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FOURTH AMENDMENT DATED AS OF JUNE 27, 1999
TO AMEND AND RESTATE THE
AMENDED AND RESTATED SECURED CREDIT AGREEMENT
Dated as of
September 3, 1998
Among
PALEX, INC., AS BORROWER
AND
THE LENDERS PARTY HERETO
AND
BANK ONE, TEXAS, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
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TABLE OF CONTENTS Page
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SECTION 1. DEFINITIONS; INTERPRETATION.................................1
Section 1.1 Definitions........................................1
Section 1.2 Interpretation....................................12
SECTION 2. THE CREDIT FACILITY........................................12
Section 2.1 Loans.............................................12
Section 2.2 Letters of Credit.................................12
Section 2.3 Types of Loans and Minimum Borrowing Amounts......16
Section 2.4 Manner of Borrowing...............................17
Section 2.5 Interest Periods..................................18
Section 2.6 Interest Payments.................................19
Section 2.7 Default Rates.....................................19
Section 2.8 Maturity of Loans.................................21
Section 2.9 Optional Prepayments..............................21
Section 2.10 Mandatory Prepayments of Loans....................21
Section 2.11 The Note..........................................21
Section 2.12 Breakage Fees.....................................22
Section 2.13 Commitment Terminations...........................22
SECTION 3. FEES AND PAYMENTS..........................................23
Section 3.1 Fees..............................................23
Section 3.2 Place and Application of Payments.................24
Section 3.3 Withholding Taxes.................................24
SECTION 4. CONDITIONS PRECEDENT.......................................26
Section 4.1 Conditions Precedent to Initial Borrowing.........26
Section 4.2 Conditions Precedent to all Borrowings............27
SECTION 5. REPRESENTATIONS AND WARRANTIES.............................29
Section 5.1 Organization......................................29
Section 5.2 Power and Authority; Validity.....................29
Section 5.3 No Violation......................................29
Section 5.4 Litigation........................................30
Section 5.5 Use of Proceeds; Margin Regulations...............30
Section 5.6 Investment Company Act............................30
Section 5.7 Public Utility Holding Company Act................30
Section 5.8 True and Complete Disclosure......................30
Section 5.9 Financial Statements..............................31
Section 5.10 No Material Adverse ..............................31
Section 5.11 Labor Controversies...............................31
Section 5.12 Taxes.............................................31
Section 5.13 ERISA.............................................31
Section 5.14 Consents..........................................31
Section 5.15 Capitalization....................................32
Section 5.16 Ownership of Property.............................32
Section 5.17 Compliance with Statutes..........................32
Section 5.18 Environmental Matters.............................32
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Section 5.19 Year 2000 Compliance..............................33
Section 5.20 Existing Liens and Indebtedness...................33
SECTION 6. COVENANTS..................................................33
Section 6.1 Corporate Existence...............................34
Section 6.2 Maintenance.......................................34
Section 6.3 Taxes.............................................34
Section 6.4 ERISA.............................................34
Section 6.5 Insurance.........................................34
Section 6.6 Financial Reports and Other Information...........35
Section 6.7 Lenders Inspection Rights.........................37
Section 6.8 Conduct of Business...............................37
Section 6.9 New Subsidiaries..................................37
Section 6.10 Dividends and Negative Pledges....................38
Section 6.11 Restrictions on Fundamental Changes...............38
Section 6.12 Environmental Laws................................39
Section 6.13 Liens.............................................39
Section 6.14 Indebtedness......................................40
Section 6.15 Loans, Advances and Investments...................41
Section 6.16 Transfer of Assets................................42
Section 6.17 Transactions with Affiliates......................42
Section 6.18 Compliance with Laws..............................42
Section 6.19 Credit Exposure...................................43
Section 6.20 Minimum Consolidated Net Worth....................43
Section 6.21 Minimum Fixed Charge Coverage Ratio...............43
Section 6.22 Maximum Funded Debt to EBITDA Ratio...............43
Section 6.23 Maximum Senior Debt to EBITDA Ratio...............43
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.............................43
Section 7.1 Events of Default.................................43
Section 7.2 Non-Bankruptcy Defaults...........................45
Section 7.3 Bankruptcy Defaults...............................46
Section 7.4 Collateral for Undrawn Letters of Credit..........46
Section 7.5 Notice of Default.................................47
SECTION 8. CHANGE IN CIRCUMSTANCES....................................47
Section 8.1 Change of Law.....................................47
Section 8.2 Unavailability of Deposits or Inability to
Ascertain LIBOR Rate............................47
Section 8.3 Increased Cost and Reduced Return.................48
Section 8.4 Lending Offices...................................49
Section 8.5 Discretion of Lender as to Manner of Funding......49
SECTION 9. THE AGENT..................................................49
Section 9.1 Appointment and Authorization of Agent............50
Section 9.2 Rights and Powers.................................50
Section 9.3 Action by Agent...................................50
Section 9.4 Consultation with Experts.........................50
Section 9.5 Indemnification Provisions........................50
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Section 9.6 Indemnity.........................................51
Section 9.7 Resignation of Agent and Successor Agent..........52
SECTION 10. MISCELLANEOUS..............................................52
Section 10.1 No Waiver of Rights...............................52
Section 10.2 Non-Business Day..................................52
Section 10.3 Documentary Taxes.................................52
Section 10.4 Survival of Representations.......................52
Section 10.5 Survival of Indemnities...........................53
Section 10.6 Setoff............................................53
Section 10.7 Notices...........................................53
Section 10.8 Counterparts......................................54
Section 10.9 Successors and Assigns............................54
Section 10.10 Sales and Transfers of Borrowings and Notes;
Participations in Borrowings and Notes..........57
Section 10.12 Headings..........................................57
Section 10.13 Legal Fees, Other Costs and Indemnification.......57
Section 10.14 Governing Law; Arbitration; Submission to
Jurisdiction; Waiver of Jury Trial..............58
Section 10.15 Confidentiality...................................60
Section 10.16 Severability......................................61
Section 10.17 Change in Accounting Principles or Tax Laws.......61
Section 10.18 Loans Under Prior Credit Agreement................61
Section 10.19 Effectiveness.....................................61
Section 10.20 Notice............................................62
EXHIBITS
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Exhibit 2.2A Form of Borrowing Request
Exhibit 2.2B Form of Application
Exhibit 2.11 Form of Note
Exhibit 4.1A Form of Subsidiary Guaranty
Exhibit 4.1B Form of Stock Pledge Agreement
Exhibit 4.1C Form of Financial Condition Certificate
Exhibit 4.1D Form of Security Agreement
Exhibit 6.6 Form of Compliance Certificate
Exhibit 10.10 Form of Assignment Agreement
SCHEDULES
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Schedule 5.1 List of Subsidiaries
Schedule 5.4 List of Litigation
Schedule 5.20 List of Existing Liens and Indebtedness
Schedule 6.13 List of Permitted Liens and Indebtedness
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FOURTH AMENDMENT DATED AS OF JUNE 27, 1999 TO AMEND AND RESTATE THE
AMENDED AND RESTATED SECURED CREDIT AGREEMENT dated as of September 3, 1998,
between PalEx, Inc., a Delaware corporation (the "Borrower"), Ridge Pallets,
Inc., a Florida corporation (a "Borrower" for purposes of Section 2.2(c)
hereof), Bank One, Texas, National Association ("Bank One"), National City Bank,
Xxxxx Fargo Bank, Comerica Bank, Paribas f/k/a Banque Paribas, and the other
lenders from time to time parties hereto (each a "Lender" and collectively, the
"Lenders"), and Bank One as administrative agent for the Lenders (in such
capacity, the "Agent").
WITNESSETH:
WHEREAS, the Borrower, certain of the Lenders and the Agent have
previously entered into that certain Amended and Restated Secured Credit
Agreement dated as of September 3, 1998 (the "Credit Agreement"); and
WHEREAS, certain of the parties to the Credit Agreement desire
to amend and restate such agreement in its entirety as provided in this Fourth
Amendment;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
Section 1.1 Definitions. Unless otherwise defined herein, the
following terms shall have the following meanings:
"Acquisition" means a direct or indirect purchase by the Borrower or
any of its Subsidiaries after the Effective Date hereof for cash, stock,
subordinated convertible notes or other securities or other property, whether in
one or more related transactions, of all or substantially all of the assets or
voting securities or other equity interests of a Person or a business unit,
division or group of a Person.
"Adjusted LIBOR Rate" means, for any Borrowing of LIBOR Loans, a rate
per annum determined in accordance with the following formula:
LIBOR Rate
Adjusted LIBOR Rate = ------------------------------------
1.00 - Eurodollar Reserve Percentage
"Affiliate" means, for any Person, (i) any other Person that directly
or indirectly through one or more intermediaries controls, or is under common
control with, or is controlled by, such Person, and (ii) any other Person owning
beneficially or controlling ten percent (10%) or more of the equity interests in
such Person. As used in this definition, "control" means the power,
directly or indirectly, to direct or cause the direction of management or
policies of a Person (through ownership of voting securities or other equity
interests, by contract or otherwise).
"Agent" means Bank One acting in its capacity as administrative agent
for the Lenders, and any successor agent appointed hereunder pursuant to Section
9.7.
"Agreement" means this Secured Credit Agreement, as amended, restated
or supplemented from time to time.
"Applicable Margin" means (i) for Base Rate Loans, 0.50%, and (ii) for
LIBOR Loans, 2.75%. The Applicable Margin for Base Rate Loans and for LIBOR
Loans , as applicable, shall be increased by 0.50% at the end of each calendar
quarter commencing March 31, 1999, and quarterly thereafter.
"Application" means an application for a Letter of Credit as defined in
Section 2.2(c).
"Arranger" means Bank One Capital Markets.
"Assignment Agreement" means an agreement in substantially the form of
Exhibit 10.10 whereby a Lender conveys part or all of its Commitments, Loans and
participations in Letters of Credit to another Person that thereupon becomes a
Lender, or that increases its Commitments, outstanding Loans and outstanding
participations in Letters of Credit pursuant to Section 10.10.
"Base Rate" means, for any day, the higher of (i) the fluctuating
commercial loan rate announced by the Agent from time to time as its base rate
for Dollar loans in the United States of America in effect on such day (which
base rate may not be the lowest rate charged by the Agent on loans to any of its
customers), or (ii) the Federal Funds Rate plus one-half of one percent (0.5%)
per annum, with any change in the Base Rate resulting from a change in such rate
to be effective on the date of the relevant change.
"Base Rate Loan" means a Loan bearing interest prior to maturity at the
Base Rate plus the Applicable Margin.
"Borrower" means PalEx, Inc., a Delaware corporation, and for purposes
of Section 2.2(b), Ridge Pallets.
"Borrowing" means any extension of credit made by the Lenders or the
Agent, as the case may be, by way of Loans or Letters of Credit, including any
Borrowings advanced, continued or converted. A Borrowing is "advanced" on the
day the Lenders or the Agent, as the case may be, advances funds comprising such
Borrowing to the Borrower or a Letter of Credit is issued, is "continued" (in
the case of LIBOR Loans) on the date a new Interest Period commences for such
Borrowing and is "converted" when such Borrowing is changed from one type of
Loan to the other, all as requested by the Borrower pursuant to Section 2.4(a).
2
"Borrowing Request" means a request for a Borrowing as defined in
Section 2.2(c).
"Business Day" means any day other than a Saturday or Sunday on which
banks are not authorized or required to close in Houston, Texas, and, if the
applicable Business Day relates to the advance or continuation of, conversion
into or payment on a LIBOR Loan, on which banks are dealing in Dollar deposits
in the interbank eurocurrency market in London, England.
"Capitalized Lease Obligations" means, for any Person, the amount of
such Person's liabilities under all leases of real or personal property (or any
interest therein) which is required to be capitalized on the balance sheet of
such Person as determined in accordance with GAAP.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than twelve (12) months
from the date of acquisition; (ii) U.S. Dollar denominated time deposits and
certificates of deposit maturing within one (1) year from the date of
acquisition thereof with any Lender or any other financial institution whose
short-term senior unsecured debt rating is at least A-1 from S&P or P-1 from
Xxxxx'x; (iii) LIBOR denominated time deposits and certificates of deposit
maturing within six (6) months from the date of acquisition thereof with any
Lender or any other financial institution whose short-term senior unsecured debt
rating is at least A-1 from S&P or P-1 from Xxxxx'x; (iv) commercial paper or
Eurocommercial paper with a rating of at least A-1 from S&P or P-1 from Xxxxx'x,
with maturities of not more than twelve (12) months from the date of
acquisition; (v) repurchase obligations entered into with any Lender or any
other financial institution whose short-term senior unsecured debt rating is at
least A-1 from S&P or P-1 from Xxxxx'x, which are secured by a fully perfected
security interest in any obligation of the type described in (i) above and has a
market value of the time such repurchase is entered into of not less than 100%
of the repurchase obligation of such Lender or such other Person thereunder;
(vi) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within twelve (12) months from the date of
acquisition thereof or providing for the resetting of the interest rate
applicable thereto not less often than annually and, at the time of acquisition,
having one of the two highest ratings obtainable from either S&P or Xxxxx'x; and
(vii) money market funds which have at least $1,000,000,000 in assets and which
invest primarily in securities of the types described in clauses (i) through
(vi) above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property and assets of the Borrower and its
Subsidiaries in which the Agent is granted a Lien for the benefit of the
Lenders.
"Collateral Account" means the cash collateral account for outstanding
undrawn Letters of Credit as defined in Section 7.4(b).
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"Commitment" means, relative to any Lender, such Lender's obligation to
make Loans and to participate in Letters of Credit issued pursuant to Sections
2.1 and 2.2 in the percentage set forth opposite its signature hereto or
pursuant to the provisions of Section 10.10, as such commitment may be reduced
from time to time pursuant to this Agreement.
"Commitment Amount" means an amount equal to $150,000,000, as such
amount may be reduced from time to time pursuant to the terms of this Agreement.
"Commitment Termination Date" means the earliest of (i) the Maturity
Date; (ii) the date on which the Commitments are terminated in full or reduced
to zero pursuant to Section 2.13; or (iii) the occurrence of any Event of
Default described in Section 7.1(f) or (g) with respect to the Borrower or the
occurrence and continuance of any other Event of Default and either (x) the
declaration of the Loans to be due and payable pursuant to Section 7.2, or (y)
in the absence of such declaration, the giving of written notice by the Agent,
acting at the direction of the Majority Lenders, to the Borrower pursuant to
Section 7.2 that the Commitments have been terminated.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit 6.6.
"Consolidated Interest Expense" means, for any period, total interest
expense of the Borrower and its Subsidiaries on a consolidated basis for such
period in connection with Indebtedness, determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income (or
loss), after provision for taxes, of the Borrower and its Subsidiaries on a
consolidated basis for such period, determined in accordance with GAAP.
"Consolidated Net Worth" means, as of any date of determination, the
Borrower's consolidated stockholders equity determined in accordance with GAAP.
"Credit Documents" means this Agreement, the Notes, the Subsidiary
Guaranties, the Stock Pledge Agreements, the Security Agreements, the Mortgages,
the Applications, the Borrowing Requests and any other documents or instruments
executed by the Borrower or any of the Guarantors in connection with this
Agreement.
"Current Liabilities" means, as of any date of determination, the sum
of all current liabilities (including, without duplication, the aggregate face
amount of all undrawn Letters of Credit but excluding all other contingent
obligations) calculated on a consolidated basis for the Borrower and its
Subsidiaries in accordance with GAAP.
"Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.
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"Dollar" and "U.S. Dollar" and the sign "$" means lawful money of the
United States of America.
"EBITDA" means, for any period, on a historic four fiscal quarter
rolling basis, the sum of (i) Consolidated Net Income plus each of the following
to the extent actually added or deducted in determining Consolidated Net Income
(a) Consolidated Interest Expense, (b) provisions for taxes based on income or
revenues, (c) up to $9,000,000 in extraordinary, unusual or non-recurring gains
or losses for the trailing four fiscal quarters through June 30, 1999, and any
extraordinary, unusual or non-recurring gains (but not losses) thereafter, plus
(d) the amount of all depreciation and amortization expense actually deducted in
determining Consolidated Net Income, all calculated on a consolidated basis for
the Borrower and its Subsidiaries and as determined in accordance with GAAP.
Upon the consummation of any Acquisition, EBITDA shall be adjusted to include
the historical financial results of the acquired business (on a trailing four
fiscal quarter pro forma basis consistent with SEC regulations and practices).
"Effective Date" means the date this Agreement becomes effective as
defined in Section 10.19.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of non-
compliance or violations, investigations or proceedings relating to any
Environmental Law ("Claims") or any permit issued under any Environmental Law,
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (ii)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to health
or safety in relation to the environment.
"Environmental Law" means any federal, state or local statute, law,
rule, regulation, ordinance, code, policy or rule of common law now or hereafter
in effect, including any judicial or administrative order, consent, decree or
judgment relating to (i) the environment, (ii) health or safety in relation to
the environment or (iii) Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Eurodollar Reserve Percentage" means, with respect to each Interest
Period for a LIBOR Loan, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentages in effect on each
day of such Interest Period, if any, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor thereto), for determining the
maximum reserve requirements (including, without limitation, any supplemental,
marginal and emergency reserves) applicable to "Eurocurrency Liabilities"
pursuant to Regulation D of the Board of Governors of the Federal Reserve System
or any other then applicable regulation of the
5
Board of Governors which prescribes reserve requirements applicable to
"Eurocurrency Liabilities" as presently defined in Regulation D.
"Event of Default" means any of the events or circumstances specified
in Section 7.1.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the next Business Day,
provided that (A) if such day is not a Business Day, the rate on such
transactions on the immediately preceding Business Day as so published on the
next Business Day shall apply, and (B) if no such rate is published on such next
Business Day, the rate for such day shall be the average of the offered rates
quoted to the Agent by two (2) federal funds brokers of recognized standing on
such day for such transactions as selected by the Agent.
"Fee Letter" means that certain letter agreement dated August 10, 1998,
by and between the Agent, the Arranger and the Borrower.
"Fixed Charge Coverage Ratio" means, for any period, on a historic four
fiscal quarter rolling basis, the ratio of (i) the sum of, without duplication,
(a) EBITDA, minus (b) cash taxes, minus (c) all cash expenditures (which have
not been financed) for fixed or capital assets which in accordance with GAAP
would be classified as capital expenditures, minus (d) all cash dividends,
distributions or payments made in respect of the capital stock of the Borrower
to the extent permitted hereunder; to (ii) the sum of, without duplication, (a)
the portion of Funded Debt due and payable within one (1) year of the date of
determination (including an amount equal to 1/7th of any outstanding balance of
the Loans, but excluding the remaining outstanding balance of the Loans, even if
such balance is due within one (1) year), plus (b) Consolidated Interest Expense
for the four fiscal quarters then ended, all calculated on a consolidated basis
for the Borrower and its Subsidiaries and as determined in accordance with GAAP.
Upon the consummation of any Acquisition, the Fixed Charge Coverage Ratio shall
be determined including the historical financial results of the acquired
business (on a trailing four fiscal quarter pro forma basis, consistent with SEC
regulations) and practices.
"Funded Debt" means, as of any date of determination, the sum, without
duplication, of the following for the Borrower and its Subsidiaries: (i)
Indebtedness for borrowed money, all obligations evidenced by bonds, debentures,
notes or similar instruments, and purchase money obligations which in accordance
with GAAP would be shown on the consolidated balance sheet of the Borrower as a
liability, (ii) all contingent and uncontingent reimbursement obligations
relative to the face amount of all drawn and undrawn letters of credit issued
for the account of the Borrower or any of its Subsidiaries, and (iii) all
Capitalized Lease Obligations.
"Funded Debt to EBITDA Ratio" means, for any period, the ratio of (i)
Funded Debt, to (ii) EBITDA.
6
"GAAP" means generally accepted accounting principles from time to time
in effect as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the statements and pronouncements of the Financial Accounting Standards Board or
in such other statements, opinions and pronouncements by such other entity as
may be approved by a significant segment of the U.S. accounting profession.
"Guarantor" means each domestic Subsidiary of the Borrower listed on
Schedule 5.1 and any other domestic Subsidiary of the Borrower required to
become a Guarantor pursuant to Section 6.9.
"Guaranty" by any Person means all obligations (other than endorsements
in the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guarantying or in effect guarantying any
Indebtedness, dividend or other obligation (including, without limitation,
obligations in connection with sales of any property) of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation, or
to purchase any property or assets constituting security therefor, primarily for
the purpose of assuring the owner of such Indebtedness or obligations of the
ability of the primary obligor to make payment of the Indebtedness or
obligation; or (ii) to advance or supply funds (x) for the purchase or payment
of such Indebtedness or obligation, or (y) to maintain working capital or other
balance sheet condition, or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation, in each case primarily
for the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of the Indebtedness or
obligation; or (iii) to lease property or to purchase securities or other
property or services of the primary obligor primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or obligation; or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the primary
obligor against loss in respect thereof. For the purpose of all computations
made under this Agreement, the amount of a Guaranty in respect of any obligation
shall be deemed to be equal to the amount that would apply if such obligation
were the direct obligation of such Person rather than the primary obligor or, if
less, the maximum aggregate potential liability of such Person under the terms
of the Guaranty.
"Hazardous Material" shall have the meaning assigned to that term in
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Acts of 1986, and
shall include any substance defined as "hazardous" or "toxic" or words used in
place thereof under any Environmental Law applicable to the Borrower or any of
its Subsidiaries.
"Highest Lawful Rate" means the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Loans or the Reimbursement Obligations, or
under laws applicable to the Agent or any of the Lenders, which are presently in
effect or, to the extent allowed by applicable law, under such laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow. Determination of the rate of interest for
the purpose of determining
7
whether the Loans or the Reimbursement Obligations are usurious under all
applicable laws shall be made 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, taken, reserved, charged or
received from the Borrower in connection with the Loans or the Reimbursement
Obligations, as applicable.
"Indebtedness" means, for any Person, the following obligations of such
Person, without duplication: (i) obligations of such Person for borrowed money;
(ii) obligations of such Person representing the deferred purchase price of
property or services other than accounts payable arising in the ordinary course
of business and other than amounts which are being contested in good faith and
for which reserves in conformity with GAAP have been provided; (iii) obligations
of such Person evidenced by bonds, notes, bankers acceptances, debentures or
other similar instruments of such Person or reimbursement obligations or other
obligations with respect to letters of credit issued for such Person's account
or letters of credit issued pursuant to such Person's application therefor; (iv)
obligations of other Persons, whether or not assumed, secured by Liens upon
property or payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person, but only to the extent of such
property's fair market value; (v) Capitalized Lease Obligations of such Person;
(vi) obligations under hedge, swap, exchange, forward, future, collar or cap
arrangements, fixed price agreements and all other agreements or arrangements
designed to protect against fluctuations in interest rates, commodity prices,
and currency exchange rates; and (vii) obligations of such Person pursuant to a
Guaranty of any of the foregoing of another Person. For purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture to which such Person is a party, to the extent such
Indebtedness has recourse to such Person.
"Indemnified Taxes" shall have the meaning ascribed to such term in
Section 3.3.
"Initial Borrowing Date" means the date on which all conditions
precedent set forth herein to the initial Borrowings are satisfied or waived in
writing and the initial Borrowing hereunder occurs.
"Interest Payment Date" means (i) for a Base Rate Loan, the last
Business Day of each calendar quarter such Loan is outstanding commencing
September 30, 1998, and (ii) for a LIBOR Loan, the last Business Day of each
Interest Period for such Loan and, during any Interest Period of six (6) months,
the next Business Day occurring three (3) months after the commencement of such
Interest Period.
"Interest Period" means the period commencing on the date that a
Borrowing of LIBOR Loans is advanced, continued or created by conversion and,
subject to Section 2.5, ending on the date one (1), two (2), three (3) or six
(6) months thereafter as selected by the Borrower pursuant to the terms of this
Agreement.
"Interest Rate Protection Agreement" means any hedge, swap, exchange,
forward, future collar or cap arrangements, fixed price agreements or other
agreements or arrangements designed to protect against fluctuations in interest
rates.
8
"Investments" shall have the meaning ascribed to such term in Section
6.15.
"L/C Commitments" means, relative to any Lender, such Lender's
obligation to participate in Letters of Credit pursuant to Section 2.2 in the
percentage set forth opposite its signature hereto or pursuant to Section 10.10,
as such commitments may be reduced from time to time pursuant to the terms of
this Agreement.
"L/C Commitment Amount" means $10,000,000, as such amount may be
reduced from time to time pursuant to the terms of this Agreement.
"L/C Documents" means this Agreement, the Letters of Credit and any
Borrowing Requests and Applications with respect thereto and any draft or other
document presented in connection with a drawing thereunder.
"L/C Obligations" means the undrawn face amounts of all outstanding
Letters of Credit and all unpaid Reimbursement Obligations with respect to
Letters of Credit.
"Lenders" is defined in the preamble.
"Lending Office" means the branch, office or affiliate of a Lender
specified on the appropriate signature page hereof or designated pursuant to
Sections 8.4 or 10.10.
"Letter of Credit" means any of the letters of credit issued by the
Agent on behalf of the Lenders for the account of the Borrower pursuant to
Section 2.2(a) or (b).
"LIBOR Loan" means a Loan bearing interest prior to maturity at the
Adjusted LIBOR Rate plus the Applicable Margin.
"LIBOR Rate" means, relative to any Interest Period for each LIBOR Loan
comprising part of the same Borrowing, a rate of interest per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/16 of 1%), equal to
the arithmetic average of the quotation by the Agent of the rate of interest per
annum at which deposits in Dollars in immediately available and freely
transferable funds are offered to the Agent two (2) Business Days before the
commencement of such Interest Period by major banks in the London interbank
market as at or about 10:00 a.m. (New York, New York time) for a period
approximately equal to such Interest Period and in an amount equal or comparable
to the aggregate principal amount of the LIBOR Loan to which such Interest
Period relates scheduled to be made, continued or converted pursuant to the
terms hereof, as applicable, as part of such Borrowing.
"Lien" means any interest in any property or asset in favor of a Person
other than the owner of the property or asset and securing an obligation owed to
such Person, whether such interest is based on the common law, statute or
contract, including, but not limited to, the security interest lien arising from
a mortgage, encumbrance, pledge, conditional sale, security agreement or trust
receipt, or a lease, consignment or bailment for security purposes.
9
"Loan" means the revolving loans by the Lenders described in Section
2.1 outstanding as a Base Rate Loan or a LIBOR Loan, each of which is a "type"
of Loan hereunder.
"Majority Lenders" means, at any time, the Lenders then holding in the
aggregate one hundred percent (100%) of the aggregate of the Commitments, or if
the Commitments have terminated pursuant to the terms hereof, the aggregate
Obligations. The percentage set forth opposite each Lender's name in the line
"Percentage" on the signature page hereto reflects the initial voting percentage
of each Lender hereunder on the Effective Date.
"Material Adverse Effect" means an effect that results in a material
adverse change since June 28, 1998, in (i) the business, properties, assets,
financial condition or prospects of the Borrower or of the Borrower and its
Subsidiaries taken as a whole, or (ii) in the ability of the Borrower or any of
the Guarantors to perform its Obligations under the Credit Documents to which it
is a party.
"Maturity Date" means December 31, 1999.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor
thereto.
"Mortgages" means each mortgage or deed of trust (including an
assignment of leases and rents) of the Borrower and any of its Subsidiaries in
form and substance reasonably satisfactory to the Agent granting the Lenders a
Lien upon any interest it has in real property, as amended, restated or
supplemented from time to time.
"Notes" means the revolving promissory notes of the Borrower as defined
in Section 2.11.
"Obligations" means all joint and several obligations of the Borrower
and the Guarantors to pay fees, costs and expenses hereunder, to pay principal
or interest on Loans and Reimbursement Obligations and to pay any other
obligations to the Agent or the Lenders arising under or in relation to any
Credit Document.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Percentage" means, for each Lender, the percentage of the Commitments
represented by such Lender's Commitment; provided that, if the Commitments are
terminated, each Lender's Percentage shall be calculated based on its Commitment
in effect immediately before such termination, subject to any assignments by
such Lender of Obligations pursuant to Section 10.10.
"Permitted Business" means any business described in Section 6.8.
"Permitted Liens" means the Liens described in Section 6.13.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization or any other
entity or organization, including a government or any agency or political
subdivision thereof.
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"Plan" means an employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that is either (i) maintained by the Borrower or any of its Subsidiaries, or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
the Borrower or any of its Subsidiaries is then making or accruing an obligation
to make contributions or has within the preceding five (5) plan years made or
had an obligation to make contributions.
"Private Subordinated Debt Issue" means a private issuance of
subordinated debt securities of the Borrower in an aggregate principal amount of
up to $50,000,000, the terms of which debt securities are (i) typical of those
contained in a public subordinated debt issue by companies of the type, size and
condition (financial and otherwise) as the Borrower, and (ii) approved by the
Majority Lenders in their sole discretion in advance of the offering thereof by
the Borrower.
"Public Subordinated Debt Issue" means a public issuance of
subordinated debt securities of the Borrower (including any issuance of
subordinated debt securities pursuant to Rule 144(a)) in an aggregate principal
amount of at least $150,000,000, the terms of which debt securities are approved
in advance of the offering thereof by the Majority Lenders in their sole
discretion."
"Reimbursement Obligation" means the obligations of the Borrower to
reimburse the Agent, for the benefit of the Lenders, for each drawing under a
Letter of Credit as described in Section 2.2(c).
"Ridge Pallets" means Ridge Pallets, Inc., a Florida corporation.
"S&P" means Standard & Poor's Rating Group or any successor thereto.
"Security Agreements" means each Security Agreement of the Borrower and
any of its Subsidiaries in substantially the form of Exhibit 4.1D, as amended,
restated or supplemented from time to time.
"Senior Debt" means, as of the date of any determination, the
outstanding Indebtedness under the Credit Documents.
"Senior Debt to EBITDA Ratio" means the ratio of (i) Senior Debt to
(ii) EBITDA.
"Stock Pledge Agreements" means each Stock Pledge Agreement of the
Borrower and any Subsidiary of the Borrower which owns a Subsidiary in
substantially the form of Exhibit 4.1B.
"Subsidiary" means, for any Person, any corporation or other entity of
which more than fifty percent (50%) of the outstanding stock or comparable
equity interests having ordinary voting power for the election of the board of
directors of such corporation, any managers of such limited liability company or
similar governing body (irrespective of whether or not, at the time, stock or
other equity interests of any other class or classes of such corporation or
other entity shall have
11
or might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned by such Person, as applicable, or by one
or more of its Subsidiaries.
"Subsidiary Guaranty" means each Guaranty of the Subsidiary Guarantors
in substantially the form of Exhibit 4.1A.
"Taxes" shall have the meaning ascribed to such term in Section 5.12.
"Unfunded Vested Liabilities" means, for any Plan at any time, the
amount by which the present value of all vested nonforfeitable accrued benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of the Borrower or any of its Subsidiaries to the PBGC or such Plan.
Section 1.2 Interpretation. The foregoing definitions shall be
equally applicable to the singular and plural forms of the terms defined. All
references to times of day in this Agreement shall be references to Houston,
Texas time unless otherwise specifically provided.
SECTION 2. THE CREDIT FACILITY.
Section 2.1 Loans. Subject to the terms and conditions hereof,
each Lender severally and not jointly agrees to make one or more loans (each a "
Loan") to the Borrower from time to time before the Commitment Termination Date
on a revolving basis in an aggregate amount not to exceed at any time
outstanding an amount equal to its Percentage of the Commitment Amount (for each
Lender, its "Commitment"), subject to any reductions thereof pursuant to the
terms of this Agreement. No Lender shall be permitted or required to make any
Loan if, after giving effect thereto, (i) the aggregate principal amount of the
Loans of all Lenders and L/C Obligations outstanding of the Borrower would
thereby exceed the Commitment Amount then in effect; or (ii) the aggregate
principal amount of all Loans of such Lender and its participating interest in
all L/C Obligations would thereby exceed the Percentage of such Lender of the
Commitment Amount then in effect. Each Borrowing of Loans shall be made ratably
from the Lenders in proportion to their respective Percentages. Loans may be
repaid, in whole or in part, and all or any portion of the principal amount
thereof reborrowed, before the Commitment Termination Date, subject to the terms
and conditions hereof."
Section 2.2 Letters of Credit.
(a) Issuance of Letters of Credit. Subject to the terms and conditions
hereof, the Agent agrees to issue, from time to time prior to the Commitment
Termination Date, at the request of the Borrower and on behalf of the Lenders
and in reliance on their obligations under this Section 2.2, one or more letters
of credit (each a "Letter of Credit") for the Borrower's account; provided that
the Agent shall have no obligation to issue a Letter of Credit if, after the
issuance thereof, (i) the outstanding Loans and L/C Obligations would thereby
exceed the Commitment Amount then in effect, (ii) the outstanding L/C
Obligations would thereby exceed the L/C Commitment Amount then in effect, or
(iii) the issuance of such Letter of Credit would violate any legal or
regulatory
12
restriction then applicable to the Agent or any Lender as notified by such
Lender to the Agent before the date of issuance of such Letter of Credit.
(b) Ridge Pallets Letter of Credit. Bank One has issued at the request
of the Borrower and Ridge Pallets an irrevocable standby letter of credit (the
"Ridge Pallets Letter of Credit") for the account of Ridge Pallets and for the
benefit of Credit Commercial de France, New York Branch (the "Facing Bank") in
the amount of $641,500 in connection with the Economic Development Revenue
Bonds, Series 1989-B (Ridge Pallets, Inc. Project) in the principal amount of
$950,000 issued by the South Carolina Jobs-Economic Development Authority (the
"Bonds"). Ridge Pallets hereby irrevocably and unconditionally agrees to
reimburse the Agent, for the benefit of the Lenders, for each payment or
disbursement made by the Agent to settle its obligations under any draft drawn
under the Ridge Pallets Letter of Credit (the "Ridge Pallets Reimbursement
Obligation") within two (2) Business Days from when such draft is paid as
provided in Section 2.2(d). For the limited purpose of the Ridge Pallets Letter
of Credit and the Ridge Pallets Reimbursement Obligation, Ridge Pallet shall be
a co-borrower under this Agreement, and each of Ridge Pallets and the Borrower
hereby agrees to be jointly and severally liable for the Ridge Pallets
Reimbursement Obligation. The stated amount of the Ridge Pallets Letter of
Credit shall be included in the use of the Commitment Amount, the Ridge Pallets
Letter of Credit shall be for all purposes a Letter of Credit under this
Agreement and the Ridge Pallets Reimbursement Obligation shall be for all
purposes a Reimbursement Obligation under this Agreement. The Ridge Pallets
Reimbursement Obligation shall be absolute, unconditional and irrevocable and
shall be performed strictly in accordance with the terms of this Agreement under
all circumstances whatsoever (other than the defense of payment in accordance
with this Agreement or a defense based on the gross negligence or willful
misconduct of the Agent), all as provided in Section 2.2(d)(ii). Ridge Pallets
agree to maintain the Facing Letter of Credit and Reimbursement Agreement dated
as of December 1, 1989, between Ridge Pallets and the Facing Bank (the "Facing
Letter of Credit Agreement") in effect at all times during the period prior to
the expiry date of the Ridge Pallets Letter of Credit, as it may be extended
from time to time, and Ridge Pallets agrees to not make any amendment to or
modification of the Facing Letter of Credit Agreement or the Letter of Credit
issued by the Facing Bank on behalf of Ridge Pallets without the written consent
of the Agent. The repayment of the Ridge Pallets Reimbursement Obligation shall
not be secured by any of the Collateral or receive the benefits of any of the
Stock Pledge Agreements.
(c) Issuance Procedure. To request that the Agent issue a Letter of
Credit, the Borrower shall deliver to the Agent (with a duplicate copy to an
operations employee of the Agent as designated by the Agent from time to time) a
duly executed Borrowing Request in the form of Exhibit 2.2A (each a "Borrowing
Request"), together with a duly executed application for the relevant Letter of
Credit substantially in the form of Exhibit 2.2B (each an "Application"), or
such other computerized issuance or application procedure, instituted from time
to time by the Agent and agreed to by the Borrower, completed to the reasonable
satisfaction of the Agent, and such other documentation and information as the
Agent may reasonably request. In the event of any irreconcilable difference or
inconsistency between this Agreement and an Application, the provisions of this
Agreement shall govern. Upon receipt of a properly completed and executed
Borrowing Request and Application and any other reasonably requested documents
or information
13
at least three (3) Business Days prior to any requested issuance date, the Agent
will process such Borrowing Request and Application in accordance with its
customary procedures and issue the requested Letter of Credit on the requested
issuance date. The Borrower may cancel any requested issuance of a Letter of
Credit prior to the issuance thereof. The Agent will notify each Lender of the
amount and expiration date of each Letter of Credit it issues promptly upon
issuance thereof. Each Letter of Credit (except for up to $2,000,000 in
aggregate face amounts of Letters of Credit) shall have an expiration date no
later than one (1) year from the date of issuance thereof, provided that in no
event shall a Letter of Credit (except for $3,000,000 in aggregate face amounts
of Letters of Credit which may have expiration dates after the Maturity Date but
prior to December 31, 2000) have an expiration date later than four (4) Business
Days before the Maturity Date. If the Agent issues any Letters of Credit with
expiration dates that automatically extend unless the Agent gives notice that
the expiration date will not so extend, the Agent will give such notice of non-
renewal before the time necessary to prevent such automatic extension if before
such required notice date (i) the expiration date of such Letter of Credit if so
extended would be later than four (4) Business Days before the Maturity Date,
(ii) the Commitment Termination Date shall have occurred, (iii) an Event of
Default has occurred and is continuing, or (iv) the Agent is so directed by the
Borrower. The Agent agrees to issue amendments to any Letter of Credit
increasing its amount, or extending its expiration date, at the request of the
Borrower subject to the conditions precedent for all Loans of Section 4.2 and
the other terms and conditions of this Section 2.2.
(d) The Borrower's Reimbursement Obligations.
(i) The Borrower hereby irrevocably and unconditionally agrees
to reimburse the Agent, for the benefit of the Lenders, for each
payment or disbursement made by the Agent to settle its obligations
under any draft drawn under a Letter of Credit (each, a "Reimbursement
Obligation") within two (2) Business Days from when such draft is paid
with either funds not borrowed hereunder or with a Borrowing subject to
Section 2.4 and the other terms and conditions contained in this
Agreement. The Reimbursement Obligation shall bear interest (which the
Borrower hereby promises to pay) from and after the date such draft is
paid until (but excluding the date) the Reimbursement Obligation is
paid at the lesser of the Highest Lawful Rate or the Base Rate plus the
Applicable Margin so long as the Reimbursement Obligation shall not be
past due, and thereafter at the default rate per annum as set forth in
Section 2.7(c), whether or not the Maturity Date shall have occurred.
If any such payment or disbursement is reimbursed to the Agent on the
date such payment or disbursement is made by the Agent, interest shall
be paid on the reimbursable amount for one (1) day. The Agent shall
give the Borrower notice of any drawing on a Letter of Credit within
one (1) Business Day after such drawing is paid.
(ii) The Borrower agrees for the benefit of the Agent and each
Lender that, notwithstanding any provision of any Application, the
obligations of the Borrower under this Section 2.2(d) and each
applicable Application shall be absolute, unconditional and irrevocable
(subject to Section 2.2(c)) and shall be performed strictly in
accordance with the terms of this Agreement and each applicable
Application under all circumstances whatsoever INCLUDING, BUT NOT
LIMITED TO, ANY DEFENSE BASED UPON THE AGENT'S OR ANY LENDER'S OWN
SIMPLE OR CONTRIBUTORY
14
NEGLIGENCE (other than the defense of payment in accordance with this
Agreement or a defense based on the gross negligence or willful
misconduct of the Agent or any Lender), including, without limitation,
the following circumstances (subject in all cases to the defense of
payment in accordance with this Agreement or a defense based on the
gross negligence or willful misconduct of the Agent or any Lender):
(1) any lack of validity or enforceability of any of
the L/C Documents;
(2) any amendment or waiver of or any consent to
depart from all or any of the provisions of any of the L/C
Documents;
(3) the existence of any claim, setoff, defense or
other right the Borrower or any Subsidiary may have at any
time against a beneficiary of a Letter of Credit (or any
Person for whom a beneficiary may be acting), the Agent, any
Lender or any other Person, whether in connection with this
Agreement, another L/C Document or any unrelated transaction;
(4) any statement or any other document presented
under a Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect, provided
that the Agent's determination that documents presented under
the Letter of Credit comply with the terms thereof did not
constitute gross negligence or willful misconduct of the
Agent;
(5) payment by the Agent under a Letter of Credit
against presentation to the Agent of a draft or certificate
that does not comply with the terms of the Letter of Credit,
provided that the Agent's determination that documents
presented under the Letter of Credit comply with the terms
thereof did not constitute gross negligence or willful
misconduct of the Agent; or
(6) any other act or omission to act or delay of any
kind by the Agent, any Lender or any other Person or any other
event or circumstance whatsoever that might, but for the
provisions of this Section 2.2(d), constitute a legal or
equitable discharge of the Borrower's obligations hereunder or
under any L/C Document, provided that such act or omission of
the Agent did not constitute gross negligence or willful
misconduct of the Agent or any Lender.
(e) The Participating Interests. Each Lender severally and not jointly
agrees to purchase from the Agent, and the Agent hereby agrees to sell to each
Lender, an undivided percentage participating interest, to the extent of its
Percentage, in each Letter of Credit (including the Ridge Pallets Letter of
Credit and all other outstanding Letters of Credit issued by the Agent) issued
by, and Reimbursement Obligation owed to, the Agent in connection with a Letter
of Credit. Upon any failure by the Borrower to pay any Reimbursement Obligation
in connection with a Letter of Credit at the time required in Sections 2.2(d)
and 2.4(c), or if the Agent is required at any time to return to the Borrower or
to a trustee, receiver, liquidator, custodian or
15
other Person any portion of any payment by the Borrower of any Reimbursement
Obligation in connection with a Letter of Credit, the Agent shall promptly give
notice of same to each Lender, and the Agent shall have the right to require
each Lender to fund its participation in such Reimbursement Obligation. Each
Lender (except the Agent to the extent it is also a Lender) shall pay to the
Agent an amount equal to each Lender's Percentage of such unpaid or recaptured
Reimbursement Obligation not later than the Business Day it receives notice from
the Agent to such effect, if such notice is received before 2:00 p.m., or not
later than the following Business Day if such notice is received after such
time. If a Lender fails to pay timely such amount to the Agent, it shall also
pay to the Agent interest on such amount accrued from the date payment of such
amount was made by the Agent to the date of such payment by the Lender at a rate
per annum equal to the Federal Funds Rate in effect for each such day, and only
after such payment shall such Lender be entitled to receive its Percentage of
each payment received on the relevant Reimbursement Obligation and of interest
paid thereon. If any such Lender fails to pay such amount to the Agent, any
payments made by the Borrower with respect to the relevant Reimbursement
Obligation shall first be applied by the Agent to the unfunded participation in
such Reimbursement Obligation before any other Lenders receive any payments or
proceeds. The Agent will thereafter pay each Lender its Percentage of each
payment received by it relating to that for which such Lender has funded its
Percentage, from the date of funding. THE SEVERAL OBLIGATIONS OF THE LENDERS TO
THE AGENT UNDER THIS SECTION 2.2(E) SHALL BE ABSOLUTE, IRREVOCABLE AND
UNCONDITIONAL UNDER ANY AND ALL CIRCUMSTANCES WHATSOEVER AND SHALL NOT BE
SUBJECT TO ANY SETOFF, COUNTERCLAIM OR DEFENSE TO PAYMENT ANY LENDER MAY HAVE OR
HAVE HAD AGAINST THE BORROWER, THE AGENT, ANY OTHER LENDER OR ANY OTHER PERSON
WHATSOEVER INCLUDING, BUT NOT LIMITED TO, ANY DEFENSE BASED ON THE FAILURE OF
THE DEMAND FOR PAYMENT UNDER THE LETTER OF CREDIT TO CONFORM TO THE TERMS OF
SUCH LETTER OF CREDIT OR THE LEGALITY, VALIDITY, REGULARITY OR ENFORCEABILITY OF
SUCH LETTER OF CREDIT AND INCLUDING, BUT NOT LIMITED TO, THOSE RESULTING FROM
THE AGENT'S OWN SIMPLE OR CONTRIBUTORY NEGLIGENCE. Without limiting the
generality of the foregoing, such obligations shall not be affected by any
Default or Event of Default or by any subsequent reduction or termination of any
Commitment of a Lender, and each payment by a Lender under Section 2.2 shall be
made without any offset, abatement, withholding or reduction whatsoever.
Section 2.3 Types of Loans and Minimum Borrowing Amounts.
Borrowings of Loans may be outstanding as either Base Rate Loans or LIBOR Loans,
as selected by the Borrower pursuant to Section 2.4. All Borrowings of LIBOR
Loans advanced on the Initial Borrowing Date shall be advanced as Base Rate
Loans unless the requisite notice for a LIBOR Loan has been given pursuant to
Section 2.4(a) and indemnification has been provided to the Lenders in
connection therewith. Each Borrowing of Base Rate Loans shall be in an amount of
not less than $500,000 and each Borrowing of LIBOR Loans shall be in an amount
of not less than $1,000,000.
16
Section 2.4 Manner of Borrowing.
(a) Notice to the Agent. Subject to the limitations in Section 2.3, the
Borrower shall give notice to the Agent by no later than 11:00 a.m. at least
three (3) Business Days before the date on which the Borrower requests the
Lenders or the Agent, as applicable, to advance a Borrowing of LIBOR Loans and
on the date the Borrower requests the Lenders or the Agent, as applicable, to
advance a Borrowing of Base Rate Loans pursuant to a duly executed Borrowing
Request, and the Agent shall promptly give the Lenders notice thereof.
(b) Selection of Interest Periods. The Borrower may select multiple
Interest Periods for the Loans constituting any particular Borrowing, provided
that at no time shall the number of different Interest Periods for outstanding
LIBOR Loans exceed five (5). The Loans included in each Borrowing shall bear
interest initially at the type of rate specified in the Borrowing Request with
respect thereto. Thereafter, the Borrower may from time to time elect to change
or continue the type of interest rate borne by each Borrowing or, subject to
Section 2.3's minimum amount requirement for each outstanding Borrowing, a
portion thereof, as follows: (i) if such Borrowing is of LIBOR Loans, the
Borrower may continue part or all of such Borrowing as LIBOR Loans for an
Interest Period specified by the Borrower or convert part or all of such
Borrowing into Base Rate Loans on the last day of the Interest Period applicable
thereto, or the Borrower may earlier convert part or all of such Borrowing into
Base Rate Loans so long as it pays the breakage fees and funding losses provided
in Section 2.12 and all interest accrued on such Borrowing, and (ii) if such
Borrowing is of Base Rate Loans, the Borrower may convert all or part of such
Borrowing into LIBOR Loans for an Interest Period specified by the Borrower on
any Business Day. Notices of the continuation of a Borrowing of LIBOR Loans for
an additional Interest Period or of the conversion of part or all of a Borrowing
of LIBOR Loans into Base Rate Loans or of Base Rate Loans into LIBOR Loans must
be given by no later than 11:00 a.m. at least three (3) Business Days before the
date of the requested continuation or conversion. The Borrower shall give such
notices concerning the advance, continuation, or conversion of a Borrowing by
telephone or facsimile (which notice shall be irrevocable once given and, if by
telephone, shall be promptly confirmed in writing) pursuant to a Borrowing
Request which shall specify the date of the requested advance, continuation or
conversion (which shall be a Business Day), the amount of the requested
Borrowing, the type of Loans to comprise such new, continued or converted
Borrowing and, if such Borrowing is to be comprised of LIBOR Loans, the Interest
Period applicable thereto. The Borrower agrees that the Agent and each Lender
may rely on any such telephonic or facsimile notice given by any person it in
good faith believes is an authorized representative of the Borrower without the
necessity of independent investigation and that, if any such notice by telephone
conflicts with any written confirmation, such telephonic notice shall govern if
the Agent or any Lender has acted in reliance thereon.
(c) Borrower's Failure to Notify. If the Borrower fails to give notice
pursuant to Section 2.4(a) or (b) of (i) the continuation or conversion of any
outstanding principal amount of a Borrowing of LIBOR Loans or of (ii) a
Borrowing of Loans to pay outstanding Reimbursement Obligations, as applicable,
and has not notified the Agent by 11:00 a.m. at least three (3) Business Days
before the last day of the Interest Period for such Borrowing of LIBOR Loans or
the day such Reimbursement Obligation becomes due that it intends to repay such
Borrowing or such
17
Reimbursement Obligation with funds not borrowed hereunder, the Borrower shall
be deemed to have requested, (x) the continuation of such Borrowing as a LIBOR
Loan with an Interest Period of one (1) month, or (y) the advance of a new
Borrowing of Base Rate Loans on such day in the amount of the Reimbursement
Obligation then due, which Borrowing shall be deemed to have been funded on such
day to pay the Reimbursement Obligation then due, in each case so long as no
Default or Event of Default shall have occurred and be continuing or would occur
as a result of such Borrowing but otherwise disregarding the conditions to a
Borrowing set forth in Section 4.2. Upon the occurrence and during the
continuance of any Event of Default, (i) each LIBOR Loan will automatically, on
the last day of the then existing Interest Period therefor, convert into a Base
Rate Loan and (ii) the obligation of the Lenders to make, continue or convert
Loans into LIBOR Loans shall be suspended.
(d) Funding and Disbursement of Loans. Not later than 1:00 p.m. on the
date of any requested advance of a new Borrowing of Loans, each Lender, subject
to all other provisions hereof, shall make available its Loan comprising its
ratable share of such Borrowing in funds immediately available in Houston, Texas
for the benefit of the Agent and according to the disbursement instructions of
the Agent. The Agent shall make the proceeds of each such Borrowing, available
in immediately available funds to the Borrower on the date of any requested
advance of a new Borrowing by 2:00 p.m. No Lender shall be responsible to the
Borrower for any failure by another Lender to fund its portion of a Borrowing,
and no such failure by a Lender shall relieve any other Lender from its
obligation, if any, to fund its portion of a Borrowing.
(e) Agent Reliance on Lender Funding. Unless the Agent shall have been
notified by a Lender before the date on which such Lender is scheduled to make
payment to the Agent of the proceeds of a Loan (which notice shall be effective
upon receipt) that such Lender does not intend to make such payment, the Agent
may assume that such Lender has made such payment when due and in reliance upon
such assumption may (but shall not be required to) make available to the
Borrower the proceeds of the Loan to be made by such Lender and, if any Lender
has not in fact made such payment to the Agent, such Lender shall, on demand,
pay to the Agent the amount made available to the Borrower attributable to such
Lender together with interest thereon for each day during the period commencing
on the date such amount was made available to the Borrower and ending on (but
excluding) the date such Lender pays such amount to the Agent at a rate per
annum equal to the interest rate attributable to the relevant Loan. If such
amount is not received from such Lender by the Agent immediately upon demand,
the Borrower will, on demand, repay to the Agent the proceeds of the Loan
attributable to such Lender with interest thereon at a rate per annum equal to
the interest rate applicable to the relevant Loan.
Section 2.5 Interest Periods. As provided in Section 2.4(a) and
(b), at the time of each request for the advance or continuation of, or
conversion into, a Borrowing of LIBOR Loans, the Borrower shall select an
Interest Period applicable to such LIBOR Loans from among the available options
subject to the limitations in Section 2.4(a); provided, however, that:
(i) the Borrower may not select an Interest Period for a
Borrowing of LIBOR Loans that extends beyond the Maturity Date;
18
(ii) whenever the last day of any Interest Period would
otherwise be a day that is not a Business Day, the last day of such
Interest Period shall either be (i) extended to the next succeeding
Business Day, or (ii) reduced to the immediately preceding Business Day
if the next succeeding Business Day is in the next calendar month; and
(iii) for purposes of determining an Interest Period, a month
means a period starting on one day in a calendar month and ending on
the numerically corresponding day in the next calendar month; provided,
however, that if there is no such numerically corresponding day in the
month in which an Interest Period is to end or if such Interest Period
begins on the last Business Day of a calendar month, then such Interest
Period shall end on the last Business Day of the calendar month in
which such Interest Period is to end.
Section 2.6 Interest Payments.
(a) Base Rate Loans. Each Base Rate Loan shall bear interest (computed
on the basis of a 365/366-day year and actual days elapsed, excluding the date
of repayment) on the unpaid principal amount thereof from the date such Loan is
made until maturity (whether by acceleration or otherwise) or conversion to a
LIBOR Loan in accordance with Section 2.4(b) hereof, at a rate per annum equal
to the lesser of (i) the Highest Lawful Rate, or (ii) the sum of the Base Rate
from time to time in effect plus the Applicable Margin, payable in arrears on
each Interest Payment Date for such Loan and at maturity (whether by
acceleration or otherwise) or conversion to a LIBOR Loan in accordance with
Section 2.4(b).
(b) LIBOR Loans. Each LIBOR Loan shall bear interest (computed on the
basis of a 360-day year and actual days elapsed, excluding the date of
repayment) on the unpaid principal amount thereof from the date such Loan is
made until maturity (whether by acceleration or otherwise) or conversion to a
Base Rate Loan in accordance with Section 2.4(b) hereof, at a rate per annum
equal to the lesser of (i) the Highest Lawful Rate, or (ii) the sum of the
Adjusted LIBOR Rate plus the Applicable Margin, payable in arrears on each
Interest Payment Date for such Loan and at maturity (whether by acceleration or
otherwise) or conversion to a Base Rate Loan in accordance with Section 2.4(b).
(c) Rate Determinations. The Agent shall determine each interest rate
applicable to the Loans and Reimbursement Obligations hereunder and such
determination shall be conclusive and binding except in the case of the Agent's
manifest error or willful misconduct. The Agent shall give prompt telephonic,
telex or facsimile notice to the Borrower and each Lender (in the case of Loans)
of the interest rate applicable to each Loan or Reimbursement Obligation (but,
if such notice is given by telephone, the Agent shall confirm such rate in
writing) promptly after the Agent has made such determination.
Section 2.7 Default Rates. If any payment of principal on any
Loan is not made when due after the expiration of the grace period therefor
provided in Section 7.1 (whether by acceleration or otherwise), such Loan shall
bear interest (computed on the basis of a year of 360, 365 or 366 days, as
applicable, and actual days elapsed) from the date such payment was due until
such principal then due is paid in full, payable on demand, at a rate per annum
equal to:
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(a) for any Base Rate Loan the lesser of (i) the Highest Lawful Rate,
or (ii) the sum of two percent (2%) per annum plus the Base Rate from time to
time in effect (but not less than the Base Rate in effect at maturity) plus the
Applicable Margin;
(b) for any LIBOR Loan the lesser of (i) the Highest Lawful Rate, or
(ii) the sum of two percent (2%) per annum plus the rate of interest in effect
thereon at the time of such default until the end of the Interest Period for
such Loan and, thereafter, at a rate per annum equal to the sum of two percent
(2%) per annum plus the Base Rate from time to time in effect (but not less than
the Base Rate in effect at maturity) plus the Applicable Margin; and
(c) for any unpaid Reimbursement Obligations, the lesser of (i) the
Highest Lawful Rate, or (ii) the sum of two percent (2%) per annum plus the Base
Rate from time to time in effect (but not less than the Base Rate in effect at
maturity) plus the Applicable Margin.
It is the intention of the Agent and each Lender to conform strictly to usury
laws applicable to it. Accordingly, if the transactions contemplated hereby or
the Loans or the Reimbursement Obligations would be usurious as to the Agent or
the Lenders under laws applicable to it (including the laws of the United States
of America and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to the Agent or such Lender notwithstanding the other
provisions of this Agreement, the Notes or any other Credit Document), then, in
that event, notwithstanding anything to the contrary in this Agreement, the
Notes or any other Credit Document, it is agreed as follows: (i) the aggregate
of all consideration which constitutes interest under laws applicable to the
Lenders that is contracted for, taken, reserved, charged or received by the
Lenders under this Agreement, the Notes or any other Credit Document or
otherwise shall under no circumstances exceed the Highest Lawful Rate, and any
excess shall be credited by the applicable Lender on the principal amount of the
applicable Note or to the Reimbursement Obligations (or, if the principal amount
of such Note and all Reimbursement Obligations owed to such Lender shall have
been paid in full, refunded by such Lender to the Borrower); (ii) in the event
that the maturity of the Notes is accelerated by reason of an election of the
holder or holders thereof resulting from any Event of Default hereunder or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under laws applicable to the Lenders may
never include more than the Highest Lawful Rate, and excess interest, if any,
provided for in this Agreement, the Notes, any other Credit Document or
otherwise shall be automatically canceled by the applicable Lenders as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by the applicable Lenders on the principal amount of the applicable
Notes or Reimbursement Obligations (or if the principal amounts thereof shall
have been paid in full, refunded by the applicable Lender to the Borrower); and
(iii) if at any time the interest provided hereunder, together with any other
fees payable pursuant to this Agreement, the Notes or any other Credit Document
and deemed interest under applicable law, exceeds the amount that would have
accrued at the Highest Lawful Rate, the amount of interest and any such fees to
accrue to the Lenders hereunder and thereunder shall be limited to the amount
which would have accrued at the Highest Lawful Rate, but any subsequent
reductions shall not reduce the interest to accrue to the Lenders hereunder and
thereunder below the Highest Lawful Rate until the total amount of interest
accrued pursuant hereto and thereto and such fees deemed to be interest equals
the amount of interest which would have accrued to the Lenders if a varying rate
per annum
20
equal to the interest hereunder had at all times been in effect plus the amount
of fees which would have been received but for the effect of this Section 2.7.
The Agent and the Lenders hereby elect to determine the applicable rate ceiling
under Article 5069-1D.001 to 1D.013 of the Texas Credit Revised Civil Statutes
by the weekly rate ceiling from time to time in effect, subject to the Agent's
and the Lenders' right subsequently to change such method in accordance with
applicable law. In the event the Loans and all Reimbursement Obligations are
paid in full by the Borrower prior to the Maturity Date and the interest
received for the actual period of the existence of the Loans or the
Reimbursement Obligations exceeds the Highest Lawful Rate, the applicable
Lenders shall refund to the Borrower the amount of the excess or shall credit
the amount of the excess against amounts owing under the Loans and none of the
Lenders shall be subject to any of the penalties provided by law for contracting
for, taking, reserving, charging or receiving interest in excess of the Highest
Lawful Rate. The provisions of Chapter 346 of Tex. Finance Code Xxx. (Xxxxxx
1998), regulating certain revolving credit accounts shall not apply to this
Agreement or any of the Notes.
Section 2.8 Maturity of Loans. Each Loan, together with accrued
and unpaid interest thereon and all other fees then due and owing under any
Credit Document, shall mature and become due and payable on the Maturity Date.
Section 2.9 Optional Prepayments. The Borrower shall have the
privilege of prepaying the Loans without premium or penalty in whole or in part
at any time. If the Borrower is prepaying LIBOR Loans, it shall give to the
Agent notice of such prepayment no later than 11:00 a.m. at least three (3)
Business Days before the proposed prepayment date. All prepayments of LIBOR
Loans shall be accompanied by accrued interest thereon, together with any
applicable breakage fees and funding losses pursuant to Section 2.12. The
Borrower may direct the application of any optional prepayment hereunder to the
Base Rate Loans or LIBOR Loans outstanding.
Section 2.10 Mandatory Prepayments of Loans. If the aggregate
principal amount of outstanding Loans and L/C Obligations shall at any time for
any reason exceed the Commitment Amount then in effect, the Borrower shall,
immediately and without notice or demand, pay the amount of such excess to the
Lenders as a prepayment of the Loans and, if all Loans have been paid, a pre-
funding of Letters of Credit pursuant to the provisions of Section 7.4. The
Borrower shall also, immediately and without notice or demand, pay the net
proceeds of any Private Subordinated Debt Issue to the Lenders as a prepayment
of the Loans and if all Loans have been paid, a pre-funding of Letters of Credit
pursuant to the provisions of Section 7.4. Any mandatory prepayment of Loans
pursuant hereto shall not be limited by the notice provision for prepayments set
forth in Section 2.9, but immediately upon determining the need to make any such
prepayment, the Borrower shall notify the Agent of such required prepayment.
Each such prepayment shall be accompanied by a payment of all accrued and unpaid
interest on the Loans prepaid and any applicable breakage fees and funding
losses pursuant to Section 2.12.
Section 2.11 The Notes. The Loans outstanding to the Borrower
from the Lenders shall be evidenced by promissory notes of the Borrower payable
to each of the Lenders in the form of Exhibit 2.11 (such promissory notes,
together with any replacements thereof, the "Notes"). Each
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holder of a Note shall record on its books and records or on a schedule to the
Note the amount of each Loan outstanding from it to the Borrower, all payments
of principal and interest and the principal balance from time to time
outstanding thereon, the type of such Loan and, if a LIBOR Loan, the Interest
Period and interest rate applicable thereto. Such record, whether shown on the
books and records of a holder of a Note or on a schedule to its Note, shall be
prima facie evidence as to all such matters; provided, however, that the failure
of any holder to record any of the foregoing or any error in any such record
shall not limit or otherwise affect the obligation of the Borrower to repay all
Loans outstanding to it hereunder, together with accrued interest thereon. At
the request of any holder of a Note and upon such holder tendering to the
Borrower the Note to be replaced, the Borrower shall furnish a new Note to such
holder to replace any outstanding Note and at such time the first notation
appearing on the schedule on the reverse side of, or attached to, such new Note
shall set forth the aggregate unpaid principal amount of all Loans, if any, then
outstanding thereon.
Section 2.12 Breakage Fees. If any Lender incurs any loss, cost
or expense (including, without limitation, any loss of profit and loss, cost,
expense or premium reasonably incurred by reason of the liquidation or re-
employment of deposits or other funds acquired by such Lender to fund or
maintain any LIBOR Loan or the relending or reinvesting of such deposits or
amounts paid or prepaid to the Lenders) as a result of any of the following
events other than any such occurrence as a result of a change of circumstance
described in Sections 8.1 or 8.2:
(i) any payment, prepayment or conversion of a LIBOR Loan on a
date other than the last day of its Interest Period (whether by
acceleration, prepayment or otherwise);
(ii) any failure to make a principal payment of a LIBOR Loan
on the due date therefor; or
(iii) any failure by the Borrower to borrow, continue, prepay
or convert to a LIBOR Loan on the date specified in a notice given
pursuant to Section 2.4(a) or (b),
then the Borrower shall pay to such Lender such amount as will reimburse such
Lender for such loss, cost or expense. If any Lender makes such a claim for
compensation, it shall provide to the Borrower a certificate executed by an
officer of such Lender setting forth the amount of such loss, cost or expense in
reasonable detail (including an explanation of the basis for and the computation
of such loss, cost or expense), and the amounts shown on such certificate shall
be conclusive and binding absent manifest error. Within ten (10) days of receipt
of such certificate, the Borrower shall pay to such Lender such amount as will
compensate such Lender for such loss, cost or expense as provided herein.
Section 2.13 Commitment Terminations. The Borrower shall have
the right at any time and from time to time, upon five (5) Business Days' prior
and irrevocable written notice to the Agent, to terminate or reduce the
Commitments without premium or penalty, in whole or in part, any partial
termination to be (i) in an amount not less than $5,000,000 as determined by the
Borrower, and (ii) allocated ratably among the Lenders in proportion to their
respective Commitments, as applicable; provided that the Commitment Amount may
not be reduced to an
22
amount less than the sum of the aggregate principal amount of outstanding Loans
plus the aggregate outstanding L/C Obligations, after giving effect to payments
on such proposed termination or reduction date, unless the Borrower provides to
the Lenders or the Agent, as applicable, cash collateral in an amount sufficient
to cover such shortage or back to back letters of credit from a financial
institution satisfactory to all of the Lenders in an amount equal to the undrawn
face amount of any applicable outstanding Letters of Credit with an expiry date
of at least five (5) days after the expiry date of any applicable Letter of
Credit and which provide that the Lenders may make a drawing thereunder in the
event that it pays a drawing under such Letter of Credit. Any termination of the
Commitments pursuant to this Section 2.13 is permanent and may not be
reinstated. The Agent shall give prompt notice to each Lender of any such
termination of the Commitments.
SECTION 3. FEES AND PAYMENTS.
Section 3.1 Fees.
(a) Commitment Fee. For the period from the Effective Date to and
including the Commitment Termination Date the Borrower shall pay to the Agent
for the ratable account of the Lenders, a commitment fee (computed on a basis of
a 365/366-day year and actual days elapsed) on an amount equal to the average
daily difference between (i) the sum of the Commitment Amount and (ii) the
outstanding Loans and L/C Obligations times 0.50% per annum. The commitment fee
shall be increased by 0.50% at the end of each calendar quarter commencing March
31, 1999, and quarterly thereafter. Such commitment fees shall be payable in
arrears commencing on September 30, 1998, and on the last Business Day of each
calendar quarter thereafter and on the Maturity Date unless the Commitments are
terminated in whole on an earlier date, in which event the commitment fee for
the period to but not including the date of such termination shall be paid in
whole on the date of such termination.
(b) Letter of Credit Fees. Commencing upon the date of issuance or
extension of any Letter of Credit, the Borrower shall pay to the Agent quarterly
in arrears (pro rated, if necessary for any portion of such quarter) for the
ratable account of the Lenders and a non-refundable fee equal to the greater of
(x) $500, or (y) the face amount of such Letter of Credit times the Applicable
Margin for LIBOR Loans, calculated on the basis of a 365/366-day year and actual
days in the period and based on the then scheduled expiry date of the Letter of
Credit. Thereafter, such fees shall be payable by the Borrower in arrears on the
last Business Day of each calendar quarter of each year commencing with the next
succeeding calendar quarter, with the last such payment on the date any such
Letter of Credit expires. In addition, the Borrower shall pay to the Agent
solely for the Agent's account, in connection with each Letter of Credit,
reasonable administrative and amendment fees and expenses for letters of credit
established by the Agent from time to time in accordance with its customary
practices and as agreed between the Agent and the Borrower and a 1/8% of 1%
fronting fee of the face amount of each Letter of Credit.
(c) Agent Fees. The Borrower shall pay to each of the Agent and the
Arranger the fees agreed to between the Agent, the Arranger and the Borrower
pursuant to the Fee Letter, and any other fees from time to time agreed to by
the Borrower and the Agent.
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Section 3.2 Place and Application of Payments. All payments of
principal of and interest on the Loans and the Reimbursement Obligations and all
other amounts payable by the Borrower under the Credit Documents shall be made
by the Borrower to the Agent by no later than 1:30 p.m. on the due date thereof
at the office of the Agent in Houston, Texas (or such other location as the
Agent may designate to the Borrower). Any payments received by the Agent from
the Borrower after 1:30 p.m. shall be deemed to have been received on the next
Business Day.
Section 3.3 Withholding Taxes.
(a) Payments Free of Withholding. Except as otherwise required by law
and subject to Section 3.3(b), each payment by the Borrower to the Agent or any
Lender under this Agreement or any other Credit Document shall be made without
withholding for or on account of any present or future taxes (other than overall
net income taxes on the recipient) imposed by or within the jurisdiction in
which the Borrower is domiciled, any jurisdiction from which the Borrower makes
any payment, or (in each case) any political subdivision or taxing authority
thereof or therein, excluding, in the case of each Lender and the Agent, taxes,
assessments or other governmental charges
(i) imposed on, based upon, or measured by its income, and
branch profits, franchise and similar taxes imposed on it, by any
jurisdiction in which the Agent or such Lender, as the case may be, is
incorporated or maintains its principal place of business or Lending
Office or which subjects the Agent or such Lender to tax by reason of a
connection between the taxing jurisdiction and the Agent or such Lender
(other than a connection resulting from the transactions contemplated
by this Agreement);
(ii) imposed as a result of a connection between the taxing
jurisdiction and the Agent or such Lender, as the case may be, other
than a connection resulting from the transactions contemplated by this
Agreement;
(iii) imposed as a result of the transfer by such Lender of
its interest in this Agreement or any other Credit Document or a
designation by such Lender (other than pursuant to Section 3.3(d)
hereof) of a new Lending Office (other than taxes imposed as a result
of any change in treaty, law or regulation after such transfer of the
Lender's interest in this Agreement or any Credit Document or
designation of a new Lending Office);
(iv) imposed by the United States of America upon a Lender
organized under the laws of a jurisdiction outside of the United
States, except to the extent that such tax is imposed or increased as a
result of any change in applicable law, regulation or treaty (other
than any addition of or change in any "anti-treaty shopping,"
"limitation of benefits," or similar provision applicable to a treaty)
after the Effective Date hereof, in the case of each Lender originally
a party hereto or, in the case of any Purchasing Lender (as defined in
Section 10.10), after the date on which it becomes a Lender; and
24
(v) which would not have been imposed but for (a) the failure
of the Agent or any Lender, as the case may be, to provide (x) an
Internal Revenue Service Form 1001 or 4224, as the case may be, or any
substitute or successor form prescribed by the Internal Revenue Service
pursuant to Section 3.3(b) below, or (y) any other certification,
documentation or proof which is reasonably requested by the Borrower,
or (b) a determination by a taxing authority or a court of competent
jurisdiction that a certification, documentation or other proof
provided by such Lender or the Agent to establish an exemption from
such tax, assessment or other governmental charge is false (all such
non-excluded taxes, assessments or other governmental charges and
liabilities being hereinafter referred to as "Indemnified Taxes").
If any such withholding is so required, the Borrower shall make the withholding,
pay the amount withheld to the appropriate governmental authority before
penalties attach thereto or interest accrues thereon and forthwith pay such
additional amount as may be necessary to ensure that the net amount actually
received by the Agent and each Lender is free and clear of such Indemnified
Taxes (including Indemnified Taxes on such additional amount) and is equal to
the amount that the Agent or such Lender (as the case may be) would have
received had such withholding not been made. If the Agent or any Lender pays any
amount in respect of any Indemnified Taxes, penalties or interest, the Borrower
shall reimburse the Agent or that Lender for the payment on demand in the
currency in which such payment was made. If the Borrower pays any Indemnified
Taxes, penalties or interest, it shall deliver official tax receipts evidencing
the payment or certified copies thereof, or other satisfactory evidence of
payment if such tax receipts have not yet been received by the Borrower (with
such tax receipts to be promptly delivered when actually received), to the Agent
or the Lender on whose account such withholding was made (with a copy to the
Agent if not the recipient of the original) within fifteen (15) days of such
payment.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Agent on or before the Effective Date, two duly
completed and signed copies of either Form 1001 (entitling such Lender to a
complete exemption from withholding under the Code on all amounts to be received
by such Lender, including fees, pursuant to the Credit Documents) or Form 4224
(relating to all amounts to be received by such Lender, including fees, pursuant
to the Credit Documents) of the Internal Revenue Service. Thereafter and from
time to time, each Lender shall submit to the Borrower and the Agent such
additional duly completed and signed copies of one or the other of such forms
(or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may be (i) notified by the Borrower,
directly or through the Agent, to such Lender, and (ii) required under then-
current United States law or regulations to avoid United States withholding
taxes on payments in respect of all amounts to be received by such Lender,
including fees, pursuant to the Credit Documents. Upon the request of the
Borrower, each Lender that is a United States person shall submit to the
Borrower a certificate to the effect that it is such a United States person.
(c) Inability of Lender to Submit Forms. If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrower or the Agent any form or certificate that such
25
Lender is obligated to submit pursuant to Section 3.3(b) or that such Lender is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise becomes ineffective or inaccurate,
such Lender shall promptly notify the Borrower and the Agent of such fact and
the Lender shall to that extent not be obligated to provide any such form or
certificate and will be entitled to withdraw or cancel any affected form or
certificate, as applicable.
(d) Refund of Taxes. If any Lender or the Agent receives a refund of
any Indemnified Tax or any tax referred to in Section 10.3 with respect to which
the Borrower has paid any amount pursuant to this Section 3.3 or Section 10.3,
such Lender or the Agent shall pay the amount of such refund (including any
interest received with respect thereto) to the Borrower.
SECTION 4. CONDITIONS PRECEDENT.
Section 4.1 Conditions Precedent to Initial Borrowing. The
obligation of each Lender to advance the initial Loans hereunder and of the
Agent to issue any Letter of Credit on the Initial Borrowing Date is subject to
the following conditions precedent, all in form and substance satisfactory to
the Lenders (and which shall be evidenced by the making of such Loan(s) and, if
applicable, the issuance of such Letter(s) of Credit) and in sufficient number
of signed counterparts, where applicable, to provide one for each Lender (except
for the Notes, of which only one original shall be signed for each Lender):
(a) The Agent shall have received:
(i) Notes. The duly executed Notes of the Borrower;
(ii) Subsidiary Guaranties. The duly executed Guaranties of
each of the Guarantors in substantially the form of Exhibit 4.1A;
(iii) Stock Pledge Agreements. The duly executed Stock Pledge
Agreements from the Borrower, Palex Container Systems, Inc., Acme
Barrel Company, Inc. and Environmental Recyclers of Colorado, Inc. in
substantially the form of Exhibit 4.1B, together with all of the
pledged securities referred to in the Stock Pledge Agreements as
required to be delivered to effectuate and perfect such stock pledges,
accompanied by executed and undated stock powers;
(iv) UCC-1 Financing Statements. The duly executed UCC-1
Financing Statements of each of the Borrower, Palex Container Systems,
Inc., Acme Barrel Company, Inc. and Environmental Recyclers of
Colorado, Inc. with respect to the stock and limited liability company
interests referenced in the Stock Pledge Agreements;
(v) Certificate of Officers of Borrower and Guarantors. A
certificate of the Secretary or Assistant Secretary and the President
or Vice President of each of the Borrower and the Guarantors containing
specimen signatures of the persons authorized to execute Credit
Documents on such Person's behalf or any other documents provided for
26
herein, together with (x) copies of resolutions of the Board of
Directors of such Person authorizing the execution and delivery of the
Credit Documents and of all other legal documents or proceedings taken
by such Person in connection with the execution and delivery of the
Credit Documents, (y) copies of such Person's Certificate or Articles
of Incorporation, certified by the Secretary of State of such Person's
jurisdiction of organization, and Bylaws or other organizational
documents;
(vi) Certificates of Existence and Good Standing. Certificates
of existence and good standing from the appropriate governing agency of
the Borrower's and each Guarantor's jurisdiction of organization and of
all jurisdictions where such Person is authorized to do business;
(vii) Fees. Payment of all fees and all expenses incurred
through the Effective Date then due and owing to the Agent and the
Arranger pursuant to this Agreement and the Fee Letter;
(viii) Consents. Certified copies of all documents evidencing
any necessary consents and governmental approvals taken or obtained by
the Borrower and the Guarantors with respect to the Credit Documents;
(ix) Financial Condition Certificate. A certificate of the
principal financial officer of the Borrower in substantially the form
of Exhibit 4.1C;
(x) Opinion of Counsel. The opinion of Xxxxxx Xxxxx, Esquire,
General Counsel to the Borrower and the Guarantors covering such
matters as the Lenders may reasonably require; and
(xi) Other Documents. Such other documents as the Lenders may
reasonably request.
(b) All legal matters incident to the execution and delivery of the
Credit Documents shall be satisfactory to the Lenders.
Section 4.2 Conditions Precedent to all Borrowings. In the case
of each advance of a Borrowing hereunder (including the issuance of, increase in
the amount of, or extension of the expiry date of, a Letter of Credit and the
initial Borrowing hereunder):
(a) Notices. In the case of a Borrowing, the Agent shall have received
the Borrowing Request required by Section 2.4, and in the case of the issuance,
extension or increase of a Letter of Credit, the Agent shall have received a
duly completed Borrowing Request and Application for such Letter of Credit
meeting the requirements of Section 2.2;
(b) Representations and Warranties True and Correct. Each of the
representations and warranties of the Borrower and its Subsidiaries set forth
herein and in the Credit Documents shall be true and correct in all material
respects as of the time of such new Borrowing, except as a result
27
of the transactions expressly permitted hereunder or thereunder and except to
the extent that any such representation or warranty relates solely to an earlier
date, in which case it shall have been true and correct in all material respects
as of such earlier date;
(c) No Default. No Default or Event of Default shall have occurred and
be continuing or would occur as a result of such Borrowing;
(d) New Litigation and Changes in Pending Litigation. Since the
Effective Date, no new litigation (including, without limitation, derivative or
injunctive actions), arbitration proceedings or governmental proceedings shall
be pending or known to be threatened against the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect; and no material development (whether or not disclosed) shall have
occurred in any litigation (including, without limitation, derivative or
injunctive actions), arbitration proceedings or governmental proceedings
previously disclosed, which could reasonably be expected to have a Material
Adverse Effect;
(e) Regulation U; Other Laws. The Borrowings to be made by the Borrower
shall not result in either the Borrower or the Agent or any Lender being in non-
compliance with or in violation of Regulation U of the Board of Governors of the
Federal Reserve System and shall not be prohibited by any other legal
requirement (including Regulations T and X of the Board of Governors of the
Federal Reserve System) imposed by the banking laws of the United States of
America, and shall not otherwise subject the Agent or any Lender to a penalty or
other onerous conditions under or pursuant to any legal requirement; and
(f) Material Adverse Change. There has occurred no event or effect that
has had or could reasonably be expected to have a Material Adverse Effect.
Each request for the advance of a Borrowing and each request for the issuance
of, increase in the amount of, or extension of the expiry date of, a Letter of
Credit shall be deemed to be a representation and warranty by the Borrower on
the date of such Borrowing, or issuance of, increase in the amount of, or
extension of the expiry date of, such Letter of Credit that all conditions
precedent to such Borrowing have been satisfied or fulfilled unless the Borrower
gives to the Agent written notice to the contrary, in which case no Lender shall
be required to fund such advances and the Agent shall not be required to issue,
increase the amount of or extend the expiry date of such Letter of Credit unless
the Majority Lenders shall have previously waived in writing such non-
compliance. In the event that any of the conditions specified in Section 4.2(c)
are not satisfied, the Borrower may not convert any Base Rate Loan into a LIBOR
Loan or continue any LIBOR Loan and may only convert or continue any LIBOR Loan
into or as a Base Rate Loan in accordance with Section 2.4(b) hereof and subject
to the applicability of the provisions of Section 2.8 regarding default rates of
interest. Further, in such case, any LIBOR Loan which has not been accelerated
pursuant to the terms hereof shall automatically convert into a Base Rate Loan
at the end of the applicable Interest Period unless prior to such time, the
conditions specified in Section 4.2(c) shall have been satisfied or waived
pursuant to the terms hereof.
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SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent and each Lender as
follows:
Section 5.1 Organization.
(a) The Borrower and each of its Subsidiaries (i) is a duly
incorporated and existing corporation (or other Person) in good standing under
the laws of the jurisdiction of its organization, (ii) has all necessary
corporate power (or comparable power, in the case of a Subsidiary that is not a
corporation) to own the property and assets it uses in its business and
otherwise to carry on its business as presently conducted, and (iii) is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business transacted by it or the nature of the property owned or
leased by it makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified could not reasonably be expected to have
a Material Adverse Effect.
(b) As of the Effective Date, the Borrower has no Subsidiaries other
than the Persons listed on Schedule 5.1, and the Borrower owns one hundred
percent (100%) of each class of capital stock or ownership interests of each
such Subsidiary except as otherwise disclosed on Schedule 5.1.
Section 5.2 Power and Authority; Validity. Each of the Borrower
and the Guarantors has the corporate (or comparable power, in the case of a
Subsidiary that is not a corporation) power and authority to execute, deliver
and carry out the terms and provisions of the Credit Documents to which it is a
party and has taken all necessary corporate (or comparable action, in the case
of a Subsidiary that is not a corporation) action to authorize the execution,
delivery and performance of the Credit Documents to which it is a party. Each of
the Borrower and the Guarantors has duly executed and delivered each such Credit
Document and each such Credit Document constitutes the legal, valid and binding
obligation of such Person enforceable in accordance with its terms, subject as
to enforcement only to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity, regardless of whether in a proceeding in equity
or at law.
Section 5.3 No Violation. Neither the execution, delivery nor
performance by the Borrower or any of the Guarantors of the Credit Documents nor
compliance by any of such Persons with the terms and provisions thereof, nor the
consummation by it of the transactions contemplated herein or therein, will (i)
contravene any applicable provision of any law, statute, rule or regulation, or
any applicable order, writ, injunction or decree of any court or governmental
instrumentality, except where such contravention could not reasonably be
expected to have a Material Adverse Effect, (ii) conflict with or result in any
breach of any term, covenant, condition or other provision of, or constitute a
default under (except where such conflict, breach or default could not
reasonably be expected to have a Material Adverse Effect), or result in the
creation or imposition of (or the obligation to create or impose) any Lien other
than any Permitted Lien upon any of the property or assets of the Borrower or
its Subsidiaries under the terms of any contractual
29
obligation to which the Borrower or any of its Subsidiaries is a party or by
which it or any of its properties or assets are bound or to which it may be
subject, or (iii) violate or conflict with any provision of the Certificate or
Articles of Incorporation or Bylaws or other governance documents, as applicable
of such Person.
Section 5.4 Litigation. As of the Effective Date, there are no
lawsuits (including, without limitation, derivative or injunctive actions),
arbitration proceedings or governmental proceedings pending or, to the best
knowledge of the Borrower, threatened, involving the Borrower or any of its
Subsidiaries except as disclosed in Schedule 5.4 and except for such lawsuits or
other proceedings which could not reasonably be expected to have a Material
Adverse Effect.
Section 5.5 Use of Proceeds; Margin Regulations. The proceeds
of the Loans may only be used to repay existing Indebtedness, to provide working
capital and for general corporate purposes (including the issuance of Letters of
Credit) and for Acquisitions. Neither the Borrower nor any of its Subsidiaries
are engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock. No proceeds of any Loan will be used to purchase or carry
any "margin stock" (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), to extend credit for the purpose of purchasing or
carrying any "margin stock," or for a purpose which violates Regulations T, U or
X of the Board of Governors of the Federal Reserve System.
Section 5.6 Investment Company Act. Neither the Borrower nor
any of its Subsidiaries is an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
Section 5.7 Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 5.8 True and Complete Disclosure. All factual
information (not including estimated, pro forma financial information and other
projections) heretofore or contemporaneously furnished by the Borrower or any of
its Subsidiaries in writing to the Lenders in connection with any Credit
Document or any transaction contemplated therein is, and all other such factual
information hereafter furnished by any such Persons in writing to the Lenders in
connection herewith, any of the other Credit Documents or the Loans will be,
true and accurate in all material respects, taken as a whole, on the date of
such information and not incomplete by omitting to state any material fact
necessary to make the information therein not misleading at such time in light
of the circumstances under which such information was provided. All estimates,
pro forma financial information and projections furnished by the Borrower or any
of its Subsidiaries in writing to the Lenders in connection with any Credit
Document or any transaction contemplated therein, were prepared by the Borrower
in good faith based upon assumptions believed by the Borrower to be reasonable
at the time such information was prepared.
30
Section 5.9 Financial Statements. The financial statements
heretofore delivered to the Lenders for the Borrower's fiscal quarter ending
June 28, 1998, were prepared on a consolidated basis in accordance with GAAP,
and such financial statements, together with the related notes and schedules,
fairly presents the financial position of the Borrower and its Subsidiaries as
of the date thereof and the results of operations for the period covered
thereby, subject to normal year-end adjustments and omission of certain
footnotes as permitted by the SEC. The Borrower and its Subsidiaries have no
material contingent liabilities or Indebtedness other than those disclosed in
such financial statements and in the Borrower's SEC filings.
Section 5.10 No Material Adverse Change. From June 28, 1998,
there has occurred no event or effect that has had, or to the best knowledge of
the Borrower could reasonably be expected to have, a Material Adverse Effect.
Section 5.11 Labor Controversies. There are no labor strikes,
lock-outs, slow downs, work stoppages or similar events pending or, to the best
knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries that could reasonably be expected to have a Material Adverse
Effect.
Section 5.12 Taxes. Except as disclosed on Schedule 5.12, the
Borrower and its Subsidiaries have filed all federal tax returns and all other
material tax returns required to be filed, and have paid all governmental taxes,
rates, assessments, fees, charges and levies (collectively, "Taxes") except such
Taxes, if any, as are being contested in good faith and for which reserves have
been provided in accordance with GAAP and except where the failure to pay such
Taxes could not reasonably be expected to have a Material Adverse Effect. Except
as disclosed on Schedule 5.12, no tax liens have been filed and no claims are
being asserted for Taxes. Except as disclosed on Schedule 5.12, the charges,
accruals and reserves on the books of the Borrower and its Subsidiaries for
Taxes and other governmental charges have been determined in accordance with
GAAP.
Section 5.13 ERISA. With respect to each Plan, the Borrower and
its Subsidiaries have fulfilled their obligations under the minimum funding
standards of, and are in compliance in all material respects with, ERISA and
with the Code to the extent applicable to it, and have not incurred any
liability under Title IV of ERISA to the PBGC or a Plan other than a liability
to the PBGC for premiums under Section 4007 of ERISA, except where such
liability could not reasonably be expected to have a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries has any contingent liability
with respect to any post-retirement benefits under a welfare plan as defined in
ERISA other than liability for continuation coverage described in Part 6 of
Title I of ERISA, except where such liability could not reasonably be expected
to have a Material Adverse Effect.
Section 5.14 Consents. All consents and approvals of, and
filings and registrations with, and all other actions of, all governmental
agencies, authorities or instrumentalities required to consummate the Borrowings
hereunder, on the date of each such Borrowing, have been obtained or made and
are or will be in full force and effect.
31
Section 5.15 Capitalization. All outstanding shares of the
Borrower and its Subsidiaries have been duly and validly issued, are fully paid
and nonassessable. None of the Borrower's Subsidiaries has outstanding any
securities convertible into or exchangeable for its capital stock or outstanding
any rights to subscribe for or to purchase, or any options for the purchase of,
or any agreement providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock
except for the nonvoting stock exchangeable into shares of the Borrower to be
issued by a Canadian Subsidiary of the Borrower to the sellers in connection
with the Acquisition of SMG Corporation and its Subsidiaries.
Section 5.16 Ownership of Property. The Borrower and its
Subsidiaries have good and marketable title to or a valid leasehold interest in
all of its property except to the extent, in the aggregate, no Material Adverse
Effect could reasonably be expected to result from the failure to have such
title or interest, subject to no Liens except Permitted Liens. The Borrower and
its Subsidiaries own or hold valid licenses to use all the material patents,
trademarks, permits, service marks and trade names, free of any burdensome
restrictions, that are necessary to the operation of the business of the
Borrower and its Subsidiaries as presently conducted, except where the failure
to own or hold such licenses could not reasonably be expected to have a Material
Adverse Effect.
Section 5.17 Compliance with Statutes. The Borrower and its
Subsidiaries are in compliance in all material respects with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies and have all necessary permits, licenses and other
necessary authorizations with respect to the conduct of their businesses and the
ownership and operation of their properties except where the failure to so
comply or hold such permits, licenses or other authorizations could not
reasonably be expected to have a Material Adverse Effect.
Section 5.18 Environmental Matters.
(a) Borrower and its Subsidiaries have complied with, and on the date
of each Borrowing will be in compliance with, all applicable Environmental Laws
and the requirements of any permits issued under such Environmental Laws except
where failure to so comply could not reasonably be expected to have a Material
Adverse Effect. To the best knowledge of the Borrower, there are no pending,
past or threatened Environmental Claims against the Borrower or any of its
Subsidiaries or any property owned or operated by the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect. To the best knowledge of the Borrower, there are no conditions or
occurrences on any property owned or operated by the Borrower or any of its
Subsidiaries or on any property adjoining or in the vicinity of any such
property that could reasonably be expected (i) to form the basis of an
Environmental Claim against the Borrower or any of its Subsidiaries or any
property owned or operated by the Borrower or any of its Subsidiaries, or (ii)
to cause any property owned or operated by the Borrower or any of its
Subsidiaries to be subject to any material restrictions on the ownership,
occupancy, use or transferability of such property by the Borrower or any of its
Subsidiaries under any applicable Environmental Law except for any such
condition or occurrence described in clauses (i) or (ii) which could not
reasonably be expected to have a Material Adverse Effect.
32
(b) To the best knowledge of the Borrower (i) Hazardous Materials have
not at any time been generated, used, treated or stored on, or transported to or
from, any property owned or operated by the Borrower or any of its Subsidiaries
in a manner that has violated or could reasonably be expected to violate any
Environmental Law, except for such violation which could not reasonably be
expected to have a Material Adverse Effect, and (ii) Hazardous Materials have
not at any time been released on or from any property owned or operated by the
Borrower or any of its Subsidiaries in a matter that has violated or could
reasonably be expected to violate any Environmental Law, except for such
violation which could not reasonably be expected to have a Material Adverse
Effect.
(c) To the best knowledge of the Borrower, the Environmental Claim
disclosed in the Borrower's SEC filings as of the Effective Date should not have
a Material Adverse Effect.
Section 5.19 Year 2000 Compliance. All devices, systems,
machinery, information technology, computer software and hardware, and other
date sensitive technology (jointly and severally its "systems") necessary for
the Borrower and its Subsidiaries to carry on their business as presently
contemplated to be conducted will be Year 2000 Compliant within a period of time
calculated to result in no material disruption of any of their business
operations. For purposes hereof, "Year 2000 Compliant" means that such systems
are designed to be used prior to, during and after the Gregorian calendar year
2000 A.D. and will operate during each such time period without error relating
to date data, specifically including any error relating to, or the product of,
date data which represents or references different centuries or more than one
century. The Borrower and its Subsidiaries will (i) undertake a detailed
inventory, review, and assessment of all areas within their businesses and
operations that could be adversely affected by the failure of the Borrower and
its Subsidiaries to be Year 2000 Compliant on a timely basis; and (ii) develop a
detailed plan and timeline for becoming Year 2000 Compliant on a timely basis.
The Borrower will, as soon as reasonably practicable, make written inquiry of
each of its and its Subsidiaries' key suppliers, vendors, and customers, and
will obtain in writing confirmations from all such Persons, as to whether such
Persons have initiated programs to become Year 2000 Compliant. For purposes
hereof, "key suppliers, vendors, and customers" refers to those suppliers,
vendors, and customers of the Borrower and its Subsidiaries whose business
failure could reasonably be expected to have a Material Adverse Effect. The fair
market value of all Collateral pledged to the Lenders as collateral to secure
the Loans is not and shall not be less than currently anticipated or subject to
substantial deterioration in value because of the failure of such Collateral to
be Year 2000 Compliant.
Section 5.20 Existing Liens and Indebtedness. The Borrower and
its Subsidiaries have no Liens or Indebtedness on any of their properties or
assets on the Effective Date other than as listed on Schedule 5.20.
SECTION 6. COVENANTS.
The Borrower covenants and agrees that, without the consent of the
Majority Lenders and so long as any Note, Letter of Credit or Reimbursement
Obligation or any other Obligation is outstanding or any Commitment is
outstanding hereunder:
33
Section 6.1 Corporate Existence. The Borrower and its
Subsidiaries will preserve and maintain their existence except (i) for the
dissolution of any Subsidiaries whose assets are transferred to the Borrower or
any of its Subsidiaries and (ii) as otherwise expressly permitted herein.
Section 6.2 Maintenance. The Borrower and its Subsidiaries will
maintain, preserve and keep their material plants, properties and equipment
necessary to the proper conduct of their businesses in reasonably good repair,
working order and condition (normal wear and tear excepted) and will from time
to time make all reasonably necessary repairs, renewals, replacements, additions
and betterments thereto so that at all times such plants, properties and
equipment are reasonably preserved and maintained; provided, however, that
nothing in this Section 6.2 shall prevent the Borrower or any of its
Subsidiaries from discontinuing the operation or maintenance of any such plants,
properties or equipment if such discontinuance is, in the judgment of the
Borrower or any such Subsidiary, as applicable, desirable in the conduct of its
business and not materially disadvantageous to the Lenders.
Section 6.3 Taxes. The Borrower and its Subsidiaries will duly
pay and discharge all Taxes upon or against them or their properties before
payment is delinquent and before penalties accrue thereon, unless and to the
extent that the same is being contested in good faith and by appropriate
proceedings and reserves have been established in conformity with GAAP.
Section 6.4 ERISA. The Borrower and its Subsidiaries will
promptly pay and discharge all obligations and liabilities arising under ERISA
or otherwise with respect to each Plan of a character which if unpaid or
unperformed might result in the imposition of a material Lien against any
properties or assets of the Borrower or any of its Subsidiaries and will
promptly notify the Agent of (i) the occurrence of any reportable event (as
defined in ERISA) relating to a Plan other than any such event with respect to
which the PBGC has waived notice by regulation; (ii) receipt of any notice from
PBGC of its intention to seek termination of any Plan or appointment of a
trustee therefor; (iii) the Borrower's or any of its Subsidiary's intention to
terminate or withdraw from any Plan; and (iv) the occurrence of any event that
could result in the incurrence of any material liability, fine or penalty, or
any material increase in the contingent liability of the Borrower or any of its
Subsidiaries, in connection with any post-retirement benefit under a welfare
plan benefit (as defined in ERISA).
Section 6.5 Insurance. The Borrower and its Subsidiaries will
maintain or cause to be maintained with responsible insurance companies,
insurance against any loss or damage to all material insurable property and
assets owned by them, such insurance to be of a character and in or in excess of
such amounts as are customarily maintained by companies similarly situated and
operating like property or assets, all of which policies shall name the Agent as
a loss payee for losses in excess of $50,000 and provide that no policy shall
terminate without at least thirty (30) days' advance written notice to the Agent
and otherwise be reasonably acceptable to the Agent. The Borrower and each of
its Subsidiaries will also insure employers' and public and product liability
risks, such insurance to be of a character and in or in excess of such amounts
as are customarily maintained by companies similarly situated and operating like
property or assets (with each liability insurance policy to name the Agent as an
additional insured) with responsible
34
insurance companies, all as reasonably acceptable to the Agent. No deductible
under any of such policies shall exceed $250,000, unless such deductible amount
under any such policy shall become unavailable on commercially reasonable terms
and the Borrower shall not self-insure any such risks, in each case except as
may have covered claims by any Subsidiary prior to the date of Acquisition
thereof. The Borrower will on or before January 31st of each calendar year and
upon the request of the Agent, furnish a certificate from an officer of the
Borrower setting forth the nature and extent of the insurance maintained
pursuant to this Section 6.5."
Section 6.6 Financial Reports and Other Information.
(a) The Borrower and its Subsidiaries will maintain a system of
accounting in such manner as will enable preparation of financial statements in
accordance with GAAP and will furnish to the Lenders and its authorized
representatives such information about the business and financial condition of
the Borrower and its Subsidiaries, including, without limitation, any corporate
documents and records, within such time period, as any Lender may reasonably
request; and, without any request, will furnish to the Agent:
(i) within forty-five (45) days after the end of each fiscal
quarter of each fiscal year of the Borrower, the consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal
quarter and the related consolidated and consolidating statements of
income and retained earnings and of cash flows for such fiscal quarter
and for the portion of the fiscal year ended with the last day of such
fiscal quarter, all of which shall be in reasonable detail and
certified by an officer of the Borrower acceptable to the Agent that
they fairly present the financial condition of the Borrower and its
Subsidiaries as of the dates indicated and the results of their
operations and changes in their cash flows for the periods indicated
and that they have been prepared in accordance with GAAP, in each case,
subject to normal year-end audit adjustments; and
(ii) within one hundred twenty (120) days after the end of
each fiscal year of the Borrower, consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of
such fiscal year and the related consolidated and consolidating
statements of income and retained earnings and of cash flows for such
fiscal year and setting forth consolidated comparative figures for the
preceding fiscal year and certified by the an officer of the Borrower
acceptable to the Agent, to the effect that such statements fairly
present the financial condition of the Borrower and its Subsidiaries as
of the dates indicated and the results of their operations and changes
in their cash flows, and in the case of the consolidated statements,
audited by an independent nationally-recognized accounting firm
acceptable to the Agent together with a certificate of such accountants
to the Lenders stating that in the course of the regular audit of the
business of Borrower, which audit was conducted in accordance with
GAAP, such accountants obtained no knowledge that a Default or an Event
of Default has occurred and is continuing, or if, in the opinion of
such accountants, a Default or an Event of Default has occurred and is
continuing, a statement as to the nature thereof.
35
(b) Each financial statement furnished to the Agent pursuant to
subsections (i) and (ii) of Section 6.6(a) shall be accompanied by (i) a written
certificate signed by an officer of the Borrower acceptable to the Agent to the
effect that (x) no Default or Event of Default has occurred during the period
covered by such statements or, if any such Default or Event of Default has
occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by the Borrower to
remedy the same, and (y) the representations and warranties contained herein are
true and correct in all material respects as though made on the date of such
certificate, except to the extent that any such representation or warranty
relates solely to an earlier date, in which case it was true and correct as of
such earlier date and except as otherwise described therein, as a result of the
transactions expressly permitted hereunder or as previously disclosed to the
Lenders, and (ii) a Compliance Certificate in the form of Exhibit 6.6 showing
the Borrower's compliance with the financial covenants set forth herein.
(c) Promptly upon receipt thereof, the Borrower will provide the Agent
with a copy of each report or "management letter" submitted to the Borrower or
any of its Subsidiaries by its independent accountants or auditors in connection
with any annual, interim or special audit made by them of the books and records
of the Borrower or any of its Subsidiaries.
(d) Promptly after obtaining knowledge of any of the following, the
Borrower will provide the Agent with written notice in reasonable detail of: (i)
any pending or threatened Environmental Claim against the Borrower or any of its
Subsidiaries or any property owned or operated by the Borrower or any of its
Subsidiaries that if adversely determined could reasonably be expected to have a
Material Adverse Effect; (ii) any condition or occurrence on any property owned
or operated by the Borrower or any of its Subsidiaries that results in
noncompliance by the Borrower or any of its Subsidiaries with any Environmental
Law that could reasonably be expected to have a Material Adverse Effect; and
(iii) the taking of any material removal or remedial action in response to the
actual or alleged presence of any Hazardous Material on any property owned or
operated by the Borrower or any of its Subsidiaries, which Hazardous Material or
the removal or remediation thereof could reasonably be expected to have a
Material Adverse Effect.
(e) The Borrower will promptly and in any event, within ten (10) days
after an officer of the Borrower has knowledge thereof, give written notice to
the Agent of: (i) any pending or threatened litigation or proceeding against the
Borrower or any of its Subsidiaries asserting any claim or claims against any of
same in excess of $250,000 in the aggregate; (ii) the occurrence of any Default
or Event of Default; (iii) any circumstance that has had a Material Adverse
Effect; and (iv) any event which would result in a breach of, Sections 6.20,
6.21, 6.22 or 6.23.
(f) The Borrower will (i) furnish such additional information,
statements and other reports with respect to the Borrower's compliance (and its
approach to and progress towards achieving compliance) with Section 5.19 as the
Agent may request from time to time; (ii) in the event of any change in
circumstances that causes or will likely cause any of the Borrower's
representations and warranties set forth in Section 5.19, to no longer be true,
the Borrower shall promptly, and in any event within ten (10) days of receipt of
information regarding a change in circumstances, provide the Agent with written
notice that describes in reasonable detail the change in circumstances and any
additional information any Lender requests of the Borrower in
36
connection therewith; and (iii) give any representative of any Lender access
during all business hours to, and permit such representative to examine, copy or
make excerpts from, any and all books, records and documents in the possession
of the Borrower and its Subsidiaries and relating to their affairs, and to
inspect any of the properties and systems of the Borrower and its Subsidiaries,
and to project test its systems to determine if they are Year 2000 Compliant in
an integrated environment, all at the sole cost and expense of the Lenders.
(g) The Agent will promptly provide to each Lender all information
provided to it by the Borrower pursuant to this Section 6.6.
Section 6.7 Lenders Inspection Rights. Upon reasonable notice
from the Agent or any Lender, the Borrower will permit the Agent or any Lender
(and such Persons as the Agent or any Lender may designate), at the Borrower's
expense while an Event of Default has occurred and is continuing, during normal
business hours following reasonable notice to visit and inspect any of the
properties of the Borrower or any of its Subsidiaries, to examine all of their
books and records, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants (and by this provision, the
Borrower authorizes such accountants to discuss with the Agent or any Lender,
and such Persons as the Agent or any Lender may designate, the affairs, finances
and accounts of the Borrower and its Subsidiaries provided that the Borrower has
the opportunity to be present at such discussions), all at such reasonable times
and as often as may be reasonably requested.
Section 6.8 Conduct of Business. The Borrower and its
Subsidiaries will not engage in any line of business other than the pallet
manufacturing, recycling and leasing services business, the drum and other
industrial container reconditioning, manufacturing, distributing and leasing
business, and related services (each, a "Permitted Business").
Section 6.9 New Subsidiaries. The Borrower shall cause (i) any
direct or indirect domestic Subsidiary which is formed or acquired after the
Effective Date to become a Guarantor with respect to, and jointly and severally
liable with all other Guarantors for, all of the Obligations under this
Agreement and the Note pursuant to a Guaranty substantially in the form of
Exhibit 4.1A, to execute and deliver a Security Agreement substantially in the
form of Exhibit 4.1D, together with a UCC-1 Financing Statement with respect to
the assets of such Guarantor as set forth therein and to execute and deliver a
Mortgage on any interest it has in real property which the Agent determines
material in its reasonable discretion, together with UCC-1 Financing Statements
with respect to the personal property assets of such Guarantor as set forth
therein (which Mortgages shall be recorded by the Agent upon written notice to
the Agent by the Borrower, a Guarantor or a Lender of the occurrence of a
Default), and (ii) any Subsidiary which forms or acquires a Subsidiary after the
Effective Date to execute and deliver to the Agent a Stock Pledge Agreement
substantially in the form of Exhibit 4.1B and to deliver to the Agent the
original stock certificates for any such Subsidiary as set forth therein (or
other evidence of its ownership interest therein) and undated stock powers
executed in blank with respect thereto, in each case within thirty (30) days
following such formation or acquisition. The Borrower shall provide to the Agent
a list of all its Subsidiaries with the state or country of incorporation and
the location of the principal place of business of each such Subsidiary at the
same time as it provides its
37
quarterly financial reports to the Agent pursuant to Section 6.6(a)(i). Upon
demand by the Agent (which demand shall be made at the request of any Lender),
the Borrower shall promptly execute and deliver to the Agent, and shall cause
its domestic Subsidiaries to promptly execute and deliver to the Agent, such
other and further security documents as may be reasonably requested by the Agent
to perfect a Lien on its rolling stock and all equipment with certificates of
title."
Section 6.10 Dividends and Negative Pledges.
(a) The Borrower shall not pay any dividends or other distributions on
its capital stock.
(b) Neither the Borrower nor any of its Subsidiaries shall, directly or
indirectly, create or otherwise permit to exist or become effective any
restriction on the ability of any Subsidiary of the Borrower to (i) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or to pay any
Indebtedness owed to the Borrower, or (ii) make loans or advances to the
Borrower or any of its Subsidiaries, except in either case for restrictions
existing under or by reason of applicable law, this Agreement and the other
Credit Documents.
(c) Neither the Borrower nor any of its Subsidiaries shall enter into
any agreement creating or assuming any Lien upon its properties, revenues or
assets, whether now owned or hereafter acquired other than as permitted
hereunder. Neither the Borrower nor any of its Subsidiaries shall enter into any
agreement other than this Agreement and the Credit Documents prohibiting the
creation or assumption of any Lien upon its properties, revenues or assets,
whether now owned or hereafter acquired or prohibiting or restricting the
ability of the Borrower or any of its Subsidiaries to amend or otherwise modify
this Agreement or any Credit Document.
Section 6.11 Restrictions on Fundamental Changes. Neither the
Borrower nor any of its Subsidiaries shall be a party to any merger into or
consolidation with, make an Acquisition or otherwise purchase or acquire all or
substantially all of the assets or stock of, any other Person, or sell all or
substantially all of its assets or stock, except:
(a) the Borrower or any of its Subsidiaries may merge into or
consolidate with, make an Acquisition or otherwise purchase or acquire all or
substantially all of the assets or stock of any other Person if upon the
consummation of any such merger, consolidation, purchase or Acquisition, (i) the
Borrower or such Subsidiary is the surviving corporation to any such merger or
consolidation (or the other Person will thereby become a Subsidiary); (ii) the
nature of the business of such acquired Person is a Permitted Business; (iii)
the Borrower shall have delivered to the Agent (which the Agent shall promptly
provide to each Lender) within ten (10) Business Days prior to the consummation
of an Acquisition a report signed by an executive officer of the Borrower which
shall contain calculations demonstrating the Borrower's compliance with Sections
6.20, 6.21, 6.22 and 6.23 (on a trailing four fiscal quarter pro forma basis,
consistent with SEC regulations and practices), such calculations to use
historical financial results of the acquired business; (iv) all Lenders shall
consent; (v) no Default or Event of Default shall have occurred and be
continuing or would otherwise be existing as a result of such merger,
consolidation, purchase
38
or Acquisition; and (vi) such merger, consolidation, purchase or Acquisition is
non-hostile in nature; and"
(b) the Borrower may purchase or otherwise acquire all or substantially
all of the stock or assets of, or otherwise acquire by merger or consolidation,
any of its Subsidiaries, and any such Subsidiary may merge into, or consolidate
with, or purchase or otherwise acquire all or substantially all of the assets or
stock of or sell all or substantially all of its assets or stock to, any other
Subsidiary of the Borrower or the Borrower, in each case so long as the Borrower
shall be the surviving entity to any such merger or consolidation if the
transaction is with the Borrower.
Except as otherwise permitted in this Section 6.11, the Borrower shall not sell
or dispose of any capital stock of or its ownership interest in any of the
Guarantors or any other Subsidiaries which it may form.
Section 6.12 Environmental Laws. The Borrower and its
Subsidiaries shall comply with all Environmental Laws (including, without
limitation, obtaining and maintaining all necessary permits, licenses and other
necessary authorizations) applicable to or affecting the properties or business
operations of the Borrower or any of its Subsidiaries except where the failure
to so comply could not reasonably be expected to have a Material Adverse Effect.
Section 6.13 Liens. The Borrower and its Subsidiaries shall not
create, incur, assume or suffer to exist any Lien of any kind on any of their
properties or assets of any kind except the following (collectively, the
"Permitted Liens"):
(a) Liens arising in the ordinary course of business by operation of
law in connection with workers' compensation, unemployment insurance, old age
benefits, social security obligations, taxes, assessments, statutory obligations
or other similar charges, good faith deposits, pledges or other Liens in
connection with (or to obtain letters of credit in connection with) bids,
performance bonds, contracts or leases to which the Borrower or its Subsidiaries
are a party or other deposits required to be made in the ordinary course of
business; provided that in each case the obligation secured is not for
Indebtedness and is not overdue or, if overdue, is being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP have been
provided therefor;
(b) mechanics', workmen, materialmen, landlords', carriers' or other
similar Liens arising in the ordinary course of business (or deposits to obtain
the release of such Liens) related to obligations not due or, if due, that are
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;
(c) inchoate Liens under ERISA and Liens for Taxes not yet due or which
are being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;
(d) Liens arising out of judgments or awards against the Borrower or
any of its Subsidiaries, or in connection with surety or appeal bonds or the
like in connection with bonding
39
such judgments or awards, the time for appeal from which or petition for
rehearing of which shall not have expired or for which the Borrower or such
Subsidiary shall be prosecuting on appeal or proceeding for review and for which
it shall have obtained a stay of execution or the like pending such appeal or
proceeding for review; provided that the aggregate amount of uninsured or
underinsured liabilities (including interest, costs, fees and penalties, if any)
of the Borrower and its Subsidiaries secured by such Liens shall not exceed
$250,000 at any one time outstanding and provided further there is adequate
assurance, in the sole discretion of the Lenders, that the insurance proceeds
attributable thereto shall be paid promptly upon the expiry of such time period
or resolution of such proceeding if necessary to remove such Liens;
(e) rights of a common owner of any interest in property held by a
Person and such common owner as tenants in common or through other common
ownership;
(f) encumbrances (other than to secure the payment of Indebtedness),
easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations in any property or rights-of-way of a Person for the purpose of
roads, pipelines, transmission lines, transportation lines, distribution lines,
removal of gas, oil, coal, metals, steam, minerals, timber or other natural
resources, and other like purposes, or for the joint or common use of real
property, rights-of-way, facilities or equipment, or defects, irregularity and
deficiencies in title of any property or rights-of-way which do not materially
diminish the value of or the ability to use such property;
(g) financing statements filed by lessors of property (but only with
respect to the property so leased) and Liens under any conditional sale or title
retention agreements entered into in the ordinary course of business;
(h) rights of lessees of equipment owned by the Borrower or any of its
Subsidiaries;
(i) existing Liens in connection with Indebtedness permitted under
Section 6.14(d) and any extension, renewal or replacement thereof;
(j) Liens securing Indebtedness permitted by Section 6.14(d) on any
assets acquired;
(k) existing Liens listed on Schedule 6.13 and any extension, renewal
or replacement thereof;
(l) Liens created by the Credit Documents; and
(m) Liens on any assets acquired in an Acquisition, provided that all
such Liens, other than Permitted Liens listed in (a) through (l) of this
Section, shall be released on or before thirty (30) days from the date of such
Acquisition.
Section 6.14 Indebtedness. The Borrower and its Subsidiaries
shall not contract, assume or suffer to exist any Indebtedness (including,
without limitation, any Guaranties), except:
(a) Indebtedness under the Credit Documents;
40
(b) unsecured intercompany loans and advances from the Borrower to any
of its Subsidiaries and unsecured intercompany loans and advances from any of
such Subsidiaries to the Borrower or any other Subsidiaries of the Borrower;
(c) existing Indebtedness listed on Schedule 6.13, and any subsequent
extensions, renewals or refinancings thereof so long as such Indebtedness is not
increased in amount, the maturity date thereof is not made earlier in time, the
interest rate per annum applicable thereto is not increased, any amortization of
principal thereunder is not shortened and the payments thereunder are not
increased;
(d) Capitalized Lease Obligations and purchase money Indebtedness on
assets acquired in an aggregate amount not to exceed $2,000,000 at any one time
outstanding;
(e) unsecured Indebtedness to a seller incurred in connection with an
Acquisition, provided that such Indebtedness is subordinated in payment to the
Obligations hereunder as reasonably acceptable to Agent, such Indebtedness
contains covenants no more restrictive than the covenants contained in this
Agreement and subordination and standstill provisions reasonably acceptable to
the Agent and no payments may be made thereon if a Default or Event of Default
shall have occurred and be continuing or would occur as a result of any such
payment;
(f) Indebtedness under any Interest Rate Protection Agreement entered
into to protect the Borrower against fluctuations in interest rates and not for
speculative purposes; and
(g) Indebtedness incurred in connection with a Public Subordinated Debt
Issue or Private Subordinated Debt Issue.
Section 6.15 Loans, Advances and Investments. The Borrower and its
Subsidiaries shall not lend money or make advances to any Person, or purchase or
acquire any stock, indebtedness, obligations or securities of, or any other
interest in, or make any capital contribution to, any Person (any of the
foregoing, an "Investment") other than:
(a) Investments in Cash Equivalents;
(b) receivables owing to the Borrower or its Subsidiaries created or
acquired in the ordinary course of business and payable on customary trade terms
of the Borrower or such Subsidiary and in compliance with the requirements of
Section 6.17;
(c) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in the
ordinary course of business;
(d) deposits made in the ordinary course of business consistent with
past practices to secure the performance of leases;
(e) as permitted by Section 6.14(b);
41
(f) loans to employees of the Borrower or any of its Subsidiaries,
provided that all such loans shall not exceed $100,000 at any one time;
(g) advances to vendors in the ordinary course of business, provided
that no such advance to a vendor shall be in excess of $100,000 and such
advances shall not exceed $500,000 at any one time; and
(h) (i) unsecured intercompany loans or advances from the Borrower to
any of its Subsidiaries or from any Subsidiaries of the Borrower to the Borrower
or any other Subsidiary of the Borrower, and (ii) Investments of the Borrower or
any Subsidiary of the Borrower in any of its Subsidiaries.
Section 6.16 Transfer of Assets. The Borrower and its
Subsidiaries shall not permit any sale, transfer, conveyance, assignment or
other disposition of any material asset of the Borrower or any of its
Subsidiaries except:
(a) transfers of inventory, equipment and other assets in the ordinary
course of business;
(b) the retirement or replacement of assets (with assets of equal or
greater value) in the ordinary course of business;
(c) transfers of any assets among the Borrower and any of its
Subsidiaries; and
(d) (i) the transfer of cash or other assets as consideration for an
Acquisition and (ii) the transfer of any assets acquired in an Acquisition which
are not necessary for the operation of the business of the Borrower and its
Subsidiaries, provided that the net cash proceeds thereof are reinvested by the
Borrower and its Subsidiaries in the operation of a Permitted Business.
Section 6.17 Transactions with Affiliates. Except as otherwise
specifically permitted herein, the Borrower and its Subsidiaries shall not enter
into or be a party to any material transaction or arrangement or series of
related transactions or arrangements which in the aggregate would be material
with any Affiliate of such Person, including without limitation, the purchase
from, sale to or exchange of property with or the rendering of any service by or
for, any Affiliate, except pursuant to the reasonable requirements of such
entity's business and upon fair and reasonable terms.
Section 6.18 Compliance with Laws. The Borrower and its
Subsidiaries shall conduct their businesses and otherwise be in compliance in
all material respects with all applicable laws, regulations, ordinances and
orders of all governmental, judicial and arbitral authorities applicable to them
and shall obtain and maintain all necessary permits, licenses and other
authorizations necessary to conduct their businesses and own and operate their
properties except where the failure to comply or have such permits, licenses or
other authorizations could not reasonably be expected to have a Material Adverse
Effect.
42
Section 6.19 Credit Exposure. No more than ten percent (10%) of
the Borrower's Consolidated Net Worth shall be subject to credit risk from any
single customer (including any Affiliate of such customer) unless such accounts
receivable are supported by a letter of credit issued or confirmed by a
financial institution acceptable to the Agent.
Section 6.20 Minimum Consolidated Net Worth. The Borrower will
maintain a minimum Consolidated Net Worth of not less than an amount equal to
the sum of (i) $78,618,000, plus (ii) for each fiscal quarter ended prior to
(but not on) such date of determination, commencing with the fiscal quarter
ended June 28, 1998, (x) an amount equal to 50% of Consolidated Net Income for
such fiscal quarter, if positive, plus (y) an amount equal to 100% of the amount
of any equity issuance by the Borrower, including in a secondary offering or
where equity is used to acquire another entity in an Acquisition, plus (z) an
amount equal to 100% of the stockholders equity of any entity acquired in an
Acquisition for which the Borrower uses the pooling of interest method of
accounting in accordance with GAAP.
Section 6.21 Minimum Fixed Charge Coverage Ratio. The Borrower
will maintain as of the end of each fiscal quarter a Fixed Charge Coverage Ratio
of at least 1.0 to 1.0 through June 28, 1999, and 1.25 to 1.0 thereafter.
Section 6.22 Maximum Funded Debt to EBITDA Ratio. The Borrower
will maintain as of the end of each fiscal quarter a maximum Funded Debt to
EBITDA Ratio of not greater than 3.50 to 1.0 through June 28, 1999, 3.25 to 1.0
from June 29, 1999, through December 28, 1999, and 3.0 to 1.0 from December 29,
1999 thereafter; provided that if a Public Subordinated Debt Issue shall have
closed, the Borrower will maintain a maximum Funded Debt to EBITDA Ratio of not
greater than 3.75 to 1.0 from and after the date thereof.
Section 6.23 Maximum Senior Debt to EBITDA Ratio. The Borrower
will maintain as of the end of each fiscal quarter a maximum Senior Debt to
EBITDA Ratio of not greater than 3.25 to 1.0 through June 28, 1999, 3.0 to 1.0
from June 29, 1999, through December 28, 1999, and 2.75 to 1.0 from December 29,
1999 thereafter."
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.
Section 7.1 Events of Default. Any one or more of the following
shall constitute an Event of Default:
(a) default by the Borrower in the payment of the principal amount of
any Loan, any Reimbursement Obligation or any interest thereon or any fees
payable hereunder within ten (10) days of the date such payment is due;
(b) default by the Borrower in the observance or performance of any
covenant set forth in Sections 6.6(e), 6.10(a), 6.11 or 6.16;
(c) default by the Borrower or any of its Subsidiaries in the
observance or performance of any provision hereof or of any other Credit
Document not mentioned in (a) or (b) above
43
(excluding any default of Section 6.21 solely as a result of distributions or
dividends made by the entity acquired in an Acquisition before the date of such
Acquisition), which is not remedied within thirty (30) days after the earlier of
(i) such default or event of default first becoming known to any officer of the
Borrower, or (ii) notice to the Borrower by the Agent of the occurrence of such
default or event of default;
(d) any representation or warranty or other written statement made or
deemed made herein, in any other Credit Document or in any financial or other
report or document furnished in compliance herewith or therewith by the Borrower
or any of its Subsidiaries proves untrue in any material respect as of the date
of the issuance or making, or deemed issuance or making thereof;
(e) default occurs in the payment when due (after any applicable grace
period) of Indebtedness in an aggregate principal amount of $250,000 or more of
the Borrower or any of its Subsidiaries, or the occurrence of any other default,
which with the passage of time or notice would permit the holder or beneficiary
of such Indebtedness, or a trustee therefor, to cause the acceleration of the
maturity of any such Indebtedness or any mandatory unscheduled prepayment,
purchase, or other early funding thereof;
(f) the Borrower or any of its Subsidiaries (i) has entered
involuntarily against it an order for relief under the United States Bankruptcy
Code or a comparable action is taken under any bankruptcy or insolvency law of
another country or political subdivision of such country, (ii) generally does
not pay, or admits its inability generally to pay, its debts as they become due,
(iii) makes a general assignment for the benefit of creditors, (iv) applies for,
seeks, consents to, or acquiesces in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any substantial part
of its property, (v) institutes any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code or any comparable
law, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fails to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) makes any
board of directors resolution in direct furtherance of any matter described in
clauses (i)-(v) above, or (vii) fails to contest in good faith any appointment
or proceeding described in Section 7.1(f);
(g) a custodian, receiver, trustee, examiner, liquidator or similar
official is appointed for the Borrower or any of its Subsidiaries or any
substantial part of its property, or a proceeding described in Section 7.1(f)(v)
is instituted against the Borrower or any of its Subsidiaries, and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of sixty (60) days;
(h) the Borrower or any of its Subsidiaries fails within thirty (30)
days (or such earlier date as any steps to execute on such judgment or order
take place) to pay, bond or otherwise discharge, or to obtain an indemnity
against on terms and conditions satisfactory to the Lenders in its sole
discretion, any one or more judgments or orders for the payment of money in
excess of $250,000 in the aggregate which is uninsured or underinsured by at
least such amount (provided
44
that there is adequate assurance, in the sole discretion of the Lenders, that
the insurance proceeds attributable thereto shall be paid promptly upon the
expiration of such time period or resolution of such proceeding), which is not
stayed on appeal or otherwise being appropriately contested in good faith in a
manner that stays execution;
(i) the Borrower or any of its Subsidiaries fails to pay when due an
amount aggregating in excess of $250,000 that it is liable to pay to the PBGC or
to a Plan under Title IV of ERISA; or a notice of intent to terminate a Plan
having Unfunded Vested Liabilities of the Borrower or any of its Subsidiaries in
excess of $250,000 (a "Material Plan") is filed under Title IV of ERISA; or the
PBGC institutes proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan; or a proceeding is
instituted by a fiduciary of any Material Plan against the Borrower or any of
its Subsidiaries to collect any liability under Section 515 or 4219(c)(5) of
ERISA and such proceeding is not dismissed within thirty (30) days thereafter;
or a condition exists by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated;
(j) the Borrower, any of its Subsidiaries, any Person acting on behalf
of the Borrower or any of its Subsidiaries, or any governmental, judicial or
arbitral authority challenges the validity of any Credit Document or any
Person's obligations thereunder, or any Credit Document ceases to be in full
force and effect in all material respects or ceases to give to the Agent and the
Lenders the rights and powers purported to be granted in its favor thereby in
all material respects;
(k) (i) any Person or two or more Persons acting in concert shall
acquire beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended), directly or indirectly, of voting securities
of the Borrower (or other securities convertible into such securities)
representing fifty percent (50%) or more of the combined voting power of all
outstanding securities of the Borrower entitled to vote in the election of
directors; or (ii) individuals who on the Effective Date, constitute the
Borrower's Board of Directors, or their successors approved in accordance with
the terms below, cease for any reason to constitute at least a majority thereof,
unless the election or nomination for the election by the Borrower's
stockholders of each new director was approved by vote of at least 2/3rds of the
directors then still in office who were directors on the Effective Date, or
their successors approved in accordance with the terms hereof; or (iii) the
common stock of the Borrower shall be delisted from the National Association of
Securities Dealers Automated Quotation System; or"
(l) A new Section 7.1(l) is hereby added as follows:
"(l) an Event of Default shall occur and be continuing under any
documents evidencing any Public Subordinated Debt Issue or any Private
Subordinated Debt Issue." Section 7.2 Non-Bankruptcy Defaults. When any Event of
Default other than those described in subsections (f) or (g) of Section 7.1 has
occurred and is continuing, the Agent shall, by notice to the Borrower: (a) if
so directed by the Majority Lenders, terminate the remaining Commitments and all
other obligations of the Lenders hereunder on the date stated in such notice
(which may be the date thereof); (b) if so directed by the Majority Lenders,
declare the principal
45
of and the accrued interest on all outstanding Notes to be forthwith due and
payable and thereupon all outstanding Notes, including both principal and
interest thereon, shall be and become immediately due and payable together with
all other amounts payable under the Credit Documents without further demand,
presentment, protest or notice of any kind, including, but not limited to,
notice of intent to accelerate and notice of acceleration, each of which is
expressly waived by the Borrower; and (c) if so directed by the Majority
Lenders, demand that the Borrower immediately pay to the Agent (to be held by
the Agent pursuant to Section 7.4) the full amount then available for drawing
under each or any outstanding Letter of Credit; and the Borrower agrees to
immediately make such payment and acknowledges and agrees that neither the Agent
nor the Lenders would have an adequate remedy at law for failure by the Borrower
to honor any such demand and that the Agent, for the benefit of the Lenders
shall have the right to require the Borrower to specifically perform such
undertaking whether or not any drawings or other demands for payment have been
made under any Letter of Credit. The Agent, after giving notice to the Borrower
pursuant to Section 7.1(c) or (d) or this Section 7.2, shall also promptly send
a copy of such notice to the other Lenders, but the failure to do so shall not
impair or annul the effect of such notice.
Section 7.3 Bankruptcy Defaults. When any Event of Default
described in subsections (f) or (g) of Section 7.1 has occurred and is
continuing with respect to the Borrower, then (i) all outstanding Notes shall
immediately become due and payable together with all other amounts payable under
the Credit Documents without presentment, demand, protest or notice of any kind,
each of which is expressly waived by the Borrower, (ii) all obligations of the
Agent or any Lender to extend further credit pursuant to any of the terms hereof
shall immediately terminate, and (iii) the Borrower shall immediately pay to the
Agent (to be held by the Agent pursuant to Section 7.4) the full amount then
available for drawing under all outstanding Letters of Credit, the Borrower
acknowledging and agreeing that neither the Agent nor the Lenders would have an
adequate remedy at law for failure by the Borrower to honor any such demand and
that the Agent and the Lenders shall have the right to require the Borrower to
specifically perform such undertaking whether or not any drawings or other
demands for payment have been made under any of the Letters of Credit.
Section 7.4 Collateral for Undrawn Letters of Credit.
(a) If the prepayment of the amount available for drawing under any or
all outstanding Letters of Credit is required under Section 7.2 or 7.3, the
Borrower shall forthwith pay the amount required to be so prepaid, to be held by
the Agent as provided in subsection (b) below.
(b) All amounts prepaid pursuant to subsection (a) above shall be held
by the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments from time to time held therein, and any
substitutions for such account, any certificate of deposit or other instrument
evidencing any of the foregoing and all proceeds of and earnings on any of the
foregoing being collectively called the "Collateral Account") as security for,
and for application by the Agent (to the extent available) to, the reimbursement
of any drawing under any Letter of Credit then or thereafter made by the Agent,
and to the payment of the unpaid balance of any Loans and all other due and
unpaid Obligations (collectively, the "Collateralized Obligations").
46
The Collateral Account shall be held in the name of and subject to the exclusive
dominion and control of the Agent, for the benefit of the Lenders, as pledgee
hereunder. If and when requested by the Borrower, the Agent shall invest and
reinvest funds held in the Collateral Account from time to time in Cash
Equivalents specified from time to time by the Borrower, provided that the Agent
is irrevocably authorized to sell investments held in the Collateral Account
when and as required to make payments out of the Collateral Account for
application to Collateralized Obligations due and owing from the Borrower to the
Lenders. If such funds have been deposited pursuant to Section 7.2 or 7.3, when
and if (i) the Borrower shall have made payment of all Collateralized
Obligations then due and payable, (ii) all relevant preference or other
disgorgement periods relating to the receipt of such payments have passed, and
(iii) no Letters of Credit, Commitments, Loans, Reimbursement Obligations or
other Obligations remain outstanding hereunder, the Agent shall repay to the
Borrower any remaining amounts held in the Collateral Account.
Section 7.5 Notice of Default. The Agent shall give notice to
the Borrower under Section 7.1(c) and (d) and 7.2 promptly upon being requested
to do so by the Majority Lenders and shall thereupon notify all the Lenders
thereof.
Section 7.6 Application of Proceeds. After the occurrence of
and during the continuance of an Event of Default, any payment to the Agent
hereunder or from the proceeds of any cash collateral shall be applied as the
Agent and the Lenders shall elect in their sole discretion.
SECTION 8. CHANGE IN CIRCUMSTANCES.
Section 8.1 Change of Law. Notwithstanding any other provisions
of this Agreement or any Note, if at any time any change in applicable law or
regulation or in the interpretation thereof makes it unlawful for any Lender to
make or continue to maintain LIBOR Loans or to give effect to its obligations as
contemplated hereby, such Lender shall promptly give notice thereof to the
Borrower and such Lender's obligations to make, continue or convert Loans into
LIBOR Loans under this Agreement shall be suspended until it is no longer
unlawful for such Lender to make or maintain LIBOR Loans. The Borrower shall
prepay on demand the outstanding principal amount of any such affected LIBOR
Loans, together with all interest accrued thereon and all other amounts then due
and payable to such Lender under this Agreement; provided, however, subject to
all of the terms and conditions of this Agreement, the Borrower may then elect
to borrow the principal amount of the affected LIBOR Loans from such Lender by
means of Base Rate Loans from such Lender that shall not be made ratably by the
Lenders but only by such affected Lender.
Section 8.2 Unavailability of Deposits or Inability to Ascertain
LIBOR Rate. If on or before the first day of any Interest Period for any
Borrowing of LIBOR Loans the Agent determines (after consultation with other
Lenders) that, due to changes in circumstances since the Effective Date,
adequate and fair means do not exist for determining the Adjusted LIBOR Rate or
such rate will not accurately reflect the cost to the Majority Lenders of
funding LIBOR Loans for such Interest Period, the Agent shall give notice of
such determination to the Borrower and the Lenders, whereupon until the Agent
notifies the Borrower and Lenders that the circumstances
47
giving rise to such suspension no longer exist, the obligations of the Lenders
to make, continue or convert Loans into LIBOR Loans shall be suspended.
Section 8.3 Increased Cost and Reduced Return.
(a) If, on or after the Effective Date, the adoption of or any change
in any applicable law, rule or regulation, 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), including the Agent in its
capacity as the issuer of Letters of Credit, with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) subjects any Lender of that type (or its Lending Office)
to any tax, duty or other charge related to any LIBOR Loan, Letter of
Credit or Reimbursement Obligation, or its participation in any
thereof, or its obligation to advance or maintain LIBOR Loans, issue
Letters of Credit or to participate therein, or shall change the basis
of taxation of payments to any Lender (or its Lending Office) of the
principal of or interest on its LIBOR Loans, Letters of Credit or
participations therein, or any other amounts due under this Agreement
related to its LIBOR Loans, Letters of Credit, Reimbursement
Obligations or participations therein, or its obligation to make LIBOR
Loans, issue Letters of Credit or acquire participations therein
(except for changes in the rate of tax on the overall net income of
such Lender or its Lending Office imposed by the jurisdiction in which
such Lender's principal executive office or Lending Office is located);
or
(ii) imposes, modifies or deems applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System) against assets of, deposits with or for the account of,
or credit extended by, any Lender of that type (or its Lending Office)
or imposes on any Lender of that type (or its Lending Office) or on the
interbank market any other condition affecting its LIBOR Loans, its
Letters of Credit, any Reimbursement Obligation owed to it or its
participation in any thereof, or its obligation to advance or maintain
LIBOR Loans, issue Letters of Credit or to participate in any thereof;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of advancing or maintaining any LIBOR Loan, issuing or
maintaining a Letter of Credit or participation therein, or to reduce the amount
of any sum received or receivable by such Lender (or its Lending Office) in
connection therewith under this Agreement or its Note(s), by an amount deemed by
such Lender to be material, then, within fifteen (15) days after demand in
reasonable detail by such Lender (with a copy to the Agent), the Borrower shall
be obligated to pay to such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduction.
(b) If, after the Effective Date, the Agent or any Lender shall have
determined that the adoption after the Effective Date of any applicable law,
rule or regulation regarding capital adequacy, or any change therein (including,
without limitation, any revision in the Final
48
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 CFR Part 208, Appendix A; 00 XXX Xxxx 000, Xxxxxxxx X) or of the
Office of the Comptroller of the Currency (12 CFR Part 3, Appendix A), or in any
other applicable capital adequacy rules heretofore adopted and issued by any
governmental authority), 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 the Agent or
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 authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's capital, or on the capital of any corporation
controlling such Lender, 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) by an amount deemed by such Lender to be material,
then from time to time, within fifteen (15) days after demand in reasonable
detail by such Lender (with a copy to the Agent), the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) The Agent and each Lender that determines to seek compensation
under this Section 8.3 shall notify the Borrower and, in the case of a Lender
other than the Agent, the Agent of the circumstances that entitle the Agent or
Lender to such compensation and will designate a different Lending Office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole judgment of such Lender, be otherwise
disadvantageous to it; provided that, the foregoing shall not in any way affect
the rights of any Lender or the obligations of the Borrower under this Section
8.3, and provided further that no Lender shall be obligated to make its LIBOR
Loans hereunder at any office located in the United States. A certificate of any
Lender claiming compensation under this Section 8.3 and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
Section 8.4 Lending Offices. The Agent and each Lender may, at
its option, elect to make its Loans hereunder at the Lending Office for each
type of Loan available hereunder or at such other of its branches, offices or
Affiliates as it may from time to time elect and designate in a written notice
to the Borrower and the Agent subject to Section 8.3(c).
Section 8.5 Discretion of Lender as to Manner of Funding.
Notwithstanding any other provision of this Agreement, each Lender shall be
entitled to fund and maintain its funding of all or any part of its Loans in any
manner it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if each Lender had
actually funded and maintained each LIBOR Loan through the purchase of deposits
in the eurodollar interbank market having a maturity corresponding to such
Loan's Interest Period and bearing an interest rate equal to LIBOR for such
Interest Period.
SECTION 9. THE AGENT.
49
Section 9.1 Appointment and Authorization of Agent. Each Lender
hereby appoints Bank One as the Agent under the Credit Documents and hereby
authorizes the Agent to take such action as Agent on its behalf and to exercise
such powers under the Credit Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto.
Section 9.2 Rights and Powers. The Agent shall have the same
rights and powers under the Credit Documents as any other Lender and may
exercise or refrain from exercising such rights and power as though it were not
the Agent, and the Agent and its Affiliates may accept deposits from, lend money
to, and generally engage in any kind of business with the Borrower or any of its
Subsidiaries or Affiliates as if it were not the Agent under the Credit
Documents. The term Lender as used in all Credit Documents, unless the context
otherwise clearly requires, includes the Agent in its individual capacity as a
Lender. References herein to the Agent Loans, or to the amount owing to the
Agent for which an interest rate is being determined, refer to the Agent in its
individual capacity as a Lender.
Section 9.3 Action by Agent. The obligations of the Agent under
the Credit Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, the Agent shall not be required to
take any action concerning any Default or Event of Default, except as expressly
provided in Sections 7.2 and 7.5. Upon the occurrence of an Event of Default,
the Agent shall take such action to enforce its Lien on the Collateral and to
preserve and protect the Collateral as may be directed by the Majority Lenders.
Unless and until the Majority Lenders give such direction, the Agent may take or
refrain from taking such actions as it deems appropriate and in the best
interest of all the Lenders. In no event, however, shall the Agent be required
to take any action in violation of applicable law or of any provision of any
Credit Document, and the Agent shall in all cases be fully justified in failing
or refusing to act hereunder or under any other Credit Document unless it first
receives any further assurances of its indemnification from the Lenders that it
may require, including prepayment of any related expenses and any other
protection it requires against any and all costs, expenses, and liabilities it
may incur in taking or continuing to take any such action. The Agent shall be
entitled to assume that no Default or Event of Default exists unless notified in
writing to the contrary by a Lender or the Borrower. In all cases in which the
Credit Documents do not require the Agent to take specific action, as
applicable, the Agent shall be fully justified in using its discretion in
failing to take or in taking any action thereunder. Any instructions of the
Majority Lenders, or of any other group of Lenders called for under specific
provisions of the Credit Documents, shall be binding on all the Lenders and
holders of Notes.
Section 9.4 Consultation with Experts. The Agent may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
Section 9.5 Indemnification Provisions. Neither the Agent nor
any of its directors, officers, agents, or employees shall be liable for any
action taken or not taken by it in connection with the Credit Documents (i) with
the consent or at the request of the Majority Lenders or all the
50
Lenders where unanimity is required or (ii) in the absence of its own gross
negligence or willful misconduct. Neither the Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with this Agreement, any other Credit Document or any
Borrowing; (ii) the performance or observance of any of the covenants or
agreements of the Borrower or any Subsidiary contained herein or in any other
Credit Document; (iii) the satisfaction of any condition specified in Section 4
hereof, except receipt of items required to be delivered to the Agent; or (iv)
the validity, effectiveness, genuineness, enforceability, perfection, value,
worth or collectability hereof or of any other Credit Document or of the Liens
provided for by the Security Documents or of any other documents or writing
furnished in connection with any Credit Document or of the Collateral; and the
Agent makes no representation of any kind or character with respect to any such
matters mentioned in this sentence. The Agent may execute any of its duties
under any of the Credit Documents by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders or any other Person
for the default or misconduct of any such agents or attorneys-in-fact selected
with reasonable care. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, other document or statement
(whether written or oral) believed by it to be genuine or to be sent by the
proper party or parties. In particular and without limiting any of the
foregoing, the Agent shall have no responsibility for confirming the existence
or worth of any Collateral or the accuracy of any Compliance Certificate or
other document or instrument received by it under the Credit Documents. The
Agent may treat the payee of any Note as the holder thereof until written notice
of transfer shall have been filed with the Agent signed by such owner in form
satisfactory to the Agent. Each Lender acknowledges that it has independently
and without reliance on the Agent or any other Lender obtained such information
and made such investigations and inquiries regarding the Borrower and its
Subsidiaries as it deems important, and based upon such information,
investigations and inquiries made its own credit analysis and decision to extend
credit to the Borrower in the manner set forth in the Credit Documents. It shall
be the responsibility of each Lender to keep itself informed about the
creditworthiness and business properties, assets, liabilities, condition
(financial or otherwise) and prospects of the Borrower and its Subsidiaries, the
creditworthiness of all account debtors of the Borrower and its Subsidiaries,
and the Agent shall have no liability whatsoever to any Lender for such matters.
The Agent shall have no duty to disclose to the Lenders information that is not
required by any Credit Document to be furnished by the Borrower or any
Subsidiaries to the Agent at such time, but is voluntarily furnished to the
Agent (either in its capacity as Agent or in its individual capacity).
Section 9.6 Indemnity. The Lenders shall ratably, in accordance
with their Percentages, indemnify and hold the Agent, and its directors,
officers, employees, agents and representatives harmless from and against any
liabilities, losses, costs or expenses suffered or incurred by it or by any
security trustee under any Credit Document or in connection with the
transactions contemplated thereby, regardless of when asserted or arising,
except to the extent they are promptly reimbursed for the same by the Borrower
or out of the proceeds of the Collateral and except to the extent that any event
giving rise to a claim was caused by the gross negligence or willful misconduct
of the party seeking to be indemnified. The obligations of the Lenders under
this Section 9.6 shall survive termination of this Agreement.
51
Section 9.7 Resignation of Agent and Successor Agent. The Agent
may resign at any time upon at least thirty (30) days' prior written notice to
the Lenders and the Borrower. Upon any such resignation of the Agent, the
Majority Lenders, with the consent of the Borrower (which consent shall not be
unreasonably withheld) shall have the right to appoint a successor Agent. If no
successor Agent, shall have been so appointed by the Majority Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent, may, on behalf
of the Lenders, appoint a successor Agent, as the case may be, which shall be
any Lender hereunder or any commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $500,000,000. Upon the acceptance of its appointment as
the Agent hereunder, such successor Agent, as the case may be, shall thereupon
succeed to and become vested with all the rights and duties of the retiring
Agent, under the Credit Documents, and the retiring Agent, shall be discharged
from its duties and obligations thereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 9 and all
protective provisions of the other Credit Documents shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent.
SECTION 10. MISCELLANEOUS.
Section 10.1 No Waiver of Rights. No delay or failure on the
part of the Agent or any of the Lenders, or on the part of the holder or holders
of the Notes, in the exercise of any power, right or remedy under any Credit
Document shall operate as a waiver thereof or as an acquiescence in any default,
nor shall any single or partial exercise thereof preclude any other or further
exercise of any other power, right or remedy. To the fullest extent permitted by
applicable law, the powers, rights and remedies under the Credit Documents of
the Lenders and the holder or holders of the Notes are cumulative to, and not
exclusive of, any rights or remedies any of them would otherwise have.
Section 10.2 Non-Business Day. If any payment of principal or
interest on any Loan, Reimbursement Obligation or of any other Obligation or
Agent Obligation shall fall due on a day which is not a Business Day, interest
or fees (as applicable) at the rate, if any, for such Loan, such Reimbursement
Obligation or such other Obligation or Agent Obligation bears for the period
prior to maturity shall continue to accrue in the manner set forth herein on
such Obligation from the stated due date thereof to and including the next
succeeding Business Day on which the same shall be payable.
Section 10.3 Documentary Taxes. The Borrower agrees that it will
pay any documentary, stamp or similar taxes payable with respect to any Credit
Document, including interest and penalties, in the event any such taxes are
assessed irrespective of when such assessment is made and regardless whether any
credit is then in use or available hereunder.
Section 10.4 Survival of Representations. All representations and
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and the other Credit Documents, and
shall continue in full force and effect with respect to the date
52
as of which they were made as long as the Borrower has any Obligation hereunder
or any Commitment hereunder is in effect.
Section 10.5 Survival of Indemnities. All indemnities and all
other provisions relative to reimbursement to the Agent and the Lenders of
amounts sufficient to protect the yield of the Lenders or the Agent with respect
to the Loans shall survive the termination of this Agreement and the other
Credit Documents and the payment of the Loans and all other Obligations for a
period of one (1) year.
Section 10.6 Setoff. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence of, and throughout the continuance of, any Default or Event
of Default, the Agent and each of the Lenders and each subsequent holder of any
of the Notes is hereby authorized by the Borrower at any time or from time to
time, without notice to the Borrower, to any Subsidiary of the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts, and in whatever currency
denominated) and any other Indebtedness at any time held or owing by the Agent
or the Lenders or that subsequent holder to or for the credit or the account of
the Borrower, whether or not matured, against and on account of the obligations
and liabilities of the Borrower to the Agent or the Lenders or that subsequent
holder under the Credit Documents, including, but not limited to, all claims of
any nature or description arising out of or connected with the Credit Documents,
irrespective of whether or not (i) the Agent or any of the Lenders or that
subsequent holder shall have made any demand hereunder or (ii) the principal of
or the interest on the Loans, the Notes and other amounts due hereunder shall
have become due and payable hereunder and although said obligations and
liabilities, or any of them, may be contingent or unmatured. The Agent and the
Lenders agree, if there shall be any other Lenders pursuant to Section 10.10(b),
that if a Lender receives and retains any payment, whether by setoff or
application of deposit balances or otherwise, on any of the Loans or L/C
Obligations in excess of its ratable share of payments on all such Obligations
then owed to the Lenders hereunder, then such Lender shall purchase for cash at
face value, but without recourse, ratably from each of the other Lenders such
amount of the Loans or L/C Obligations, or participations therein, held by such
Lender (or interest therein) as shall be necessary to cause such Lender to share
such excess payment ratably with all the other Lenders; provided, however, that
if any such purchase is made by any Lender, and if such excess payment or part
thereof is thereafter recovered from such purchasing Lender, the related
purchases from the other Lenders shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, with
interest pro rata, to the extent the purchasing Lender is required to pay
interest on the amount restored.
Section 10.7 Notices. Except as otherwise specified herein, all
notices under the Credit Documents shall be in writing (including cable,
telecopy or telex) and shall be given to a party hereunder at its address,
telecopier number or telex numbers set forth below or such other address,
telecopier number or telex as such party may hereafter specify by notice to the
Lenders or the Borrower, as applicable, given by courier, by United States
certified or registered mail, by telegram or by other telecommunication device
capable of creating a written record of such notice
53
and its receipt. Notices under the Credit Documents shall be addressed to the
Agent and the Lenders as set forth on the signature pages hereto and to the
Borrower as follows:
PalEx, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
with a copy to
PalEx, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx Xxxxx
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Each such notice, request or other communication shall be effective (i)
if given by telecopier, when such telecopy is transmitted to the telecopier
number specified in this Section 10.7 and a confirmation of receipt of such
telecopy has been received by the sender, (ii) if given by telex, when such
telex is transmitted to the telex number specified in this Section 10.7 and the
answer back is received by sender, (iii) if given by courier, when delivered,
(iv) if given by mail, five (5) days after such communication is deposited in
the mail, registered with return receipt requested, addressed as aforesaid or
(v) if given by any other means, when delivered at the addresses specified in
this Section 10.7; provided that any notice given pursuant to Section 2 shall be
effective only upon receipt and, provided further, that any notice that but for
this provision would be effective after the close of business on a Business Day
or on a day that is not a Business Day shall be effective at the opening of
business on the next Business Day.
Section 10.8 Counterparts. This Agreement may be executed in any
number of counterparts, and by the different parties on different counterpart
signature pages, each of which when executed shall be deemed an original but all
such counterparts taken together shall constitute one and the same Agreement.
Section 10.9 Successors and Assigns. This Agreement shall be
binding upon the Borrower, the Agent and the Lenders and their respective
successors and assigns, and shall inure to the benefit of the Borrower, the
Agent and the Lenders and their respective successors and assigns, including any
subsequent holder of the Notes. The Borrower may not assign any of its rights or
obligations under any Credit Document without the consent of the Agent and all
of the Lenders.
54
Section 10.10 Sales and Transfers of Borrowings and Notes;
Participations in Borrowings and Notes.
(a) Any Lender may at any time sell to one or more banks
("Participants"), participating interests in any Borrowing owing to such Lender,
any Note held by such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder, provided that no Lender may sell any
participating interests in any such Borrowing, Note, Commitment or other
interest hereunder without also selling to such Participant the appropriate pro
rata share of its Borrowings, Notes, Commitments and other interests hereunder,
and provided further that no Lender shall transfer, grant or assign any
participation under which the Participant shall have rights to vote upon or
consent to any matter to be decided by the Lender or the Majority Lenders
hereunder or under any Credit Document or approve any amendment to or waiver of
this Agreement or any other Credit Document except to the extent such amendment
or waiver would (i) increase the amount of such Lender's Commitment and such
increase would affect such Participant, (ii) reduce the principal of, or
interest on, any of such Lender's Borrowings, or any fees or other amounts
payable to such Lender hereunder and such reduction would affect such
Participant, (iii) postpone any date fixed for any scheduled payment of
principal of, or interest on, any of such Lender's Borrowings, or any fees or
other amounts payable to such Lender hereunder, or (iv) release any Collateral
for any Obligation (including, without limitation, any Subsidiary Guaranty, any
Stock Pledge Agreement, any Security Agreement or Mortgage), except as otherwise
specifically provided in any Credit Document. In the event of any such sale by a
Lender of participating interests to a Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Note for all purposes
under this Agreement and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. The Borrower agrees that if amounts
outstanding under this Agreement and the Notes are due and unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement or any Note, provided
that such right of setoff shall be subject to the obligation of such Participant
to share with the Lenders, and the Lenders agree to share with such Participant,
as provided in Section 10.6. The Borrower also agrees that each Participant
shall be entitled to the benefits of Sections 2.12 and 8.3 with respect to its
participation in the Commitments and the Borrowings outstanding from time to
time, provided that no Participant shall be entitled to receive any greater
amount pursuant to such Sections than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred.
(b) Any Lender may at any time sell to any Lender or any Affiliate
thereof, and, with the consent of the Agent and the Borrower (which shall not be
unreasonably withheld or delayed), to one or more banks or other financial
institutions (a "Purchasing Lender"), all or any part of its rights and
obligations under this Agreement and the Notes, pursuant to an Assignment
Agreement in the form attached as Exhibit 10.10 hereto, executed by such
Purchasing Lender and such
55
transferor Lender (and, in the case of a Purchasing Lender which is not then a
Lender or an Affiliate thereof, by the Borrower and the Agent) and delivered to
the Agent; provided that, each such sale to a Purchasing Lender shall be in an
amount of $5,000,000 or more, or if in a lesser amount, such sale shall be of
all of the Lender's rights and obligations under this Agreement and all of the
Notes payable to it to one eligible assignee. Notwithstanding the above, any
Lender may sell to one or more eligible assignees all or any part of their
rights and obligations under this Agreement and the Notes with only the consent
of the Agent (which shall not be unreasonably withheld) if an Event of Default
shall have occurred and be continuing. No Lender may sell any Loans to a
Purchasing Lender without also selling to such Purchasing Lender the appropriate
pro rata share of its Borrowings, Notes, Commitments and other interests
hereunder, including participations in Letters of Credit hereunder. Upon such
execution, delivery, acceptance and recording, from and after the effective date
of the transfer determined pursuant to such Assignment Agreement (x) the
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such Assignment Agreement, have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein and (y) the transferor Lender
thereunder shall, to the extent provided in such Assignment Agreement, be
released from its obligations under this Agreement (and, in the case of an
Assignment Agreement covering all or the remaining portion of a transferor
Lender's rights and obligations under this Agreement, such transferor Lender
shall cease to be a party hereto). Such Assignment Agreement shall be deemed to
amend this Agreement to the extent, and only to the extent, necessary to reflect
the addition of such Purchasing Lender and the resulting adjustment of
Commitments and Percentages arising from the purchase by such Purchasing Lender
of all or a portion of the rights and obligations of such transferor Lender
under this Agreement, the Notes and the other Credit Documents. On or prior to
the effective date of the transfer determined pursuant to such Assignment
Agreement, the Borrower, at its own expense, shall execute and deliver to the
Agent in exchange for any surrendered Notes, new Notes as appropriate to the
order of such Purchasing Lender in an amount equal to the Commitments assumed by
it pursuant to such Assignment Agreement, and, if the transferor Lender has
retained a Commitment or Borrowing hereunder, new Notes to the order of the
transferor Lender in an amount equal to the Commitments or Borrowings retained
by it hereunder. Such new Notes shall be dated the Initial Borrowing Date and
shall otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the transferor Lender shall be returned by the Agent to the
Borrower marked "canceled."
(c) Upon its receipt of an Assignment Agreement executed by a
transferor Lender, a Purchasing Lender and the Agent (and, in the case of a
Purchasing Lender that is not then a Lender or an Affiliate thereof, by the
Borrower), together with payment to the Agent hereunder of a registration and
processing fee of $3,500 (unless the transfer is from a Lender to an Affiliate
of such Lender), the Agent shall (i) promptly accept such Assignment Agreement,
and (ii) on the effective date of the transfer determined pursuant thereto give
notice of such acceptance and recordation to the Lenders and the Borrower.
(d) The provisions of the foregoing clauses (b) and (c) shall not apply
to or restrict, or require the consent of or any notice to any Person to
effectuate, the pledge or assignment by any Lender of its rights under this
Agreement and its Notes to any Federal Reserve Bank.
56
(e) If, pursuant to this Section 10.10 any interest in this Agreement
or any Note is transferred to any transferee which is organized under the laws
of any jurisdiction other than the United States of America or any State
thereof, the transferor Lender shall cause such transferee, concurrently with
the effectiveness of such transfer, (i) to represent to the transferor Lender
(for the benefit of the transferor Lender, the Agent and the Borrower) that
under applicable law and treaties no taxes will be required to be withheld by
the Agent, the Borrower or the transferor Lender with respect to any payments to
be made to such transferee in respect of the Loans or the L/C Obligations, (ii)
to furnish to the transferor Lender (and, in the case of any Purchasing Lender,
the Agent and the Borrower) either U.S. Internal Revenue Service Form 4224 or
U.S. Internal Revenue Service Form 1001 or such successor forms as shall be
adopted from time to time by the relevant United States taxing authorities
(wherein such transferee claims entitlement to complete exemption from U.S.
federal withholding tax on all interest payments hereunder), and (iii) to agree
(for the benefit of the transferor Lender, the Agent and the Borrower) to
provide the transferor Lender (and, in the case of any Purchasing Lender, the
Agent and the Borrower) a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments dully
executed and completed by such transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.
Section 10.11 Amendments. Any provision of the Credit Documents
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by (a) the Borrower, (b) the Majority Lenders (in the case of a
consent or waiver, the Borrower may rely on the consent or waiver of the Agent
on behalf of the Majority Lenders, the Agent agreeing to obtain the necessary
consents or waivers from the Majority Lenders before providing such consent or
waiver), and (c) if the rights or duties of the Agent are affected thereby, the
Agent; provided that:
(i) no amendment or waiver shall (A) increase the Commitment
Amount without the consent of all Lenders or increase any Commitment of
any Lender without the consent of such Lender, (B) postpone the
Maturity Date without the consent of all Lenders or reduce the amount
of or postpone the date for any scheduled payment of any principal of
or interest on any Loan, Reimbursement Obligation or of any fee or any
other amounts payable hereunder without the consent of each Lender owed
such Obligation or (C) release any Collateral or any Subsidiary
Guaranty without the consent of all the Lenders and the Agent; and
(ii) no amendment or waiver shall, unless signed by each
Lender, change the provisions of this Section 10.11 or the definition
of Majority Lenders or affect the number of Lenders required to take
any action under any other provision of the Credit Documents.
Section 10.12 Headings. Section headings used in this Agreement
are for reference only and shall not affect the construction of this Agreement.
Section 10.13 Legal Fees, Other Costs and Indemnification. Subject
to the limitations set forth in Section 4.1(a)(v), the Borrower, upon demand by
the Agent or any of the Lenders,
57
agrees to pay the reasonable fees and disbursements of legal counsel to Agent or
any Lender in connection with the preparation and execution of the Credit
Documents, any amendment, waiver or consent related thereto, whether or not the
transactions contemplated therein are consummated, any Default or Event of
Default by the Borrower hereunder and any enforcement (including, without
limitation, all workout and bankruptcy proceedings) of any of the Credit
Documents or collection of any Obligations; provided that the Borrower shall
only have to pay the reasonable fees and disbursements of one law firm in
connection therewith unless the Agent, any Lender or their counsel is of the
reasonable opinion that representation by one law firm would not be feasible or
that a conflict of interest would exist. The Borrower further agrees to
indemnify the Agent and each Lender and its respective directors, officers,
shareholders, employees and attorneys (collectively, the "Indemnified Parties"),
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all reasonable attorneys' fees and
other reasonable expenses of litigation or preparation therefor, whether or not
the Indemnified Party is a party thereto) which any of them may pay or incur
arising out of or relating to (a) any Credit Document, the Loans, the Letters of
Credit or the application or proposed application by the Borrower of the
proceeds of any Loan, REGARDLESS OF WHETHER SUCH CLAIMS OR ACTIONS ARE FOUNDED
IN WHOLE OR IN PART UPON THE ALLEGED SIMPLE OR CONTRIBUTORY NEGLIGENCE OF ANY OF
THE INDEMNIFIED PARTIES AND/OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
SHAREHOLDERS, EMPLOYEES OR ATTORNEYS, (b) any investigation of any third party
or any governmental authority involving the Agent or any Lender and related to
any use made or proposed to be made by the Borrower of the proceeds of the
Borrowings, or any transaction financed or to be financed in whole or in part,
directly or indirectly with the proceeds of any Borrowing, and (c) any
investigation of any third party or any governmental authority, litigation or
proceeding, related to any environmental cleanup, audit, compliance or other
matter relating to any Environmental Law or the presence of any Hazardous
Material (including, without limitation, any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any Environmental
Law) with respect to the Borrower or any of its Subsidiaries, regardless of
whether caused by, or within the control of, the Borrower or any of its
Subsidiaries; provided, however, that the Borrower shall not be obligated to
indemnify any Indemnified Party for any of the foregoing arising out of (i) such
Indemnified Party's gross negligence or willful misconduct, (ii) the Agent's
failure to pay under any Letter of Credit after the presentation to it of a
request required to be paid under applicable law, or (iii) the Agent's or any
Lender's breach of any material provision of any Credit Document. The Borrower,
upon demand by the Indemnified Party at any time, shall reimburse the
Indemnified Party for any legal or other expenses incurred in connection with
investigating or defending against any of the foregoing except if the same is
excluded from indemnification pursuant to the provisions of the foregoing
sentence.
Section 10.14 Governing Law; Arbitration; Submission to
Jurisdiction; Waiver of Jury Trial.
(a) The Credit Agreement, and the other Credit Documents, and the
rights and duties of the parties thereto, shall be construed in accordance with
and governed by the internal laws of the State of Texas.
58
(b) THE AGENT, EACH LENDER AND THE BORROWER HEREBY WAIVES ITS RIGHT TO
RESOLVE DISPUTES, CLAIMS, AND CONTROVERSIES ARISING FROM THE CREDIT AGREEMENT,
ANY OTHER CREDIT DOCUMENT OR ANY MATTER IN CONNECTION THEREWITH, INCLUDING,
WITHOUT LIMITATION, CONTRACT DISPUTES AND TORT CLAIMS, THROUGH ANY COURT
PROCEEDING OR LITIGATION AND ACKNOWLEDGES THAT ALL SUCH DISPUTES, CLAIMS AND
CONTROVERSIES SHALL BE RESOLVED PURSUANT TO THIS SECTION, EXCEPT THAT EQUITABLE
RELIEF AND CERTAIN OTHER RIGHTS AND REMEDIES SET FORTH BELOW MAY BE SOUGHT FROM
ANY COURT OF COMPETENT JURISDICTION. EACH PARTY REPRESENTS TO THE OTHER PARTIES
THAT THIS WAIVER IS MADE KNOWINGLY AND VOLUNTARILY AFTER CONSULTATION WITH AND
UPON ADVICE OF ITS COUNSEL AND IS A MATERIAL PART OF THIS AGREEMENT. ALL SUCH
DISPUTES, CLAIMS AND CONTROVERSIES SHALL BE RESOLVED BY BINDING ARBITRATION
PURSUANT TO THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION
("AAA"). Any arbitration proceeding held pursuant to this arbitration provision
shall be conducted in Houston, Texas or at any other place selected by mutual
agreement of the parties. No act to take or dispose of any collateral shall
constitute a waiver of this arbitration agreement or be prohibited by this
arbitration agreement. This arbitration provision shall not limit the right of
any party during any dispute, claim or controversy to seek, use, and employ
ancillary, or preliminary rights and/or remedies, judicial or otherwise, for the
purposes of realizing upon, preserving, protecting, foreclosing upon or
proceeding under forcible entry and detainer for possession of, any real or
personal property, and any such action shall not be deemed an election of
remedies. Such remedies include, without limitation, obtaining injunctive relief
or a temporary restraining order, invoking a power of sale under any deed of
trust or mortgage, obtaining a writ of attachment or imposition of a
receivership, or exercising any rights relating to personal property, including
exercising the right of set-off, or taking or disposing of such property with or
without judicial process pursuant to the Uniform Commercial Code. Any disputes,
claims or controversies concerning the lawfulness or reasonableness of an act,
or exercise of any right or remedy concerning any collateral, including any
claim to rescind, reform, or otherwise modify any agreement relating to the
collateral, shall also be arbitrated; provided, however that no arbitrator shall
have the right or the power to enjoin or restrain any act of either party.
Judgment upon any award rendered by any arbitrator may be entered in any court
having jurisdiction. The statute of limitations, estoppel, waiver, laches and
similar doctrines which would otherwise be applicable in an action brought by a
party shall be applicable in any arbitration proceeding, and the commencement of
an arbitration proceeding shall be deemed the commencement of any action for
these purposes. The federal arbitration act (Title 9 of the United States Code)
shall apply to the construction, interpretation, and enforcement of this
arbitration provision.
(c) To the fullest extent permitted by applicable law, each party
hereto agrees that any court proceeding or litigation permitted by Section
10.14(b) may be brought and maintained in the courts of the State of Texas
sitting in Xxxxxx County or the United States District Court for the Southern
District of Texas. To the fullest extent permitted by applicable law, the
Borrower hereby expressly and irrevocably submits to the jurisdiction of the
courts of the State of Texas and the United States District Court for the
Southern District of Texas for the purpose of any such
59
litigation as set forth above and irrevocably agrees to be bound by any judgment
rendered thereby in connection with such litigation. To the fullest extent
permitted by applicable law, the Borrower further irrevocably consents to the
service of process, by registered mail, postage prepaid, or by personal service
within or without the state of Texas. To the fullest extent permitted by
applicable law, the Borrower hereby expressly and irrevocably waives any
objection which it may have or hereafter may have to the laying of venue of any
such litigation brought in any such court referred to above and any claim that
any such litigation has been brought in an inconvenient forum. To the extent
that the Borrower has or hereafter may acquire any immunity from jurisdiction of
any court or from any legal process (whether through service of notice,
attachment prior to judgment, attachment in aid of execution or otherwise) with
respect to itself or its property, the Borrower hereby irrevocably waives to the
fullest extent permitted by applicable law, such immunity in respect of its
obligations under the Credit Agreement and the other Credit Documents.
(d) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY
HERETO VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY (BY ITS
ACCEPTANCE HEREOF) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING PERMITTED BY SECTION 10.14(B) AND WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF THE CREDIT AGREEMENT, ANY OTHER CREDIT DOCUMENT, ANY
OTHER RELATED DOCUMENT OR ANY RELATIONSHIP BETWEEN THE AGENT, ANY LENDER, THE
BORROWER AND/OR ANY GUARANTOR, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR
DISPUTE SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE LENDERS TO PROVIDE THE LOANS AND THE LETTERS OF
CREDIT.
Section 10.15 Confidentiality. The Agent and each Lender agrees it will
not disclose without the Borrower's consent (other than to its employees,
auditors, counsel or other professional advisors or to its Affiliates) any
information concerning the Borrower or any of its Subsidiaries furnished
pursuant to any of the Credit Documents; provided that the Agent and any Lender
may disclose any such information (i) that has become generally available to the
public other than through the Agent or the Lenders or that was previously known
to the Agent or such Lender or comes from a source other than the Borrower or
any of its Subsidiaries, (ii) if required or appropriate in any examination or
audit or any report, statement or testimony submitted to any federal or state
regulatory body having or claiming to have jurisdiction over the Agent or such
Lender, (iii) if required or appropriate in response to any summons or subpoena
or in connection with any litigation, (iv) in order to comply with any law,
order, regulation or ruling applicable to Agent or such Lender, (v) to any
prospective or actual permitted transferee in connection with any contemplated
or actual permitted transfer of any interest in the Note by such Lender, and
(vi) in connection with the exercise of any remedies by the Agent or any Lender;
provided that such actual or prospective transferee executes an agreement with
the applicable Lender containing provisions substantially identical to those
contained in this Section 10.15 prior to such transferee's receipt of any such
information.
60
Section 10.16 Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 10.17 Change in Accounting Principles or Tax Laws. If (i)
any change in accounting principles from those used in the preparation of the
financial statements of the Borrower referred to in Section 5.9 is hereafter
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accounts (or successors thereto or
agencies with similar functions) and such change materially affects the
calculation of any component of any financial covenant, standard or term found
in this Agreement, or (ii) there is a material change in federal or foreign tax
laws which materially affects the Borrower's ability to comply with the
financial covenants, standards or terms found in this Agreement, the Borrower,
the Agent and the Lenders agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such changes with the desired result
that the criteria for evaluating the Borrower's and its Subsidiaries'
consolidated financial condition shall be the same after such changes as if such
changes had not been made. Unless and until such provisions have been so
amended, the provisions of this Agreement shall govern.
Section 10.18 Loans Under Prior Credit Agreement. On the Initial
Borrowing Date:
(a) The Borrower shall pay all accrued and unpaid commitment
fees outstanding under the Prior Credit Agreement;
(b) each Revolving Loan under the Prior Credit Agreement shall
be deemed to be repaid with the proceeds of a new LIBOR Loan(s) and each Agent
Loan under the Prior Credit Agreement shall be deemed to be repaid with the
proceeds of a new Base Rate Loan and the Borrower shall pay all breakage fees in
connection therewith as required under the Prior Credit Agreement;
(c) each Letter of Credit outstanding under the Prior Credit
Agreement shall be deemed to have been issued under this Agreement without
payment of any further fronting fee (but subject to the other fees set forth in
Section 3.1(b));
(d) the Prior Credit Agreement and the commitments thereunder
shall be superseded by this Agreement and the commitments under the Prior Credit
Agreement shall terminate; and
(e) the commitment of The Sumitomo Bank, Limited under the
Prior Credit Agreement shall permanently terminate.
Section 10.19 Effectiveness. This Agreement shall become effective
on the date (the "Effective Date") on which the Borrower, the Agent and each
Lender has signed and delivered to
61
the Agent a counterparty signature page hereto or, in the case of a Lender, the
Agent has received telex or facsimile notice that such a counterpart has been
signed and mailed to the Agent.
Section 10.20 Notice. The Credit Documents constitute the entire
understanding among the Borrower, the Agent and the Lenders and supersede all
earlier or contemporaneous agreements, whether written or oral, concerning the
subject matter of the Credit Documents. THIS WRITTEN AGREEMENT TOGETHER WITH THE
OTHER CREDIT DOCUMENTS REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.
BORROWER:
PALEX, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
RIDGE PALLETS, INC.
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
LENDER'S CONSENT
The Lenders hereby consent to Borrower's non-compliance with the
requirements of Section 6.21 for the quarter ending June 27, 1999. This consent
is expressly limited to the covenant expressly enumerated herein for the period
ending June 27, 1999 and shall not constitute a consent to or waiver of any
other breach of the terms of the Credit Agreement and shall not constitute the
consent to or waiver of non-compliance with the provisions of Sections 6.21 at
the end of any subsequent fiscal period.
62
LENDERS:
-------
Percentage of Commitment BANK ONE, TEXAS, National Association,
Date: 44.0000000000% as Administrative Agent and as a Lender
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Director
Address for Notices:
Bank One, Texas, NA
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Telex No.: 6734165
Answerback: BONE DAL
Payment Instructions:
Name of Credit Bank: Xxxx Xxx, Xxxxx, XX
Xxxx, Xxxxx: Houston, Texas
Method of Payment: ABA #000000000
For Credit To: Bank One, Texas, NA
Account No.: 0749905618
Reference: PalEx, Inc.
Attention: Xxxxxx Xxxxxx
Lending Office:
Bank One, Texas, NA
000 Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
63
Percentage of Commitment NATIONAL CITY BANK, as Lender
Date: 16.0000000000%
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Address for Notices:
-------------------
National City Bank
000 X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Telex: N/A
Answerback: N/A
Payment Instructions:
--------------------
Name of Credit Bank: National City Bank
City, State: Cleveland, Ohio
Method of Payment: ABA #000000000
For Credit To: Columbus Commercial Loan Operations
Account No.: 151804
Reference: PalEx, Inc.
Attention: Xxxxxx Xxxxxxxx (000) 000-0000
Lending Office:
--------------
National City Bank
000 X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
64
Percentage of Commitment XXXXX FARGO BANK, as Lender
Date: 16.0000000000%
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
Address for Notices:
-------------------
Xxxxx Fargo Bank
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Telex No.: __________________
Answerback: _________________
Payment Instructions:
--------------------
Name of Credit Bank: Xxxxx Fargo Bank
City, State: San Francisco, California
Method of Payment: ABA #000000000
For Credit To: LAG Operations Admin
Account No.: 2714507209
Reference: PalEx, Inc., Obligor #4717910047, Obligation #18
Loan Adjustment Group #6147
Lending Office:
--------------
Xxxxx Fargo Bank
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Telex No.: __________________
Answerback: _________________
65
Percentage of Commitment COMERICA BANK, as Lender
Date: 12.00%
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
Address for Notices:
0000 Xxxxxx Xxxxxx Xx., Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Telex No.: N/A
Answerback: N/A
Payment Instructions:
Name of Credit Bank: Comerica Bank
City, State: Detroit, Michigan
Method of Payment: ABA #000000000
For Credit To: Commercial Loan Servicing
Account No.: 21585-90010
Reference: PalEx, Inc. #6539608203
Lending Office:
Comerica Bank
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx XxXxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
66
Percentage of Commitment PARIBAS, as Lender
Date: 10.00%
By: /s/ Xxxxx Xxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxx Xxxxx Xxxxxxx
Title: Vice President Director
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxx
Title: Director
Address for Notices:
Paribas
0000 Xxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Telex No.: 166514 or 166343
Answerback: PARIBAS HOU E
with copies to:
Paribas, New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxx - Legal Dept.
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Payment Instructions:
Name of Credit Bank: Bankers Trust Company
City, State: New York, NY
Method of Payment: ABA #000000000
For Credit To: For Account 00000000 - Paribas, New York
Account No.: For Further Credit to A/C #2144-001545 Paribas,
Houston Agency
Reference: PalEx, Inc.
Attention: Xxxx Xxxxx-Xxxxxx
Lending Office:
Paribas
0000 Xxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
67
EXHIBIT 2.2A
FORM OF BORROWING REQUEST
No Change From Exhibit Attached to
Amended and Restated Secured Credit Agreement
dated September 3, 1998
EXHIBIT 2.2B
FORM OF APPLICATION
No Change From Exhibit Attached to
Amended and Restated Secured Credit Agreement
dated September 3, 1998
EXHIBIT 2.11
FORM OF NOTE
No Change From Exhibit Attached to
Amended and Restated Secured Credit Agreement
dated September 3, 1998
EXHIBIT 4.1A
FORM OF SUBSIDIARY GUARANTY
No Change From Exhibit Attached to
Amended and Restated Secured Credit Agreement
dated September 3, 1998
EXHIBIT 4.1B
FORM OF STOCK PLEDGE AGREEMENT
No Change From Exhibit Attached to
Amended and Restated Secured Credit Agreement
dated September 3, 1998
EXHIBIT 4.1C
FORM OF FINANCIAL CONDITION CERTIFICATE
No Change From Exhibit Attached to
Amended and Restated Secured Credit Agreement
dated September 3, 1998
EXHIBIT 4.1D
FORM OF SECURITY AGREEMENT AND FINANCING STATEMENT
No Change From Exhibit Attached to
Second Amendment to Amended and Restated Secured Credit Agreement
dated December 28, 1998
EXHIBIT 6.6
FORM OF COMPLIANCE CERTIFICATE
No Change From Exhibit Attached to
Amended and Restated Secured Credit Agreement
dated September 3, 1998
EXHIBIT 10.10
FORM OF ASSIGNMENT AGREEMENT
No Change From Exhibit Attached to
Amended and Restated Secured Credit Agreement
dated September 3, 1998
SCHEDULE 5.1
LIST OF SUBSIDIARIES
1. Acme Barrel Company, Inc., an Illinois corporation
2. Atlas Container Company, Inc., a Delaware corporation
3. Bay Area Pallet Company, a California corporation
4. Black River Forest Products, Inc., a Wisconsin corporation
5. Charlotte Steel Drum Corporation, a Delaware corporation
6. Consolidated Container Corporation, a Minnesota corporation
7. Container Services Company NW, Inc., f/k/a Container Services
Company NW Acquisitions, Inc., a Delaware corporation
8. Container Services Company SW, Inc., f/k/a Container Services
Company SW Acquisitions, Inc., a Delaware corporation
9. Container Resources Corporation, a Minnesota corporation
10. Xxxxxxx Pallet Co., Inc., a Wisconsin corporation
11. Drum Service Co. of Florida, a Florida corporation
12. Environmental Recylers of Colorado Inc.
13. Xxxxxxx Lumber Incorporated, an Ohio corporation
14. Xxxxxxxx Lumber Co.
15. Interstate Pallet Co., Inc., a Virginia corporation
16. NLD, Inc., a Delaware corporation
17. NLP Transport, Inc., a Delaware corporation
18. New London Pallet, Inc., a Wisconsin corporation
19. PalEx-Texas, L.P., a Texas limited partnership
20. PalEx-Texas, Inc., a Texas corporation
21. Ridge Pallets, Inc., a Florida corporation
22. Sheffield Lumber and Pallet Company, Inc., a North Carolina
corporation
23. Shipshewana Pallet Co., Inc., a Delaware corporation
24. Sonoma Pacific Company, a California corporation
25. Southern Pallet, Inc., a Delaware corporation
26. Southern Steel Drums, Inc., a Florida corporation
27. Valley Crating and Packaging, Inc., a Delaware corporation
28. Western Container Limited Liability Company (a Wyoming L.L.C.
owned by Acme Barrel Company, Inc. and Environmental Recyclers of
Colorado, Inc.)
SCHEDULE 5.4
LIST OF LITIGATION
Any matters disclosed in the Borrower's SEC filings.
SCHEDULE 5.20
LIST OF EXISTING LIENS AND INDEBTEDNESS
1. Financing Statements filed in connection with equipment leases entered
into in the ordinary course of business.
2. Financing Statement No. 0000000000 from Interstate Pallet Co., Inc., as
Debtor, to Alpine Engineered Products, Inc., as Secured Party, covering
a pallet dismantler #331-058 filed with the Virginia Secretary of
State.
3. Right of Reverter reserved by New Boston Special Industrial Development
Corporation in Warranty Deed recorded in Volume 1999, Page 243 of the
Bowie County, Texas Real Property Records.
4. $600,000 Industrial Development Bond.
5. Ridge Pallets Letter of Credit issued by Bank One.
6. $325,000 letter of credit securing workers' compensation obligations
issued by Bank One.
7. $50,000 letter of credit securing lease obligation issued by Bank One.
8. Capital leases of equipment.
9. Indebtedness under existing credit facility.
10. $2,243,000 subordinated debt issued by Container Services Company SW,
Inc. and Container Services Company NW, Inc.
11. $10,095,000 subordinated convertible notes issued to sellers in
connection with Acquisitions.
12. $1,420,000 promissory note issued by ESOP of Acme Barrel Company, Inc.
backed by letter of credit issued by Bank One.
SCHEDULE 6.13
LIST OF PERMITTED LIENS AND INDEBTEDNESS
1. Financing Statement No. 0000000000 from Interstate Pallet Co., Inc., as
Debtor, to Alpine Engineered Products, Inc., as Secured Party, covering
a pallet dismantler #331-058 filed with the Virginia Secretary of
State.
2. Right of Reverter reserved by New Boston Special Industrial Development
Corporation in Warranty Deed recorded in Volume 1999, Page 243 of the
Bowie County, Texas Real Property Records.
3. $600,000 Industrial Development Bond.
4. $2,243,000 subordinated debt issued by Container Services Company SW,
Inc. and Container Services Company NW, Inc.
5. $1,420,000 promissory note issued by ESOP of Acme Barrel Company, Inc.
backed by letter of credit issued by Bank One.
CONSENT AND ACKNOWLEDGMENT
Each of the undersigned Guarantors, by its signature hereto,
acknowledges and agrees to the terms and conditions of that certain Fourth
Amendment dated as of June 27, 1999 to Amend and Restate the Amended and
Restated Secured Credit Agreement dated September 3, 1998 (the "Amendment"), by
and between Palex, Inc., a Delaware corporation (the "Borrower"), Ridge Pallets,
Inc., a Florida corporation, Bank One, Texas, National Association, National
City Bank, Xxxxx Fargo Bank, Comerica Bank, Paribas and the other lenders from
time to time parties hereto (collectively, the "Lenders"). Each of the
undersigned acknowledges and reaffirms its obligations under its Guaranty
(collectively, the "Guaranties") and its Security Agreement and Financing
Statement (collectively the "Security Agreements"), and agrees that the
Guaranties shall remain in full force and effect. Although the undersigned
Guarantors have been informed by the Borrower of the matters set forth in the
Amendment, and the undersigned have acknowledged and agreed to same, the
undersigned understand and agree that neither the Agent nor the Lenders have any
duty to notify the Guarantors or to seek any of the Guarantors acknowledgment or
agreement, and nothing contained herein shall create such a duty as to any
transactions hereafter.
Dated as of June 27, 1999.
ACME BARREL COMPANY, INC.
ATLAS CONTAINER COMPANY, INC.
CHARLOTTE STEEL DRUM CORPORATION
CONTAINER SERVICES COMPANY NW, INC.
CONSOLIDATED CONTAINER CORPORATION
CONTAINER SERVICES COMPANY SW, INC.
DRUM SERVICE CO. OF FLORIDA
ENVIRONMENTAL RECYCLERS OF COLORADO, INC.
XXXXXX DRUM & BARREL CO., INC.
PALEX CONTAINER SYSTEMS, INC.
SOUTHERN STEEL DRUMS, INC.
WESTERN CONTAINER LIMITED LIABILITY COMPANY
By: /s/ Xxxxxx Xxx
----------------------------------
Name: Xxxxxx Xxx
Title: Vice President
81
CONSENT AND ACKNOWLEDGMENT
Each of the undersigned Guarantors, by its signature hereto,
acknowledges and agrees to the terms and conditions of that certain Fourth
Amendment dated as of June 27, 1999 to Amend and Restate the Amended and
Restated Secured Credit Agreement dated September 3, 1998 (the "Amendment") by
and between Palex, Inc., a Delaware corporation (the "Borrower"), Ridge Pallets,
Inc., a Florida corporation, Bank One, Texas, National Association, National
City Bank, Xxxxx Fargo Bank, Comerica Bank, Paribas and the other lenders from
time to time parties hereto (collectively, the "Lenders"). Each of the
undersigned acknowledges and reaffirms its obligations under its Guaranty
(collectively, the "Guaranties") and its Security Agreement and Financing
Statement (collectively the "Security Agreements"), and agrees that the
Guaranties shall remain in full force and effect. Although the undersigned
Guarantors have been informed by the Borrower of the matters set forth in the
Amendment, and the undersigned have acknowledged and agreed to same, the
undersigned understand and agree that neither the Agent nor the Lenders have any
duty to notify the Guarantors or to seek any of the Guarantors acknowledgment or
agreement, and nothing contained herein shall create such a duty as to any
transactions hereafter.
Dated as of June 27, 1999.
BAY AREA PALLET COMPANY
XXXXXXX PALLET CO., INC.
XXXXXXX LUMBER INCORPORATED
INTERSTATE PALLET CO., INC.
XXXXXXXX LUMBER CO.
NLD, INC.
NLP TRANSPORT, INC.
NEW LONDON PALLET, INC.
PALLET OUTLET COMPANY, INC.
RIDGE PALLETS, INC.
SHEFFIELD LUMBER AND PALLET COMPANY, INC.
SHIPSHEWANA PALLET CO., INC.
SONOMA PACIFIC COMPANY
SOUTHERN PALLET, INC.
VALLEY CRATING AND PACKAGING, INC.
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
82
