULT........................................... 56
ARTICLE XI AGENT........................................................ 57
11.1 APPOINTMENT.................................................. 57
11.2 AUTHORIZATION................................................ 57
11.3 RESPONSIBILITIES OF AGENT.................................... 57
11.4 RESIGNATION AND SUCCESSOR.................................... 59
11.5 NOTEHOLDERS.................................................. 59
11.6 CONSULTATION WITH COUNSEL.................................... 59
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11.7 EXPENSES AND INDEMNIFICATION................................. 59
11.8 BENEFIT AND APPLICABILITY OF ARTICLE......................... 59
ARTICLE XII ASSIGNMENT OF NOTE AND LIENS................................. 60
12.1 ASSIGNMENT OF NOTE AND LIENS................................. 60
12.2 NOTEMAKER ESTOPPEL CERTIFICATE............................... 60
ARTICLE XIII MISCELLANEOUS................................................ 60
13.1 NOTICES...................................................... 60
13.2 SEVERABILITY................................................. 61
13.3 CAPTIONS..................................................... 61
13.4 SUCCESSORS AND ASSIGNS....................................... 61
13.5 SYNDICATIONS................................................. 61
13.6 NON-LIABILITY OF THE AGENT AND THE LENDERS................... 61
13.7 FINANCING STATEMENTS......................................... 61
13.8 LIST OF EXHIBITS AND SCHEDULES............................... 61
13.9 MODIFICATION................................................. 62
13.10 WAIVER....................................................... 62
13.11 APPLICABLE LAW............................................... 62
13.12 CHOICE OF FORUM, SERVICE OF PROCESS AND JURISDICTION......... 62
13.13 WAIVER OF JURY TRIAL. ...................................... 63
13.14 NO THIRD PARTY BENEFICIARY................................... 63
13.15 PAYMENT OF EXPENSES.......................................... 63
13.16 CONFLICTS.................................................... 64
13.17 ENTIRETY..................................................... 64
13.18 RIGHT OF SETOFF.............................................. 64
13.19 JOINT AND SEVERAL OBLIGATIONS................................ 64
13.20 ENTIRETY..................................................... 64
13.21 MULTIPLE COUNTERPARTS........................................ 64
-iii-
CREDIT AGREEMENT
This Credit Agreement (the "AGREEMENT") is made and entered into effective
July 28, 1997 (the "EFFECTIVE DATE") by and among:
INNOVATIVE VALVE TECHNOLOGIES, INC. ("INVATEC"), PUGET INVESTMENTS, INC.
("PUGET"), XXXXXXXXXX-BENICIA, INC. ("BENICIA"), STEAM SUPPLY & RUBBER CO.,
INC. ("STEAM"), AND XXXXXXXXXX COMPANY ("XXXXXXXXXX" which with Invatec,
Puget, Benicia and Steam being sometimes herein collectively called the
"BORROWERS," and singly called a "BORROWER"); and,
THE SAFE SEAL COMPANY, INC. (the "AGENT"), as agent for THE SAFE SEAL
COMPANY, INC., HARLEY INDUSTRIES, INC., VALVE REPAIR OF SOUTH CAROLINA,
INC., SPINSAFE CORPORATION, THE SAFE SEAL COMPANY (CANADA), INC., GSV, INC.
and PLANT SPECIALTIES, INC. (collectively, the "LENDERS").
RECITALS
In consideration of the premises, for other good, fair and valuable
considerations, the receipt, adequacy and reasonable equivalency of which are
acknowledged, and for other valuable consideration, the parties agree as set out
herein.
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement and the other Loan
Documents, unless the context requires otherwise, the following terms shall have
the respective meanings ascribed to them in this Article or in the Sections
referred to below:
"ACCOUNT DEBTORS" means all, and "ACCOUNT DEBTOR" means any account debtor,
customer or other obligor with respect to any of the Accounts.
"ACCOUNTS", "CHATTEL PAPER", "CONTRACTS", "CONTRACT RIGHTS", "DOCUMENTS",
"EQUIPMENT", "FIXTURES", "GENERAL INTANGIBLES", "GOODS", and "INSTRUMENTS" shall
have the meanings ascribed to such terms in the UCC, and shall mean the
Accounts, Chattel Paper, Contracts, Contract Rights, Documents, Equipment,
Fixtures, General Intangibles, Goods, and Instruments of each of the Borrowers
in which the Agent is granted security interests for the benefit of the Lenders
pursuant to the Loan Documents.
"ADJUSTED LIBOR RATE LOANS" means all, and "ADJUSTED LIBOR RATE LOAN" means any,
of the Loans, with respect to any Interest Period, which bears interest at a
rate of interest determined by reference to the LIBOR Rate for such Interest
Period.
"ADJUSTED LIBOR RATE" means, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the product of (i) the LIBOR Rate in effect for
such Interest Period, and (ii) Statutory Reserves.
-1-
"ADVANCES" means all, and "ADVANCE" means any, of the disbursements by the
Lenders of the sums loaned to the Borrowers pursuant to this Agreement.
"AFFILIATE" of any Person means any other Person which, directly or indirectly,
controls or is controlled by or is under common control with such Person and,
without limiting the generality of the foregoing, includes (i) any Person which
beneficially owns or holds five per cent or more of any class of Voting Shares
of such Person or five per cent or more of the equity interest in such Person,
(ii) any Person of which such Person beneficially owns or holds five per cent or
more of any class of Voting Shares or in which such Person beneficially owns or
holds five per cent or more of the equity interest in such Person and (iii) any
director, officer, member, manager or employee of such Person. For the purposes
of this definition, the term "CONTROL" (including, with correlative meanings,
the terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with respect
to any Person, 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 Shares or by contract or otherwise.
"AGENT" shall have the meaning ascribed to such term in the preamble hereof.
"AGREEMENT" means this Agreement, as it may, from time to time, be amended.
"ALTERNATE BASE RATE LOANS" means that portion of any Loan which bears interest
at a rate of interest determined by reference to the Alternate Base Rate.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the greater
of (i) the Base Rate in effect on such day, (ii) the Base CD Rate in effect on
such day PLUS one (1) per cent, or (iii) the Federal Funds Effective Rate in
effect on such day PLUS one-half (1/2) of one (1) per cent. If Chase shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate,
or both, for any reason, including the inability or failure of Chase to obtain
sufficient quotations in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to clause (ii) or (iii), or both, of the
first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Base Rate, the Base CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Base Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
"APPLICABLE MARGIN" shall have the meaning ascribed to such term in Section 3.3.
"ASSESSMENT RATE" means the annual assessment rate (net of refunds) estimated by
Chase (in good faith, but in no event in excess of statutory or regulatory
maximums) to be payable by Chase to the Federal Deposit Insurance Corporation
(or any successor) for insurance to such Governmental Authority (or such
successor) of time deposits made in Dollars at the U.S. offices of Chase during
the current calendar year.
"AVAILABILITY" means, at any time, with respect to the Loans, the lesser, at
such time, of the Commitment (as such amount may be reduced or increased in
accordance with the provisions of this Agreement), and the Borrowing Base, MINUS
the sum, at such time, of (i) the unpaid principal balance of, and accrued
interest and fees on, the Loans, and (ii) the Reserves established by the Agent
pursuant to Section 2.2.B.
-2-
"BASE CD RATE" means the sum of (i) the product of (a) the Three-Month Secondary
CD Rate, and (b) Statutory Reserves, and (ii) the Assessment Rate.
"BASE RATE" means the variable rate of interest announced from time to time by
Chase as the prime rate, and used by Chase as a general reference rate of
interest, but which rate of interest may not be the lowest rate charged by Chase
on similar loans. If Chase shall, during the term of this Agreement, abolish or
abandon the practice of announcing or publishing a "PRIME RATE", then the "BASE
RATE" used during the remaining term of this Agreement shall be that interest
rate or other general reference rate then in effect and used by Chase, which,
from time to time, in the judgment of Chase, most effectively approximates the
initial definition of the "BASE RATE".
"BOARD" means the Board of Governors of the Federal Reserve System of the U.S.
"BORROWERS" means all, and "BORROWER" means any, of Invatec, Puget, Benicia,
Steam, Xxxxxxxxxx and any other Consolidated Subsidiary of any of them which the
Lenders may, at the time of its acquisition or formation by a Borrower, require
to become a Borrower hereunder.
"BORROWING BASE CERTIFICATE" means any of the certificates attached to a
Certificate of Compliance and delivered by Borrowers to the Agent calculating
the Borrowing Base pursuant to Section 7.1.A.(6).
"BORROWING BASE" means the amounts calculated pursuant to Section 2.2 to
determine the Availability.
"BORROWING DATE" means the date (which must be a Business Day) specified in any
Notice of Borrowing, as a date on which the Borrowers request the Agent make an
Advance.
"BORROWING" means any amount disbursed by the Agent, (i) to or on behalf of the
Borrowers under the Loan Documents, whether such amount advanced constitutes an
original disbursement of funds, the continuation of an amount outstanding, or
(ii) a disbursement of funds in accordance with and to satisfy the Obligations.
"BUSINESS DAY" means any day, other than a Saturday, Sunday or legal holiday in
the State of New York, on which banks are open for substantially all their
banking business in New York, New York except that, if any determination of a
"BUSINESS DAY" shall relate to a Eurodollar Loan, the term "BUSINESS DAY" shall,
in addition, exclude any day on which banks are not open for dealings in Dollar
deposits in the London interbank market.
"CAPITAL EXPENDITURE" means any expenditure by a Person for an asset which will
be used in a year or years subsequent to the year in which the expenditure is
made and which asset is properly classifiable in relevant financial statements
of such Person as equipment, real property, improvements, fixed assets, or a
similar type of capitalized asset in accordance with GAAP.
"CAPITAL LEASE" means, as of any date, any lease of property, real or personal,
which would be capitalized on a balance sheet of the lessee prepared as of such
date in accordance with GAAP, together with any other lease by such lessee which
is in substance a financing lease, including, without limitation, any lease
under which (i) such lessee has or will have an option to purchase the property
subject thereto at a nominal amount or at an amount less than a reasonable
estimate of the fair market value of such property as of the date such lease is
entered into, or (ii) the term of the lease approximates or exceeds the expected
useful life of the property leased thereunder.
-3-
"CASH COLLATERAL ACCOUNT" means the non-interest bearing cash collateral account
established with Chase in the names of the Borrowers pursuant to Section 6.1,
and the Lockbox Agreement.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended from time to time, and all regulations and
rulings issued thereunder.
"CERTIFICATE OF COMPLIANCE" means any of the certificates delivered by the
Borrowers pursuant to Section 7.1.A.(6).
"CHANGE OF CONTROL" means (i) if any Person, or group of Persons acting together
shall acquire sufficient stock ownership of any of the Borrowers to permit such
Person or group to elect a majority of the Board of Directors of any Borrower or
otherwise control any Borrower, (ii) if there shall occur any merger,
consolidation or dissolution of any Borrower with any other Person, or (iii) if
there shall occur any sale, lease or other disposition of all or substantially
all of the assets or capital stock of any Borrower to any other Person.
"CHASE" means The Chase Manhattan Bank, whose address, for the purposes of this
Agreement, is Asset Based Lending, 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Credit Deputy.
"CODE" means the Internal Revenue Code of 1986, as amended from time to time.
"COLLATERAL DOCUMENTS" means all security agreements, security agreement-pledges
and any other agreements or documents executed or delivered to secure the
repayment of the Obligations or any part thereof.
"COLLATERAL" means and includes all of each Borrower's assets now owned or
hereafter acquired.
"COMMITMENT FEE" shall have the meaning set forth in Section 3.13.
"COMMITMENT PERIOD" means the period beginning on the Effective Date and ending
on the earlier of (i) the Commitment Termination Date, or (ii) the date on which
the obligations of the Lenders to fund Advances hereunder terminates after the
occurrence of an Event of Default.
"COMMITMENT TERMINATION DATE" means January 30, 2000, or if such date is not a
Business Day, then the Business Day preceding such date.
"COMMITMENT" means obligations of the Lenders to extend credit to the Borrowers
in the amount of $5,000,000.00, as same may be adjusted from time to time
pursuant to the terms of Section 2.6.
"CONSEQUENTIAL LOSS" shall have the meaning set forth in Section 3.14.
"CONSOLIDATED SUBSIDIARIES" means Puget and Benicia as to Invatec, and Steam and
Xxxxxxxxxx as to Puget, and any other entity acquired by any of the Borrowers,
the capital stock of which is owned in its entirety by a Borrower or a wholly
owned direct subsidiary of a Borrower, and "CONSOLIDATED SUBSIDIARY" means any
of them.
"CONTRACT RATE" means the rates of interest on the Loans calculated as set out
in Section 3.2.A.
-4-
"CONTROLLED GROUP" means (i) the controlled group of corporations as defined in
ss.1563 of the Code, or (ii) the group of trades or businesses under common
control as defined in ss.414(c) of the Code, of which a Borrower is or may
become a part.
"CONVERSION DATE" shall have the meaning ascribed to such term in Section
3.2.A.(4).
"DEBTOR LAWS" means all applicable liquidation, conservatorship, bankruptcy,
moratorium, arrangement, receivership, insolvency, reorganization or similar
laws, from time to time in effect, affecting the rights of creditors generally.
"DEFAULT RATE" shall have the meaning ascribed to such term in Section 3.5.
"DEFAULT" shall have the meaning ascribed to such term in Section 10.1.
"DIVIDENDS" means in respect of any Person, (i) cash distributions or any other
distributions (including distributions by tax-option corporations) on, or in
respect of, any class of capital stock of such Person, whether in cash,
property, securities or a combination thereof (whether by reduction of capital
or otherwise), except for distributions made solely in shares of stock of the
same class, and (ii) any and all funds, cash or other payments (or the setting
aside of any amounts for any such purpose) made in respect of the redemption,
repurchase or acquisition of such stock, unless such stock shall be redeemed or
acquired through the exchange of such stock with stock of the same class.
"DOLLARS" and the symbol "$" shall refer to currency of the U.S.
"EBITDA" means for any fiscal period of the Borrowers, the sum of the following
which would be reflected on the consolidated income statement of the Borrowers
prepared in accordance with GAAP, (i) net income; PLUS, (ii) income taxes; PLUS
(iii) Interest Expense; PLUS, (iv) non-cash charges in respect of depreciation
and amortization.
"EFFECTIVE DATE" has the meaning ascribed to such term in the preamble hereof.
"ELIGIBLE ACCOUNTS" means, at the time of any determination thereof, each
Account of a Borrower as to which the following requirements have been fulfilled
to the satisfaction of the Agent. Standards of eligibility may be fixed and
revised from time to time solely by the Agent in the Agent's judgment. In
general, without limiting the foregoing, an Account shall in no event be deemed
to be an Eligible Account unless:
A. A Borrower has lawful and absolute title to the Account and the Account
constitutes an "ACCOUNT" within the meaning of the UCC.
B. All payments due on the Account have been invoiced and the Account is
not evidenced by any Chattel Paper, promissory note, or other
Instrument.
C. The Account is a valid, legally enforceable obligation of an Account
Debtor who is obligated under the Account for goods or services
previously delivered or rendered to the Person and the Account has not
been outstanding for more than ninety (90) days from invoice date.
-5-
D. There has been excluded from the Account any portion that is subject to
any dispute, setoff, counterclaim, contras, chargebacks, net-out
contract, deduction, credits, returns, discounts, and allowances of any
nature at any time issued, owing, granted, outstanding, available or
claimed, and other claim or defense on the part of the Account Debtor
or any claim on the part of the Account Debtor denying liability for
the Account.
E. The Account Debtor has finally accepted the goods or services from the
sale out of which the Account arose and has not objected to goods or
services or returned any of such goods, except for complaints made or
goods returned in the ordinary course of business for which, in the
case of goods returned, goods of equal or greater value have been
shipped in return.
F. A Borrower has the full and unqualified right to assign and grant a
security interest in the Account to the Agent as security for the
Obligations.
G. The Account is subject to a fully perfected first priority security
interest and Lien in favor of the Agent for the benefit of the Lenders
pursuant to the Loan Documents, prior to the rights of, and enforceable
as such, against any other Person.
H. The Account is not subject to any Lien in favor of any Person other
than the Lien of the Agent pursuant to the Loan Documents.
I. The Account arose from a transaction in the ordinary course of business
of the Borrower from a completed, outright and lawful sale of goods to
which title (subject to any security interests retained by the Borrower
or created by an Account Debtor in favor of the Borrower) has passed to
the Account Debtor, or for the rendering of services by or on behalf of
the Borrower to the Account Debtor.
J. The Account Debtor has not asserted that the Account, and the Borrower
is not aware that the Account, arises out of a xxxx and hold,
consignment or progress billing arrangement.
K. An Eligible Account shall not include any Account from an Account
Debtor who is obligated to a Borrower on any Account whatsoever if more
than fifty (50) per cent of the Accounts of that Account Debtor has
been due and payable for more than ninety (90) days from the invoice
date.
L. The Account Debtor is a U.S. Person and no Account Debtor in respect of
the Account is, (i) primarily conducting business in any jurisdiction
located outside the U.S., except those Accounts secured by letters of
credit specifically approved by the Agent, (ii) an Affiliate of a
Borrower or a Consolidated Subsidiary, (iii) any Governmental
Authority, domestic or foreign, unless secured by an assignment of
claims in form and content satisfactory to the Agent, and duly
confirmed by the Governmental Authority, or (iv) the subject of a
proceeding under any Debtor Laws.
M. An Eligible Account shall not include an Account from or among any
Affiliates of the Borrowers or an Account which arises out of a
transaction in which any Borrower or Consolidated Subsidiary shall have
provided any surety or guaranty bond to the Account Debtor or other
Person.
-6-
N. The Account complies with all material requirements of all applicable
laws and regulations, whether Federal, state or local.
O. The Account is denominated in and provides for payment by the Account
Debtor in Dollars.
P. The Account has not been and is not required to be charged off or
written off as uncollect-ible in accordance with GAAP or the customary
business practice a Borrower.
Q. The Agent shall have the right to approve, in the Agent's business
judgment, the credit-worthiness of the Account Debtor.
"ELIGIBLE INVENTORY" shall mean the Inventory described in Section 2.3, however,
there shall be excluded from Eligible Inventory any item in which the Lenders do
not have a perfected first priority Lien except as permitted in Section 2.3.
"EMPLOYEE PLAN" means any, and "EMPLOYEE PLANS" means all, employee benefit or
other plans maintained, in whole or in part, for the employees of the Borrowers
and the Consolidated Subsidiaries or any ERISA Affiliate, and covered by Title
IV of ERISA, or subject to the minimum funding standards under ss.412 of the
Code.
"ENVIRONMENTAL LAWS" means all Requirements relating to pollution or protection
of the environment (including, but not limited to, ambient air, surface water,
groundwater, land surface, and subsurface strata), including, but not limited
to, CERCLA/XXXX, RCRA/HSWA, and other laws relating to (i) Hazardous Materials,
or (ii) the generation, manufacture, processing distribution, use treatment,
handling, storage, disposal or transportation of Hazardous Materials.
"ERISA AFFILIATE" means any Person which, together with a Borrower or any
Subsidiary, would be treated as a single employer under the provisions of Title
I or Title IV of ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
together with all regulations issued pursuant thereto.
"EURODOLLAR LOANS" means all, and "EURODOLLAR LOAN" means any, of the Loans,
with respect to any Interest Period, which bears interest at a rate of interest
determined by reference to the Adjusted LIBOR Rate for such Interest Period.
"EVENT OF DEFAULT" shall have the meaning ascribed to such term in Section 10.1.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, 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 on the next
succeeding 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 the day of such transactions received by Chase from three Federal
funds brokers of recognized standing selected by it.
"FINANCIAL OFFICER" means, with respect to any Person, the chairman, the
president, the chief executive officer, or the chief financial officer of such
Person.
-7-
"FINANCIAL STATEMENTS" means all, and "FINANCIAL STATEMENT" means any, of the
balance sheets, income statements stockholders statements and statements of cash
flow and contingent liabilities of the Borrowers and the Consolidated
Subsidiaries.
"FINANCING STATEMENT" means each UCC-1 financing statement sufficient for
purposes of perfecting the Agent's security interest for the benefit of the
Lenders in the Collateral pursuant to the UCC.
"FISCAL YEAR" means the fiscal year of Invatec for accounting purposes ending
each December 31.
"FUNDED DEBT RATIO" means Funded Debt divided by EBITDA.
"FUNDED DEBT" means interest bearing Indebtedness (including Subordinated
Indebtedness) and preferred stock.
"FUNDING ACCOUNT" means the non-interest bearing account established pursuant to
Section 2.4.
"GAAP" means those generally accepted accounting principles and practices which
are recognized as such by the American Institute of Certified Public Accountants
acting through its Accounting Principles Board or by the Financial Accounting
Standards Board ("FASB") or through other appropriate boards or committees
thereof and which are consistently applied for all periods after the Effective
Date so as to properly reflect the financial condition, and the results of
operations and cash flows, of the Borrowers, except that any accounting
principle or practice required to be changed by the Accounting Principles Board
or FASB (or other appropriate board or committee of the boards) in order to
continue as a generally accepted accounting principle or practice, may be so
changed. In the event of a change in GAAP, the Agent and the Borrowers will
thereafter negotiate in good faith to revise any covenants of this Agreement
affected thereby in order to make such covenants consistent with GAAP then in
effect. If no agreement is reached, the financial covenants shall be calculated
based on GAAP before any change in GAAP.
"GOVERNMENTAL AUTHORITY" means any government (or any political subdivision or
jurisdiction thereof), court, bureau, agency or other governmental authority,
domestic or foreign, having jurisdiction over any Borrower or any Borrower's
business or properties.
"GUARANTY" means any contract, agreement or understanding of any Person pursuant
to which such Person guarantees, or in effect guarantees, in writing any
Indebtedness of any other Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including, without limitation, agreements: (i) To
purchase such Indebtedness or any property constituting security therefor; (ii)
to advance or supply funds (a) for the purchase or payment of such Indebtedness,
or (b) to maintain net worth or working capital or other balance sheet
conditions, or otherwise to advance or make available funds for the purchase or
payment of such Indebtedness; (iii) to purchase property, securities or service
primarily for the purpose of assuring the holder of such Indebtedness of the
ability of the Primary Obligor to make payment of the Indebtedness; or, (iv)
otherwise to assure the holder of the Indebtedness of the Primary Obligor
against loss in respect thereof. "GUARANTY" shall not include, however, the
indorsement of negotiable instruments or documents for deposit or collection by
a Borrower in the ordinary course of business.
"HAZARDOUS MATERIALS INDEMNIFICATION AGREEMENT" means the agreement executed
pursuant to Section 7.1.Q.
-8-
"HAZARDOUS MATERIALS" means hazardous substances (as defined in CERCLA/XXXX and
regulations promulgated thereunder), hazardous wastes (as defined in RCRA/HSWA
and regulations promulgated thereunder), Class I Industrial Solid Wastes,
asbestos or asbestos-containing materials or poly-chlorinated biphenyl, and any
material quantities of any other pollutants or contaminants, including, but not
limited to, any material quantities of any flammable material, explosive
materials, radioactive materials, waste oil, or used oil. In the event that
either CERCLA/XXXX or RCRA/HSWA is ever amended to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment. To the extent the Environmental Laws in effect
in any State wherein any of the Premises are located establish a meaning of
"HAZARDOUS SUBSTANCES" or "HAZARDOUS WASTES" which is broader than that
specified in either CERCLA/XXXX or RCRA/HSWA, such broader meaning shall apply.
"HSWA" means the Hazardous and Solid Waste Amendments of 1984, as amended from
time to time, and all regulations and rulings issued thereunder.
"INDEBTEDNESS" means, with respect to any Person, all indebtedness, obligations
and liabilities of such Person, including, without limitation: (i) All
liabilities which would be reflected on a balance sheet of such Person prepared
in accordance with GAAP; (ii) all obligations of such Person in respect of any
Guaranty; (iii) all obligations, indebtedness and liabilities secured by any
Lien or any security interest on any property or assets of such Person; and,
(iv) all issued and outstanding preferred stock, which is redeemable by the
holder of such stock, of such Person valued at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends.
"INTANGIBLE ASSETS" means those assets of any Person which are (i) deferred
assets, other than prepaid insurance and prepaid taxes, (ii) patents,
copyrights, trademarks, trade names, franchises, goodwill, experimental
expenses, covenants not to compete and other similar assets which would be
classified as intangible assets on a balance sheet of such Person, prepared in
accordance with GAAP, (iii) unamortized debt discount and expense, and (iv)
assets located, and notes and receivables due from obligors domiciled, outside
of the U.S. unless same are backed fully by negotiable letters of credit issued
or confirmed by U.S. banks which are satisfactory to Agent.
"INTEREST OPTION" shall have the meaning ascribed to such term in Section 3.2.
"INTEREST PAYMENT DATE" means (i) as to any Adjusted Base Rate Loan, (a) the
last day of each month commencing on the first of such days to occur after such
Loan is made or any Adjusted Libor Rate Loan is converted to a Base Rate Loan,
and (b) the Commitment Termination Date, and (ii) as to any Eurodollar Loan, (a)
the last day of each month commencing on the first of such days to occur after
such Loan is made and the last day of the Interest Period for such Loan, and (b)
the Commitment Termination Date.
"INTEREST PERIOD" means, with respect to any Eurodollar Loan, the period
commencing on the Borrowing Date and ending on the Commitment Termination Date,
consistent with the following provisions. The duration of each Interest Period
shall be selected by the Borrowers in a Notice of Borrowing as provided in
Section 2.1 or a Rollover Notice as provided in Section 3.2.A.(3):
-9-
A. With respect to Eurodollar requested by Borrowers:
(1) Initially, the period commencing on the Borrowing Date or
Conversion Date with respect to such Eurodollar Loan and ending one
(1), two (2), three (3) or six (6) months thereafter; and,
(2) Thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such Eurodollar
Loan and ending one (1), two (2), three (3) or six (6) months
thereafter, as selected by the Borrowers in a Rollover Notice.
B. Each Interest Period shall be as selected by the Borrowers, subject to
the Agent's consent, at the Agent's sole discretion. The Borrowers'
choice of Interest Period is also subject to the following limitations:
(1) No Interest Period shall end on a date after the Commitment
Termination Date; and,
(2) If the last day of an Interest Period would be a day other than a
Business Day, the Interest Period shall end on the next succeeding
Business Day (unless the Interest Period relates to a Eurodollar Loan
and the next succeeding Business Day is in a different calendar month
than the day on which the Interest Period would otherwise end, in which
event the Interest Period shall end on the preceding Business Day).
"INVENTORY DESIGNATION REPORT" means each written report delivered to the Agent
pursuant to Section 7.1.A.(5) designating the Inventory which is intended to be
included in Eligible Inventory.
"INVENTORY" means, as of any date, (i) the inventory which would be reflected on
the balance sheet of the Borrowers as of such date prepared in accordance with
GAAP, and (ii) the assets of the Borrowers held for sale, and (iii) in all
instances inventory in which the Agent is granted security interests pursuant to
the Loan Documents.
"INVESTMENT" means any investment in any period, whether by means of share
purchase, loan, advance, extension of credit, capital contribution or otherwise,
in or to a Person, the Guaranty of any Indebtedness of such Person, or the
subordination of any claim against such Person to other Indebtedness of such
Person.
"IRS" means the Internal Revenue Service, Department of the U.S. Treasury, an
agency of the U.S. government.
"LANDLORD AGREEMENTS" means all, and "LANDLORD AGREEMENT" means any, of the
agreements executed pursuant to the provisions Section 8.1.E.
"LEASEHOLDS" means all, and "LEASEHOLD" means any, (i) of the leases described
in Schedule 8.1.E by which a Borrower is entitled to occupy and use the
Premises, and (ii) any and all other leases, sub-leases, licenses, concessions
or other agreements, written or verbal, now or hereafter in effect, which grant
a possessory interest in and to, or the right to use, all or any portion of the
Premises and any other leased real property.
"LENDERS" means all, and "LENDER" means any, of the Lenders described in the
preamble hereof.
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"LIBOR RATE" means, with respect to any Eurodollar Loan for any Interest Period,
an interest rate per annum equal to the rate at which Dollar deposits
approximately equal in principal amount to the Euro-dollar Loan requested and
for a maturity equal to the applicable Interest Period are offered for
Eurodollars in immediately available funds to the London branch of Chase by
leading banks in whatever Eurodollar interbank market may be selected by Chase,
in its sole discretion, at approximately 11:00 A.M., London time, two (2)
Business Days prior to the first day of such Interest Period.
"LIEN" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrangement, or any other
interest in property designed to secure the repayment of Indebtedness, whether
arising by agreement, under any statute or law, or otherwise.
"LOAN DOCUMENTS" means this Agreement, the Note, including any renewals,
extensions and modifications thereof, the Collateral Documents and any
agreements or documents executed or delivered pursuant to the terms of this
Agreement, and with respect to this Agreement, and such other agreements and
documents, any amendments or supplements thereto or modifications thereof.
"LOAN PARTIES" means the Borrowers and any Person who becomes a Borrower after
the Effective Date, and the term "LOAN PARTY" means any of them.
"LOANS" means the aggregate unpaid principal balance of all Borrowing made under
Section 2.1.
"LOCKBOX AGREEMENT" means the agreement executed pursuant to Section 6.1.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on, (i) the
validity, performance, or enforceability of any of the Loan Documents, (ii) the
financial condition or business operations of any Loan Party, (iii) the ability
of any of the Borrowers to fulfill the Obligations, and/or (iv) the value of the
Collateral.
"MATERIAL CONTRACTS" shall have the meaning set out in Section 6.7.
"MAXIMUM RATE" and "MAXIMUM AMOUNT" respectively mean the maximum non-usurious
rate and the maximum non-usurious amount of interest permitted by applicable
laws that at any time, or from time to time, may be contracted for, taken,
reserved, charged or received on the Obligations under the laws which are
presently in effect of the U.S. and the State of New York, applicable to the
holders of the Note or, to the extent permitted by law, under such applicable
laws of the U.S. and the State of New York which may hereafter be in effect and
which allow a higher maximum non-usurious interest rate than applicable laws now
allow.
"NET INCOME" or "NET LOSS" means, with respect to any Person other than an
individual for any period, the aggregate income (or loss) of such Person for
such period which shall be an amount equal to net revenues and other proper
items of income for such Person less the aggregate for such Person of any and
all expenses, and less Federal, state and local income taxes, but excluding any
extraordinary gains or losses or any gains or losses from the sale or
disposition of assets other than in the ordinary course of business, all of the
foregoing being computed and calculated in accordance with GAAP.
"NET WORTH" means, with respect to any Person at any time, the sum of such
Person's capital stock, capital in excess of par or stated value of shares of
its capital stock, retained earnings, and any other account which, in accordance
with GAAP constitutes stockholders' equity.
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"NOTEMAKER ESTOPPEL CERTIFICATE" shall have the meaning set out in Section
8.1.C.
"NOTES" means all, and "NOTE" means the Note executed and delivered pursuant to
Section 3.1, together with any renewals, extensions or modifications thereof.
"NOTICE OF BORROWING" shall have the meaning ascribed to such term in Section
2.1.
"OBLIGATIONS" mean:
A. All present and future indebtedness, obligations and liabilities of any
Loan Party to any of the Lenders arising pursuant to any of the Loan
Documents, regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, joint, several, or
joint and several;
B. All costs incurred by the Agent or any of the Lenders to obtain,
preserve, perfect and enforce the Liens and security interests securing
payment of such indebtedness, liabilities and obligations, and to
maintain, preserve and collect the property in which any of the Lenders
has been granted a Lien to secure payment of the Loans, or any part
thereof, including but not limited to, taxes, assessments, insurance
premiums, repairs, attorneys' fees and legal expenses, rent, storage
charges, advertising costs, brokerage fees and expenses of sale; and,
C. Any other Indebtedness of any Loan Party owing, or which may hereafter
become owing, by any Loan Party to the Agent or any of the Lenders,
arising out of any overdraft or pursuant to any agreement directly
among any Loan Party with the Agent or any of the Lenders; and,
D. All renewals, extensions and modifications of the Indebtedness referred
to in the foregoing clauses, or any part thereof.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor to all
or any of the Pension Benefit Guaranty Corporation's functions under ERISA.
"PENSION PLAN" means any Employee Plan which is subject to the provisions of
Title IV of ERISA.
"PERMITS" shall have the meaning ascribed in Section 9.1.R.
"PERMITTED LIENS" means: (i) Liens granted to the Agent for the benefit of the
Lenders to secure the Obligations; and, (ii) pledges or deposits made to secure
payment of worker's compensation insurance (or to participate in any fund in
connection with worker's compensation insurance), unemployment insurance,
pensions or social security programs; and, (iii) Liens imposed by mandatory
provisions of law such as for materialmen's, mechanics', warehousemen's and
other like Liens arising in the ordinary course of business securing
Indebtedness the payment for which is not yet due, or if same is due, it is
being contested in good faith and as to which a bond has been provided; and,
(iv) Liens for taxes, assessments and governmental charges or levies imposed
upon a Person or upon such Person's income or profits or property, if the same
are not yet due and payable or if the same are being contested in good faith and
as to which adequate cash reserves have been provided; and, (v) Liens arising
from good faith deposits in connection with tenders, leases, real estate bids or
contracts (other than contracts involving the borrowing of money), pledges or
deposits to secure public or statutory obligations and
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deposits to secure the payment of taxes, assessments, customs duties or other
similar charges; and, (vi) encumbrances consisting of zoning restrictions,
easements, or other restrictions on the use of real property, provided that such
items do not impair the use of such property for the purposes intended, and none
of which is violated by existing or proposed structures or land use; and, (vi)
Scheduled Liens.
"PERSON" shall include an individual, a corporation, non-profit corporation, a
professional association, a joint venture, a general partnership, a limited
partnership, a limited liability company, a limited liability partnership, a
trust, an unincorporated organization or a government or any agency or political
subdivision thereof.
"PLEDGED STOCK" shall have the meaning ascribed to such term in Section 5.1.B
but shall not include the presently outstanding preferred stock (the "Preferred
Stock") of Puget.
"PREMISES" collectively means the leased properties or demised premises
described in each of the Leaseholds.
"PREPAYMENT CHARGE" means a prepayment charge on, as applicable, the amount of
the reduction in the Commitment made pursuant to Section 2.6 and equal to (a)
one and one-half (1 1/2) per cent if such prepayment or reduction occurs after
July 31, 1997, but on or before January 31, 1998, (b) one (1) per cent if such
prepayment or reduction occurs after January 31, 1998, but on or before July 31,
1998, or (c) one-half (1/2) of one (1) per cent if such optional prepayment or
reduction occurs after July 31, 1998, but on or before January 31, 1999. No
Prepayment Charge shall be due and owing by the Borrowers for any optional
prepayment or reduction after January 31, 1999.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as amended from
time to time, and all regulations and rulings issued thereunder.
"REGULATION D" means Regulation D of the Board, 12 C.F.R. Part 204, or any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"REGULATION G" means Regulation G of the Board, 12 C.F.R. Part 207, or any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"REGULATION T" means Regulation T of the Board, 12 C.F.R. Part 220, as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"REGULATION U" means Regulation U promulgated by the Board, 12 C.F.R. Part 221,
or any successor or other regulation hereafter promulgated by the Board to
replace the prior Regulation U and having substantially the same function.
"REGULATION X" means Regulation X promulgated by the Board, 12 C.F.R. Part 224,
or any successor or other regulation hereafter promulgated by the Board to
replace the prior Regulation X and having substantially the same function.
"REGULATORY DEFECTS" means the failure by any Borrower to comply with all laws,
statutes, orders, rules and regulations of any Governmental Authority, and such
failure to comply has a Material Adverse Effect.
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"RENTALS" of any Person means, as of any date, the aggregate amount of the
obligations and liabilities, including future obligations and liabilities not
yet due and payable, of such Person to make payments under leases, subleases and
similar arrangements for the use of real, personal or mixed property, other than
leases which are Capital Leases.
"REPORTABLE EVENT" shall have the meaning ascribed to such term in Title IV of
ERISA.
"REQUIREMENTS" means (i) any and all present and future judicial decisions,
statutes, rulings, rules, regulations, orders, permits, certificates or
ordinances of any Governmental Authority in any manner applicable to any Loan
Party or any of their respective properties, and (ii) any and all contracts,
written or oral, of any nature to which any Loan Party or any of their
respective properties may be bound.
"RESPONSIBLE OFFICER" means, with respect to any Person, the chief executive
officer, the president, the chief financial officer or the controller, of such
Person.
"XXXX" means the Superfund Amendments and Reauthorization Act of 1986, as
amended from time to time, and all regulations and rulings issued thereunder.
"SECURITY AGREEMENT-PLEDGES" means all, and "SECURITY AGREEMENT-PLEDGE" means
each first priority Security Agreement-Pledge executed pursuant to Section
5.1.B.
"SECURITY AGREEMENTS" means all, and "SECURITY AGREEMENT" means each first
priority Security Agreement executed pursuant to Section 5.1.A.
"SOLVENT" means, with respect to any Person on a particular date, that on such
date (i) the fair value of the property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent liabilities, of
such Person, (ii) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability of
such Person on the Person's debts as they become absolute and matured, (iii)
such Person is able to realize upon the Person's assets and pay the Person's
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, (iv) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (v) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"STATUTORY RESERVES" shall, on any day, mean the difference (expressed as a
decimal) of the number one minus the aggregate of the maximum reserve
percentages (including, without limitation, any basic, marginal, special,
emergency, or supplemental reserves) expressed as a decimal established by the
Board (or any successor governmental body) and any other banking authority to
which Chase is subject, however:
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A. With respect to the Base CD Rate for new negotiable non-personal time
deposits in Dollars of over $100,000.00 and with maturities
approximately equal to three (3) months, the actual reserves
established by the Board; and,
B. With respect to the Adjusted LIBOR Rate for Eurocurrency Liabilities,
as defined in Regu- lation D, such reserve percentages ("EURODOLLAR
RESERVE REQUIREMENT") shall include, without limitation, those imposed
under Regulation D or under any similar or successor regulation with
respect to Eurocurrency Liabilities or Eurocurrency funding. Eurodollar
Loans shall be deemed to constitute Eurocurrency Liabilities and as
such shall be deemed to be subject to such reserve requirements without
benefit of or credit for proration, exceptions or setoffs which may be
available from time to time to any bank under Regulation D. Each
determination by Chase of the Eurodollar Reserve Requirement shall, in
the absence of manifest error, be conclusive and binding.
C. Statutory Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of a Borrower or a
Consolidated Subsidiary which expressly contains in the instruments evidencing
the Indebtedness or in the indenture or other similar instrument under which
Indebtedness is issued (which indenture or other similar instrument shall be
binding on all holders of the Indebtedness), subordination provisions (in form
and substance satisfactory to the Lenders) substantially to the effect that the
holders agree that the Indebtedness evidenced by such instrument, any renewals
or extensions thereof, shall at all times and in all respects be subordinate and
junior in right of payment to the Obligations and subject to a Subordination
Agreement.
"SUBORDINATION AGREEMENT" means each Subordination Agreement executed pursuant
to Section 8.1.D.
"SUBSIDIARY" means, with respect to any Person, the parent of such Person, any
corporation, association or other business entity of which securities or other
ownership interests representing more than fifty (50) per cent of the Voting
Shares or the ordinary voting power are, at the time as of which any
determination is being made, owned or controlled, directly or indirectly, by the
parent or one or more Subsidiaries of the parent.
"TANGIBLE NET WORTH" means, with respect to any Person at any time, the sum of
such Person's capital stock, capital in excess of par or stated value of shares
of its capital stock, retained earnings, and any other account which, in
accordance with GAAP constitutes stockholders' equity, LESS treasury stock, LESS
the amount of any write-up subsequent to the Effective Date in the value of any
asset above the cost or depreciated cost thereof to such Person, LESS the book
value of all Intangible Assets which would be treated as intangibles under GAAP,
including, without limitation, goodwill, trademarks, tradenames, patents,
copyrights and licenses, covenants not to compete.
"TEMPORARY CASH INVESTMENT" shall mean any Investment maturing within one (1)
year of the date of acquisition thereof, (i) in direct, readily marketable
obligations of the U.S. or obligations fully guaranteed by the U.S., (ii)
commercial paper rated in the highest grade by Standard & Poor's Corporation or
Xxxxx'x Investor Service, Inc. (collectively, the "RATING AGENCIES"), and (iii)
Dollar time deposits with, and certificates of deposit and banker's acceptances
issued by, Chase, Texas Commerce or any domestic U.S. bank having capital
surplus and undivided profits aggregating at least
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$5,000,000.00 and whose long-term debt rating is at least investment grade
determined by the Rating Agencies.
"TEXAS COMMERCE" mean Texas Commerce Bank National Association, whose address,
for the purposes of this Agreement, is 000 Xxxx Xxxxxx, X.X. Xxx 0000, Xxxxxxx,
Xxxxx 00000-0000.
"THREE-MONTH SECONDARY CD RATE" means, for any day, the secondary market rate
for three-month certificates of deposit reported as being in effect on such day
(or, if such day shall not be a Business Day, the next preceding Business Day)
by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York, New York, received at approximately 10:00 a.m., New York, New York,
time, on such day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by Chase from three New York, New York negotiable
certificate of deposit dealers of recognized standing selected by it.
"TITLE DOCUMENTS" means any all warehouse receipts, bills of lading or similar
documents of title relating to goods in which any of the Borrowers at any time
has an interest, whether now, or at any time or times hereafter, issued to the
Borrowers or the Agent by any Person, and whether covering Inventory or
otherwise.
"TRANSACTIONS" shall have the meaning ascribed to such term in Section 9.1.B.
"UCC" means the Uniform Commercial Code in effect in the applicable jurisdiction
in which any of the Collateral is located.
"UNITED STATES" and "U.S." each means the United States of America.
"VOTING SHARES" of any corporation or limited liability company means shares,
membership certificates or interests of any class or classes, however
designated, having ordinary voting power for the election of at least a majority
of the members of the Board of Directors, or other governing bodies, of such
corporation or limited liability company.
1.2 OTHER DEFINITIONS.
A. All terms defined in this Agreement shall have the above-defined
meanings when used in any of the Loan Documents, certificates, reports
or other documents made or delivered pursuant to this Agreement, unless
the context therein shall require otherwise.
B. Defined terms used herein in the singular shall import the plural and
vice versa.
C. The words "HEREOF", "HEREIN", "HEREUNDER" and similar terms when used
in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement.
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D. Unless specifically otherwise notedreferences to statutes by Popular
Names are reference to the United States Code Annotated including the
regulations promulgated thereunder, and all amendments thereof.
E. References to any obligations or liabilities of "THE BORROWERS" or "A
BORROWER" shall refer to the joint and several obligations of all such
Persons.
ARTICLE II
LOANS
2.1 REVOLVING COMMITMENTS. Subject to the terms and conditions of this
Agreement, the Lenders agree to lend to the Borrowers on a revolving basis, in
one or more Advances from time to time during the Commitment Period, an amount
equal to the amounts requested by the Borrowers in each Notice of Borrowing in
the form of Exhibit 2.1 attached hereto. The Lenders shall not be obligated to
make Advances, however, (i) in excess of the Commitment, (ii) if an Event of
Default or a Default shall exist, and/or, (iii) if the amount of the Advance
exceeds Availability. Within the limits of this Section and subject to Section
2.2, the Borrowers may borrow, repay and re-borrow in accordance with the terms
and conditions of this Agreement.
2.2 BORROWING BASE. The aggregate principal amount at any time remaining
unpaid on the Loans will not be in excess of the amounts arrived at by the
computation provided for in the following formulas not to exceed, however, the
Commitment.
A. Availability will be computed daily and the aggregate principal amount
at any time remaining unpaid on the Loans will be the lesser of the
Commitment and sum of the following:
(i) Up to eighty-five (85) per cent of Eligible Accounts; and,
(ii) Up to sixty-five (65) per cent of the Loan Value of Eligible
Inventory, not to exceed, however, $2,500,000.00.
B. The Agent retains the right to establish reasonable reserves
("RESERVES") as it deems appro- priate under the Commitment, based on
such factors as the Agent deems appropriate, including, but not limited
to, increases in dilution of Accounts, the value of Eligible Inven-
tory and if the Borrowers shall fail to obtain Landlord Agreements
within forty-five (45) days of the Effective Date. The Borrowers
acknowledge that the establishment of Reserves will have the effect of
limiting or restricting Advances. As of the Effective Date, the Agent
has established a Reserve of $700,000.00 because the Borrowers are not
acquiring the Preferred Stock. The Lenders agree that the Lenders will
terminate the Reserve at such time as the Borrowers shall have
delivered to the Agent (i) share certificates representing the
Preferred Stock evidencing that a Borrower has acquired the Preferred
Stock, together with a Security Agreement-Pledge of the Preferred Stock
to the Agent for the benefit of the Lenders, (ii) a subordination
agreement in form and content satisfactory to the Agent executed by the
holders of the Preferred Stock subordinating all rights of the holders
to the Obligations, or (iii) evidence satisfactory to the Agent of the
payment of dividends on the Preferred Stock, together with an opinion
of legal counsel to the Borrowers (a) that the holders of the Preferred
Stock do not have any rights to compel Puget to acquire the Preferred
Stock and cannot convert the Preferred Stock to common or other class
of shares
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of Puget, and (b) no consent or approval of the holders of the
Preferred Stock is required for the validity of the Transactions.
2.3 LOAN VALUE OF ELIGIBLE INVENTORY. The "LOAN VALUE OF ELIGIBLE INVENTORY"
means the lowest of (i) the Borrowers' net purchase cost or manufacturing cost
of domestic finished goods Inventory (on a first-in/first-out basis), and (ii)
the lowest bulk market price of Inventory minus estimated expenses for packing,
selling and delivery. The Agent shall have the sole right, in the Agent's
judgment, to determine which Inventory is marketable and saleable at any
particular time for inclusion in the Borrowing Base. Without limiting the
Agent's judgment, work-in-progress, obsolete or out of condition Inventory,
Inventory classified as long term assets, used Inventory, remanufactured
Inventory, returned Inventory, foreign Inventory, Inventory in transit, damaged
Inventory, supplied Inventory and slow moving Inventory shall not be included in
the Borrowing Base. Inventory in the possession of third parties shall not be
included in the Borrowing Base. In the event that Inventory previously included
in an Inventory Designation Report ceases to be Eligible Inventory, the
Borrowers shall promptly pay to the Lenders an amount sufficient to continue to
be in compliance with Section 2.2.
2.4 BORROWING PROCEDURE. The Borrowers will open a bank account (the
"FUNDING ACCOUNT") with Chase into which account all Advances on the Loans will
be deposited. No other deposits will be made to the Funding Account.
A. Advances on the Loans shall be made pursuant to a Notice of Borrowing
signed by a Responsible Officer of Invatec, which shall specify (i) the
aggregate amount of such Bor- rowing, (ii) the requested Borrowing Date
of such Borrowing, and (iii) the Interest Option selected in accordance
with Section 3.2. If Invatec shall specify a Eurodollar Loan, the
Notice of Borrowing shall also specify the length of the Interest
Period selected by Invatec for such Borrowing. Invatec shall give the
Agent the Notice of Borrowing not later than 12:00 noon (New York, New
York time), (i) at least three (3) Business Days prior to a proposed
Eurodollar Loan Advance or conversion, and (ii) one (1) Business Day
prior to a proposed Alternate Base Rate Loan Advance or conversion. If
no election as to the type of Loan is specified in any such notice, all
such Loans shall be Alternate Base Rate Loans. If no Interest Period
with respect to any Eurodollar Loan is specified in any such notice,
then an Interest Period of three (3) months duration shall be deemed to
have been selected (subject to the provisions of the definition of
"INTEREST PERIOD").
B. The Agent shall be entitled to rely and act upon requests made or
purportedly made by any Responsible Officer of Invatec and each Notice
of Borrowing shall be irrevocable and binding on the Borrowers. The
Borrowers shall be unconditionally and absolutely estopped from denying
(i) the authenticity and validity of any transaction so acted upon by
the Agent once the Agent has made an Advance and has deposited or
transferred such funds as requested in any such Notice of Borrowing,
and (ii) the Borrowers' liability and responsibility therefor. The
Borrowers covenant and agree to assume liability for and to protect,
indemnify and save the Agent and the Lenders harmless from any and all
liabilities, obligations, damages, penalties, claims, causes of action,
costs, charges and expenses, including attorneys' fees, which may be
imposed upon, incurred by or asserted against the Agent or any of the
Lenders by reason of any loss, damage or claim howsoever arising or
incurred because of, out of or in connection with the transfer of funds
pursuant to a Notice of Borrowing.
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C. After receiving a Notice of Borrowing in the manner provided herein,
the fulfillment of all applicable conditions set forth herein and after
receipt by the Agent of such funds, the Agent will, as soon as
practicable, but in no event later than 5:00 p.m. (New York, New York
time) on the third Business Day, in the case of a Eurodollar Loan, and
on the first Business Day, in the case of an Alternate Base Rate Loan,
deposit the Advance in immediately available funds in the Funding
Account.
D. The initial funding of the Loans shall be an Alternate Base Rate Loan.
At any time after the Effective Date, the Borrowers may convert to
Alternate Base Rate Loans or Eurodollar Loans, subject to and pursuant
to the provisions of Section 3.2.
2.5 USE OF PROCEEDS. The proceeds, if any, of a Borrowing under the
Commitment on the Effective Date shall be solely used to refinance existing
Indebtedness of Steam Supply and to provide for working capital requirements of
the Borrowers. All proceeds of each subsequent Borrowing under the Commitment
after the Effective Date shall be solely used to provide for working capital
requirements of the Borrowers.
2.6 REDUCTION OF COMMITMENT. The Borrowers may at any time, or from time to
time, upon not less than thirty (30) Business Days' prior notice to the Agent,
in whole permanently and irrevocably terminate, or from time to time, in part
permanently and irrevocably reduce the Credit Commitment ratably among the
Lenders in accordance with the amounts of their respective Commitment. The
Commitment shall not, however, be reduced at any time to an amount less than the
Loans outstanding under the Commitment at such time.
A. Each partial reduction of the Commitment shall be in a minimum of
$100,000.00, or integral multiples thereof.
B. Each reduction must be accompanied by prepayment of the Note to the
extent that the aggregate principal amount of the Note then outstanding
exceeds the Commitment, as so reduced, together with interest on the
principal sum so prepaid.
C. Simultaneously with any termination or reduction of the Commitment
pursuant to this Section (not including, however, Section 2.6.D), the
Borrowers shall pay to the Lenders, (i) the Commitment Fee due and
owing through and including the date of such termination or reduction
on the amount of the Commitment so terminated or reduced, and (ii) the
Pre- payment Charge on the amount of the Commitment so terminated or
reduced. In any instance, the Borrowers shall pay the Consequential
Loss if applicable. No Prepayment Charge shall, however, be due and
owing by the Borrowers pursuant to this Section for any termination or
reduction of the Commitment after January 31, 1999.
D. The Commitment shall be permanently reduced on each date that a
prepayment of principal of the Loans is required pursuant to Section
3.7.A.(3) or Section 3.7.A.(4) by the amount of each such required
prepayment. In any event, the Commitment of the Lenders shall
automatically and permanently terminate on the Commitment Termination
Date, and all Loans still outstanding on such date shall be due and
payable in full together with accrued interest thereon.
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2.7 REQUIRED PAYMENTS. If any time during the term of this Agreement, the
outstanding amount of the Advances made pursuant to Section 2.1 shall exceed the
Borrowing Base, the Borrowers will immediately pay to the Lenders an amount
equal to the excess, including any unpaid interest on the principal sum paid.
ARTICLE III
NOTE
3.1 NOTE. The Advances made under Section 2.1 shall be evidenced by the Note
which shall (i) be dated the Effective Date, (ii) be in the amount of the
Commitment, (iii) bear interest in accordance with Section 3.2, and (iv) be in
the form of Exhibit 3.1. Notwithstanding the principal amount of the Note as
stated on the face thereof, the amount of principal actually owing on the Note,
at any given time, shall be the aggregate of all Advances made by the Lenders to
the Borrowers, less all payments of principal actually received by the Lenders.
The records of the Agent evidencing the date and amount of each Advance, as well
as the amount of each payment made by the Borrowers, shall be rebuttably
presumptive evidence of the amounts owing and unpaid on the Note. The Borrowers
shall repay, and shall pay interest on, the unpaid principal amount of the Loans
in accordance with the terms of the Note and this Agreement.
3.2 INTEREST RATE OPTIONS. Subject to the provisions of this Section, the
Borrowers shall elect an option (an "INTEREST OPTION") of having all or any
portion of the Loans bear interest at rates determined as follows:
A. After the initial funding, Invatec for the Borrowers shall elect to
have Loans bear interest at a rate based upon the Alternate Base Rate
or at the Adjusted LIBOR Rate. Each change in an Interest Option made
pursuant to this Section shall be deemed both a payment of the
Alternate Base Rate Loan or Adjusted LIBOR Rate Loan from which such
change was made and a Borrowing (notwithstanding that the unpaid
principal amount of the Loan is not thereby changed) as an Alternate
Base Rate Loan or an Adjusted LIBOR Rate Loan into which such change
was made on the Date of such change.
(1) Prior to Default, the unpaid principal of the Loans shall bear
interest from the date of Advance as follows:
(a) If an Alternate Base Rate Loan is chosen, at a rate per annum
which shall, from day to day, be an amount equal to the lesser of:
(i) The Alternate Base Rate in effect from day to day, plus the
Applicable Margin (a "CONTRACT RATE"); or, (ii) the Maximum Rate;
or,
(b) If an Adjusted LIBOR Rate Loan is chosen, at a rate per annum
which shall, from day to day, be an amount equal to the lesser of:
(i) The Adjusted LIBOR Rate in effect from day to day, plus the
Applicable Margin (also a "CONTRACT RATE"); or, (ii) the Maximum
Rate.
(2) Invatec shall, for the Borrowers, in each Notice of Borrowing, give
the Agent notice of the Interest Option selected and the term thereof
with respect to each Borrowing made hereunder.
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(3) Prior to the termination of each Interest Period with respect to
each Adjusted LIBOR Rate Loan, Invatec shall, for the Borrowers, give
notice (a "ROLLOVER NOTICE") to the Agent of the Interest Option which
shall be applicable to such portion of the Loan upon the expiration of
such Interest Period. The Rollover Notice shall be given to the Agent
at least one (1) Business Day, in the case of an Alternate Base Rate
selection, or three (3) Business Days, in the case of an Adjusted LIBOR
Rate selection, prior to the termination of the Interest Period. If the
Borrowers shall specify an Adjusted LIBOR Rate, the Rollover Notice
shall also specify the length of the succeeding Interest Period
(subject to the provisions of the definitions of such term), selected
by the Borrowers with respect to such portion of the Loan. Each
rollover notice shall be irrevocable and effective upon notification
thereof to the Agent. If the required Rollover Notice shall not have
been timely received by the Agent (in accordance with the above
provisions of this Section) prior to the expiration of the then
relevant Interest Period in effect when such Notice was required to be
given, the Borrowers shall be deemed to have selected the rate set
forth in Section 3.2.A.(1)(a) to be applicable to such portion of the
Loan upon expiration of such Interest Period and the Borrowers shall be
deemed to have given the Agent notice of such selection.
(4) With respect to an Alternate Base Rate Loan, Invatec for the
Borrowers shall have the right, on any Business Day (a "CONVERSION
DATE"), to convert such Alternate Base Rate Loan to an Adjusted LIBOR
Rate Loan by giving the Agent a Rollover Notice of such election at
least three (3) Business Days prior to such Conversion Date.
(5) Notwithstanding anything in this Section to the contrary, no
Alternate Base Rate Loan may be converted to an Adjusted LIBOR Rate
Loan and no Adjusted LIBOR Rate Loan may be continued as such when any
Default or Event of Default has occurred and is continuing, but each
such Loan shall be automatically converted to an Alternate Base Rate
Loan on the last day of its applicable Interest Period.
B. No more than five (5) Eurodollar Loans shall be outstanding and
Eurodollar Loans made on any date shall be in a minimum aggregate
principal amount of $1,000,000.00, and an integral multiples of
$100,000.00 for amounts in excess thereof.
3.3 APPLICABLE MARGIN. With respect to any Loan, the Applicable Margin shall
be determined as a function of the Funded Debt Ratio and shall be calculated as
set forth below.
A. The Applicable Margin for Adjusted LIBOR Rate Loans and Alternate Base
Rate Loans shall be as follows:
ADJUSTED LIBOR RATE LOANS ALTERNATE BASE RATE LOANS
FUNDED DEBT RATIO APPLICABLE MARGIN APPLICABLE MARGIN
------------------- ------------------- -------------------------------
Equal to or greater
than 4.00:1.00 3.00 % 0.50 %
Equal to or greater
than 3.50:1.00, but
less than 4.00:1.00 2.75 % 0.25 %
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Equal to or greater
than 2.75:1.00, but
less than 3.50:1.00 2.50 % 0.00 %
Less than 2.75:1.00 2.25 % 0.00 %
B. The Funded Debt Ratio shall be deemed to be 4.00:1.00 from the
Effective Date to and including December 31, 1997. Any change in the
Applicable Margin after December 31, 1997, shall be effective upon the
date of delivery of (i) the annual audited Financial State- ments to be
delivered pursuant to Section 7.1.A.(1), and (ii) thereafter shall be
determined quarterly from the Financial Statements of the Borrowers
most recently delivered pursuant to Section 7.1.A.(3) at the end of
each fiscal quarter for the preceding consecutive twelve (12) month
period; provided, further, for the first ensuing Fiscal Year, the
Funded Debt Ratio will be determined quarterly, at the end of each
fiscal quarter, for the Fiscal Year to date. If the Borrowers shall
fail to deliver any such Financial Statements within the times
specified in Section 7.1.A.(1) or Section 7.1.A.(3), the Funded Debt
Ratio shall be deemed to be 4.00:1.00 until the Borrowers deliver such
Financial Statements to the Agent. The Funded Debt Ratio will be
determined by using actual Funded Debt divided by EBITDA annualized to
the end of the Fiscal Year.
3.4 INTEREST RECAPTURE. Notwithstanding the terms of Section 3.2.A.(1), if
on any Interest Payment Date, the Lenders do not receive interest on the Loans
at the applicable Contract Rate because the applicable Contract Rate exceeds or
has exceeded the Maximum Rate, then the Borrowers shall, upon the demand of
Invatec, pay to the Lenders, in addition to interest otherwise required
hereunder on each Interest Payment Date thereafter, interest at the Maximum Rate
until the cumulative interest received by the Lenders equals the interest which
would have been received at the applicable Contract Rate. In no event shall,
however, the Borrowers be required to pay, for any appropriate computation
period, interest at a rate exceeding the Maximum Rate effective during such
period.
3.5 DEFAULT RATE. If a Default or an Event of Default shall occur and be
continuing and not be waived, the Borrowers shall on demand from time to time
pay interest, to the extent permitted by law, on all Loans outstanding up to the
date such Default or Event of Default is cured at a rate per annum equal to two
(2) per cent in excess of the Alternate Base Rate (the "DEFAULT RATE"), but
never in excess of the Maximum Rate.
3.6 MAXIMUM INTEREST. It is the intention of the parties to comply with all
applicable usury laws. Accordingly, it is agreed that notwithstanding any
provision apparently to the contrary in the Loan Documents, no such provision
shall require the payment or permit the collection of interest in excess of the
Maximum Amount or the Maximum Rate. If any excess of interest in such respect is
provided for, or shall be adjudicated to be so provided for, in the Loan
Documents, then in such event the provisions of this Section shall govern and
control and (i) no Loan Party liable for the payment of any sums to become due
under the Loan Documents shall be obligated to pay the amount of such interest
to the extent that it is in excess of the Maximum Amount or the Maximum Rate,
and (ii) any such excess which may have been collected shall be first applied as
a credit against the then unpaid principal amount on the Note and the excess, if
any, refunded to the Borrowers and the effective rate of interest shall be
automatically reduced to the Maximum Rate. Without limitation of the foregoing,
all calculations of the rate of interest contracted for, charged or received
under the Loan Documents which are made for the purpose of determining whether
such rate exceeds the Maximum Rate, shall be
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made, to the extent permitted by applicable usury laws, by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the Loans, all interest at any time contracted for, charged or
received by the holder or holders of the Note in connection with the Loans.
3.7 PAYMENTS ON THE NOTE. The Note will be paid and prepaid in accordance
with the terms set out in this Section.
A. The unpaid principal amount of the Note, together with all accrued but
unpaid interest thereon, and unpaid Commitment Fees, shall be due and
payable on the Commitment Termination Date. Interest on the Note shall
be due and payable monthly as it accrues, on the Interest Payment
Dates.
(1) The Borrowers shall make prepayments of the Loans from time to time
such that the Availability equals or exceeds zero at all times. Any
prepayments required by this Section shall be applied to outstanding
Alternate Base Rate Loans up to the full amount thereof before they are
applied to outstanding Eurodollar Loans. The Borrowers shall not,
however, be required to make any prepayment of any Eurodollar Loan
pursuant to this Section until the last day of the Interest Period with
respect thereto so long as an amount equal to such required prepayment
is deposited by the Borrowers in a cash collateral account with the
Agent to be held in such account on terms satisfactory to the Agent.
(2) On the date of any termination or reduction of the Commitment
pursuant to Section 2.6, the Borrowers shall pay or prepay so much of
the Loans as shall be necessary in order that the Availability equals
or exceeds zero following such termination or reduction. Any
prepayments required by this Section shall be applied to outstanding
Alternate Base Rate Loans up to the full amount thereof before they are
applied to outstanding Eurodollar Loans. The Borrowers shall not,
however, be required to make any prepayment of any Eurodollar Loan
pursuant to this Section until the last day of the Interest Period with
respect thereto so long as an amount equal to such required prepayment
is deposited by the Borrowers in a cash collateral account with the
Agent to be held in such account on terms satisfactory to the Agent.
(3) Within three (3) days of (i) the sale of any assets of the
Borrowers (excluding sales of assets in the ordinary course of business
subject, however, to Section 6.4), (ii) the consummation of the sale or
issuance in a public or private offering of any debt or equity
securities of the Borrowers, or (ii) there shall occur a Change of
Control, the Borrowers shall make a mandatory prepayment of the Loans
in an amount equal to one hundred (100) per cent of the proceeds
received or realized (net of taxes due and any expenses of sale) by the
Borrowers or in the case of a Change of Control, by the sellers of any
Borrower's stock, which proceeds shall be applied as set forth in
Section 3.9.D.
(4) Except as provided in Subsection 3.7.A.(4)(a), not later than the
third day following the receipt by the Agent, the Borrowers or any
Subsidiary of a Borrower of, (i) any proceeds of any insurance required
to be maintained pursuant to Section 7.1.F on account of each separate
loss, damage or injury in excess of $25,000.00 (or, if there shall be a
Default or an Event of Default shall be continuing, the full amount of
proceeds) to any asset of the Borrowers or such Subsidiary of a
Borrower (including, without limitation, any Collateral), or (ii) any
proceeds of any business interruption insurance required to be
maintained pursuant
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to Section 7.1.F in excess of $50,000.00 (or, if there shall be
continuing a Default or Event of Default, the full amount of proceeds),
the Borrowers or the Subsidiary shall notify the Agent of such receipt,
in writing or by telephone, promptly confirmed in writing. Not later
than the day following receipt by the Agent, the Borrowers or the
Subsidiary of any such proceeds, there shall become due and payable a
prepayment of the Loans in an amount equal to one hundred (100) per
cent of such proceeds, and prepayments from such proceeds shall be
applied as set forth in Section 3.9.D.
(a) In the case of the receipt of proceeds described above with
respect to the loss, damage or injury to any asset of the
Borrowers or any Subsidiary of a Borrower (other than proceeds of
any business interruption insurance), the Borrowers may elect, by
written notice delivered to the Agent not later than the day on
which a prepayment would otherwise be required as above set out,
to apply all or a portion of such proceeds for the purpose of
replacing, repairing, restoring or rebuilding the relevant
tangible property, and, in such event, any required prepayment as
set out above shall be reduced Dollar for Dollar by the amount of
such election. An election under this Subsection shall not be
effective unless: (i) at the time of such election there is no
Default or continuing Event of Default; (ii) the Borrowers shall
have certified to the Agent that: {1} the proceeds of the
insurance adjustment for such loss, damage or injury, together
with other funds available to the Borrowers, shall be sufficient
to complete such replacement, repair, restoration or rebuilding in
accordance with all applicable laws, regulations and ordinances;
and, {2} to the best knowledge of the Borrowers, no Default or
Event of Default has arisen or will arise as a result of such
loss, damage, injury, replacement, repair or rebuilding; and,
(iii) if the amount of proceeds in question exceeds $250,000.00,
the Borrowers shall have obtained the written consent of the
Lenders to such election.
(b) In the event of an election under Subsection 3.7.A.(4)(a),
pending application of the proceeds to the required replacement,
repairs, restoration or rebuilding, the Borrowers shall, not later
than the time at which prepayment would have been in the absence
of such election required as set out above, apply such proceeds to
the prepayment of the outstanding principal balance, if any, of
the Loans (not in permanent reduction of the Commitment), and
deposit (the "SPECIAL DEPOSIT") with the Agent, the balance, if
any, of such proceeds remaining after such application, pursuant
to agreements in form, scope and substance satisfactory to the
Agent. The Special Deposit, together with all earnings on such
Special Deposit, shall be available to the Borrowers solely for
the replacement, repair, rebuilding or restoration of the tangible
property suffering the injury, loss or damage in respect of which
such prepayment and Special Deposit were made or to such other
purpose as to which the Lenders may consent in writing. If a
Default or Event of Default shall thereafter occur, the balance of
the Special Deposit and earnings thereon may be applied by the
Agent to repay the Obligations in such order as the Agent shall
elect. The Agent shall be entitled to require proof, as a
condition to the making of any withdrawal from the Special
Deposit, that the proceeds of such withdrawal are being applied
for the purposes permitted hereunder.
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B. The Agent may charge, when due payable, any Borrowers' account with the
Agent for all interest, principal and Commitment Fees or other fees
owing to the Agent or any of the Lenders on or with respect to this
Agreement and/or the Loans and other Loan Documents.
3.8 CALCULATION OF INTEREST RATES. Interest on the unpaid principal of the
Note and the Commitment Fees shall be calculated on the basis of the actual days
elapsed in a year consisting of three hundred sixty (360) days. The Agent shall
determine each Contract Rate applicable to the Loans and shall promptly advise
the Borrowers of the Contract Rates so determined.
3.9 PREPAYMENTS. Subject to the terms and conditions contained in this
Section and elsewhere in this Agreement and upon five (5) Business Days prior
notice to the Agent, the Borrowers shall have the right to prepay any Loan at
any time in whole or from time to time in part (except in the case of a
Eurodollar Loan which may be prepaid only on the last day the Interest Period
applicable to such Eurodollar Loan) without penalty, except as otherwise
provided for herein.
A. Partial prepayments shall be in an aggregate principal amount of
$2,000,000.00, or a greater integral multiple of $500,000.00.
B. Simultaneously with any optional prepayment of any Loan, the Borrowers
shall pay to the Agent for the benefit of the Lenders, the Prepayment
Charge.
C. Each Contract Rate has been determined, in part, based on the Lenders'
cost of funds. Therefore, the Borrowers shall pay a prepayment charge
in an amount equal to the Consequential Loss if the Borrowers shall, in
any manner, prepay any Adjusted LIBOR Rate Loan. Additionally, the
Borrowers indemnify and agree to hold the Lenders harmless against, and
reimburse the Lenders on demand for, any loss, cost or expense incurred
or sustained by the Lenders (including without limitation any loss,
cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by the Lenders to fund or maintain
an Adjusted LIBOR Rate Loan) as a result of: (i) Any payment or
prepayment, whether required hereunder or otherwise, of any Adjusted
LIBOR Rate Loan made after the delivery of a Notice of Borrowing, but
before the applicable Borrowing Date if such payment or prepayment
prevents the proposed Loan from becoming fully effective; or, (ii) the
failure of any Adjusted LIBOR Rate Loan to be made by the Lenders due
to any action or inaction of the Borrowers. A certificate of the Agent
setting forth any amount or amounts which the Lenders are entitled to
receive pursuant to this Section shall be delivered to the Borrowers
and shall be conclusive, if made in good faith, absent manifest error.
Notwithstanding the foregoing, in no event shall the Lenders be
permitted to receive any compensation hereunder constituting interest
in excess of the Maximum Rate or the Maximum Amount. Without prejudice
to the survival of any other obligations of the Borrowers hereunder,
the obligations of the Borrowers under this Section shall survive the
payment of the Loans.
D. If no Default shall have occurred, prepayments shall be applied (i)
first to the discharge of any expenses for which the Agent or any of
the Lenders may be entitled to receive reimbursement under any
agreement with any of the Borrowers, (ii) next, to the Prepayment
Charge, (iii) next, to the Consequential Loss, if applicable, (iv)
next, to accrued interest on the Note, (v) the balance remaining, if
any, shall be applied to the reduction of principal, and in such
instance first to the Alternate Base Rate Loans, and secondly to the
Eurodollar
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Loans. Prepayments shall be applied to the Eurodollar Loans as the
Borrowers shall select; provided, however, the Borrowers shall select
Eurodollar Loans to be prepaid in a manner designed to minimize the
Consequential Loss resulting from such prepayments. If, however, the
Borrowers shall fail to select the Eurodollar Loan to which such
prepayments are to be applied, the Lenders shall be entitled to apply
the prepayment in any manner the Lenders shall deem appropriate.
E. If, however, a Default has occurred and is continuing at the time of a
prepayment, the Lenders shall be entitled to apply the prepayment in
any manner the Lenders shall deem appropriate.
3.10 MANNER OF PAYMENTS. All payments and prepayments of principal of, and
interest on, the Note shall be made by the Borrowers to the Agent before 12:00
noon (New York, New York time) in lawful money of the U.S. in immediately
available funds at the office of Chase. Any payment or prepayment received by
the Agent after 12:00 noon (New York, New York time), shall be deemed to have
been received by the Agent on the next succeeding Business Day. Should the
principal of or interest on the Note or any fee or other amount payable
hereunder become due and payable on other than a Business Day, payment in
respect thereof may be made on the next succeeding Business Day (except as
otherwise specified in the definition of "INTEREST PERIOD"), and such extension
of time shall in such case be included in computing interest, if any, in
connection with such payment.
3.11 RENEWALS OF NOTE. All renewals and rearrangements, if any, of the Note
shall be deemed to be made pursuant to this Agreement, and accordingly, shall be
subject to the terms and provisions hereof. The Borrowers shall be deemed to
have ratified, as of the date of such renewal or rearrangement, all of the
representations, covenants and agreements herein and in the Loan Documents set
forth.
3.12 TAXES.
A. Any and all payments by Borrowers hereunder or under the Note shall be
made free and clear of, and without deduction for, any and all present
or future taxes (including, but not limited to, excise taxes), levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto ("TAXES"), imposed by any Governmental Authority,
exclud- ing in the case of each Lender and the Agent, taxes imposed
upon its income, assets or operations, and franchise taxes imposed upon
it by any Governmental Authority. If the Borrowers shall be required by
law to deduct any Taxes for which the Borrowers are re- sponsible under
the preceding sentence from or in respect of any sum payable hereunder
or under the Note, (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)
the Lenders receives an amount equal to the sum which would have been
received had no such deductions been made, (ii) the Borrowers shall
make such deductions, and (iii) the Borrowers shall pay the full amount
deducted to the relevant Governmental Au- thority or other authority in
accordance with applicable law.
B. The Borrowers shall 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 hereunder or under the Loan Documents
or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or the other Loan Documents ("OTHER TAXES").
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C. The Borrowers indemnify and agree to hold the Agent and the Lenders
harmless for the full amount of Taxes and Other Taxes paid by the Agent
or any of the Lenders or any liability, including penalties and
interest, arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted.
D. Without prejudice to the survival of any other agreement, the
agreements and obligations of the Borrowers contained in this Section
shall survive the payment in full of the Obligations.
3.13 COMMITMENT FEES. The Borrowers agree to pay to the Agent for the
account of the Lenders a commitment fee (the "COMMITMENT FEE") for the granting
of the Loans computed at a rate per annum equal to one-fourth (1/4) of one (1)
per cent on the average daily un-borrowed amount of the Commitment in effect
during the period for which payment is made. Commencing on September 30, 1997,
the Commitment Fee shall be payable quarterly, in arrears, on (i) the last day
of each March, June, September and December during the Commitment Period, (ii)
the date of each reduction or termination of the Commitment of Lenders
hereunder, and (iii) the Commitment Termination Date. After any reduction of the
Commitment pursuant to Section 2.6, the Commitment Fee shall be computed on the
Commitment, as so reduced.
3.14 CONSEQUENTIAL LOSS. The Borrowers agree to reimburse the Lenders for
and against any loss or reasonable expense (including, but not limited to, any
loss or expense sustained or incurred or to be sustained or incurred in
liquidating or employing deposits from third parties acquired to affect or
maintain any Loan or part thereof as a Eurodollar Loan) which the Lenders may
sustain or incur as a consequence of any of the following events (regardless of
whether such events occur as a result of the occurrence of an Event of Default
or the exercise of any right or remedy of the Agent or the Lenders under this
Agreement or any other Loan Document, or at law): (i) any failure of the
Borrowers to fulfill on the date of any Borrowing hereunder the applicable
conditions set forth in Article VIII applicable to it; (ii) any failure of the
Borrowers to borrow hereunder after irrevocable Notice of Borrowing pursuant to
Section 2.4.A has been given; (iii) any payment, prepayment or conversion of a
Eurodollar Loan on a date other than the last day of the relevant Interest
Period; (iv) any default in payment or prepayment of the principal amount of any
Loan or any part thereof or interest accrued thereon, as and when due and
payable (at the due date thereof, by notice of prepayment or otherwise); or, (v)
the occurrence of an Event of Default (collectively, "CONSEQUENTIAL LOSS"). Such
loss or expense shall include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or converted or not borrowed for the period
from the date of such payment, prepayment or conversion or failure to borrow to
the last day of the Interest Period for such Loan (or, in the case of a failure
to borrow, the Interest Period for such Loan which would have commenced on the
date of such failure to borrow), at the applicable rate of interest for such
Loan provided for herein over (ii) the amount of interest (as determined by such
Lender) that would be realized by such Lender in reemploying the funds so paid,
prepaid or converted or not borrowed in U.S. Treasury obligations with
comparable maturities for comparable periods. The Agent shall provide to the
Borrowers a statement explaining any loss or expense and setting forth, if
applicable, the computation pursuant to the preceding sentence, and such
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statement shall be conclusive absent manifest error. The Borrowers shall pay the
Lenders the amount shown as due on any such statement within ten (10) days after
the receipt of the same.
3.15 PAYMENTS IN RESPECT OF INCREASED COSTS.
A. Notwithstanding any other provision hereof, if after the date of this
Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof (whether or
not having the force of law) or any change in GAAP or regulatory
accounting principles shall (i) impose, modify or make applicable to
the Lenders any reserve, special deposit or similar requirement with
respect to the obligations hereunder, (ii) impose on the Lenders any
other condition with respect to the obligations hereunder, or (iii)
subject the Lenders to any tax (other than {a} taxes imposed on the
overall net income of the Lenders, and {b} franchise taxes imposed on
the Lenders by any political subdivision or taxing authority) charge,
fee, deduction or withholding of any kind whatsoever, and the result of
any of the foregoing shall be to increase the cost to the Lenders
hereunder or to reduce the amount of principal, interest or any fee or
compensation receivable by the Lenders hereunder, then such additional
amount or amounts as will compensate the Lenders for such additional
costs or reduction shall be paid to the Lenders by the Borrowers.
B. If, after the date of this Agreement, the Lenders shall determine that
the adoption of any applicable law, rule, regulation or guideline
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administra- tion thereof, or compliance by the Lenders with any request
or directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority, central bank or
comparable agency, has or would have the effect of reducing the rate of
return on the Lenders' capital as a consequence of the obligations
hereunder to a level below that which the Lenders could have achieved
but for such adoption, change or compliance, then from time to time,
the Borrowers shall pay to the Lenders such additional amount or
amounts as will compensate the Lenders for such reduction.
C. A certificate of the Agent setting forth such amount or amounts,
supported by calculations as shall be necessary to compensate the
Lenders as specified in Section 3.15.A and Section 3.15.B shall be
delivered to the Borrowers and shall be conclusive and binding upon the
Borrowers absent manifest error. The Borrowers shall pay the Lenders
the amount shown as due on any such certificate within ten (10)
Business Days after receipt of the same.
D. Failure on the part of the Lenders to demand compensation for any
increased costs, reduction in amounts received or receivable hereunder
or reduction in the rate of return earned on capital, in each case
pursuant to Section 3.15.A or Section 3.15.B, shall not constitute a
waiver of the right to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in rate of
return pursuant to Section 3.15.A and Section 3.15.B. The protection
under this Section shall be available to the Lenders regardless of any
possible contention of the invalidity or inapplicability of any law,
regulation or other condition which shall give rise to any demand by
the Lenders for compensation (but if such law, regulation or other
condition is finally determined to be invalid or inapplicable, the
Lenders shall promptly refund (without interest) all amounts paid
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under this Section arising from such invalid or inapplicable law,
regulation or other condition).
ARTICLE IV
SPECIAL PROVISIONS FOR EURODOLLAR LOANS
4.1 INADEQUACY OF EURODOLLAR LOAN PRICING. If with respect to any Interest
Period for any Euro-dollar Loan:
A. The Agent determines in good faith (which determination shall be
conclusive absent manifest error) that, by reason of circumstances
affecting the Eurodollar interbank market generally, deposits in
Dollars (in the applicable amounts) are not being offered to the
Lenders in the Eurodollar interbank market for such Interest Period;
or,
B. The Agent determines in good faith (which determination shall be
conclusive absent manifest error) that (i) the Adjusted LIBOR Rate will
not adequately and fairly reflect the cost to the Lenders of
maintaining or funding such Eurodollar Loan for such Interest Period,
or (ii) reasonable means do not exist for ascertaining the Adjusted
LIBOR Rate, then, the Agent shall forthwith give notice thereof to the
Borrowers. Thereafter, until the Agent notifies the Borrowers that the
circumstances giving rise to such suspension no longer exist, (i) the
obligation of the Lenders to make Eurodollar Loans shall be suspended,
and (ii) the Borrowers shall either (a) repay in full the then
outstanding principal amount of the Eurodollar Loans, together with
accrued interest thereon on the last day of the then current Interest
Period applicable to such Eurodollar Loans, or (b) convert such
Eurodollar Loans to Alternate Base Rate Loans in accordance with
Section 3.2.A.(3) on the last day of the then current Interest Period
applicable to each such Eurodollar Loan.
4.2 ILLEGALITY. If with respect to any Interest Period for any Eurodollar
Loan:
A. The Agent determines in good faith (which determination shall be
conclusive absent manifest error) that any change in any applicable
law, rule or regulation or in the interpretation, application or
administration thereof makes it unlawful, or any central bank or other
Gov- ernmental Authority asserts that it is unlawful for the Lenders to
maintain or fund any Loan by means of Dollar deposits obtained in any
Eurodollar interbank market (any of the above being described as a
"EURODOLLAR EVENT"), then, the Agent shall forthwith give notice
thereof to the Borrowers. Upon receipt of such notice, the Borrowers
shall either (i) prepay in full the then outstanding principal amount
of the affected Eurodollar Loans, together with accrued interest
thereon, or (ii) convert the affected Eurodollar Loans to Alternate
Base Rate Loans on either (a) the last day of the then current Interest
Period applicable to each affected Eurodollar Loan if such Lender may
lawfully continue to maintain and fund such Eurodollar Loan to such
day, or (b) immediately, if the Lenders may not lawfully continue to
fund and maintain such Eurodollar Loans to such day. Upon the
occurrence of any Eurodollar Event, and at any time thereafter so long
as such Eurodollar Event shall contin- ue, the Lenders may exercise the
aforesaid option by giving notice thereof to the Agent and the
Borrowers.
B. Any prepayment of any Eurodollar Loan which is required under the
preceding Section shall be made, together with accrued and unpaid
interest and all other amounts payable to the
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Lenders under this Agreement with respect to such prepaid Eurodollar
Loan on the date stated in the notice to the Borrowers referred to
above, which date ("REQUIRED PREPAYMENT DATE") shall be not less than
fifteen (15) days from the date of such notice.
4.3 EFFECT ON INTEREST OPTIONS. If notice has been given pursuant to Section
4.1 or Section 4.2 requiring a type of Eurodollar Loan to be repaid or
converted, then unless and until the Agent notifies the Borrowers that the
circumstances giving rise to such repayment no longer apply requiring such
repayment or conversion, all Loans shall thereafter be Alternate Base Rate
Loans. If the Agent notifies the Borrowers that the circumstances giving rise to
such repayment no longer apply, the Borrowers may thereafter select Loans to be
Eurodollar Loans in accordance with Section 3.2.A.(1).
4.4 PAYMENTS NOT AT END OF INTEREST PERIOD. If the Borrowers make any
payment of principal with respect to any Adjusted LIBOR Rate Loan on any day
other than the last day of the Interest Period applicable to such Adjusted LIBOR
Rate Loan, the Borrowers shall reimburse the Lenders on demand the Consequential
Loss incurred by the Lenders as a result of the timing of such payment. A
certificate of the Agent setting forth the basis for the determination of the
amount of Consequential Loss shall be delivered to the Borrowers and shall, in
the absence of manifest error, be conclusive and binding. Any conversion of an
Adjusted LIBOR Rate Loan to a different Interest Option on any day other than
the last day of the Interest Period for such Adjusted LIBOR Rate shall be deemed
a payment for purposes of this Section.
4.5 SURVIVAL OF OBLIGATIONS. Failure on the part of the Lenders to demand
compensation pursuant to this Article for any increased costs or reduction in
amounts received or receivable with respect to any Interest Period, shall not
constitute a waiver of the Lenders' rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
rate of return in such Interest Period or in any other Interest Period. The
protection under this Article shall be available to the Lenders regardless of
any possible contention of the invalidity or inapplicability of any law,
regulation or other condition which shall give rise to any demand by the Lenders
for compensation.
ARTICLE V
COLLATERAL FOR LOANS
5.1 COLLATERAL FOR LOANS. The Loans shall be secured by the following
property (collectively, the "COLLATERAL") and Liens in the Collateral shall be
created by or in the Collateral Documents, including, but not limited to, those
described as follows:
A. A Security Agreement in the form of Exhibit 5.1.A duly executed by each
Borrower, creat- ing a first priority lien and security interest in and
upon all of the Borrower's present and future Accounts, Inventory,
Equipment, furniture, Goods, Fixtures, General Intangibles,
Instruments, margin accounts, tax refunds, Chattel Paper, drafts,
acceptances, Contracts and Contract Rights, Documents, Title Documents,
notes, returned and repossessed Goods and all other personal property
or interests in personal property, together with all accessions to,
substitutions for, and all replacements, products and proceeds of the
foregoing (including, without limitation, proceeds of insurance
policies insuring any of the foregoing), all books and records
(including, without limitation, customer lists, credit files, computer
programs, printouts and other computer materials and records)
pertaining to any of the foregoing, and
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all insurance policies insuring any of the foregoing, whether now owned
or hereafter acquired, and wherever located.
B. A Security Agreement-Pledge in the form of Exhibit 5.1.B duly executed
by Invatec and Puget (other than the Preferred Stock), as applicable,
creating a first priority lien and security interest in and upon all of
the outstanding and issued capital stock of Puget, Benicia, Steam and
Xxxxxxxxxx (collectively, the "PLEDGED STOCK").
5.2 COLLATERAL DOCUMENTS. Each of the Collateral Documents will be duly
executed by the parties thereto. Each document, including, without limitation,
any Financing Statement, required by the Collateral Documents, under law or
requested by the Agent to be filed, registered or recorded in order to create,
in favor of the Agent for the benefit of the Lenders, a perfected first Lien on
the Collateral described therein, shall be properly filed, registered or
recorded in each jurisdiction in which the filing, registration or recordation
thereof is so required or requested. The Agent shall receive an acknowledgment
copy, or other evidence satisfactory to the Agent, of each such filing,
registration or recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto.
5.3 FURTHER ASSURANCES. The Collateral Documents will contain a description
of the Collateral sufficient to grant to the Agent for the benefit of the
Lenders perfected Liens pursuant to applicable law in all Collateral. Upon the
filing by the Agent of the Financing Statements and the delivery to the Agent of
the Pledged Stock, the Agent will have, for the benefit of the Lenders,
perfected first priority Liens in all Collateral. The Borrowers shall make,
execute or endorse, and acknowledge and deliver or file or cause the same to be
done, all vouchers, invoices, notices, certifications and additional agreements,
undertakings, conveyances, transfers, assignments, Financing Statements or other
assurances, and take any and all such other action, as the Agent may, from time
to time, deem necessary or proper in connection with any of the Loan Documents,
or for better assuring and confirming unto the Agent for the benefit of the
Lenders creation of Liens in all Collateral, or for granting to the Agent for
the benefit of the Lenders any security for the Obligations which the Agent may
reasonably request from time to time.
5.4 OTHER LOANS. It is agreed that the Collateral and the Collateral
Documents given to secure the Loans shall secure all Obligations, regardless of
how same may arise and all collateral given to secure any other obligations of
any of the Borrowers shall additionally secure the Obligations. Any Default
shall constitute an event of default in all Obligations and the collateral
documents securing the payment of same.
ARTICLE VI
CUSTODY, INSPECTION, COLLECTION
AND MAINTENANCE OF COLLATERAL
6.1 CASH COLLATERAL ACCOUNT. The Borrowers will open a collection account
(the "CASH COLLATERAL ACCOUNT") with Chase into which account all payments made
on all Accounts will be deposited. The Cash Collateral Account will be
established pursuant to the terms of this Agreement and the Lockbox Agreement
among the Borrowers, the Agent and Chase in the form of Exhibit 6.1. The
Borrowers will provide written notification to each Account Debtor to remit all
payments to the Cash Collateral Account.
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6.2 COLLECTION OF ACCOUNTS. So ;ong as the procedures set forth in this
Article remain in effect, the arrangements between the Agent and the Lenders
with respect to making of Loans shall be handled in the manner set out herein.
A. The Borrowers will, at Borrowers' cost and expense, (i) arrange for
remittances on Ac- counts to be made directly to the Cash Collateral
Account or in such other manner as the Agent may direct, (ii) except
for disputed items, promptly deposit all payments received by the
Borrowers on account of Accounts, whether in the form of cash, checks,
notes, drafts, bills of exchange, money orders or otherwise, into the
Cash Collateral Account in original form received (but with any
endorsements of the Borrowers necessary for deposit or collection), and
on the date of receipt thereof, and (iii) deposit or cause to be
deposited into the Cash Collateral Account all other sums paid or
payable to the Borrowers from any source, including, but not limited
to, insurance proceeds and condemnation awards. The deposits into the
Cash Collateral Account will be subject to withdrawal only by the Agent
as hereinafter provided. Until such payments are deposited, such
payments shall be deemed to be held in trust by the Borrowers for and
as the Lenders' property and shall not be commingled with the
Borrowers' other accounts, all of which will be maintained in
accordance with Section 7.1.M.
B. All remittances and payments that are deposited in accordance with the
foregoing will be immediately applied by the Agent to reduce the
outstanding balance of the Loans, subject to the continued accrual of
interest on such remittances and payments for two (2) Business Days (or
three {3} Business Days in the case of remittances and payments
received after 12:00 noon, New York, New York time) and in any event
subject to final collection in cash of the item deposited.
C. The Agent shall not, however, be required to credit Borrowers' account
for the amount of any instrument which is unsatisfactory to the Agent
and the Agent may charge the Borrowers' account for the amount of any
instrument which is returned to the Agent unpaid.
D. Each month the Agent shall render to the Borrowers a statement of the
Borrowers' account, which shall constitute an account stated and shall
be deemed to be correct and accepted by and be binding upon the
Borrowers unless the Agent receives a written statement of the
Borrowers' exceptions within thirty (30) days after such statement was
rendered to the Borrowers.
E. The Borrowers shall not, without the Agent's prior written consent,
which the Agent may withhold in the Agent's business judgment, with
respect to any single Account in excess of $2,500.00 or any combination
of Accounts in excess of $50,000.00 in any Fiscal Year, grant any
extension of the time of payment of any Accounts, compromise, adjust or
settle any Accounts for less than the full amount thereof, release, in
whole or in part, any Person or property liable for the payment
thereof, extend the time for payment thereof, or allow any credit or
discount whatsoever thereon except as permitted under Section 7.3.P.
F. If at any time during the term of this Agreement, the Agent permits the
Borrowers to collect any of the proceeds of the Collateral, then until
the authority of the Borrowers to collect the proceeds of the
Collateral is terminated by the Agent, the Borrowers will, at the
Borrowers' sole cost and expense, but on the Agent's behalf and for the
Agent's account, collect as the
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Lenders' property and hold in trust for the Lenders, all amounts unpaid
on Collateral, and shall not commingle such collections with funds of
the Borrowers, except to pay the Obligations.
G. Upon the occurrence and continuance of an Event of Default, the Agent
may (and upon the determination of the Lenders, shall) send a notice of
assignment and/or notice of the Lenders' security interest to any and
all Account Debtors or any third party holding or otherwise concerned
with any of the Collateral, and thereafter the Agent shall have the
sole right to collect the Accounts and/or take possession of the
Collateral and the books and records relating thereto.
H. At any time after the occurrence and during the continuance of an Event
of Default, the Agent may, without notice to or consent from the
Borrowers xxx upon or otherwise collect, extend the time of payment of,
or compromise or settle for cash, credit or otherwise upon any terms,
any of the Accounts or any securities, instruments or insurance
applicable thereto and/or release the Account Debtor thereon. The Agent
is authorized and empowered to accept the return of the goods
represented by any of the Accounts. The Agent and the Lenders shall
not, under any circumstances or in any event whatsoever, have any
liability for any error, omission or delay of any kind occurring in the
settlement, collection or payment of any of the Accounts or any
instrument received in payment thereof, or for any damage resulting
therefrom.
6.3 VERIFICATION OF ACCOUNTS. At the Agent's request, the Borrowers will,
upon the creation of Accounts, or at such intervals as the Agent may require,
provide the Agent with (i) confirmatory assignment schedules, (ii) copies of
Account Debtor's invoices, (iii) evidence of shipment or delivery, and (iv) such
further schedules, documents and/or information regarding the Accounts as the
Agent may reasonably require. The Agent shall have the right to confirm and
verify all Accounts and do whatever the Agent may reasonably deem necessary to
protect the Lenders' interests. The items to be provided under this Section are
to be in forms satisfactory to the Agent and executed by the Borrowers and
delivered to the Agent, from time to time, solely for the Agent's convenience in
maintaining records of the Collateral. The failure to deliver any of such items
to the Agent shall not affect, terminate, modify or otherwise limit the Liens in
favor of the Agent for the benefit of the Lenders.
6.4 SALES OF INVENTORY. So long as there exists no Default, Inventory
subject to the Liens in favor of the Agent for the benefit of the Lenders may be
sold by the Borrowers in the ordinary course of business, but shall not
otherwise be taken or removed from the Premises. If there shall occur a Default,
the then Inventory shall not be sold, taken or removed, except with the Agent's
prior consent and upon substitution of other Collateral in form and amount
satisfactory to the Agent, in the Agent's business judgment or upon payment of
an amount satisfactory to the Agent to be applied to the Obligations in such
order as the Agent, in the Agent's sole discretion, may determine.
6.5 INSPECTIONS AND FIELD EXAMINATIONS. At all times, the Agent and any of
the Lenders shall have full access to, and the right to examine, check, inspect
and make abstracts and copies from the books, records, audits, correspondence
and all other papers relating to the Collateral. The Agent or any of the
Lenders, and their respective agents, may enter upon any of the Premises at any
time during business hours and at any other reasonable time, and from time to
time, for the purpose of inspecting the Collateral and any and all records
pertaining thereto. The Agent shall have the right to make field examinations,
as often as it may request (but initially scheduled for three (3) times in each
Fiscal Year)
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the existence and condition of the Accounts, books and records of the Borrowers
and to review compliance with the terms and conditions of this Agreement and the
other Loan Documents. If there shall occur an Event of Default, the Agent is
authorized to make as many field examinations, as it may reasonably require. The
Borrowers shall permit any authorized representative designated by the Agent to
discuss the affairs, finances and condition of the Borrowers with the
appropriate Financial Officer and such other officers of the Borrowers as the
Agent shall deem appropriate and the Borrowers' independent public accountants,
as applicable. The Agent agrees that it shall schedule any meeting with any such
independent public accountant through a Responsible Officer of Invatec who shall
have the right to be present at any such meeting. The Borrowers irrevocably
authorize and direct all accountants and auditors employed by the Borrowers to
exhibit and deliver to the Agent at any time during the term of this Agreement
copies of any of the Financial Statements, trial balances or other accounting
records of any sort of the Borrowers in the accountant's or auditor's
possession, and to disclose to the Agent any information they may have
concerning the financial status and business operations. The Borrowers authorize
all Governmental Authority to furnish to the Agent copies of reports or
examinations relating to a Borrower, whether made by the Borrowers or otherwise.
6.6 REPORTS. Each of the Borrowers will, daily on each Business Day, deliver
to the Agent, in form and detail satisfactory to the Agent, (i) confirmatory
assignment schedules, (ii) the Borrower's daily invoice register with respect to
sales for the preceding day, (iii) a collections report for the preceding day,
(iv) the Borrower's daily debit and credit adjustments journal, and (v) with any
supporting documentation reasonably requested by the Agent relating to the
foregoing. Each of the Borrowers will, immediately upon learning thereof, report
to the Agent all matters materially affecting the value, enforceability or
collectibility of any of the Collateral such as the reclamation, repossession or
return to the Borrower of goods and claims or disputes asserted by any Account
Debtor. In addition, each of the Borrowers shall notify the Agent of any
noncompliance in respect of the representations, warranties and covenants
contained in Section 9.3.
6.7 MATERIAL CONTRACTS. Each of the Borrowers will comply with the terms of
the Borrower's Material Contracts. Material Contracts shall include any contract
with any supplier, franchisor, vendor, dealer or distributor from which the
Borrower purchases Inventory and the sales of the Inventory so purchased
constitutes ten (10) per cent or more of the Borrower's sales.
6.8 COMPLIANCE WITH LAW. The Borrowers shall comply with all actions, rules,
regulations and orders of any Governmental Authority applicable to the
Collateral or any part thereof or to the operation of the businesses of the
Borrowers. The Borrowers may, however, contest or dispute any actions, rules,
regulations, orders and directions of a Governmental Authority in any reasonable
manner, provided the Agent is satisfied that the contest or dispute does not
affect the Agent's Liens or have a Material Adverse Effect. Upon the occurrence
and during the continuance of an Event of Default: (i) if any of the Accounts
includes a charge for any Tax, the Agent is hereby authorized (but in no event
obligated) in its discretion to pay the amount thereof to the Governmental
Authority for the account of the Borrowers and to charge the Borrowers' account
therefor; and, (ii) the Borrowers shall notify the Agent if any Accounts include
any Tax and, in the absence of such notice, the Agent shall have the right to
retain the full proceeds of such Accounts and shall not be liable for any taxes
that may be due from the Borrowers by reason of the sale and delivery creating
such Accounts.
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6.9 ACCESS. So long as amounts are owing under Obligations, the Agent:
A. May use any owned or leased lifts, hoists, trucks and other facilities
or equipment for han- dling or removing the Collateral; and,
B. Shall have, and is hereby granted, a right of ingress and egress to and
through any owned or leased property, including the Premises.
6.10 PROTECTION. At any time there shall be an Event of Default, the Agent
may, at any time, take such steps as the Agent deems necessary to protect the
Agent's interest in and to preserve the Collateral, including the hiring of
security guards or the placing of other security protection measures as the
Agent may deem appropriate. The Agent may elect to employ and maintain at the
Premises a custodian who shall have full authority to do all acts necessary to
protect the Agent's interest in the Collateral. The Agent may lease warehouse
facilities to which the Agent may move all or part of the Collateral. The
Borrowers agree to cooperate fully with all of the Agent's efforts to preserve
the Collateral and will take such actions necessary to preserve the Collateral
as the Agent may direct. All of the Agent's reasonable expenses of preserving
the Collateral, including any expenses relating to the bonding of a custodian,
shall be charged to the Borrowers' account and added to the Obligations. The
Agent shall not be responsible or liable for any shortage, discrepancy, damage,
loss or destruction of any part of the Collateral wherever the same may be
located and regardless of the cause thereof.
6.11 RIGHT TO RECEIVE. The Agent shall have the right to receive, endorse,
assign and/or deliver in the names of the Agent and the Borrowers, any and all
checks, drafts and other instruments for the payment of money relating to the
Accounts. The Borrowers waive notice of presentment, protest and of non-payment
of any instrument so endorsed. The Borrowers constitute the Agent or the Agent's
designee as Borrowers' attorney-in-fact with power to: (i) endorse Borrowers'
names upon any notes, acceptances, checks, drafts, money orders or other
evidences of payment or Collateral that may come into its possession; (ii) sign
Borrowers' names on any invoice or xxxx of lading relating to any Accounts,
drafts against Account Debtors, assignments and verifications of Accounts and
notices to Account Debtors; (iii) send verifications of Accounts to any Account
Debtor; (iv) upon the occurrence of an Event of Default, notify the U.S. Postal
Service to change the address for delivery of mail addressed to the Borrowers to
such address as the Agent may designate; and, (v) do all other acts and things
necessary to preserve, collect, or perfect the Agent's interest in the
Collateral and carry out this Agreement. All acts of said attorney or designee
are hereby ratified and approved and said attorney or designee shall not be
liable for any acts of omission or commission, for any error of judgment or for
any mistake of fact or law. This power of attorney is coupled with an interest
and is irrevocable until all of the Obligations are paid in full and this
Agreement and the Commitment is terminated.
ARTICLE VII
COVENANTS
7.1 AFFIRMATIVE COVENANTS. Until the fulfillment of all Obligations, unless
the Agent and the Lenders shall otherwise consent in writing, the Borrowers will
perform and comply with the following covenants:
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A. The Borrowers shall furnish to the Agent:
(1) As soon as possible, but in any event within one hundred twenty
(120) days after the end of each Fiscal Year, audited, consolidated
Financial Statements of the Borrowers and the Consolidated Subsidiaries
consisting of statements of income, stockholder's equity and cash flow
for such Fiscal Year and a balance sheet as of the end of such Fiscal
Year, setting forth, in each case, in comparative form, corresponding
figures from the immediately preceding annual audit, accompanied by
supporting schedules required by GAAP, all in reasonable detail and
satisfactory in scope to the Agent, as fairly presenting the financial
position of the Borrowers and the Consolidated Subsidiaries as of the
dates indicated in accordance with GAAP, together with an opinion
thereon, without material qualifications or exceptions certified by
independent certified public accountants selected by the Borrowers and
satisfactory to the Agent, and the consolidating Financial Statements
of each Consolidated Subsidiary;
(2) As soon as possible, but in any event within one hundred twenty
(120) days after the end of each Fiscal Year, the auditors' management
report, and promptly upon receipt thereof, each written report
submitted to the Borrowers by independent accountants made in any
annual, quarterly or special audit.
(3) Within thirty (30) days after the end of each calendar month, an
unaudited balance sheet as of the end of such calendar month and the
related statements of income, and stockholder's equity and setting
forth, the amounts for such calendar month and the Fiscal Year to date,
prepared in accordance with GAAP, and certified by the Financial
Officer of Invatec as fairly presenting the financial position of the
Borrowers as of the dates indicated, subject to changes resulting from
audit and normal year-end adjustment, and (i) commencing on September
30, 1997, and for each quarter-annual period thereafter until January
31, 1998, and monthly after such date, the Financial Statements shall
include statements of cash flows, and (ii) commencing on January 31,
1998, the Financial Statements shall set forth amounts for the
corresponding periods in the prior Fiscal Year, in comparative form;
(4) As soon as possible, but in any event within fifteen (15) days
after the end of each calendar month, a consolidated aging and listing
of all Accounts, Eligible Accounts and all accounts payable for such
month certified as being true and correct by the Financial Officer of
Invatec.
(5) Within fifteen (15) days after the end of each calendar month, an
Inventory Designation Report;
(6) On the Effective Date and within thirty (30) days after the end of
each calendar month, Invatec will provide to the Agent (i) a
Certificate of Compliance (with an attached Borrowing Base Certificate)
in the form of Exhibit 7.1.A.(6), signed by the Financial Officer of
Invatec certifying that no Events of Default have occurred and the
Borrowers are in compliance with the covenants set out in Section 7.2
(which annual Certificate of Compliance with respect to the calculation
of the covenants set out in Section 7.2 shall be signed by the
Borrowers' accountants), calculating the Borrowing Base and
demonstrating compliance as at the end of such month with the
Availability requirements, and (ii) together with such payment, if any,
as may be necessary to bring the Availability to zero;
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(7) Within thirty (30) days prior to the end of each Fiscal Year, a
summary of business plans and financial operation projections
(including, without limitation, with respect to Capital Expenditures)
for the Borrowers for the next Fiscal Year (including quarterly balance
sheets, statements of income and of cash flow) and annual projections
for the next following Fiscal Year prepared by management and in form,
substance and detail (including, without limitation, principal
assumptions) satisfactory to the Agent;
(8) As soon as practicable, copies of all reports, forms, filings,
documents and financial information submitted to any Governmental
Authority and/or the Borrowers' shareholders;
(9) As soon as possible, copies of the Federal income tax return and
all extension thereof of the Borrowers for the current Fiscal Year then
ended, certified as being true and correct by the Financial Officer of
Invatec; and,
(10) From time to time, such further information regarding the
business, affairs and financial condition of the Borrowers as the Agent
may reasonably request.
B. The Borrowers shall, promptly upon learning thereof: (i) inform the
Agent, in writing, of any material delay in the Borrowers' performance
of any Borrowers' obligations to any Account Debtor or of any assertion
of any claims, setoffs or counterclaims by any Account Debtor; and,
(ii) furnish to and inform the Agent of all material adverse
information relating to the financial condition of any Account Debtor.
C. The Borrowers shall comply with all Requirements of any Governmental
Authority, including, but expressly not limited to Environmental Laws
applicable to the Premises, any property owned by the Borrowers, or any
parts thereof, and the Occupational Safety and Health Act of 1970
("OSHA"), if the failure to be in compliance would have a Material
Adverse Effect.
D. Each Borrowers will, at all times, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect, all
Permits, franchises, patents, copyrights, trademarks and trade names
material to the conduct of their businesses.
E. The Borrowers shall act prudently and in accordance with customary
industry standards in managing or operating any Borrowers' assets,
properties, business and investments. The Borrowers shall keep in good
working order and condition, ordinary wear and tear excepted, all of
their assets and properties which are necessary to the conduct of their
businesses. The Borrowers shall maintain and operate their business in
the same general manner in which presently conducted and operated.
F. The Borrowers will maintain with financially sound, responsible and
reputable insurance companies insurance against such risks, and in such
amounts and with co-insurance and deductibles as are satisfactory to
the Agent and as otherwise are usually carried by owners of similar
businesses and properties in the same general areas in which a Borrower
operates, and at least in the amounts and types presently carried by
the Borrowers. All insurance covering tangible personal property
subject to Liens in favor of the Agent for the benefit of the Lenders
granted pursuant to the Collateral Documents shall provide that, in the
case of each separate loss, the full amount of insurance proceeds shall
be payable to the Agent and
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shall further provide for at least thirty (30) days prior written
notice to the Agent of the cancellation or substantial modification
thereof. The Borrowers shall cause the insurance policies or proper
certificates evidencing the same to be delivered to the Agent. If the
Borrowers shall fail to obtain insurance as herein provided, or to keep
the same in force, the Agent may obtain such insurance and pay the
premiums therefor and charge the Borrowers' accounts therefor, and such
expenses so paid shall be part of the Obligations.
G. Each Borrower will continue to be a corporation duly incorporated and
existing in good standing under the laws of the state of its
incorporation and will continue to be duly licensed or qualified in all
jurisdictions wherein the character of the property owned or leased by
it or the nature of the business transacted by it makes licensing or
qualification necessary, and the failure to do so would have a Material
Adverse Effect.
H. Each Borrower will promptly inform the Agent of the creation or
acquisition of any direct or indirect Subsidiary. The Borrowers shall
cause each (i) Subsidiary not in existence on the Effective Date (ii)
inactive Subsidiary existing on the Effective Date which becomes active
with the consent of the Lenders, to become a Borrower, and to execute
the Collateral Documents, as applicable, and cause the direct parent of
each such Subsidiary to pledge all of the capital stock of such
Subsidiary pursuant to a Security Agreement-Pledge in the form attached
hereto and cause each such Subsidiary to pledge its accounts receivable
and all other assets pursuant to the Collateral Documents.
I. The Borrowers shall pay and discharge all taxes, assessments and
governmental charges or levies including, but expressly not limited to,
Taxes, prior to the date on which penalties or liens attach thereto and
become of public record, except such Taxes, if any, as are being
contested in good faith and as to which adequate reserves have been
provided. The Borrowers shall pay all lawful claims for labor,
materials and supplies, unless such claims are being contested in good
faith, and which, if unpaid and in excess of $25,000.00 in the
aggregate, might become a Lien or charge on such Person's properties.
J. The Borrowers shall give the Agent prompt written notice of (i) any IRS
audit of any of the Borrowers, (ii) of the filing or commencement of
any action, suit, or administrative pro- ceeding against any of the
Borrowers, whether at law or in equity or by or before any Governmental
Authority, (iii) any Reportable Event, or (iv) violations of any
Requirement (any of which (a) is material and is brought by or on
behalf of any Person, or in which injunctive or other equitable relief
is sought, and (b) it is probable (within the meaning of Statement of
Financial Accounting Standards No. 5 promulgated by FASB) that there
will be an adverse determination and which, if adversely determined,
would (x) reasonably be expected to result in liability in an aggregate
amount of $25,000.00 or more, not reimburs- able by insurance, or (y)
materially impair the ability of such Person to perform its obliga-
tions under any of the Loan Documents to which it is a party.
K. The Borrowers will furnish to the Agent prompt notice of any
development in the business, affairs, financial condition or Material
Contracts of any of the Borrowers which has had or which is likely, in
the judgment of any Responsible Officer of the Borrowers, to have, a
Material Adverse Effect.
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L. The Borrowers will furnish to the Agent prompt notice of the issuance
by any Governmental Authority of any injunction, order, decision or
other restraint prohibiting, or having the effect of prohibiting, the
making of the Loans or occurrence of other Advances, or invalidating,
or having the effect of invalidating, any provision of the Loan
Documents, or the initiation of any litigation or similar proceeding
seeking any such injunction, order, decision or other restraint.
M. The Borrowers will maintain all operating accounts (other than accounts
maintained at other business locations provided that aggregate balances
in all such other accounts do not exceed $25,000.00 at any time
outstanding but no more than $10,000.00 in any one account) and cash
management arrangements with Chase or Texas Commerce.
N. The Borrowers will pay in full all reasonable and necessary expenses,
including legal expenses and attorney's fees, of the Agent or any of
the Lenders which have been or may be incurred by the Agent or any of
the Lenders in connection with the preparation of the Loan Documents,
the lending hereunder, the collection or enforcement of the Obligations
and the recording and filing and re-recording and re-filing of any such
document and the release of any of the Collateral.
O. Except for the filing of continuation statements and the making of
other filings by the Agent as secured party or assignee, at all times
take all actions necessary to maintain the Liens and security interests
provided for under or pursuant to this Agreement and the Collateral
Documents as valid and perfected first priority Liens on the Collateral
intended to be covered thereby (subject only to the Permitted Liens)
and supply all information to the Agent necessary for such maintenance.
P. The Borrowers will make full and timely payment of the Obligations
whether now existing or hereafter arising, and duly comply with all the
terms and covenants contained in this Agreement (including, without
limitation, the Borrowing limitations) and in each of the other Loan
Documents, all at the times and places and in the manner set forth
therein.
Q. The Borrowers shall execute and deliver to the Agent, for the benefit
of Agent and each of the Lenders, the Hazardous Materials
Indemnification Agreement in the form of Exhibit 7.1.Q.
7.2 FINANCIAL COVENANTS. Until the fulfillment of all Obligations unless the
Lenders shall otherwise consent in writing, Borrowers shall maintain the
following financial covenants.
A. The Borrowers (exclusive of Invatec) shall have on a combined basis,
and shall maintain a Net Worth of $10,600,000.00.
B. The Borrowers shall not have Net Loss for any consecutive two (2) month
period or Net Loss for any quarterly period during the term hereof.
C. The Borrowers shall not permit Availability to be less than zero at any
time.
7.3 OTHER COVENANTS. Until the fulfillment of all Obligations, unless the
Agent and the Lenders shall otherwise consent in writing, Borrowers will perform
and comply with the following covenants:
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A. The Borrowers will not create, incur, assume or suffer to exist
Indebtedness, except (i) the Indebtedness ("SCHEDULED INDEBTEDNESS")
described in Schedule 7.3.A, (ii) the Loans; (iii) current accounts
payable and other current obligations (other than for borrowed money)
arising out of transactions in the ordinary course of business; and
(iv) subject to Section 7.3.D, 7.3.E and Section 7.3.E, (a)
Indebtedness incurred in connection with the acquisition of Equipment
or other assets, or (b) Rentals.
B. The Borrowers will not incur, create, assume or permit to exist any
Lien on any of its property or assets (including the stock of any
direct or indirect Subsidiary), whether owned at the date hereof or
hereafter acquired, or assign or convey any rights to or security
interests in any future revenues, except for (i) the Liens ("SCHEDULED
LIENS") described in Schedule 7.3.B, and (ii) the Permitted Liens.
C. The Borrowers will not (i) pay or modify, amend or otherwise alter the
terms and provisions of any Subordinated Indebtedness, (ii) directly or
indirectly prepay, redeem, purchase or retire any Indebtedness other
than Indebtedness incurred hereunder and Scheduled Indebtedness (except
as otherwise permitted hereunder), (iii) execute a Guaranty (except in
favor of the Lenders), or (iv) otherwise in any manner directly or
indirectly become or be responsible for Indebtedness (including, but
not limited to, working capital maintenance and take or pay contracts)
of any other Person.
D. For each Fiscal Year, the Borrowers will not expend or enter into the
commitment to expend, whether by Capital Lease (but only with respect
to the obligations under the Capital Lease accruing in such Fiscal
Year) or Capital Expenditure, an amount in the aggregate exceeding
$400,000.00.
E. For each Fiscal Year, the Borrowers will not expend or enter into the
commitment to expend by Capital Lease an amount in the aggregate
exceeding $100,000.00.
F. The Borrowers will not (i) lend or advance any money, credit or
property to any Person, or (ii) make or have outstanding any
Investments in any Person, except Temporary Cash Investments and such
other "CASH EQUIVALENT" investments as the Lenders may, from time to
time, approve.
G. The Borrowers will not, and will not permit any Subsidiary to, (i)
declare or pay any Dividends, (ii) dissolve or liquidate, or (iii)
become a party of any merger or consolidation, or purchase, lease or
otherwise acquire all or substantially all of the assets or capital
stock of any Person.
H. None of the Borrowers will issue, sell or otherwise dispose of any
shares of its capital stock or other securities, or rights, warrants or
options to purchase or acquire any shares or securities.
I. None of the Borrowers will amend its organizational documents,
including but not limited to, Articles or Certificate of Incorporation
and bylaws.
J. None of the Borrowers will change its name, Fiscal Year, current tax
status or method of accounting except as required by GAAP. A Borrower
may change its name if the
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Borrowers have given the Agent sixty (60) days prior notice of such
name change and there shall have been taken such action as the Agent
deems necessary to continue the perfection of the Liens securing
payment of the Obligations.
K. None of the Borrowers will pay any management fees to or enter into any
transaction with any Affiliates, other than transactions in the
ordinary course of business and upon fair and reasonable terms not
materially less favorable than could be obtained in an arm's-length
transaction with a Person that was not an Affiliate.
L. None of the Borrowers will engage in any other line of business or
business venture, including, but expressly not limited to, any joint
ventures, partnerships or other ventures, other than those presently
engaged or those which are directly related thereto, or change any
method of operation or manner of doing business in any material
respect.
M. None of the Borrowers will (i) use proceeds of any Loan to acquire any
security in any transaction which is subject to ss.13 or ss.14 of the
Securities Exchange Act of 1934, including particularly (but without
limitation) ss.13(d) and ss.14(d) thereof, or (ii) permit the proceeds
of any Advance to be used for any purpose which is or could become a
violation of, or is inconsistent with, Regulation G, T, U or X of the
Board.
N. None of the Borrowers will sell, assign, convey, exchange, lease or
otherwise dispose of any of its properties, rights, assets or business,
whether now owned or hereafter acquired, except in the ordinary course
of business and for a fair consideration.
O. None of the Borrowers will enter into any arrangement, directly or
indirectly, with any Person whereby the Borrower shall sell or transfer
any property, real or personal, and used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property which the Borrowers intends to use for
substantially the same purpose or purposes as the property being sold
or transferred.
P. None of the Borrowers will sell, assign, discount, transfer, or
otherwise dispose of any Accounts, promissory notes, drafts or trade
acceptances or other rights to receive payment held by it, with or
without recourse, except (i) for the purpose of collection or
settlement in the ordinary course of business, or (ii) the sale of any
such accounts to the Agent or any of the Lenders.
7.4 ERISA COMPLIANCE. Borrowers shall, and shall cause each ERISA Affiliate
to:
A. At all times, make prompt payment of all contributions required under
all Employee Plans and required to meet the minimum funding standard
set forth in ERISA with respect to all Employee Plans;
B. With respect to any Pension Plan, not permit to exist any material
"ACCUMULATED FUNDING DEFICIENCY" (within the meaning of ss.302 of ERISA
and ss.412 of the Code), whether or not waived, with respect thereto;
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E. Not engage in any transaction in connection with which the Borrowers or
any ERISA Affiliate could be subject to either a material civil penalty
assessed pursuant to the provisions of ss.502 of ERISA or a material
tax imposed under the provisions of ss.4975 of the Code;
D. Not terminate any Pension Plan in a "DISTRESS TERMINATION" under
ss.4041 of ERISA, or take any other action which could result in a
material liability of the Borrowers or any ERISA Affiliate to the PBGC;
E. Not adopt an amendment to any Pension Plan requiring the provision of
security under ss.307 of ERISA or ss.40(a)(29) of the Code;
F. Within thirty (30) days after the filing thereof, furnish to the Agent
each annual report/return (Form 5500 Series), as well as all schedules
and attachments required to be filed with the Department of Labor
and/or the IRS pursuant to ERISA, and the regulations promulgated
thereunder, in connection with each Employee Plan for each Employee
Plan year;
G. Notify the Agent immediately of any fact, including, but not limited
to, any Reportable Event arising in connection with any Employee Plan,
which might constitute grounds for termination thereof by the PBGC or
for the appointment by the appropriate U.S. District Court of a trustee
to administer an Employee Plan, together with a statement, if requested
by the Agent, as to the reason therefor and the action, if any,
proposed to be taken with respect thereto; and,
H. Furnish to the Agent, upon request, such additional information
concerning any Employee Plan as may be requested.
7.5 INDEMNITY. EACH LOAN PARTY, JOINTLY AND SEVERALLY, INDEMNIFY AND SHALL
SAVE, AND HOLD THE AGENT AND THE LENDERS (INDIVIDUALLY, AN "INDEMNITEE" AND
COLLECTIVELY, THE "INDEMNITEES") FROM AND AGAINST THE FOLLOWING (EACH A
"CLAIM"): (I) ANY AND ALL CLAIMS, DEMANDS, ACTIONS, OR CAUSES OF ACTION THAT ARE
ASSERTED AGAINST ANY INDEMNITEE BY ANY PERSON IF THE CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION DIRECTLY OR INDIRECTLY RELATES TO A CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION THAT THE PERSON ASSERTS OR MAY ASSERT AGAINST A LOAN PARTY (II)
ANY AND ALL CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTION THAT ARE ASSERTED
AGAINST ANY INDEMNITEE IF THE CLAIM, DEMAND, ACTION OR CAUSE OF ACTION DIRECTLY
OR INDIRECTLY RELATES TO THE COMMITMENT, THE USE OF PROCEEDS OF THE LOANS, OR
THE RELATIONSHIP OF A LOAN PARTY AND THE AGENT OR ANY OF THE LENDERS UNDER THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED PURSUANT TO THIS AGREEMENT; (III) ANY
ADMINISTRATIVE OR INVESTIGATIVE PROCEEDING BY ANY GOVERNMENTAL AUTHORITY
DIRECTLY OR INDIRECTLY RELATED TO A CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
DESCRIBED IN CLAUSES (I) OR (II) ABOVE; AND, (IV) ANY AND ALL LIABILITIES,
LOSSES, REASONABLE AND NECESSARY COSTS OR EXPENSES (INCLUDING ATTORNEYS' FEES
AND DISBURSEMENTS) THAT ANY INDEMNITEE SUFFERS OR INCURS AS A RESULT OF ANY OF
THE FOREGOING. If any claim is asserted against any Indemnitee, the Indemnitee
shall promptly notify the Borrowers, but the failure to so promptly notify the
Borrowers shall not affect the Loan Parties' obligations under this Section
unless such failure materially prejudices the Loan Parties' right to participate
in the contest of the Claim. The obligations and liabilities of the Loan Parties
to any Indemnitee under this Section shall survive the expiration or termination
of this Agreement and the repayment of the Obligations.
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ARTICLE VIII
CONDITIONS PRECEDENT
8.1 INITIAL ADVANCES. The obligation of the Lenders to make any Advance on
the Loans is subject to the conditions precedent that, on or before the date of
the initial Advance, the Agent shall have received the following:
A. The Borrowers must evidence in a manner satisfactory to the Agent that
the principals of the Borrowers shall have funded not less than
$7,400,000.00 in equity contributions to the Borrowers.
B. A duly executed Notice of Borrowing.
C. Each of the Collateral Documents duly executed by the parties thereto.
Each document, including, without limitation, any Financing Statements,
required by the Collateral Documents, under law or requested by the
Agent to be filed, registered or recorded in order to create, in favor
of the Agent for the benefit of the Lenders, a perfected first priority
Lien on the Collateral described therein shall have been properly
filed, registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, the
Agent shall have received an acknowledgment copy, or other evidence
satisfactory to the Agent, of each such filing, registration or
recordation and satisfactory evi- dence of the payment of any necessary
fee, tax or expense relating thereto. The Agent shall have received the
possession of the certificates representing all of the Pledged Stock,
together with undated stock powers executed in blank.
D. Subordination Agreements executed by X. Xxxxx Xxxx and Xxxxx X. Xxxx in
the form of Exhibit 8.1.D.
E. The Landlord Agreements in the form of Exhibit 8.1.E, duly executed by
each landlord under on each Leasehold pursuant to which any Borrower
possesses any leasehold interest in real property on which any portion
of the Borrower's business is operated. All of the Leaseholds are set
out in Schedule 8.1.E. Notwithstanding the foregoing, if the Borrowers
have not obtained all Landlord Agreements on or before the Effective
Date, the condition will be waived as to the initial fundings of the
Loans, however, the Borrowers covenant to obtain the Landlord
Agreements within forty-five (45) days of the Effective Date. If,
within forty-five (45) days of the Effective Date, the Borrowers have
not obtained all Landlord Agreements, there will be established a
Reserve equal to the rental which will accrue over a ninety (90) day
period for each of the Leaseholds for which a Landlord Agreement has
not been obtained.
F. The duly executed Lockbox Agreement.
G. The duly executed Hazardous Materials Indemnification Agreement.
H. Favorable opinions of legal counsel for Borrowers in form and substance
satisfactory to the Agent subject to reasonable assumptions,
qualifications and limitations.
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I. An Officers Certificate in the form of Exhibit 8.1.1 certified by the
President and the Secretary of Invatec, stating that after due
investigation and review of matters pertinent to the subject matter of
such certificate, (i) no litigation is pending or threatened which
would have a Material Adverse Effect except as specifically disclosed
in the Financial Statements of Borrowers; (ii) no investigation or
proceeding before any Governmental Authority is con- tinuing or
threatened against such Borrower, or any officer, director or Affiliate
of such Borrower with respect to this Agreement, the Documents or any
of the transactions contemplated hereby or thereby which could have a
Material Adverse Effect; and, (iii) to the best knowledge and belief of
such Persons, after due investigation and review of matters pertinent
to the subject matter of such certificate (a) all of the
representations and warranties contained herein and the other Loan
Documents are true and correct as of the date of the Advance, and (b)
no event has occurred and is continuing, or would result from the Ad-
xxxxx, which constitutes a Default or an Event of Default. The Agent
shall also receive a summary and analysis of all litigation in which
any Borrower is involved, in form and substance acceptable to the
Agent, and a statement to the effect that no litigation in which a
Borrower is involved would, in the event of an adverse determination,
have a Material Adverse Effect.
J. Resolutions of each of the Borrowers approving the execution, delivery
and performance of this Agreement, the other Loan Documents and the
transactions contemplated herein and therein, duly adopted by its board
of directors and accompanied by a certificate of the Secretary of each
Borrower stating that the resolutions are true and correct, have not
been altered or repealed and are in full force and effect. The
resolutions shall certify the name of each officer authorized to sign
the Loan Documents to be executed by the Borrower and the other
documents or certificates to be delivered by the Borrower pursuant to
the Loan Doc- uments, together with the true signature of each such
officer. The Agent may conclusively rely on each certificate until the
Agent receives a further certificate of the Secretary canceling or
amending the prior certificate and submitting the name and signature of
each officer named in such further certificate.
K. Certificates of Corporate Existence issued by the Secretary of State of
each state of incorporation for each respective Borrower and a
Certificate of Account Status or like certificates for each Borrower
and Certificates of Qualification, Certificates of Authorization or
other similar instruments for each Borrower, issued by the Secretary of
State or other appropriate official of each of the states wherein a
Borrower is qualified to do business, each dated within ten (10) days
of the Effective Date.
L. The Agent shall have received certified copies of requests for copies
or information on Form UCC-11 or certificates satisfactory to the
Lenders of a UCC reporting service, listing all effective financing
statements which name any of the Borrowers (including the assumed names
under which any of the Borrowers may or has conducted business) as
debtor and which are filed in the appropriate offices in any state in
which any of the Borrowers have operating offices, together with copies
of such financing statements. With respect to any Liens which are not
Permitted Liens, the Agent shall have received termination statements
in form and substance satisfactory to it.
M. Copies of the Articles of Incorporation of each Borrower and all
amendments thereto, certified by the Secretary of State of the State of
incorporation for the Borrower, and dated
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within ten days of the Effective Date, and a copy of the bylaws of each
Borrower, and all amendments thereto, certified by the Secretary of the
Borrower, as being true, correct and complete as of the date of such
certification.
N. The Agent shall have received and determined to be in form and
substance satisfactory to the Agent:
(1) The most recent, dated not earlier than forty-five (45) days
prior to the Effective Date, schedule and aging of accounts receivable
of the Borrowers;
(2) Evidence that the Borrowers have not less than $3,200,000.00
of Availability on the Effective Date;
(3) A copy of a field examination of the Borrowers' books and
records and the results of such field examination shall be satisfactory
to the Agent in all respects;
(4) The Financial Statements described in Section 9.1.D, together
with management letters received for the last Fiscal Year;
(5) Evidence that the Transactions are in compliance with all
Requirements;
(6) Evidence that all requisite third party consents (including,
without limitation, consents with respect to the Borrowers) to the
Transactions have been received;
(7) Copies of all Material Contracts between any of the Borrowers
and its major customers and suppliers and all material leases and
franchise agreements of the Borrowers;
(8) Evidence that the Borrowers have cash management and
management information systems satisfactory to the Agent;
(9) Evidence that there has occurred no event which would have a
Material Adverse Effect on the business, assets, operations or
financial condition of the Borrowers since the date of the last
Financial Statements provided to the Agent; and,
(10) Evidence that there are no actions, suits or proceedings at
law or in equity or by or before any Governmental Authority now pending
or threatened against or affecting any of the Borrowers or any of
respective Borrower's business, assets or rights which involve any of
the Transactions.
O. The Agent shall have had the opportunity, if the Agent so chooses, to
examine the books of account and other records and files of the
Borrowers and to make copies thereof, and to conduct a pre-closing
field examination which shall include, without limitation, verification
of Eligible Accounts, payment of payroll taxes and accounts payable and
formulation of an opening Borrowing Base, and the results of such
examination and audit shall have been satisfactory to the Agent in all
respects.
P. The corporate structure and capitalization of each of the Borrowers
shall be satisfactory to the Lenders in all respects.
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Q. All legal matters in connection with the Transactions shall be
satisfactory to the Agent, the Lenders and their respective counsel in
their sole discretion.
R. Invatec, for and on behalf of the Borrowers, shall have executed and
delivered to the Agent a disbursement authorization letter with respect
to the disbursement of the proceeds of the Advance made on the
Effective Date, in form and substance satisfactory to the Agent.
S. The Agent and the Lenders shall have received from the Borrowers, and
its counsel where appropriate, a letter stating that there are no
material violations of ERISA, OSHA or Environmental Laws which would
have a Material Adverse Effect.
T. The Agent and the Lenders shall have received from the Borrowers and
shall be satisfied with management prepared income statements, balance
sheets and cash flow projections for the Borrowers for Fiscal Years
1997, 1998, and 1999, including a pro forma balance sheet as of the
Effective Date.
U. Evidence satisfactory to the Agent that the insurance policies required
by this Agreement and the Collateral Documents are in force and effect,
the originals of all such policies, or copies of the policies with
certificates of insurance, where required, and receipts showing that
the premiums therefor have been paid.
V. The Borrowers shall have paid in full (i) all fees owed to the Agent
and the Lenders by the Borrowers under this Agreement, and, (ii) all
legal fees charged, and all costs and expenses incurred, by legal
counsel to the Agent through the Effective Date in connection with the
Transactions.
W. Upon the fulfillment of all applicable conditions set forth herein, the
Agent will, as soon as practicable, but in no event later than 5:00
p.m. (New York, New York time) on the first Business Day after the
Effective Date, fund the proceeds of the Advance to Union Bank of
California to payoff and discharge Indebtedness of Steam Supply secured
by Liens on the Collateral, and upon receipt of and such other
instruments as the Agent shall require.
8.2 SUBSEQUENT ADVANCES. The obligation of any Lender to make any subsequent
Advance under this Agreement shall be subject to the following additional
conditions precedent:
A. As of the date of the making of such Advance, there shall not exist any
Default or Event of Default.
B. Borrowers shall have performed and complied with all agreements and
conditions contained herein and in each of the Loan Documents which are
required to be performed or complied with before or on the date of such
Advance.
C. As of the date of making such Advance, no change that would cause a
Material Adverse Effect shall have occurred.
D. In the case of any Borrowing, the Agent shall have received an
appropriate Notice of Borrowing dated as of the date of a Borrowing
signed by a Responsible Officer of Borrowers. All of the statements
contained in such Notice of Borrowing shall be true and correct, and
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such Notice of Borrowing shall contain a certification by such officer
that, as of the date thereof, (i) all of the representations and
warranties of Borrowers contained in this Agreement and each of the
Loan Documents executed by Borrowers are true and correct, (ii) no
event has occurred and is continuing, or would result from the
Borrowing, which constitutes a Default or an Event of Default, and
(iii) such other facts as Lenders may request.
E. The representations and warranties contained in each of the Loan
Documents shall be true in all material respects on the date of making
of such Advance, the same force and effect as though made on and as of
that date.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
9.1 REPRESENTATIONS AND WARRANTIES CONCERNING THE BORROWERS. The Borrowers
represent and warrant to the Agent and each of the Lenders the following matters
concerning the Borrowers.
A. Each Borrower is a corporation duly incorporated and existing in good
standing under the laws of the State shown in its Certificate of
Resolution. Each Borrower is duly licensed or qualified in all
jurisdictions wherein the character of the property owned or leased by
it or the nature of the business transacted by it makes licensing or
qualification necessary by foreign corporations and where failure to
become so licensed or qualified would have a Material Adverse Effect.
B. Each Borrower has the corporate power and requisite authority to
execute, deliver and perform the Loan Documents to be executed by it.
The execution, delivery and perfor- xxxxx by each Borrower of this
Agreement and each of the other Loan Documents to which it is a party,
the Borrowing hereunder by the Borrower, the execution and delivery by
the Borrower of the Note, the grant of security interests in the
Collateral created by the Collateral Documents and the performance by
the Borrower of the Obligations thereunder (collectively, the
"TRANSACTIONS") have been duly authorized by all necessary corporate
action. Such actions will not (i) violate any provision of law, the
Borrower's Articles of Incorporation or bylaws, or (ii) result in the
breach of or constitute a default under other agreement or instrument
to which the Borrower is a party. No consent of the Borrower's
shareholders or any holder of Indebtedness of the Borrower is required
as a condition to the validity of this Agreement.
C. The Loan Documents, when duly executed and delivered in accordance with
this Agreement, will constitute legal, valid and binding obligations of
each Borrower in accordance with their respective terms.
D. Each of the Borrowers has furnished to the Agent, (i) current fiscal
year end Financial Statements, including a balance sheet and an income
and surplus statement, and related statements of retained earnings and
changes in financial condition, and current interim, year-to-date
balance sheet and the income and surplus statements and related
statements of retained earnings and changes in financial condition. The
Financial Statements are true and correct and have been prepared in
accordance with GAAP throughout the periods involved. The balance
sheets fairly present the financial condition of the Borrower as of the
dates
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thereof, and the income and surplus statements fairly present the
results of the operations of the Borrower for the periods indicated.
There have been no changes in the condition, financial or otherwise, of
any Borrower since the dates of such Financial Statements which would
have a Material Adverse Effect.
E. Except as disclosed in the Financial Statements referenced in Section
9.1.D, none of the Borrowers has any (i) Investment in any other
Person, or (ii) agreements in effect providing for or relating to
extensions of credit in respect of which it is or may become directly
or contingently obligated.
F. There is no material fact that Borrowers have failed to disclose to the
Agent or the Lenders which could have a Material Adverse Effect.
Neither the Financial Statements referenced in Section 9.1.D, nor any
certificate or statement delivered herewith or heretofore by Borrowers
to the Agent in connection with negotiations of the Loan Documents,
contains any untrue statement of a material fact or omits to state any
material fact necessary to keep the statements contained herein or
therein from being misleading.
G. The Borrowers have good title to the assets pledged or given as
Collateral to secure the Loans, free and clear of all Liens except the
Permitted Liens. None of the Borrowers is aware of any reason why each
of the Collateral Documents to which it is a party would not create and
grant to the Agent, for the benefit of the Lenders, a legal, valid and
perfected first priority security interest in the Collateral identified
therein, subject to the Permitted Liens.
H. Each Borrower has good and marketable title to, or valid leasehold
interest in, all of its respective properties and assets shown on the
most recent balance sheet referred to in Section 9.1.D and all assets
and properties acquired since the date of such balance sheet, except
for (i) such properties as are no longer used or useful in the conduct
of its business or as have been disposed of in the ordinary course of
business, and (ii) minor defects in title that do not interfere with
the ability of the Borrower to conduct its business as now conducted.
All such assets and properties are free and clear of all Liens other
than Permitted Liens.
I. Each Borrower has complied in all material respects with all
obligations under all Leaseholds to which it is a party and under which
it is in occupancy, except for the failure of the Borrower to obtain
the consent of all of the owners of the Premises to the transfer of the
Leaseholds or where noncompliance does not affect the Borrower's use or
occupancy, and all such leases are in full force and effect and the
Borrower enjoys peaceful and undisturbed possession under all such
leases.
J. Each Borrower owns or controls or has the right to use all material
trademarks, trademark rights, trade names, trade name rights,
copyrights, patents, patent rights and licenses which are necessary for
the conduct of its business. No Borrower is infringing upon or
otherwise acting adversely to any of such trademarks, trademark rights,
trade names, trade name rights, copyrights, patent rights or licenses
owned by any other Person or Persons. There is no claim or action by
any such other Person pending, or to the knowledge of any Re- sponsible
Officer of any of the Borrowers, threatened, against any of the
Borrowers with respect to any of the rights or property referred to in
this Section.
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K. Invatec is the sole shareholder of Puget and Benicia. Puget is the sole
shareholder of Steam and Xxxxxxxxxx. No Borrower owns any other
Subsidiary. The sole shareholders of Invatec are set out in Schedule
9.1.K, which sets out the authorized and the issued capital stock of
Invatec. There are no outstanding warrants or options to purchase any
of the capital stock of any of Borrowers. All outstanding capital stock
of each Borrower has been validly issued, is fully paid and
non-assessable and is owned by the shareholder free and clear of all
Liens, except for the Liens in favor of the Lenders.
L. Each of the Borrowers is and, after consummation of this Agreement and
after giving effect to all Indebtedness incurred and the Liens in
connection herewith, will be Solvent.
M. Except as disclosed in writing to the Agent and the Lenders, no
Borrower is a party to a transaction with any Affiliate. All such
transactions are in the ordinary course of business and upon fair and
reasonable terms not materially less favorable than could be obtained
in an arm's-length transaction with a Person that was not an Affiliate.
N. None of the Borrowers is in default in any material respect under any
contract, lease, loan agreement, indenture, mortgage, security
agreement or other material agreement or obligation to which the
Borrower is a party or by which any of the Borrower's property is bound
except for the failure of the Borrower to obtain the consent of all of
the owners of the Premises to the transfer of the Leaseholds.
O. Neither the business nor the property of any Borrower are, affected by
any fire, explosion, accident, strike, lockout or other labor dispute,
storm, hail, earthquake, embargo, act of God or other casualty (whether
or not covered by insurance), which could have a Material Adverse
Effect.
P. The proceeds of the Loans will be used by the Borrowers solely for the
purposes specified herein. None of such proceeds will be used for the
purpose of purchasing or carrying any "MARGIN STOCK" as defined in
Regulation U, Regulation X, or Regulation G, or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to
purchase or carry margin stock or for any other purpose which might
constitute this transaction a "PURPOSE CREDIT" within the meaning of
such Regulation U, Regulation X, or Regulation G. No Borrower is
engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock. Neither any of the Borrowers nor
any Person acting on behalf of any Borrower has taken or will take any
action which might cause the Note or any of the other Loan Documents,
including this Agreement, to violate Regulation U, Regulation X, or
Regulation G or any other regulations of the Board or to violatess.8 of
the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may
hereinafter be in effect. No Borrower owns margin stock except for that
described in the Financial Statements referred to in Section 9.1.D and,
as of the Effective Date, the aggregate value of all margin stock owned
by any Borrower does not exceed twenty-five (25) per cent of the value
of all of the Borrower's assets. If requested by any Lender, each
Borrower shall furnish to such Lender a statement on Federal Reserve
Form U-1 referred to in Regulation U.
Q. No Borrower has during the preceding five (5) years, been known as or
used any fictitious, assumed or trade names except for the assumed
names enumerated in Schedule 9.1.Q. The
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principal office, chief executive office and principal place of
business of each Borrower is at the address set out in the Security
Agreement executed by the Borrower. Each Borrower maintains its
principal records and books at such address.
R. Each Borrower possesses all licenses, permits, approvals and consents,
including, without limitation, all environmental, health and safety
licenses and permits, approvals and consents (collectively, the
"PERMITS") of all Governmental Authority as required to conduct its
business. Each such Permit is and will be in full force and effect.
Each Borrower is in compliance in all material respects with all
Permits, and to its knowledge no event, including, without limitation,
any violation of any law, rule or regulation, has occurred which allows
the revocation or termination of any Permit or any restriction thereon.
S. All employment agreements, compensation agreements or management
agreements of any of the Borrowers is terminable with not more than
thirty (30) days notice.
9.2 REGULATORY MATTERS. Borrowers represent and warrant that as of the
Effective Date, no Regulatory Defects exist, and specifically the following
matters.
A. No Borrower or any Person having "CONTROL" (as that term is defined in
12 U.S.C. ss.375(b)(5) or in regulations promulgated pursuant thereto)
of any Borrower, is an "EXECUTIVE OFFICER", "DIRECTOR", or "PRINCIPAL
SHAREHOLDER" (as those terms are defined in 12 U.S.C.ss.375(b) or in
regulations promulgated pursuant thereto) of any of the Lenders, of a
bank holding company of which any of the Lenders is a subsidiary, or of
any subsidiary of a bank holding company of which any of the Lenders is
a subsidiary, or of any bank at which any of the Lenders maintains a
"CORRESPONDENT ACCOUNT" (as such term is defined in such statute or
regulations), or of any bank which maintains a correspondent account
with any of the Lenders.
B. Except as disclosed in the Financial Statements of the Borrowers and
the summary and analysis of litigation in which the Borrowers are
involved, there are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to
the knowledge of any Responsible Officer of any of the Borrowers
threatened against or affecting any Borrower or the business, assets or
rights of any of the Borrowers (i) which involve any of the
Transactions, or (ii) as to which it is probable (within the meaning of
Statement of Financial Accounting Standards No. 5 promulgated by FASB)
that there will be an adverse determination and which, if adversely
determined, would, individually or in the aggregate, materially impair
the ability of any Borrower to conduct business substantially as now
conducted, or have a Material Adverse Effect.
C. The Borrowers have filed all U.S. tax returns and all state and foreign
tax returns which are required to be filed. The returns properly
reflect the U.S. income tax, foreign tax and/or state taxes of each
Borrower for the period covered thereby. The Borrowers have paid, or
made provisions for the payment of, all Taxes which have become due
pursuant to the re- turns or pursuant to any assessment received by the
Borrower, except such Taxes, if any, as are being contested in good
faith and as to which, adequate cash reserves have been provided. No
Federal income tax returns of any Borrower have been audited by the
IRS. None of the Borrowers has, as of the Effective Date, requested or
been granted any
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extension of time to file any Federal, state, local or foreign tax
return. None of the Borrowers is a party to or has any obligation under
any tax sharing agreement.
D. (i) No Reportable Event has occurred and is continuing with respect to
any Employee Plan; (ii) PBGC has not instituted proceedings to
terminate any Employee Plan; (iii) neither the Borrowers, any ERISA
Affiliate, any member of the Controlled Group, nor any duly-ap- pointed
administrator of an Employee Plan has (a) incurred any liability to
PBGC with respect to any Employee Plan other than for premiums not yet
due or payable, or (b) insti- tuted or intends to institute proceedings
to terminate any Employee Plan underss.4041 or ss.4041A of ERISA or
withdraw from any Multi-Employer Plan (as that term is defined in
ss.3(37) of ERISA); and, (iv) each Employee Plan has been maintained
and funded in all material respects in accordance with its terms and
with all provisions of ERISA applicable thereto.
E. No Borrower is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940, the Interstate Commerce Act (as any of the preceding acts have
been amended), or any other law (other than Regulation X) which
regulates the incurring by Borrowers of Indebtedness, including but not
limited to laws relating to common contract carriers or the sale of
electricity, gas, steam, water, or other public utility services.
F. The Borrowers have complied with, and will continue to comply with, the
provisions of the Fair Labor Standards Act of 1938, 29 U.S.C. ss.ss.200
et.seq., as amended from time to time (the "FLSA"), including
specifically, but without limitation, 29 U.S.C. ss.215(a). This
representation and warranty, and each re-confirmation thereof, shall
constitute assurance from Borrowers, given as of the Effective Date and
as of the date of each re-confirmation, that Borrowers have complied
with the requirements of the FLSA, in general, and 29 U.S.C.
ss.215(a)(1), thereof, in particular.
G. Except as disclosed to the Lenders in writing, the Borrowers are
compliance with all laws, rules, regulations, orders and decrees which
are applicable to the Borrowers or their properties.
H. None of the Borrowers has been accused of being in violation of Title
IX, of the Organized Crime Control Act of 1970, entitled "RACKETEER
INFLUENCED AND CORRUPT ORGANIZATIONS" (RICO), 18 U.S.C. ss.ss.1961
et.seq.
I. The operations of the Borrowers comply in all material respects with
all applicable Environ- mental Laws (except as disclosed in writing to
the Lenders) and with OSHA. The Borrowers and all of Borrowers' present
facilities or operations, as well as, to the knowl- edge of the
Borrowers, Borrowers' past facilities or operations, are not subject to
any judicial or administrative proceeding or any outstanding written
order or agreement with any Governmental Authority or private party
respecting (i) Environmental Laws, (ii) any remedial work (except as
disclosed in writing to the Lenders), or (iii) any environmental claims
arising from the release of Hazardous Materials into the environment.
To the best of the knowledge of the Borrowers, none of Borrowers'
operations is the subject of any Federal or state investigation
evaluating whether any remedial work is needed to respond to a release
of any Hazardous Materials into the environment in violation of
Environmental
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Laws. Borrowers have not filed any notice under Enviromental Laws
indicating past or present treatment, storage, or disposal of Hazardous
Materials or reporting a spill or release of Hazardous Materials into
the environment in violation of Environmental Laws. To the best of the
knowledge of the Borrowers, Borrowers do not have any contingent
liability in connection with any release of any Hazardous Materials and
none of Borrowers' operations involve the generation, transportation,
treatment or disposal of Hazardous Materials.
9.3 REPRESENTATIONS REGARDING ACCOUNTS. The Borrowers make the following
representations and warranties which shall be deemed to be incorporated by
reference in each Notice of Borrowing and shall be deemed repeated and confirmed
with respect to each item of the Accounts as it is created or otherwise acquired
by the Borrowers.
A. Each Account Debtor named in an Eligible Account or on an invoice is,
to the best of Borrowers' knowledge, Solvent and will continue to be
fully able to pay in full when due all Accounts on which the Account
Debtor is obligated in full when due.
B. Each Eligible Account shall be a good and valid account representing an
undisputed bona fide indebtedness incurred or an amount indisputably
owed by the Account Debtor therein named, for a fixed sum as set forth
in the invoice relating thereto with respect to an absolute sale and
delivery upon the specified terms of goods sold by the Borrowers, or
work, labor and/or services theretofore rendered by the Borrowers.
C. No Eligible Account is or shall be subject to any defense, setoff,
counterclaim, discount or allowances except as may be stated in the
copy of the invoice delivered to the Agent.
D. No note, trade acceptance, draft or other instrument or chattel paper
has been or will be received with respect to merchandise giving rise to
any Eligible Account unless the same is assigned and delivered to the
Agent.
E. There has been no material change in credit criteria or collection
policies concerning Accounts of the Borrowers since December 31, 1996.
F. A Borrowers shall be the sole owner, free and clear of all Liens except
in favor of the Agent or otherwise permitted hereunder, of and fully
authorized to sell, transfer, pledge and/or grant a security interest
in each and every item of Collateral owned by it;
G. To the best of Borrowers' knowledge, none of the transactions
underlying or giving rise to any Eligible Accounts shall violate any
applicable state or federal laws or regulations, and all documents
relating to any Accounts shall be legally sufficient under such laws or
regulations and shall be legally enforceable in accordance with their
terms, subject, as to enforceability, to the effect of applicable
Debtor Laws.
H. All documents and agreements relating to Eligible Accounts shall be
true and correct and in all respects what they purport to be.
I. To the best of Borrowers' knowledge, all signatures and endorsements
that appear on all documents and agreements relating to Eligible
Accounts shall be genuine and all signatories and endorsers with
respect thereto shall have full capacity to contract.
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J. Borrowers shall maintain books and records pertaining to the Accounts
in such detail, form and scope as the Agent shall require.
K. Borrowers will immediately notify the Agent if any Accounts arise out
of contracts with any Governmental Authority, and will execute any
instruments and take any steps required by the Agent in order that all
monies due or to become due under any such contract shall be assigned
to the Agent and notice thereof given to the Governmental Authority
under the Assignment of Claims Act.
L. Borrowers shall not redate any invoice or sale or make sales on
extended dating beyond that customary in the industry
9.4 REPRESENTATIONS REGARDING INVENTORY. The Borrowers make the following
representations and warranties regarding the Inventory which shall be deemed to
be incorporated by reference in each Notice of Borrowing and shall be deemed
repeated and confirmed with respect to each item of Inventory as it is acquired
by Borrowers.
A. No part of the Inventory is subject to any Lien or security interest
whatsoever except for the security interest granted to the Agent in the
Loan Documents.
B. All Inventory is located on the Premises.
C. Except as promptly disclosed to the Agent from time to time in writing,
all Inventory shall be of good merchantable quality, free from any
defects which would affect the market value of the Inventory.
D. Borrowers will, immediately upon learning thereof, report to the Agent
any material loss or destruction of, or substantial damage to, any of
the Inventory, and any other matters affecting the value of the
Inventory.
E. Borrowers shall conduct a physical count of the Inventory at such
intervals as the Agent may request and promptly supply the Agent with a
copy of such counts accompanied by a report of the value (based on the
lower of cost {on a FIFO basis} or market value) of such Inventory.
9.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties by Borrowers shall survive delivery of the Loan Documents and the
making of the Loans. Any investigation at any time made by or on behalf of the
Agent or any of the Lenders shall not diminish the Agent's or any Lender's right
to rely on the representations and warranties made by Borrowers.
ARTICLE X
DEFAULTS AND REMEDIES
10.1 EVENTS OF DEFAULT. The Borrowers shall be in Default hereunder if any
one of the following shall occur:
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A. If any installment of principal on any of the Note shall not be paid
when and as due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or by acceleration thereof or
otherwise;
B. If any installment of interest on the Note, any fee or any other
amounts payable hereunder, or any other Loan Document or in connection
with any Advance or the Transactions shall not be paid when and as due
and payable, or if there shall occur a failure to pay any Obligations
owed to the Lenders when and as the same shall become due and payable;
C. If there be a termination of all or any portion of any Material Contract.
D. If any representation, statement, warranty or certification made by any
Loan Party in the Loan Documents, or furnished to the Agent or any of
the Lenders in connection with the Loans, shall prove to have been
incorrect in any material respect at the time of making or issuance
thereof.
E. If there shall occur any one of the following events (an "EVENT OF
DEFAULT"), and if the event can be cured by affirmative action on the
part of Borrowers but shall continue uncured after five (5) days from
the earlier to occur of (i) the date such event becomes known to a Loan
Party, or (ii) the date the Agent shall have given notice to Borrowers
that such event has occurred; provided, however, the Agent shall not be
required to give notice of any such failure or event; provided,
further, if an Event of Default cannot be cured within time above
specified because of causes beyond Borrowers' control, Borrowers must
timely commence and continue the curing of the Event of Default with
due diligence to completion:
(1) If the Borrowers shall fail to comply with any of the covenants and
agreements set forth in Section 7.1.A.(3) or Section 7.1.A.(7); and/or,
(2) Both the following events shall occur: (i) Either (a) process shall
have been instituted to terminate, or a notice of termination shall
have been filed with respect to, any Employee Plan (other than a
Multi-Employer Plan as that term is defined in ss.3(37) of ERISA) by
Borrowers, any ERISA Affiliate, any Subsidiary, any member of the
Controlled Group, PBGC or any representative of any thereof, or any
such Employee Plan shall be terminated in any such case under ss.4041
or ss.4042 of ERISA, or (b) a Reportable Event, the occurrence of which
would cause the imposition of a lien under ss.4068 of ERISA, shall have
occurred with respect to any Employee Plan (other than a Multi-Employer
Plan as that term is defined in ss.3(37) of ERISA) and be continuing
for a period of sixty (60) days; and, (ii) the sum of the estimated
liability to PBGC under ss.4062 of ERISA and the currently payable
obligations of Borrowers or any ERISA Affiliate to fund liabilities (in
excess of amounts required to be paid to satisfy the minimum funding
standard of ss.412 of the Code) under the Employee Plan or Employee
Plans subject to such event shall exceed ten (10) per cent of Tangible
Net Worth at such time; and/or,
(3) Any or all of the following events shall occur with respect to any
Multi-Employer Plan (as that term is defined in ss.3(37) of ERISA) to
which Borrowers or any ERISA Affiliate contributes or contributed on
behalf of its employees: (i) Borrowers or any ERISA Affiliate incurs a
withdrawal liability under ss.4201 of ERISA; (ii) any such plan is "IN
REORGANIZATION" as that term is defined in ss.4241 of ERISA; or, (iii)
any such Employee Plan
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is terminated under ss.4041A of ERISA and the Agent determines in good
faith that the aggregate liability likely to be incurred by Borrowers
or any ERISA Affiliate, as a result of all or any of the events
specified in subsections (i), (ii) and (iii) above occurring, shall
have a Material Adverse Effect.
F. If there shall occur any change in the condition (financial or
otherwise) of the Borrowers which, in the opinion of the Agent or the
Lenders, has a Material Adverse Effect.
G. If any of the Loan Documents shall, for any reason, (i) cease to be, or
shall be asserted by the Borrowers not to be, legal, valid and binding
agreements enforceable against the Borrowers executing the same in
accordance with the respective terms thereof, (ii) in any manner be
terminated or become or be declared ineffective or inoperative, or
(iii) in any manner whatsoever cease to give or provide the Liens,
security interests, rights, titles, interests, remedies, powers or
privileges intended to be created thereby.
H. If there shall occur a failure by the Borrowers in the observance or
performance of any other provision of the Loan Documents. The
provisions of this Agreement shall control in the event that any
provision of any other Loan Document is in conflict with the provisions
of any other instrument executed pursuant hereto and all of such
provisions in such other instruments shall be deemed to be cumulative
of the provisions hereof to the extent such provisions are not
inconsistent herewith.
I. If there shall occur a failure beyond any period of grace, if any, by
the Borrowers in the payment, when due, of (i) the interest on or the
principal of any Indebtedness in excess of $10,000.00, other than
accounts payable incurred in the ordinary course of business, or (ii)
any other Indebtedness and if the effect of any such default shall be
to accelerate, or to permit the holder or obligee of any such
Indebtedness, at its option to accelerate, the maturity of such
Indebtedness.
J. If a judgment (not reimbursed by insurance) or decree for the payment
of money, a fine or penalty which when taken together with all other
such judgments, decrees, fines and penalties shall exceed $10,000.00
shall be rendered by a court or other tribunal against a Loan Party,
and (i) shall remain undischarged or un-bonded for a period of thirty
(30) consecutive days during which the execution of such judgment,
decree, fine or penalty shall not have been stayed effectively, or (ii)
any judgment creditor or other Person shall legally commence actions to
collect on or enforce such judgment, decree, fine or penalty.
K. If there shall be any Change of Control of any of the Borrowers.
L. If a Lien in excess of $10,000.00 arising from unpaid Taxes shall be
filed against any of the Borrowers' properties or assets.
M. If any Borrower shall:
(1) Apply for, consent to or acquiesce in the appointment of a
receiver, trustee or liquidator of such Person, or of such Person's
property; and/or,
(2) Admit in writing such Person's inability to pay debts as they
mature; and/or,
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(3) Make a general assignment for the benefit of creditors; and/or,
(4) Be adjudicated to be bankrupt or insolvent by any court having
jurisdiction; and/or,
(5) File a voluntary petition in bankruptcy or a petition or answer
seeking reorganization, composition, readjustment, an arrangement or
similar relief with creditors under any present or future Debtor Laws
or file an answer admitting the material allegations of a petition
filed against such Person in bankruptcy, reorganization or insolvency
proceeding, or corporate action shall be taken for the purpose of
effecting any of the foregoing; and/or,
(6) Have a receiver or trustee or assignee in bankruptcy or insolvency
appointed for such Person or such Person's property without such
Person's application or consent.
N. If an involuntary petition or complaint shall be filed against any of
the Borrowers seeking bankruptcy or reorganization of such Person or
the appointment of a receiver, custodian, trustee, intervenor or
liquidator of such Person, or of all or substantially all of such Per-
son's assets, and such petition or complaint shall not have been
dismissed within thirty (30) days of the filing thereof; or, if an
order, order for relief, judgment or decree shall be entered by any
court of competent jurisdiction or other competent authority approving
a petition or complaint seeking reorganization of any of the Borrowers
or appointing a receiver, custodian, trustee, intervenor or liquidator
of such Person, or of all or substantially all of such Person's assets.
10.2 REMEDIES. Upon the occurrence of an Event of Default, the obligation of
the Lenders to extend Advances to the Borrowers pursuant hereto shall
immediately terminate. If a Default shall occur, the Lenders may, at their
option, without notice to the Borrowers, declare the principal of and interest
accrued on the Obligations to be forthwith due and payable, whereupon the same
shall become due and payable without any presentment, demand, protest, notice of
protest, notice of intent to accelerate the maturity of the Obligations, notice
of acceleration of the maturity of the Obligations or notice of any kind, all of
which are hereby waived. Notwithstanding the foregoing, if the Default is a
default set out in Section 10.1.M or Section 10.1.N, the Commitment shall
automatically terminate and the principal of the Note, together with accrued
interest and fees thereon and any other liabilities of the Borrowers accrued
hereunder shall automatically become due and payable, both as to principal and
interest, without any presentment, demand, protest, notice of protest, notice of
intent to accelerate the maturity of the Obligations, notice of acceleration of
the maturity of the Obligations or notice of any kind, all of which are hereby
waived. Thereafter, the Agent, for and on behalf of the Lenders, may exercise
all remedies available to the Agent as provided in any of the Loan Documents,
and at law or in equity. None of the provisions contained in any of the Loan
Documents shall, or shall be deemed to, give the Agent or any of the Lenders the
right to exercise control over the assets, including, without limitation, real
property, affairs, or management of Borrowers. The rights of the Agent and the
Lenders are limited to the exercise the remedies provided in this Agreement and
the other Loan Documents.
10.3 NOTICES OF DEFAULT. Upon becoming aware of the existence of any
condition or event which constitutes a Default or an Event of Default, the
Borrowers shall immediately furnish to the Agent notice specifying the nature
and period of existence thereof and the action taken or proposed to be taken
with respect thereto.
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ARTICLE XI
AGENT
11.1 APPOINTMENT. In order to expedite the transactions contemplated by this
Agreement, the Agent is appointed to act as agent on behalf of the Lenders. Each
of the Lenders (which term "LENDER" or "LENDERS" shall, unless otherwise
expressly indicated, include the Agent in its capacity as a Lender) and each
subsequent holder of the Note, by its acceptance thereof, irrevocably authorizes
the Agent to take such action on its behalf and to exercise such powers
hereunder and under the other Loan Documents as are specifically delegated to or
required of the Agent by the terms hereof and the terms thereof together with
such powers as are reasonably incidental thereto. No other agent or coagent will
be appointed without to consent of Chase.
11.2 AUTHORIZATION. The Agent is hereby expressly authorized on behalf of
the Lenders, without hereby limiting any implied authority to:
A. Receive on behalf of each of the Lenders any payment of principal of or
interest on the Note and all other amounts accrued hereunder paid to
the Agent and, pursuant to the terms hereof, distribute to each Lender
its proper share of all payments so received;
B. Give notice to the Lenders of the receipt or sending of any notice,
schedule, report, projection, financial statement or other document or
information pursuant to this Agreement or any of the other Loan
Documents and shall promptly forward a copy thereof to each Lender;
C. Take all actions with respect to this Agreement and the other Loan
Documents as are specifically delegated to the Agent; and,
D. In the event that (i) the Borrowers fail to pay any of the Obligations
when due, or (ii) the Agent receives written notice of the occurrence
of a Default or an Event of Default, the Agent shall, within a
reasonable time, give written notice thereof to the Lenders, and shall
take such action with respect to such Default, Event of Default or
other condition or event as it shall be directed to take by the
Lenders; provided, however, that, unless and until the Agent shall have
received such directions, the Agent may take such action or refrain
from taking such action under the Loan Documents with respect to a
Default or Event of Default as it shall deem advisable in the best
interests of all of the Lenders.
11.3 RESPONSIBILITIES OF AGENT. It is expressly understood and agreed that
the obligations of the Agent under the Loan Documents are only those expressly
set forth in the Loan Documents.
A. The Agent shall be entitled to assume that no Default or Event of
Default has occurred and is continuing, unless the Agent has actual
knowledge of such fact or has received notice from a Lender that such
Lender considers that a Default or an Event of Default has occurred and
is continuing and specifying the nature thereof.
B. In the event that the Agent shall acquire actual knowledge of any Event
of Default or of an event which, with the giving of notice or the lapse
of time, or both, would constitute an Event of Default, the Agent shall
promptly give notice thereof to the Lenders.
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C. Lenders recognize and agree, that for the purposes of Section 2.1
hereof the Agent shall not be required to independently determine
whether the conditions described in Section 8.2 have been satisfied
and, in disbursing funds to the Borrowers, may rely fully upon
statements contained in the relevant Notice of Borrowing.
D. Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted to be
taken by it or them hereunder or under any of the other Loan Documents
or in connection herewith or therewith at the request or with the
approval of the Lenders (or, if otherwise specifically required
hereunder or thereunder, the consent of all the Lenders).
E. Neither the Agent nor any of its directors, officers, employees or
agents shall have any responsibility to the Borrowers on account of the
failure or delay in performance or breach by any Lender, other than the
Agent, of any of its obligations hereunder or to any Lender on account
of the failure of or delay in performance or breach by any other Lender
or the Borrowers of any of their respective obligations hereunder or in
connection herewith.
F. The Agent shall, in the absence of knowledge to the contrary, be
entitled to accept any certificate furnished pursuant to this Agreement
or any of the other Loan Documents as conclusive evidence of the facts
stated therein. The Agent shall incur no liability under or in respect
of any of the Loan Documents by acting upon any such notice, consent,
certifi- cate, warranty or other paper or instrument believed by it to
be genuine or authentic or to be signed by the proper party or parties,
or with respect to anything which it may do or refrain from doing in
the exercise of its judgment, or which may appear to it to be neces-
sary or desirable in the circumstances.
G. The Agent shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement,
or in any certificate or other document referred to or provided for in,
or received by any Lender under, this Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any document referred to or provided for herein or
for any failure by Borrowers to perform any of its obligations
hereunder.
H. Agent may employ agents and attorneys-in-fact and shall not be
answerable, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it.
I. The relationship between the Agent and each of the Lenders is only that
of principal and agent and has no fiduciary aspects, and the Agent's
duties hereunder are acknowledged to be only ministerial and not
involving the exercise of discretion on its part. Nothing in this
Agreement or elsewhere contained shall be construed to impose on the
Agent any duties or responsibilities other than those for which express
provision is herein made. In performing its duties and functions
hereunder, the Agent does not assume and shall not be deemed to have
assumed, and hereby expressly disclaims, any obligation or
responsibility toward or any relationship of agency or trust with or
for the Borrowers. As to any matters not expressly provided for by
this Agreement (including, without limitation, enforcement or
collection of the Note), the Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected
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in so acting or refraining from acting upon the instructions of the
Lenders and such instructions shall be binding upon all the Lenders and
all holders of the Note; provided, however, that Agent shall not be
required to take any action which exposes Agent to personal liability
or which is contrary to this Agreement or applicable law.
11.4 RESIGNATION AND SUCCESSOR. Subject to the appointment and acceptance of
a successor Agent as provided below, the Agent may resign at any time by giving
written notice thereof to the Lenders and Borrowers and the Agent may be removed
at any time with or without cause by the Lenders. Upon any such resignation or
removal, the Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation or the Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent. Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder and
under each of the other Loan Documents. After any retiring Agent's resignation
or removal hereunder as Agent, the provisions of this Article shall continue in
effect for its benefit in respect to any actions taken or omitted to be taken by
it while it was acting as the Agent.
11.5 NOTEHOLDERS. The Agent may treat the payee of the Note as the holder
thereof until written notice of transfer shall have been filed with it signed by
such payee and in form satisfactory to the Agent.
11.6 CONSULTATION WITH COUNSEL. The Agent may consult with legal counsel
selected by it in connection with matters arising under this Agreement or any of
the other Loan Documents and any action taken or suffered in good faith by it in
accordance with the opinion of such counsel shall be full justification and
protection to it.
11.7 EXPENSES AND INDEMNIFICATION. Each Lender agrees to reimburse the Agent
in the amount of any expenses incurred for the benefit of the Lenders by the
Agent, including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, not reimbursed by the Borrowers.
Each Lender agrees to indemnify and hold harmless the Agent and any of its
directors, officers, employees or agents, on demand, 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 it in its capacity as the
Agent or any of them in any manner relating to or arising out of this Agreement
or any of the other Loan Documents or any action taken or omitted by it or any
of them under this Agreement or any of the other Loan Documents, to the extent
not reimbursed by the Borrowers.
11.8 BENEFIT AND APPLICABILITY OF ARTICLE. The agreements contained in this
Article are applicable to and solely for the benefit of the Agent and the
Lenders, and are not applicable to or for the benefit of, or shall the
provisions of this Article be relied upon by the Borrowers or any other Person,
and no Loan Party assumes or shall have any duties, covenants, obligations or
other liabilities of any kind whatever by reason or in consequence of any
provisions contained in this Article.
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ARTICLE XII
ASSIGNMENT OF NOTE AND LIENS
12.1 ASSIGNMENT OF NOTE AND LIENS. It is specifically understood and agreed
among the Borrowers, the Agent, and the Lenders that the Lenders have borrowed
sums from Chase and Texas Commerce (collectively, the "BANKS") pursuant to
certain credit facilities granted by the Banks and administered by Chase. To
secure the extension of credit to the Lenders, the Lenders will collaterally
assign, transfer and convey to Chase, as agent for the Banks, the Note and the
Collateral Documents. As assignee of the Note and the Collateral Documents and
agent for the Banks, Chase will, so long as any sums are owing by any of the
Lenders to the Banks, be the successor Agent and shall administer the Loans made
pursuant to the terms of this Agreement for and on behalf of the Lenders. The
Note, duly indorsed with recourse, will be delivered to Chase, as the agent for
the benefit of the Banks, together with a Security Agreement-Collateral
Assignment of Note. Pursuant to the terms of the Security Agreement-Collateral
Assignment of Note Chase has the right to exercise and will exercise all of the
functions of the Agent hereunder. Each of the Borrowers agree to perform and
fulfil its respective obligations hereunder to Chase and as required by it.
12.2 NOTEMAKER ESTOPPEL CERTIFICATE. In confirmation of their respective
acknowledgements of the assignment of the Note and Collateral Documents and
their respective agreements to perform and fulfil their agreements to Chase, the
Borrowers agree to execute and deliver to Chase a Notemaker Estoppel Certificate
in the form of Exhibit 12.2.
ARTICLE XIII
MISCELLANEOUS
13.1 NOTICES. All notices and other communications given to any party in
accordance with the provisions of this Agreement shall be deemed to have been
given (i) on the date of receipt, if hand delivered, (ii) three (3) days after
being deposited with the U.S. Postal Service, postage prepaid, certified mail,
return receipt requested, or (iii) upon receipt (promptly confirmed in writing)
if by any telex, facsimile or other telecommunications equipment, in each case
addressed to such party as provided in this Section or in accordance with the
latest revoked direction from such party. Notices to be provided to any of the
Borrowers shall be given to Invatec. Notices to be provided to any of the
Lenders shall be given to the Agent. Notices, consents and other communications
provided for herein shall be in writing and shall be addressed:
If to Invatec: INNOVATIVE VALVE TECHNOLOGIES, INC.
00000 Xxxxxxx Xxxxx, X-000
Xxxxxxx, Xxxxx 00000
If to the Agent: THE SAFE SEAL COMPANY, INC.
00000 Xxxxxxx Xxxxx, X-000
Xxxxxxx, Xxxxx 00000
If to Chase: THE CHASE MANHATTAN BANK
Asset Based Lending
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Credit Deputy
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13.2 SEVERABILITY. In the event any one or more of the provisions contained
in the Loan Documents should be held to be invalid, illegal or unenforceable in
any respect, the validity, enforceability and legality of the remaining
provisions contained in the Loan Documents shall not in any manner be affected
thereby and shall be enforceable in accordance with their terms. The parties
shall endeavor, in good faith negotiation, to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as nearly as possible to that of the invalid, illegal or unenforceable
provision.
13.3 CAPTIONS. The Article, Section, Subsection captions, headings, and
arrangements, the Schedules, Exhibits and the Table of Contents used in this
Agreement are for convenience of reference only and do not in any manner affect,
limit, amplify, or modify the terms and provisions hereof.
13.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon Borrowers,
any Subsidiary of Borrowers, any ERISA Affiliate, the Agent and the Lenders and
shall inure to the benefit of Borrowers, any Subsidiary of Borrowers, any ERISA
Affiliate, Agent, Lenders and the successors and assigns of the Agent and the
Lenders. No Loan Party may, without the prior consent of the Lenders, assign any
rights, powers, duties or obligations hereunder. Without limiting the generality
of the foregoing, the Borrowers specifically confirms that any Lender may at any
time and from time to time pledge or otherwise grant a security interest in any
Loan or any Note (or any part thereof) to any Federal Reserve Bank.
13.5 SYNDICATIONS. In the event that Chase shall elect to further syndicate
the credit facility provided under this Agreement, the Borrowers agree to use
their best efforts to assist Chase in same, including, but not limited to, the
providing of such information and confirmations of the Obligations to proposed
syndicate members as shall be necessary to permit the proposed syndicate members
to evaluate the credit facility provided hereunder.
13.6 NON-LIABILITY OF THE AGENT AND THE LENDERS. The relationship among the
Borrowers, the Agent and the Lenders is, and shall at all times remain, solely
that of debtors and creditors. Neither the Agent nor any of the Lenders
undertakes or assumes any responsibility or duty to any Person to review,
inspect, supervise, pass judgment upon, or inform any Person of any matter in
connection with any phase of such Person's business, operations, or condition,
financial or otherwise. Each Person shall rely entirely upon such Person's own
judgment with respect to such matters. Any review, inspection, supervision,
exercise of judgment, or information supplied to any Person by the Agent or any
of the Lenders in connection with any such matter is for the protection of the
Agent and the Lenders, and no Person is entitled to rely thereon.
13.7 FINANCING STATEMENTS. Any carbon, photographic or other reproduction of
any Financing Statement signed by any of the Borrowers is sufficient as a
financing statement for all purposes, including, without limitation, filing in
any state pursuant to the provisions of the UCC.
13.8 LIST OF EXHIBITS AND SCHEDULES. The following Exhibits and Schedules
are attached hereto and made a part hereof for all purposes:
Exhibit 2.1 Notice of Borrowing
Exhibit 3.1 Note
Exhibit 5.1.A Security Agreement
Exhibit 5.1.B Security Agreement-Pledge of Stock
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Exhibit 6.1. Lockbox Agreement
Exhibit 7.1.A.(6) Certificate of Compliance
Exhibit 7.1.Q Hazardous Materials Indemnification Agreement
Exhibit 8.1.D Subordination Agreement
Exhibit 8.1.E Landlord Agreements
Exhibit 8.1.I Officers Certificate
Exhibit 12.2 Notemaker Estoppel Certificate
Schedule 7.3.A Scheduled Indebtedness
Schedule 7.3.B Scheduled Liens
Schedule 8.1.E Leaseholds
Schedule 9.1.K Invatec Shareholders
Schedule 9.1.Q Borrowers' Assumed or Trade Names
13.9 MODIFICATION. All modifications, consents, amendments or waivers of any
provision of any Loan Document, or consent to any departure by the Borrowers
therefrom, shall be effective only if the same shall be in writing and agreed to
by the Lenders and then shall be effective only in the specific instance and for
the purpose for which given.
13.10 WAIVER. The acceptance by the Agent or any of the Lenders of any
partial payment on the Obligations shall not be deemed to be a waiver of any
Event of Default then existing. No waiver by the Agent or any of the Lenders of
any Event of Default shall be deemed to be a waiver of any other then existing
or subsequent Event of Default, or Default. No delay or omission by the Agent or
any of the Lenders in exercising any right under the Loan Documents shall impair
that right or be construed as a waiver thereof or any acquiescence therein, or
shall any single or partial exercise of any right preclude other or further
exercise thereof or the exercise of any other right under the Loan Documents or
otherwise. Any waiver of any provision of this Agreement or the Note or consent
to any departure by the Borrowers therefrom must be authorized as provided in
Section 11.2, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
the Borrowers in any case shall entitle it to any other or further notice or
demand in similar or other circumstances. Each holder of any of the Note shall
be bound by any amendment, modification, waiver or consent authorized as
provided herein, whether or not such Note shall have been marked to indicate
such amendment, modification, waiver or consent. The rights of the Agent and the
Lenders hereunder and under the Loan Documents shall be in addition to all other
rights provided by law.
13.11 APPLICABLE LAW. THIS AGREEMENT AND THE LOAN DOCUMENTS HAVE BEEN
NEGOTIATED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED IN THE STATE OF NEW
YORK, AND THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT
TO THE CONFLICTS-OF-LAW RULES AND PRINCIPALS OF THE STATE OF NEW YORK, AND THE
APPLICABLE LAWS OF THE U.S. SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT
AND INTERPRETATION OF THIS AGREEMENT AND ALL OF THE LOAN DOCUMENTS EXCEPT AS
SPECIFICALLY SET OUT IN ANY SUCH LOAN DOCUMENT.
13.12 CHOICE OF FORUM, SERVICE OF PROCESS AND JURISDICTION. Any suit, action
or proceeding against any Loan Party with respect to the Loan Documents, or the
enforcement of any judgment entered by any court in respect thereof, shall be
brought in the courts of the State of New York, or in the U.S. courts located in
State of New York, as the Agent, in the Agent's sole discretion, may elect.
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The Agent, each Lender, and each Loan Party submit to the non-exclusive
jurisdiction of such courts for the purpose of any such suit, action or
proceeding.
A. All parties irrevocably waive, in connection with any such suit,
action or proceeding, any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions.
B. All parties irrevocably consent to the service of process of any of
the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, to each such Person, as the case may be, at its address set
forth in Section 13.1.
C. Nothing herein shall affect the right of any party to serve process
in any other manner permitted by law.
13.13 WAIVER OF JURY TRIAL. Each party hereto hereby waives any right it may
have to a trial by jury in respect of any in any legal proceeding directly or
indirectly arising out of, under or in connection with or relating to any of the
Loan Documents or the Transactions. Except as prohibited by law, each party
hereto hereby waives any right it may have to claim or recover in any litigation
referred to in this Section any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages. Each party
hereto (i) certifies that no representative, agent or attorney of the Agent or
any Lender has represented, expressly or otherwise, that such Lender would not,
in the event of litigation, seek to enforce the foregoing waivers, and (ii)
acknowledges that it has been induced to enter into this Agreement, the Note and
the other Loan Documents, as applicable, by, among other things, the mutual
waivers and certifications herein.
13.14 NO THIRD PARTY BENEFICIARY. Except as otherwise expressly set out
herein, the parties do not intend for the this Agreement to inure to the benefit
of any third party, or for this Agreement to be construed to make or render the
Agent or any of the Lenders liable to any mechanic, materialman, supplier,
contractor, subcontractor, purchaser or lessee of any property owned by
Borrowers for debts or claims accruing to any such Persons against Borrowers.
Neither the Agent nor any of the Lenders, by anything herein or in any of the
other Loan Documents, assumes any Indebtedness of Borrowers under any contract
or agreement assigned to the Agent or any of the Lenders, and neither the Agent
nor any of the Lenders shall be responsible in any manner for the performance by
the Borrowers of any of the terms and conditions thereof.
13.15 PAYMENT OF EXPENSES. The Borrowers shall pay all necessary and
reasonable expenses, charges, costs and fees provided for in this Agreement or
relating to the Loans or the Collateral, including fees, charges, and taxes in
connection with recording or filing any of the Loan Documents, charges, fees of
any consultants, fees and expenses of the Agent's counsel (which attorneys may
be employees of the Agent), fees and expenses of the Agent's special counsel,
which may include fees billed for law clerks, paralegals and other persons not
admitted to the Bar but performing services under the supervision of an
attorney, printing, photocopying and duplicating expenses, air freight charges,
escrow fees, costs of surveys, premiums of insurance policies and surety bonds,
fees for any appraisal, market or feasibility study required by the Agent fees
for the preparation or review of any releases of any of the Liens. All such
expenses, charges, costs and fees shall be the Borrowers' obligations regardless
of whether or not the Borrowers have requested and met the conditions for the
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Loans. This obligation on the part of the Borrowers shall survive the execution
and delivery of the Loan Documents and the repayment of the Obligations. The
Borrowers authorize the Agent to pay such expenses, charges, costs and fees at
any time by a disbursement of the Loans.
13.16 CONFLICTS. If there shall exist any conflict among this Agreement and
any of the other Loan Documents, the provisions of this Agreement shall control.
13.17 ENTIRETY. The Loan Documents embody the entire agreement among the
parties and supersede all prior agreements and understandings, if any, relating
to the subject matter hereof and thereof. Any previous agreement among the
parties hereto with respect to the Transactions is superseded by the Loan
Documents. Except as expressly provided herein or the Loan Documents (other than
this Agreement), nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement or the other Loan Documents.
13.18 RIGHT OF SETOFF. If an Event of Default shall have occurred and be
continuing, upon the request of the Lenders each Lender shall and is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to setoff and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender to or for the credit or the account of the Borrowers
against any and all of the obligations of the Borrowers now or hereafter
existing under this Agreement and the Note held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
the Note and although such obligations may be unmatured. Each Lender agrees to
notify promptly the Agent and the Borrowers after any such setoff and
application made by such Lender, but the failure to give such notice shall not
affect the validity of such setoff and application. The rights of each Lender
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which may be available to such
Lender.
13.19 JOINT AND SEVERAL OBLIGATIONS. The Borrowers are jointly and severally
responsible for their respective agreements, covenants, representations and
warranties and obligations contained in this Agreement.
13.20 ENTIRETY. The Loan Documents embody the entire agreement among the
parties and supersede all prior agreements and understandings, if any, relating
to the subject matter hereof and thereof. Any previous agreement among the
parties hereto with respect to the Transactions is superseded by the Loan
Documents. Except as expressly provided herein or the Loan Documents (other than
this Agreement), nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement or the other Loan Documents.
13.21 MULTIPLE COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
THIS WRITTEN CREDIT AGREEMENT AND THE LOAN DOCUMENTS DESCRIBED HEREIN REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
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In witness whereof, the parties have duly executed this Agreement on the day
and year hereinabove first set forth.
INNOVATIVE VALVE PUGET INVESTMENTS, INC.
TECHNOLOGIES, INC.
BY:/s/ XXXXXXX X. XXXXXXXX BY:/s/ XXXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX XXXXXXX X. XXXXXXXX
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
XXXXXXXXXX-BENICIA, INC, STEAM SUPPLY & RUBBER CO., INC.
BY:/s/ XXXXXXX X. XXXXXXXX BY:/s/ XXXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX XXXXXXX X. XXXXXXXX
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
XXXXXXXXXX COMPANY THE SAFE SEAL COMPANY, INC., AGENT
BY:/s/ XXXXXXX X. XXXXXXXX BY:/s/ XXXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX XXXXXXX X. XXXXXXXX
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
SENIOR VICE PRESIDENT
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Schedule 7.3.A
Scheduled Indebtedness
(1) 5.5% Convertible Subordinated Promissory Note dated July ___, 1997,
executed by Innovative Valve Technologies, Inc., in the original
principal amount of $____________, payable to the order of X. Xxxxx
King.
(2) 5.5% Convertible Subordinated Promissory Note dated July ___, 1997,
executed by Innovative Valve Technologies, Inc., in the original
principal amount of $____________, payable to the order of X. X. Xxxx.
Schedule 7.3.B
Scheduled Liens
None
Schedule 8.1.E
Leaseholds
(1) 0000-0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxx 00000
(2) 0000 X.X. 00xx Xxxxx
Xxxxxxxx, Xxxxxx 00000
(3) 0000 Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
(4) Steam Supply
(Lease from Puget Investments)
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
(5) Bay 4
000000 Xxxxxxxx Xxx
Xxxxxxxxx, Xxxxxx 00000
(6) 0000 Xxxxxxxx Xxxx, Xxxx #0
Xxxxxxx, Xxxxxxxxxx 00000
Schedule 9.1.Q
Borrowers' Assumed or Trade Names
Xxxxxxxxxx Company:
Xxxx-Xxxx Acquisitions, Inc. (Borrower will not use post July 28, 1997)
Xxxxxxxxxx Valve Company, Inc.
