EXHIBIT 10.8
EXECUTION COPY
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CREDIT AGREEMENT
dated as of October 7, 1998
among
SYNAGRO TECHNOLOGIES, INC.,
VARIOUS FINANCIAL INSTITUTIONS
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
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TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS............................................................................................1
1.1 Definitions............................................................................................1
1.2 Other Interpretive Provisions.........................................................................14
SECTION 2 COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND
LETTER OF CREDIT PROCEDURES...........................................................................15
2.1 Commitments...........................................................................................15
2.1.1 Loan Commitment...............................................................................15
2.1.2 L/C Commitment................................................................................15
2.2 Loan Procedures.......................................................................................16
2.2.1 Various Types of Loans........................................................................16
2.2.2 Borrowing Procedures..........................................................................16
2.2.3 Conversion and Continuation Procedures........................................................17
2.3 Letter of Credit Procedures...........................................................................18
2.3.1 L/C Applications...............................................................................18
2.3.2 Participations in Letters of Credit............................................................18
2.3.3 Reimbursement Obligations......................................................................19
2.3.4 Limitation on Obligations of Issuing Banks.....................................................19
2.3.5 Funding by Banks to Issuing Banks..............................................................20
2.4 Commitments Several...................................................................................20
2.5 Certain Conditions....................................................................................20
SECTION 3 NOTES EVIDENCING LOANS................................................................................21
3.1 Notes.................................................................................................21
3.2 Recordkeeping.........................................................................................21
SECTION 4 INTEREST..............................................................................................21
4.1 Interest Rates........................................................................................21
4.2 Interest Payment Dates................................................................................22
4.3 Setting and Notice of Eurodollar Rates................................................................22
4.4 Computation of Interest...............................................................................22
SECTION 5 FEES..................................................................................................22
5.1 Non-Use Fee...........................................................................................22
5.2 Letter of Credit Fees.................................................................................23
5.3 Agent's Fees..........................................................................................23
SECTION 6 REDUCTION AND TERMINATION OF THE COMMITMENTS; PREPAYMENTS.............................................23
6.1 Reduction or Termination of the Commitments...........................................................23
6.2 Prepayments...........................................................................................24
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES........................................................24
7.1 Making of Payments.....................................................................................24
7.2 Application of Certain Payments........................................................................24
7.3 Due Date Extension.....................................................................................24
7.4 Setoff.................................................................................................25
7.5 Proration of Payments..................................................................................25
7.6 Taxes..................................................................................................25
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS...............................................27
8.1 Increased Costs........................................................................................27
8.2 Basis for Determining Interest Rate Inadequate or Unfair...............................................28
8.3 Changes in Law Rendering Eurodollar Loans Unlawful.....................................................29
8.4 Funding Losses.........................................................................................30
8.5 Right of Banks to Fund through Other Offices...........................................................30
8.6 Discretion of Banks as to Manner of Funding............................................................30
8.7 Mitigation of Circumstances; Replacement of Affected Bank..............................................31
8.8 Conclusiveness of Statements; Survival of
Provisions.............................................................................................31
SECTION 9 WARRANTIES.............................................................................................32
9.1 Organization, etc......................................................................................32
9.2 Authorization; No Conflict.............................................................................32
9.3 Validity and Binding Nature............................................................................32
9.4 Financial Condition....................................................................................33
9.5 No Material Adverse Change.............................................................................33
9.6 Litigation and Contingent Liabilities..................................................................33
9.7 Ownership of Properties; Liens.........................................................................33
9.8 Subsidiaries...........................................................................................34
9.9 Pension of Plans.......................................................................................34
9.10 Investment Company Act.................................................................................34
9.11 Public Utility Holding Company Act.....................................................................34
9.12 Regulation U...........................................................................................35
9.13 Taxes..................................................................................................35
9.14 Solvency, etc..........................................................................................35
9.15 Environmental Matters..................................................................................35
9.16 Year 2000 Problem......................................................................................37
9.17 Information............................................................................................37
SECTION 10 COVENANTS.............................................................................................38
10.1 Reports, Certificates and Other Information...........................................................38
10.1.1 Audit Report..................................................................................38
10.1.2 Quarterly Reports.............................................................................38
10.1.3 Monthly Reports...............................................................................39
10.1.4 Compliance Certificates.......................................................................39
10.1.5 Reports to SEC and to Shareholders..........................................................39
10.1.6 Notice of Default, Litigation and ERISA Matters.............................................39
10.1.7 Subsidiaries................................................................................41
10.1.8 Management Reports..........................................................................41
10.1.9 Projections.................................................................................41
10.1.10 Other Information..........................................................................41
10.2 Books, Records and Inspections......................................................................41
10.3 Insurance 42
10.4 Compliance with Laws; Payment of Taxes and Liabilities..............................................42
10.5 Maintenance of Existence, etc.......................................................................42
10.6 Financial Covenants.................................................................................42
10.6.1 Minimum Net Worth...........................................................................42
10.6.2 Minimum Interest Coverage...................................................................43
10.6.3 Funded Debt to EBITDA Ratio.................................................................43
10.6.4 Senior Funded Debt to EBITDA Ratio..........................................................43
10.6.5 Debt to Capitalization Ratio.................................................................43
10.6.6 Capital Expenditures........................................................................44
10.7 Limitations on Debt.................................................................................44
10.8 Liens...............................................................................................45
10.9 Operating Leases....................................................................................46
10.10 Restricted Payments.................................................................................46
10.11 Mergers, Consolidations, Sales......................................................................46
10.12 Use of Proceeds.....................................................................................47
10.13 Further Assurances..................................................................................47
10.14 Transactions with Affiliates........................................................................48
10.15 Employee Benefit Plans..............................................................................48
10.16 Environmental Laws..................................................................................48
10.17 Unconditional Purchase Obligations..................................................................48
10.18 Inconsistent Agreements.............................................................................48
10.19 Business Activities.................................................................................48
10.20 Advances and Other Investments......................................................................49
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC...........................................................50
11.1 Effectiveness.......................................................................................50
11.1.1 Notes.......................................................................................50
11.1.2 Resolutions.................................................................................50
11.1.3 Consents, etc...............................................................................50
11.1.4 Incumbency and Signature Certificates.......................................................51
11.1.5 Guaranty....................................................................................51
11.1.6 Security Agreement..........................................................................51
11.1.7 Pledge Agreements...........................................................................51
11.1.8 Opinion of Counsel for the Company and the Guarantors.......................................51
11.1.9 Other.......................................................................................51
11.2 Conditions 51
11.2.1 Compliance with Warranties, No Default, etc.....................................................51
11.2.2 Confirmatory Certificate........................................................................52
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT......................................................................53
12.1 Events of Default.......................................................................................53
12.1.1 Non-Payment of the Loans, etc...................................................................53
12.1.2 Non-Payment of Other Debt.......................................................................53
12.1.3 Other Material Obligations......................................................................53
12.1.4 Bankruptcy, Insolvency, etc.....................................................................53
12.1.5 Non-Compliance with Provisions of This Agreement................................................54
12.1.6 Warranties......................................................................................54
12.1.7 Pension Plans...................................................................................54
12.1.8 Judgments.......................................................................................55
12.1.9 Invalidity of Guaranty, etc.....................................................................55
12.1.10 Invalidity of Collateral Documents, etc........................................................55
12.1.11 Change in Control..............................................................................55
12.2 Effect of Event of Default..............................................................................56
SECTION 13 THE AGENT...............................................................................................57
13.1 Appointment and Authorization...........................................................................57
13.2 Delegation of Duties....................................................................................57
13.3 Liability of Agent......................................................................................57
13.4 Reliance by Agent.......................................................................................58
13.5 Notice of Default.......................................................................................58
13.6 Credit Decision.........................................................................................59
13.7 Indemnification.........................................................................................59
13.8 Agent in Individual Capacity............................................................................61
13.9 Successor Agent.........................................................................................61
13.10 Withholding Tax.........................................................................................62
13.11 Collateral Matters......................................................................................64
SECTION 14 GENERAL.................................................................................................64
14.1 Waiver; Amendments......................................................................................64
14.2 Confirmations...........................................................................................65
14.3 Notices................................................................................................ 65
14.4 Computations............................................................................................65
14.5 Regulation U............................................................................................66
14.6 Costs, Expenses and Taxes...............................................................................66
14.7 Subsidiary References...................................................................................66
14.8 Captions................................................................................................66
14.9 Assignments; Participations.............................................................................67
14.9.1 Assignments.....................................................................................67
14.9.2 Participations..................................................................................68
14.10 Governing Law..........................................................................................69
14.11 Counterparts...........................................................................................69
14.12 Successors and Assigns.................................................................................69
14.13 Indemnification by the Company.........................................................................70
14.14 Interest...............................................................................................70
14.15 Forum Selection and Consent to Jurisdiction............................................................72
14.16 Waiver of Jury Trial...................................................................................73
SCHEDULES
SCHEDULE 1.1 Pricing Schedule
SCHEDULE 2.1 Banks and Percentages
SCHEDULE 9.6 Litigation and Contingent Liabilities
SCHEDULE 9.8 Subsidiaries
SCHEDULE 9.15 Environmental Matters
SCHEDULE 10.7(b) Existing Unsecured Debt
SCHEDULE 10.7(c) Existing Secured Debt
SCHEDULE 10.8 Existing Liens
SCHEDULE 10.9 Existing Operating Leases
SCHEDULE 10.11 Assets Held for Sale
SCHEDULE 12.1.11 Key Executives
SCHEDULE 14.3 Addresses for Notices
EXHIBITS
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Compliance Certificate (Section 10.1.3)
EXHIBIT C Form of Guaranty (Section 1)
EXHIBIT D Form of Security Agreement (Section 1)
EXHIBIT E Form of Company Pledge Agreement (Section 1)
EXHIBIT F Form of Subsidiary Pledge Agreement (Section 11.1.7)
EXHIBIT G Form of Assignment Agreement (Section 14.9)
vi
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of October 7, 1998 (this
"Agreement"), is entered into among SYNAGRO TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), various financial institutions (together with their
respective successors and assigns, the "Banks"), and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION (in its individual capacity, "BofA"), as agent for
the Banks.
WHEREAS, the Banks have agreed to extend a revolving credit facility
(with letter of credit subfacility) to the Company;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
SECTION 1 DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have the
following meanings:
Affected Bank means any Bank that has given notice to the Company
(which has not been rescinded) of (i) any obligation by the Company to pay any
amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any
circumstances of the nature described in Section 8.2 or 8.3.
Affiliate of any Person means (i) any other Person which, directly
or indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person.
Agent means BofA in its capacity as agent for the Banks hereunder
and any successor thereto in such capacity.
Agent-Related Persons means BofA and any successor agent arising
under Section 13.9, together with their respective Affiliates (including, in the
case of BofA, the Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
Agreement - see the Preamble.
Assignee - see Section 14.9.1.
Assignment Agreement - see Section 14.9.1.
Bank - see the Preamble. References to the "Banks" shall include the
Issuing Bank; for purposes of clarification only, to the extent that BofA (or
any successor Issuing Bank) may have rights or obligations in addition to those
of the other Banks due to its status as Issuing Bank, its status as such will be
specifically referenced.
Base Rate means at any time the greater of (a) the Federal Funds
Rate plus 0.5% and (b) the Reference Rate.
Base Rate Loan means any Loan which bears interest at or by
reference to the Base Rate.
Base Rate Margin - see Schedule 1.1.
BofA - see the Preamble.
Business Day means any day on which BofA is open for commercial
banking business in Chicago, New York and San Francisco and, in the case of a
Business Day which relates to a Eurodollar Loan, on which dealings are carried
on in the interbank eurodollar market.
Capital Expenditures means all expenditures which, in accordance
with GAAP, would be required to be capitalized and shown on the consolidated
balance sheet of the Company, but excluding expenditures made in connection with
the replacement, substitution or restoration of assets to the extent financed
(i) from insurance proceeds (or other similar recoveries) paid on account of the
loss of or damage to the assets being replaced or restored or (ii) with awards
of compensation arising from the taking by eminent domain or condemnation of the
assets being replaced.
Capital Lease means, with respect to any Person, any lease of (or
other agreement conveying the right to use) any real or personal property by
such Person that, in conformity with GAAP, is accounted for as a capital lease
on the balance sheet of such Person.
Cash Equivalent Investment means, at any time, (a) any evidence of
Debt, maturing not more than one year after such time, issued or guaranteed by
the United States Government or any agency thereof, (b) commercial paper,
maturing not more than one year from the date of issue, or corporate demand
notes, in each
case (unless issued by a Bank or its holding company) rated at least A-l by
Standard & Poor's Ratings Group or P-l by Xxxxx'x Investors Service, Inc., (c)
any certificate of deposit (or time deposits represented by such certificates of
deposit) or bankers acceptance, maturing not more than one year after such time,
or overnight Federal Funds transactions that are issued or sold by a commercial
banking institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$500,000,000, (d) any repurchase agreement entered into with any Bank (or other
commercial banking institution of the stature referred to in clause (c)) which
(i) is secured by a fully perfected security interest in any obligation of the
type described in any of clauses (a) through (c) and (ii) has a market value at
the time such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of such Bank (or other commercial banking institution)
thereunder and (e) investments in short-term asset management accounts offered
by any Bank for the purpose of investing in loans to any corporation (other than
the Company or an Affiliate of the Company), state or municipality, in each case
organized under the laws of any state of the United States or of the District of
Columbia.
CERCLA - see Section 9.15.
Code means the Internal Revenue Code of 1986.
Collateral Documents means the Company Pledge Agreement, each
Subsidiary Pledge Agreement, the Security Agreement and any other agreement
pursuant to which the Company or any Guarantor grants collateral to the Agent
for the benefit of the Banks.
Commitment Amount means $40,000,000 as reduced from time to time
pursuant to Section 6.1.
Commitment means, as to any Bank, such Bank's commitment to make
Loans, and to issue or participate in Letters of Credit, under this Agreement.
Company - see the Preamble.
Company Pledge Agreement means a pledge agreement between the
Company and the Agent, substantially in the form of Exhibit E.
Computation Period means each of the following periods: (a) the
period of three consecutive Fiscal Quarters ending September 30, 1998; and (b)
each period of four consecutive Fiscal Quarters ending on the last day of a
Fiscal Quarter on or after December 31, 1998.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period, excluding any extraordinary gains during such
period.
Controlled Group means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.
Debt of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, whether or not evidenced by bonds,
debentures, notes or similar instruments, (b) all obligations of such Person as
lessee under Capital Leases which have been or should be recorded as liabilities
on a balance sheet of such Person, (c) all obligations of such Person to pay the
deferred purchase price of property or services (excluding trade accounts
payable in the ordinary course of business), (d) all indebtedness secured by a
Lien on the property of such Person, whether or not such indebtedness shall have
been assumed by such Person (it being understood that if such Person has not
assumed or otherwise become personally liable for any such indebtedness, the
amount of the Debt of such Person in connection therewith shall be limited to
the lesser of the face amount of such indebtedness or the fair market value of
all property of such Person securing such indebtedness), (e) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn) and banker's acceptances issued for the account of
such Person (including the Letters of Credit), (f) all Hedging Obligations of
such Person, (g) all Suretyship Liabilities of such Person and (h) all Debt of
any partnership in which such Person is a general partner. The amount of any
Person's Debt in respect of any obligation to pay the deferred purchase price of
property or services where such obligation is contingent upon sales, revenues,
the achievement of a particular business goal or any similar test shall be the
maximum amount which (at any date of determination) is reasonably expected to be
paid in respect of such obligation as estimated by the Company (subject to the
approval of the Required Banks, which shall not be unreasonably withheld).
Debt to be Repaid means the Debt listed on Schedule 10.7(g).
Disposal - see the definition of "Release".
Dollar and the sign "$" mean lawful money of the United States of
America.
EBITDA means, for any period, Consolidated Net Income for such
period plus (a) to the extent deducted in determining such Consolidated Net
Income, Interest Expense, income tax expense, depreciation and amortization for
such period; and (b) for the Computation Periods ending September 30, 1998 and
December 31, 1998, $900,000, for the Computation Period ending March 31, 1999,
$600,000, and for the Computation Period ending June 30, 1999, $300,000;
provided that for purposes of calculating EBITDA for any period, the
consolidated net income of any Person acquired by the Company or any Subsidiary
during such period (plus, to the extent deducted in determining such
consolidated net income, interest expense, income tax expense, depreciation and
amortization of such Person) shall be included on a pro forma basis for such
period (assuming the consummation of each such acquisition and the incurrence or
assumption of any Debt in connection therewith occurred on the first day of such
period, but adjusted to add back non-recurring expenses (such as owner
compensation) to the extent disclosed to and approved by the Required Banks)
based upon (a) to the extent available, (i) the audited consolidated balance
sheet of such acquired Person and its consolidated Subsidiaries as at the end of
the fiscal year of such Person preceding the acquisition of such Person and the
related audited consolidated statements of income, stockholders' equity and cash
flows for such fiscal year and (ii) any subsequent unaudited financial
statements for such Person for the period prior to the acquisition of such
Person so long as such statements were prepared on a basis consistent with the
audited financial statements referred to above or (b) to the extent the items
listed in clause (a) are not available, such historical financial statements and
other information as is disclosed to, and approved by, the Required Banks;
provided, further, that for purposes of calculating EBITDA for any Computation
Period ending on or before June 30, 1999, Recyc EBITDA shall be excluded.
Effective Date - see Section 11.1.
Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release of Hazardous Substances (as defined in Section 9.5) or injury to the
environment.
Environmental Laws means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed and enforceable duties, licenses, authorizations
and permits of, and agreements with, any governmental authority, in each case
relating to environmental matters.
ERISA means the Employee Retirement Income Security Act of 1974.
Eurocurrency Reserve Percentage means, with respect to any
Eurodollar Loan for any Interest Period, a percentage (expressed as a decimal)
equal to the daily average during such Interest Period of the percentage in
effect on each day of such Interest Period, as prescribed by the FRB, for
determining the aggregate maximum reserve requirements applicable to
"Eurocurrency Liabilities" pursuant to Regulation D or any other then applicable
regulation of the FRB which prescribes reserve requirements applicable to
"Eurocurrency Liabilities" as presently defined in Regulation D.
Eurodollar Loan means any Loan which bears interest at a rate
determined by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Margin - see Schedule 1.1.
Eurodollar Office means with respect to any Bank the office or
offices of such Bank which shall be making or maintaining the Eurodollar Loans
of such Bank hereunder or, if applicable, such other office or offices through
which such Bank determines the Eurodollar Rate. A Eurodollar Office of any Bank
may be, at the option of such Bank, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any
Interest Period, the rate per annum at which Dollar deposits in immediately
available funds are offered to the Eurodollar Office of BofA two Business Days
prior to the beginning of such Interest Period by major banks in the interbank
eurodollar market as at or about 10:00 A.M., Chicago time, for delivery on the
first day of such Interest Period, for the number of days comprised therein and
in an amount equal or comparable to the amount of the Eurodollar Loan of BofA
for such Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any
Eurodollar Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) determined pursuant to the following
formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) ---------------
1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in Section 12.1.
EWR Acquisition means the acquisition by the Company of
Environmental Waste Recycling, Inc., a North Carolina corporation, for a total
purchase price not exceeding $12,500,000, an immediate cash payment not
exceeding $7,000,000 and contingent cash payments not exceeding $3,000,000, and
otherwise on terms and conditions reasonably satisfactory to the Required Banks.
Exemption Representation - see Section 7.6.
Federal Funds Rate means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor publication, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such day
will be the arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
Financial Letter of Credit means any Letter of Credit determined by
the applicable Issuing Bank to be a "financial guaranty-type Standby Letter of
Credit" as defined in footnote 13 to Appendix A to the Risk Based Capital
Guidelines issued by the Comptroller of the Currency (or in any successor
regulation, guideline or ruling by any applicable banking regulatory authority).
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of the Company and its
Subsidiaries, which period shall be the 12-month period ending on December 31 of
each year. References to a Fiscal Year with a number corresponding to any
calendar year (e.g., "Fiscal Year 1998") refer to the Fiscal Year ending on
December 31 of such calendar year.
FRB means the Board of Governors of the Federal Reserve System or
any successor thereto.
Funded Debt means all Debt of the Company and its Subsidiaries,
excluding (i) contingent obligations in respect of undrawn letters of credit and
Suretyship Liabilities (except, in each case, to the extent constituting
Suretyship Liabilities in respect of Debt of a Person other than the Company or
any Subsidiary), (ii) Hedging Obligations and (iii) Debt of the Company to
Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries.
Funded Debt to EBITDA Ratio means (a) for the Computation Periods
ending September 30, 1998 and December 31, 1998, the ratio of (i) Funded Debt as
of the last day of such Computation Period to (ii) the sum of (1) EBITDA for
such Computation Period (multiplied, solely in the case of the Computation
Period ending September 30, 1998, by 1.33) plus (2) the lesser of (A) $1,983,000
and (B) Recyc EBITDA for such Computation Period; (b) for the Computation
Periods ending March 31, 1999 and June 30, 1999, the ratio of (i) Funded Debt as
of the last day of such Computation Period to (ii) the sum of (1) EBITDA for
such Computation Period plus (2) Recyc EBITDA for such Computation Period; and
(c) for any Computation Period ending thereafter, the ratio of (i) Funded Debt
as of the last day of such Computation Period to (ii) EBITDA for such
Computation Period.
GAAP means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
Group - see Section 2.2.1.
Guarantor means, on any day, each Subsidiary that has executed a
counterpart of the Guaranty on or prior to that day (or is required to execute a
counterpart of the Guaranty on that date).
Guaranty means a guaranty substantially in the form of Exhibit C.
Hazardous Substances - see Section 9.15.
Hedging Obligations means, with respect to any Person, all
liabilities of such Person under interest rate, currency and commodity swap
agreements, cap agreements and collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates, currency exchange rates or commodity prices.
Highest Lawful Rate means, with respect to any indebtedness owed to
any Bank hereunder or under any Note, 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 by such Bank with respect to such indebtedness
under applicable law.
Immaterial Law means any provision of any Environmental Law the
violation of which will not (a) violate any judgment, decree or order which is
binding upon the Company or any Subsidiary, (b) result in or threaten any injury
to public health or the environment or any material damage to the property of
any Person or (c) result in any liability or expense (other than any de minimis
liability or expense) for the Company or any Subsidiary; provided that no
provision of any Environmental Law shall be an Immaterial Law if the Agent has
notified the Company that the Required Banks have determined in good faith that
such provision is material.
Interest Coverage Computation Period means each of the following
periods: (a) the Fiscal Quarter ending September 30, 1998; (b) the period of two
consecutive Fiscal Quarters ending December 31, 1998; (c) the period of three
consecutive Fiscal Quarters ending March 31, 1999; and (d) each period of four
consecutive Fiscal Quarters ending on the last day of a Fiscal Quarter on or
after June 30, 1999.
Interest Coverage Ratio means, for any Interest Coverage Computation
Period, the ratio of (a) Consolidated Net Income before deducting Interest
Expense, income tax expense and amortization for such Interest Coverage
Computation Period to (b) Interest Expense for such Computation Period.
Interest Expense means, as to any Person for any Computation Period,
the consolidated interest expense of the Company and its Subsidiaries for such
Computation Period (including all imputed interest on Capital Leases but
excluding deferred financing fees related to any warrant or other equity
interest issued in connection with any financing).
Interest Period means, as to any Eurodollar Loan, the period
commencing on the date such Loan is borrowed or continued as, or converted into,
a Eurodollar Loan and ending on the date one, two, three or six months
thereafter, as selected by the Company pursuant to Section 2.2.3; provided that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended
to the following Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month,
in which event such Interest Period shall end on the preceding
Business Day;
(ii) any Interest Period for a Eurodollar Loan that
begins on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period shall end
on the last Business Day of the calendar month at the end of such
Interest Period; and
(iii) the Company may not select any Interest Period for
any Loan which would extend beyond the scheduled Termination Date.
Investment means, relative to any Person, (a) any loan or advance
made by such Person to any other Person (excluding any commission, travel or
similar advances made to directors, officers and employees of the Company or any
of its Subsidiaries), (b) any Suretyship Liability of such Person, (c) any
ownership or similar interest held by such Person in any other Person and (d)
deposits and the like relating to prospective acquisitions of businesses.
Issuing Bank means BofA in its capacity as an issuer of Letters of
Credit hereunder and any other Bank which, with the written consent of the
Company and the Agent, is the issuer of one or more Letters of Credit.
L/C Application means, with respect to any request for the issuance
of a Letter of Credit, a letter of credit application in the form being used by
the applicable Issuing Bank at the time of such request for the type of letter
of credit requested; provided that to the extent any such letter of credit
application is inconsistent with any provision of this Agreement, the applicable
provision of this Agreement shall control.
LC Fee Rate - see Schedule 1.1.
Letter of Credit - see Section 2.1.2.
Lien means, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.
Loan Documents means this Agreement, the Notes, the Guaranty, the
L/C Applications and the Collateral Documents.
Loans - see Section 2.1.1.
Margin Stock means any "margin stock" as defined in Regulation U of
the FRB.
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole, or (b) a material adverse effect upon any substantial portion of the
collateral under the Collateral Documents or upon the legality, validity,
binding effect or enforceability against the Company or any Guarantor of any
Loan Document.
Multiemployer Pension Plan means a multiemployer plan, as such term
is defined in Section 4001(a)(3) of ERISA, and to which the Company or any
member of the Controlled Group may have any liability.
Net Worth means the Company's consolidated stockholders' equity
(excluding any equity attributable to mandatorily redeemable preferred stock).
Non-Financial Letter of Credit means any Letter of Credit other than
a Financial Letter of Credit.
Non-Use Fee Rate - see Schedule 1.1.
Note - see Section 3.1.
Operating Lease means any lease of (or other agreement conveying the
right to use) any real or personal property by the Company or any Subsidiary, as
lessee, other than any Capital Lease.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
Multiemployer Pension Plan), and to which the Company or any member of the
Controlled Group may have any liability, including any liability by reason of
having been a substantial employer within the meaning of Section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under Section 4069 of ERISA.
Percentage means, with respect to any Bank, the percentage specified
opposite such Bank's name on Schedule 2.1 hereto, reduced (or increased) by
assignments pursuant to Section 14.9.1.
Person means any natural person, corporation, partnership, trust,
limited liability company, association, governmental authority or unit, or other
entity, whether acting in an individual, fiduciary or other capacity.
RCRA - see Section 9.15.
Recyc means Recyc, Inc., a California corporation.
Recyc EBITDA means, for any period, Recyc Net Income for such period
plus, to the extent deducted in determining such Recyc Net Income, Interest
Expense, income tax expense,
depreciation and amortization for such period; provided that for the two months
ending September 30, 1998, the five months ending December 31, 1998, the eight
months ending March 31, 1999, and the eleven months ending June 30, 1999, Recyc
EBITDA shall be multiplied by 6, 2.4, 1.5, and 1.09, respectively.
Recyc Net Income means, with respect to Recyc for any period, the
net income (or loss) of Recyc for such period, excluding any extraordinary gains
during such period.
Release has the meaning specified in CERCLA and the term "Disposal"
(or "Disposed") has the meaning specified in RCRA; provided that in the event
either CERCLA or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply as of the effective date of
such amendment; and provided, further, that to the extent that the laws of a
state wherein any affected property lies establish a meaning for "Release" or
"Disposal" which is broader than is specified in either CERCLA or RCRA, such
broader meaning shall apply.
Reference Rate means, for any day, the rate of interest in effect
for such day as publicly announced from time to time by BofA in San Francisco,
California, as its "reference rate." (The "reference rate" is a rate set by BofA
based upon various factors, including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate.) Any change in the reference rate announced by BofA shall take effect at
the opening of business on the day specified in the public announcement of such
change.
Required Banks means Banks having Percentages aggregating 66-2/3% or
more; provided that at any time there are less than three Banks, "Required
Banks" shall mean all Banks.
SEC means the Securities and Exchange Commission.
Security Agreement means a Security Agreement substantially in the
form of Exhibit D.
Senior Funded Debt means the remainder of (a) Funded Debt minus (b)
the Debt described in Section 10.7(b).
Senior Funded Debt to EBITDA Ratio means (a) for the Computation
Periods ending September 30, 1998 and December 31, 1998, the ratio of (i) Senior
Funded Debt as of the last day of such Computation Period to (ii) the sum of (1)
EBITDA for such Computation Period (multiplied, solely in the case of the
Computation Period ending September 30, 1998, by 1.33) plus (2) the lesser of
(A) $1,983,000 and (B) Recyc EBITDA for such Computation Period; (b) for the
Computation Periods ending March 31, 1999 and June 30, 1999, the ratio of (i)
Senior Funded Debt as of the last day of such Computation Period to (ii) the sum
of (1) EBITDA for such Computation Period plus (2) Recyc EBITDA for such
Computation Period; and (c) for any Computation Period ending thereafter, the
ratio of (i) Senior Funded Debt as of the last day of such Computation Period to
(ii) EBITDA for such Computation Period.
Stated Amount means, with respect to any Letter of Credit at any
date of determination, the maximum aggregate amount available for drawing
thereunder at any time during the then ensuing term of such Letter of Credit
under any and all circumstances, plus the aggregate amount of all unreimbursed
payments and disbursements under such Letter of Credit.
Subordinated Debt means Debt of the Company which has maturities and
other terms, and which is subordinated to the obligations of the Company and its
Subsidiaries hereunder and under the Loan Documents in a manner, approved in
writing by the Required Banks.
Subsidiary means, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which such Person
and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares or other ownership interests as have more than 50% of the
ordinary voting power for the election of directors or other managers of such
entity. Unless the context otherwise requires, each reference to Subsidiaries
herein shall be a reference to Subsidiaries of the Company.
Subsidiary Pledge Agreement means each pledge agreement
substantially in the form of Exhibit F issued by any Subsidiary, whether
pursuant to Section 11.1.7 or Section 10.13.
Suretyship Liability means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.
Termination Date means the earlier to occur of (a) October 5, 2001
or (b) such other date on which the Commitments shall terminate pursuant to
Section 6 or 12.
Total Outstandings means at any time the sum of (a) the aggregate
principal amount of all outstanding Loans plus (b) the Stated Amount of all
Letters of Credit.
Type of Loan or Borrowing - see Section 2.2.1. The types of Loans or
borrowings under this Agreement are as follows: Base Rate Loans or borrowings
and Eurodollar Loans or borrowings.
Unmatured Event of Default means any event that, if it continues
uncured, will, with lapse of time or notice or both, constitute an Event of
Default.
1.2 Other Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
(b) Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "including" is not limiting and means
"including without limitation."
(ii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
such statute or regulation.
(e) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(f) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Company, the Banks and the other parties thereto and are the products of all
parties. Accordingly, they shall not be construed against the Agent or the Banks
merely because of the Agent's or Banks' involvement in their preparation.
SECTION 2 COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND LETTER
OF CREDIT PROCEDURES
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Banks, severally and for itself alone, agrees to make
loans to, and to issue or participate in the issuance of letters of credit for
the account of, the Company as follows:
2.1.1 Loan Commitment. Each Bank will make loans on a revolving
basis ("Loans") from time to time before the Termination Date in such Bank's
Percentage of such aggregate amounts as the Company may from time to time
request from all Banks; provided that the Total Outstandings will not at any
time exceed the Commitment Amount.
2.1.1 L/C Commitment.(a) The Issuing Banks will issue standby
letters of credit, in each case containing such terms and conditions as are
permitted by this Agreement and are reasonably satisfactory to the applicable
Issuing Bank and the Company (each a "Letter of Credit"), at the request of and
for the account of the Company (or jointly for the account of the Company and
any Subsidiary) from time to time before the date which is 30 days prior to the
scheduled Termination Date and (b) as more fully set forth in Section 2.3.5,
each Bank agrees to purchase a participation in each such Letter of Credit;
provided that the aggregate Stated Amount of all Letters of Credit shall not at
any time exceed the lesser of (i) $5,000,000 and (ii) the excess, if any, of the
Commitment Amount over the aggregate principal amount of all outstanding Loans.
2.2 Loan Procedures
2.2.1 Various Types of Loans. Each Loan shall be either a Base Rate
Loan or a Eurodollar Loan (each a "type" of Loan), as the Company shall specify
in the related notice of borrowing or conversion pursuant to Section 2.2.2 or
2.2.3. Eurodollar Loans having the same Interest Period are sometimes called a
"Group" or collectively "Groups". Base Rate Loans and Eurodollar Loans may be
outstanding at the same time, provided that (i) not more than five different
Groups of Eurodollar Loans shall be outstanding at any one time, (ii) the
aggregate principal amount of each Group of Eurodollar Loans shall at all times
be at least $1,000,000 and an integral multiple of $500,000 and (iii) during the
90 days immediately following the Effective Date, the Company may not select any
Interest Period for any Group of Eurodollar Loans which would end after December
31, 1998 (or such earlier date specified by the Agent from time to time). All
borrowings, conversions and repayments of Loans shall be effected so that each
Bank will have a pro rata share (according to its Percentage) of all types and
Groups of Loans.
2.2.2 Borrowing Procedures. The Company shall give written notice or
telephonic notice (followed promptly by written confirmation thereof) to the
Agent of each proposed borrowing not later than (a) in the case of a Base Rate
borrowing, 10:00 A.M., Chicago time, on the proposed date of such borrowing, and
(b) in the case of a Eurodollar borrowing, 10:00 A.M., Chicago time, at least
three Business Days prior to the proposed date of such borrowing. Each such
notice shall be effective upon receipt by the Agent, shall be irrevocable, and
shall specify the date, amount and type of borrowing and, in the case of a
Eurodollar borrowing, the initial Interest Period therefor. Promptly upon
receipt of such notice, the Agent shall advise each Bank thereof. Not later than
1:00 p.m., Chicago time, on the date of a proposed borrowing, each Bank shall
provide the Agent at the office specified by the Agent with immediately
available funds covering such Bank's Percentage of such borrowing and, so long
as the Agent has not received
written notice that the conditions precedent set forth in Section 11 with
respect to such borrowing have not been satisfied, the Agent shall pay over the
requested amount to the Company on the requested borrowing date. Each borrowing
shall be on a Business Day. Each borrowing shall be in an aggregate amount of at
least $500,000 and an integral multiple of $100,000.
2.2.3 Conversion and Continuation Procedures. (a) Subject to the
provisions of Section 2.2.1, the Company may, upon irrevocable written notice to
the Agent in accordance with clause (b) below:
(i) elect, as of any Business Day, to convert any
outstanding Loan into a Loan of a different type; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any Group of Eurodollar Loans having an
Interest Period expiring on such day (or any part thereof in an
aggregate amount not less than $500,000 or a higher integral
multiple of $100,000) for a new Interest Period.
(b) The Company shall give written or telephonic (followed promptly
by written confirmation thereof) notice to the Agent of each proposed conversion
or continuation not later than (i) in the case of conversion into Base Rate
Loans, 10:00 a.m., Chicago time, on the proposed date of such conversion; and
(ii) in the case of a conversion into or continuation of Eurodollar Loans, 10:00
a.m., Chicago time, at least three Business Days prior to the proposed date of
such conversion or continuation, specifying in each case:
(1) the proposed date of conversion or continuation;
(2) the aggregate amount of Loans to be converted or
continued;
(3) the type of Loans resulting from the proposed
conversion or continuation; and
(4) in the case of conversion into, or continuation of,
Eurodollar Loans, the duration of the requested Interest Period
therefor.
(c) If upon expiration of any Interest Period applicable to any
Eurodollar Loan, the Company has failed to select timely a new Interest Period
to be applicable to such Eurodollar Loan, the Company shall be deemed to have
elected to convert such Eurodollar Loan into a Base Rate Loan effective on the
last day of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
notice of conversion or continuation pursuant to this Section 2.4 or, if no
timely notice is provided by the Company, of the details of any automatic
conversion.
(e) Unless the Required Banks otherwise consent, during the
existence of any Event of Default or Unmatured Event of Default, the Company may
not elect to have a Base Rate Loan converted into or continued as a Eurodollar
Loan.
2.3 Letter of Credit Procedures.
2.3.1 L/C Applications. The Company shall give notice to the Agent
and the applicable Issuing Bank of the proposed issuance of each Letter of
Credit on a Business Day which is at least three Business Days (or such lesser
number of days as the Agent and such Issuing Bank shall agree in any particular
instance) prior to the proposed date of issuance of such Letter of Credit. Each
such notice shall be accompanied by an L/C Application, duly executed by the
Company (together with any Subsidiary for the account of which the related
Letter of Credit is to be issued) and in all respects satisfactory to the Agent
and the applicable Issuing Bank, together with such other documentation as the
Agent or such Issuing Bank may reasonably request in support thereof, it being
understood that each L/C Application shall specify, among other things, the date
on which the proposed Letter of Credit is to be issued, the expiration date of
such Letter of Credit (which shall not be later than seven days prior to the
Termination Date) and whether such Letter of Credit is to be transferable in
whole or in part. So long as the applicable Issuing Bank has not received
written notice that the conditions precedent set forth in Section 11 with
respect to the issuance of such Letter of Credit have not been satisfied, such
Issuing Bank shall issue such Letter of Credit on the requested issuance date.
Each Issuing Bank shall promptly advise the Agent of the issuance of each Letter
of Credit by such Issuing Bank and of any amendment thereto, extension thereof
or event or circumstance changing the amount available for drawing thereunder.
2.3.2 Participations in Letter of Credit. Concurrently with the
issuance of each Letter of Credit, the applicable Issuing Bank shall be deemed
to have sold and transferred to each other Bank, and each other Bank shall be
deemed irrevocably and unconditionally to have purchased and received from such
Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such other Bank's Percentage, in such Letter of
Credit and the Company's reimbursement obligations with respect thereto. For the
purposes of this Agreement, the unparticipated portion of each Letter of Credit
shall be deemed to be the applicable Issuing Bank's "participation" therein.
Each Issuing Bank hereby agrees, upon request of the Agent or any Bank, to
deliver to such Bank a list of all outstanding Letters of Credit issued by such
Issuing Bank, together with such information related thereto as such Bank may
reasonably request.
2.3.3 Reimbursement Obligations. The Company hereby unconditionally
and irrevocably agrees to reimburse the applicable Issuing Bank for each payment
or disbursement made by such Issuing Bank under any Letter of Credit honoring
any demand for payment made by the beneficiary thereunder, in each case on the
date that such payment or disbursement is
made. Any amount not reimbursed on the date of such payment or disbursement
shall bear interest from the date of such payment or disbursement to the date
that such Issuing Bank is reimbursed by the Company therefor, payable on demand,
at a rate per annum equal to the Base Rate from time to time in effect plus the
Base Rate Margin from time to time in effect plus, beginning on the third
Business Day after receipt of notice from the Issuing Bank of such payment or
disbursement, 2%. The applicable Issuing Bank shall notify the Company and the
Agent whenever any demand for payment is made under any Letter of Credit by the
beneficiary thereunder; provided that the failure of such Issuing Bank to so
notify the Company shall not affect the rights of such Issuing Bank or the Banks
in any manner whatsoever.
2.3.4 Limitation on Obligations of Issuing Banks. In determining
whether to pay under any Letter of Credit, no Issuing Bank shall have any
obligation to the Company or any Bank other than to confirm that any documents
required to be delivered under such Letter of Credit appear to have been
delivered and appear to comply on their face with the requirements of such
Letter of Credit. Any action taken or omitted to be taken by an Issuing Bank
under or in connection with any Letter of Credit, if taken or omitted in the
absence of gross negligence and willful misconduct, shall not impose upon such
Issuing Bank any liability to the Company or any Bank and shall not reduce or
impair the Company's reimbursement obligations set forth in Section 2.3.3 or the
obligations of the Banks pursuant to Section 2.3.5.
2.3.5 Funding by Banks to Issuing Banks. If an Issuing Bank makes
any payment or disbursement under any Letter of Credit and the Company has not
reimbursed such Issuing Bank in full for such payment or disbursement by 10:00
A.M., Chicago time, on the date of such payment or disbursement, or if any
reimbursement received by such Issuing Bank from the Company is or must be
returned or rescinded upon or during any bankruptcy or reorganization of the
Company or otherwise, each other Bank shall be obligated to pay to the Agent for
the account of such Issuing Bank, in full or partial payment of the purchase
price of its participation in such Letter of Credit, its pro rata share
(according to its Percentage) of such payment or disbursement (but no such
payment shall diminish the obligations of the Company under Section 2.3.3), and
upon notice from the applicable Issuing Bank, the Agent shall promptly notify
each other Bank thereof. Each other Bank irrevocably and unconditionally agrees
to so pay to the Agent in immediately available funds for the applicable Issuing
Bank's account the amount of such other Bank's Percentage of such payment or
disbursement. If and to the extent any Bank shall not have made such amount
available to the Agent by 2:00 P.M., Chicago time, on the Business Day on which
such Bank receives notice from the Agent of such payment or disbursement (it
being understood that any such notice received after noon, Chicago time, on any
Business Day shall be deemed to have been received on the next following
Business Day), such Bank agrees to pay interest on such amount to the Agent for
the applicable Issuing Bank's account forthwith on demand for each day from the
date such amount was to have been delivered to the Agent to the date such amount
is paid, at a rate per annum equal to (a) for the first three days after demand,
the Federal Funds Rate from time to time in effect and (b) thereafter, the Base
Rate from time to time in effect. Any Bank's failure to make available to the
Agent its Percentage of any such
payment or disbursement shall not relieve any other Bank of its obligation
hereunder to make available to the Agent such other Bank's Percentage of such
payment, but no Bank shall be responsible for the failure of any other Bank to
make available to the Agent such other Bank's Percentage of any such payment or
disbursement.
2.4 Commitments Several. The failure of any Bank to make a requested
Loan on any date shall not relieve any other Bank of its obligation (if any) to
make a Loan on such date, but no Bank shall be responsible for the failure of
any other Bank to make any Loan to be made by such other Bank.
2.5 Certain Conditions. Notwithstanding any other provision of this
Agreement, no Bank shall have an obligation to make any Loan, and no Issuing
Bank shall have any obligation to issue any Letter of Credit, if an Event of
Default or Unmatured Event of Default exists.
SECTION 3. NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank shall be evidenced by a promissory
note (each a "Note") substantially in the form set forth in Exhibit A, with
appropriate conforming insertions, payable to the order of such Bank in a face
principal amount equal to such Bank's Percentage of the Commitment Amount.
3.2 Recordkeeping. Each Bank shall record in its records, or at its
option on the schedule attached to its Note, the date and amount of each Loan
made by such Bank, each repayment or conversion thereof and, in the case of each
Eurodollar Loan, the dates on which each Interest Period for such Loan shall
begin and end. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on such
Note. The failure to so record any such amount or any error in so recording any
such amount shall not, however, limit or otherwise affect the obligations of the
Company hereunder or under any Note to repay the principal amount of the Loans
evidenced by such Note together with all interest accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the
unpaid principal amount of each Loan for the period commencing on the date such
Loan is advanced until such Loan is paid in full as follows:
(a) at all times while such Loan is a Base Rate Loan, at
a rate per annum equal to the sum of the Base Rate from time to time
in effect plus the Base Rate Margin from time to time in effect; and
(b) at all times while such Loan is a Eurodollar Loan,
at a rate per annum equal to the sum of the Eurodollar Rate (Reserve
Adjusted) applicable to each Interest Period for such Loan plus the
Eurodollar Margin from time to time in effect;
provided that, unless the Required Banks otherwise agree in writing, at any time
an Event of Default exists the interest rate applicable to each Loan shall be
increased by 2%.
4.2 Interest Payment Dates. Accrued interest on each Base Rate Loan
shall be payable in arrears on the last Business Day of each calendar month and
at maturity. Accrued interest on each Eurodollar Loan shall be payable on the
last day of each Interest Period relating to such Loan (and, in the case of a
Eurodollar Loan with a six-month Interest Period, on the three-month anniversary
of the first day of such Interest Period) and at maturity. After maturity,
accrued interest on all Loans shall be payable on demand.
4.3 Setting and Notice of Eurodollar Rates. The applicable
Eurodollar Rate for each Interest Period shall be determined by the Agent, and
notice thereof shall be given by the Agent promptly to the Company and each
Bank. Each determination of the applicable Eurodollar Rate by the Agent shall be
conclusive and binding upon the parties hereto, in the absence of demonstrable
error. The Agent shall, upon written request of the Company or any Bank, deliver
to the Company or such Bank a statement showing the computations used by the
Agent in determining any applicable Eurodollar Rate hereunder.
4.4 Computation of Interest. All determinations of interest for Base
Rate Loans when the Base Rate is determined by the Reference Rate shall be made
on the basis of a year of 365 or 366 days, as the case may be, and the actual
number of days elapsed. All other computations of interest shall be computed for
the actual number of days elapsed on the basis of a year of 360 days. The
applicable interest rate for each Base Rate Loan shall change simultaneously
with each change in the Base Rate.
SECTION 5 FEES.
5.1 Non-Use Fee. The Company agrees to pay to the Agent for the
account of each Bank a non-use fee, for the period from _______, 1998 to the
Termination Date, at a rate per annum equal to the Non-Use Fee Rate in effect
from time to time of the daily average of the unused amount of such Bank's
Percentage of the Commitment Amount. For purposes of calculating usage under
this Section, the Commitment Amount shall be deemed used to the extent of the
Total Outstandings. Such non-use fee shall be payable in arrears on the last
Business Day of each calendar quarter and on the Termination Date for any period
then ending for which such non-use fee shall not have theretofore been paid. The
non-use fee shall be computed for the actual number of days elapsed on the basis
of a year of 360 days.
5.2 Letter of Credit Fees. (a) The Company agrees to pay to the
Agent for the account of the Banks pro rata according to their respective
Percentages a letter of credit fee for each Letter of Credit in an amount equal
to the applicable LC Fee Rate (based on the type of Letter of Credit) per annum
in effect from time to time of the undrawn amount of such Letter of Credit
(computed for the actual number of days elapsed on the basis of a year of 360
days); provided that, unless the Required Banks otherwise agree in writing, the
rate applicable to each Letter of Credit shall be increased by 2% at any time
that an Event of Default exists. Such letter of credit fee shall be payable in
arrears on the last Business Day of each calendar quarter and on the Termination
Date (and, if any Letter of Credit remains outstanding on the Termination Date,
thereafter on demand) for the period from the date of the issuance of each
Letter of Credit to the date such payment is due or, if earlier, the date on
which such Letter of Credit expired or was terminated.
(b) The Company agrees to pay each Issuing Bank a fronting fee for
each Letter of Credit issued by such Issuing Bank in the amount separately
agreed to between the Company and such Issuing Bank.
(c) In addition, with respect to each Letter of Credit, the Company
agrees to pay to the applicable Issuing Bank, for its own account, such fees and
expenses as such Issuing Bank customarily requires in connection with the
issuance, negotiation, processing and/or administration of letters of credit in
similar situations.
5.3 Agent's Fees. The Company agrees to pay to the Agent such
agent's fees as are mutually agreed to from time to time by the Company and the
Agent.
SECTION 6 REDUCTION AND TERMINATION OF THE COMMITMENTS; PREPAYMENTS.
6.1 Reduction or Termination of the Commitments. The Company may
from time to time on at least five Business Days' prior written notice received
by the Agent (which shall promptly advise each Bank thereof) permanently reduce
the Commitment Amount to an amount not less than the Total Outstandings. Any
such reduction shall be in an amount not less than $5,000,000 or a higher
integral multiple of $1,000,000. The Company may at any time on like notice
terminate the Commitments upon payment in full of all Loans and all other
obligations of the Company hereunder and cash collateralization in full,
pursuant to documentation in form and substance reasonably satisfactory to the
Banks, of all obligations arising with respect to the Letters of Credit. All
reductions of the Commitment Amount shall reduce the Commitments pro rata among
the Banks according to their respective Percentages.
6.2 Prepayments. The Company may from time to time prepay the Loans
in whole or in part, without premium or penalty, provided that the Company shall
give the Agent (which shall promptly advise each Bank) notice thereof not later
than 10:00 A.M., Chicago time, on the day of such prepayment (which shall be a
Business Day), specifying the Loans to be prepaid and the date and amount of
prepayment. Each partial prepayment shall be in a principal amount of
$100,000 or a higher integral multiple thereof. Any prepayment of a Eurodollar
Loan on a day other than the last day of an Interest Period therefor shall
include interest on the principal amount being repaid and shall be subject to
Section 8.4.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on
the Loans, and of all non-use fees and Letter of Credit fees, shall be made by
the Company to the Agent in immediately available funds at the office specified
by the Agent not later than noon, Chicago time, on the date due; and funds
received after that hour shall be deemed to have been received by the Agent on
the next following Business Day. The Agent shall promptly remit to each Bank its
share of all such payments received in collected funds by the Agent for the
account of such Bank. All payments under Section 8.1 shall be made by the
Company directly to the Bank entitled thereto.
7.2 Application of Certain Payments. Each payment of principal shall
be applied to such Loans as the Company shall direct by notice to be received by
the Agent on or before the date of such payment or, in the absence of such
notice, as the Agent shall determine in its discretion. Concurrently with each
remittance to any Bank of its share of any such payment, the Agent shall advise
such Bank as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Notes, or of non-use fees or Letter of Credit fees, falls
due on a day which is not a Business Day, then such due date shall be extended
to the immediately following Business Day (unless, in the case of a Eurodollar
Loan, such immediately following Business Day is the first Business Day of a
calendar month, in which case such date shall be the immediately preceding
Business Day) and, in the case of principal, additional interest shall accrue
and be payable for the period of any such extension.
7.4 Setoff. The Company agrees that the Agent and each Bank have all
rights of set-off and bankers' lien provided by applicable law, and in addition
thereto, the Company agrees that at any time any Event of Default exists, the
Agent and each Bank may apply to the payment of any obligations of the Company
hereunder, whether or not then due, any and all balances, credits, deposits,
accounts or moneys of the Company then or thereafter with the Agent or such
Bank.
7.5 Proration of Payment. If any Bank shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise, but excluding any payment pursuant to Section 8.7 or 14.9) on account
of principal of or interest on any Note (or on account of its participation in
any Letter of Credit) in excess of its pro rata share of payments and other
recoveries obtained by all Banks on account of principal of and interest on
Notes (or such participations) then held by them, such Bank shall purchase from
the other Banks such
participation in the Notes (or sub-participations in Letters of Credit) held by
them as shall be necessary to cause such purchasing Bank to share the excess
payment or other recovery ratably with each of them; provided that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Bank, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery.
7.6 Taxes. (a) All payments of principal of, and interest on, the
Loans and all other amounts payable hereunder shall be made free and clear of
and without deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, but excluding franchise
taxes and taxes imposed on or measured by any Bank's net income or receipts (all
non-excluded items being called "Taxes"). If any withholding or deduction from
any payment to be made by the Company hereunder is required in respect of any
Taxes pursuant to any applicable law, rule or regulation, then the Company will:
(i) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt
or other documentation satisfactory to the Agent evidencing such
payment to such authority; and
(iii) (except to the extent such withholding or
deduction would not be required if such Bank's Exemption
Representation were true) pay to the Agent for the account of the
Banks such additional amount or amounts as is necessary to ensure
that the net amount actually received by each Bank will equal the
full amount such Bank would have received had no such withholding or
deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or any Bank with
respect to any payment received by the Agent or such Bank hereunder, the Agent
or such Bank may pay such Taxes and the Company will (except to the extent such
Taxes are payable by a Bank and would not have been payable if such Bank's
Exemption Representation were true) promptly pay such additional amounts
(including any penalty, interest and expense) as is necessary in order that the
net amount received by such Person after the payment of such Taxes (including
any Taxes on such additional amount) shall equal the amount such Person would
have received had such Taxes not been asserted.
(b) If the Company fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Agent, for the account of
the respective Banks, the required receipts or other required documentary
evidence, the Company shall indemnify the Banks for any incremental Taxes,
interest or penalties that may become payable by any Bank as a result of any
such failure. For purposes of this Section 7.6, a distribution hereunder by the
Agent or any Bank to or for the account of any Bank shall be deemed a payment by
the Company.
(c) Each Bank represents and warrants (such Bank's "Exemption
Representation") to the Company and the Agent that, as of the date of this
Agreement (or, in the case of an Assignee, the date it becomes a party hereto),
it is entitled to receive payments hereunder without any deduction or
withholding for or on account of any Taxes imposed by the United States of
America or any political subdivision or taxing authority thereof.
(d) Upon the request from time to time of the Company or the Agent,
each Bank that is organized under the laws of a jurisdiction other than the
United States of America shall execute and deliver to the Company and the Agent
one or more (as the Company or the Agent may reasonably request) United States
Internal Revenue Service Forms 4224 or Forms 1001 or such other forms or
documents, appropriately completed, as may be applicable to establish the
extent, if any, to which a payment to such Bank is exempt from withholding or
deduction of Taxes.
(e) If, and to the extent that, any Bank shall obtain a credit,
relief or remission for, or repayment of, any Taxes indemnified or paid by the
Company pursuant to this Section 7.6, such Bank agrees to promptly notify the
Company thereof and thereupon enter into negotiations in good faith with the
Company to determine the basis on which an equitable reimbursement of such Taxes
can be made to the Company.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption of
any applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or any Eurodollar Office of
such Bank) with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency
(A) shall subject any Bank (or any Eurodollar Office of such
Bank) to any tax, duty or other charge with respect to its
Eurodollar Loans, its Note or its obligation to make Eurodollar
Loans, or shall change the basis of taxation of payments to any Bank
of the principal of or interest on its Eurodollar Loans or any other
amounts due under this Agreement in respect of its Eurodollar Loans
or its obligation to make Eurodollar Loans (except for changes in
the rate of tax on the overall net income of such Bank or its
Eurodollar Office imposed by the jurisdiction in which such Bank's
principal executive office or Eurodollar Office is located); or
(B) shall impose, modify or deem applicable any reserve
(including any reserve imposed by the FRB, but excluding any reserve
included in the determination of interest rates pursuant to Section
4), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by any Bank
(or any Eurodollar Office of such Bank); or
(C) shall impose on any Bank (or its Eurodollar Office) any
other condition affecting its Eurodollar Loans, its Note or its
obligation to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D of the FRB, to impose a cost on) such Bank (or any
Eurodollar Office of such Bank) of making or maintaining any Eurodollar Loan, or
to reduce the amount of any sum received or receivable by such Bank (or its
Eurodollar Office) under this Agreement or under its Note with respect thereto,
then within 10 Business Days after demand by such Bank (which demand shall be
accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of which shall be
furnished to the Agent), the Company shall pay directly to such Bank such
additional amount as will compensate such Bank for such increased cost or such
reduction.
(b) If any Bank shall reasonably determine that the adoption or
phase-in of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank or
any Person controlling such Bank 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 Bank's or such controlling Person's capital as a consequence of
such Bank's obligations hereunder or under any Letter of Credit to a level below
that which such Bank or such controlling Person could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's or such
controlling Person's policies with respect to capital adequacy) by an amount
deemed by such Bank or such controlling Person to be material, then from time to
time, within 10 Business Days after demand by such Bank (which demand shall be
accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of which shall be
furnished to the Agent), the Company shall pay to such Bank such additional
amount or amounts as will compensate such Bank or such controlling Person for
such reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If
with respect to any Interest Period:
(a deposits in Dollars (in the applicable amounts) are not
being offered to the Agent in the interbank eurodollar market for
such Interest Period, or the Agent otherwise reasonably determines
(which determination, if made in good faith, shall be binding and
conclusive on the Company) that by reason of circumstances affecting
the interbank eurodollar market adequate and reasonable means do not
exist for ascertaining the applicable Eurodollar Rate; or
(b Banks having an aggregate Percentage of 40% or more advise
the Agent that the Eurodollar Rate (Reserve Adjusted) as determined
by the Agent will not adequately and fairly reflect the cost to such
Banks of maintaining or funding such Eurodollar Loans for such
Interest Period (taking into account any amount to which such Banks
may be entitled under Section 8.1) or that the making or funding of
Eurodollar Loans has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion of
such Banks materially affects such Loans;
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Bank shall be under any obligation to
make or convert into Eurodollar Loans and (ii) on the last day of the current
Interest Period for each Eurodollar Loan, such Loan shall, unless then repaid in
full, automatically convert to a Base Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event
that any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith judgment of any
Bank cause a substantial question as to whether it is) unlawful for any Bank to
make, maintain or fund Eurodollar Loans, then such Bank shall promptly notify
each of the other parties hereto and, so long as such circumstances shall
continue, (a) such Bank shall have no obligation to make or convert into
Eurodollar Loans (but shall make Base Rate Loans concurrently with the making of
or conversion into Eurodollar Loans by the Banks which are not so affected, in
each case in an amount equal to such Bank's pro rata share of all Eurodollar
Loans which would be made or converted into at such time in the absence of such
circumstances) and (b) on the last day of the current Interest Period for each
Eurodollar Loan of such Bank (or, in any event, on such earlier date as may be
required by the relevant law, regulation or interpretation), such Eurodollar
Loan shall, unless then repaid in full, automatically convert to a Base Rate
Loan. Each Base Rate Loan made by a Bank which, but for the circumstances
described in the foregoing sentence, would be a Eurodollar Loan (an "Affected
Loan") shall remain outstanding for the same period as the Group of Eurodollar
Loans of which such Affected Loan would be a part absent such circumstances.
8.4 Funding Losses. The Company hereby agrees that upon demand by
any Bank (which demand shall be accompanied by a statement setting forth the
basis for the amount being claimed, a copy of which shall be furnished to the
Agent), the Company will indemnify such Bank against any net loss or expense
which such Bank may sustain or incur (including any net loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Bank to fund or maintain any Eurodollar Loan), as reasonably determined
by such Bank, as a result of (a) any payment, prepayment or conversion of any
Eurodollar Loan of
such Bank on a date other than the last day of an Interest Period for such Loan
(including any conversion pursuant to Section 8.3) or (b) any failure of the
Company to borrow or continue, or to convert any Loan into, a Eurodollar Loan on
a date specified therefor in a notice of borrowing, continuation or conversion
pursuant to this Agreement. For this purpose, all notices to the Agent pursuant
to this Agreement shall be deemed to be irrevocable.
8.5 Right of Banks to Fund through Other Offices. Each Bank may, if
it so elects, fulfill its commitment as to any Eurodollar Loan by causing a
foreign branch or affiliate of such Bank to make such Loan, provided that in
such event for the purposes of this Agreement such Loan shall be deemed to have
been made by such Bank and the obligation of the Company to repay such Loan
shall nevertheless be to such Bank and shall be deemed held by it, to the extent
of such Loan, for the account of such branch or affiliate.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank 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 such Bank had actually funded and
maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Bank. (a)
Each Bank shall promptly notify the Company and the Agent of any event of which
it has knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Bank's good faith judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by the
Company to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence
of any circumstance of the nature described in Section 8.2 or 8.3 (and, if any
Bank has given notice of any such event described in clause (i) or (ii) above
and thereafter such event ceases to exist, such Bank shall promptly so notify
the Company and the Agent). Without limiting the foregoing, each Bank will
designate a different funding office if such designation will avoid (or reduce
the cost to the Company of) any event described in clause (i) or (ii) of the
preceding sentence and such designation will not, in such Bank's sole good faith
judgment, be otherwise disadvantageous to such Bank.
(b) At any time any Bank is an Affected Bank, the Company may
replace such Affected Bank as a party to this Agreement with one or more other
bank(s) or financial institution(s) reasonably satisfactory to the Agent (and
upon notice from the Company such Affected Bank shall assign pursuant to an
Assignment Agreement, and without recourse or warranty, its Commitment, its
Loans, its Note, its participation in Letters of Credit, and all of its other
rights and obligations hereunder to such replacement bank(s) or other financial
institution(s) for a purchase price equal to the sum of the principal amount of
the Loans so assigned, all accrued and unpaid interest thereon, its ratable
share of all accrued and unpaid non-use fees and Letter of Credit fees, any
amounts payable under Section 8.4 as a result of such Bank receiving payment of
any Eurodollar Loan prior to the end of an Interest Period therefor and all
other obligations owed to such Affected Bank hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. Banks may use reasonable
averaging and attribution methods in determining compensation under Sections 8.1
and 8.4, and the provisions of such Sections shall survive repayment of the
Loans, cancellation of the Notes, cancellation or expiration of the Letters of
Credit and any termination of this Agreement.
SECTION 9 WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement and
to induce the Banks to make Loans and issue or participate in Letters of Credit
hereunder, the Company warrants to the Agent and the Banks that:
9.1 Organization, etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
each Subsidiary is duly organized, validly existing and in good standing under
the laws of the state of its organization; and the Company and each Subsidiary
is duly qualified to do business in each jurisdiction where the nature of its
business makes such qualification necessary (except in those instances in which
the failure to be qualified or in good standing does not have a Material Adverse
Effect) and has full power and authority to own its property and conduct its
business as presently conducted by it.
9.2 Authorization; No Conflict. The execution and delivery by the
Company of this Agreement and each other Loan Document to which it is a party,
the borrowings hereunder, the execution and delivery by each Guarantor of each
Loan Document to which it is a party and the performance by each of the Company
and each Guarantor of its obligations under each Loan Document to which it is a
party are within the organizational powers of the Company and each Guarantor,
have been duly authorized by all necessary organizational action on the part of
the Company and each Guarantor (including any necessary shareholder, partner or
member action), have received all necessary governmental approval (if any shall
be required), and do not and will not (a) violate any provision of law or any
order, decree or judgment of any court or other government agency which is
binding on the Company or any Guarantor, (b) contravene or conflict with, or
result in a breach of, any provision of the certificate of incorporation,
partnership agreement, by-laws or other organizational documents of the Company
or any Guarantor or of any agreement, indenture, instrument or other document
which is binding on the Company, any Guarantor or any other Subsidiary or (c)
result in, or require, the creation or imposition of any Lien on any property of
the Company, any Guarantor or any other Subsidiary (other than Liens arising
under the Loan Documents).
9.3 Validity and Binding Nature. Each of this Agreement and each
other Loan Document to which the Company is a party is the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency and similar laws affecting the
enforceability of creditors' rights generally and to general principles of
equity; and each Loan Document to which any Guarantor is a party is, or upon the
execution and delivery thereof by such Guarantor will be, the legal, valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, subject to bankruptcy, insolvency and similar laws
affecting the enforceability of creditors' rights generally and to general
principles of equity.
9.4 Financial Condition. The audited consolidated financial
statements of the Company and its Subsidiaries as at December 31, 1997 and the
unaudited consolidated financial statements of the Company and its Subsidiaries
as at June 30, 1998, copies of each of which have been delivered to each Bank,
were prepared in accordance with GAAP (subject, in the case of such unaudited
statements, to the absence of footnotes and to normal year-end adjustments) and
present fairly the consolidated financial condition of the Company and its
Subsidiaries as at such dates and the results of their operations for the
periods then ended.
9.5 No Material Adverse Change. Since December 31, 1997, there has
been no material adverse change in the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole.
9.6 Litigation and Contingent Liabilities. No litigation (including
derivative actions), arbitration proceeding, labor controversy or governmental
investigation or proceeding is pending or, to the Company's knowledge,
threatened against the Company or any Subsidiary which might reasonably be
expected to have a Material Adverse Effect, except as set forth in Schedule 9.6.
Other than any liability incident to such litigation or proceedings, neither the
Company nor any Subsidiary has any material contingent liabilities not listed in
such Schedule 9.6.
9.7 Ownership of Properties; Liens. Each of the Company and each
Subsidiary owns good and, in the case of real property, indefeasible title to
all of its properties and assets, real and personal, tangible and intangible, of
any nature whatsoever (including patents, trademarks, trade names, service marks
and copyrights), free and clear of all Liens, charges and material claims
(including material infringement claims with respect to patents, trademarks,
copyrights and the like) except as permitted pursuant to Section 10.8.
9.8 Subsidiaries. The Company has no Subsidiaries except those
listed in Schedule 9.8.
9.9 Pension Plans. (a) During the twelve-consecutive-month period
prior to the date of the execution and delivery of this Agreement or the making
of any Loan hereunder, (i) no steps have been taken to terminate any Pension
Plan and (ii) no contribution failure has occurred
with respect to any Pension Plan sufficient to give rise to a lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which could result in the incurrence by the Company
of any material liability, fine or penalty.
(b) All contributions (if any) have been made to any Multiemployer
Pension Plan that are required to be made by the Company or any other member of
the Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable law; neither the Company nor any member of the
Controlled Group has withdrawn or partially withdrawn from any Multiemployer
Pension Plan, incurred any withdrawal liability with respect to any such plan,
received notice of any claim or demand for withdrawal liability or partial
withdrawal liability from any such plan, and no condition has occurred which, if
continued, might result in a withdrawal or partial withdrawal from any such
plan; and neither the Company nor any member of the Controlled Group has
received any notice that any Multiemployer Pension Plan is in reorganization,
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of any excise tax, that any such plan is or has been
funded at a rate less than that required under Section 412 of the Code, that any
such plan is or may be terminated, or that any such plan is or may become
insolvent.
9.10 Investment Company Act. Neither the Company nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.
9.11 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary 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.
9.12 Regulation U. The Company is not engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock.
9.13 Taxes. Each of the Company and each Subsidiary has filed all
Federal tax returns and other material tax returns and reports required by law
to have been filed by it and has paid all taxes and governmental charges thereby
shown to be owing, except any such taxes or charges which are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books.
9.14 Solvency, etc. On the Effective Date (or, in the case of any
Person which becomes a Guarantor after the Effective Date, on the date such
Person becomes a Guarantor), and immediately prior to and after giving effect to
the issuance of each Letter of Credit and each borrowing hereunder and the use
of the proceeds thereof (and after giving effect to any right of contribution
and subrogation), (a) each of the Company's and each Guarantor's assets will
exceed its liabilities and (b) each of the Company and each Guarantor will be
solvent, will be able to pay its debts as they mature, will own property with
fair saleable value greater than the amount required to pay its debts and will
have capital sufficient to carry on its business as then constituted.
9.15 Environmental Matters.
(a) No Violations. Except as set forth on Schedule 9.15, neither
the Company nor any Subsidiary, nor any operator of the Company's or any
Subsidiary's properties, is in violation of any judgment, decree, order, law,
permit, license, rule or regulation pertaining to environmental matters,
including those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
or any other Environmental Law which (i) in any single case, requires
expenditures in any three-year period of $250,000 or more by the Company and its
Subsidiaries in penalties and/or for investigative, removal or remedial actions
or (ii) individually or in the aggregate otherwise might reasonably be expected
to have a Material Adverse Effect.
(b) Notices. Except as set forth on Schedule 9.15, neither the
Company nor any Subsidiary has received written notice from any third party,
including any Federal, state or local governmental authority: (a) that any one
of them has been identified by the U.S. Environmental Protection Agency as a
potentially responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 000 Xxxxxxxx X; (b) that any hazardous
waste, as defined by 42 U.S.C. Section 6903(5), any hazardous substance as
defined by 42 U.S.C. Section 9601(14), any pollutant or contaminant as defined
by 42 U.S.C. Section 9601(33) or any toxic substance, oil or hazardous material
or other chemical or substance regulated by any Environmental Law, excluding
household hazardous waste (all of the foregoing, "Hazardous Substances"), which
any one of them has generated, transported or disposed of has been found at any
site at which a Federal, state or local agency or other third party has
conducted a remedial investigation, removal or other response action pursuant to
any Environmental Law; (c) that the Company or any Subsidiary must conduct
sampling, testing, a remedial investigation, removal, or a response action
pursuant to any Environmental Law; or (d) of any Environmental Claim.
(c) Handling of Hazardous Substances. Except as set forth on
Schedule 9.15, (i) no portion of the real property or other assets of the
Company or any Subsidiary has been used for the handling, processing, storage or
disposal of Hazardous Substances except in accordance in all material respects
with applicable Environmental Laws; and no underground tank or other underground
storage receptacle for Hazardous Substances is located on such properties; (ii)
in the course of any activities conducted by the Company, any Subsidiary or the
operators of any real property of the Company or any Subsidiary, no Hazardous
Substances have been generated or are being used on such properties except in
accordance in all material respects with applicable Environmental Laws; (iii)
there have been no Releases of Hazardous Substances on, upon, into
or from any real property or other assets of the Company or any Subsidiary,
which Releases singly or in the aggregate might reasonably be expected to have a
material adverse effect on the value of such real property or assets; (iv) to
the Company's actual knowledge, there have been no Releases on, upon, from or
into any real property in the vicinity of the real property or other assets of
the Company or any Subsidiary which, through soil or groundwater contamination,
may have come to be located on, and which might reasonably be expected to have a
material adverse effect on the value of, the real property or other assets of
the Company or any Subsidiary; and (v) any Hazardous Substances generated by the
Company and its Subsidiaries have been transported offsite only by properly
licensed carriers and, to the best of the Company's knowledge, delivered only to
treatment or disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities have been and
are, to the best of the Company's knowledge, operating in compliance with such
permits and applicable Environmental Laws.
(d) Investigations. Except as set forth on Schedule 9.15, the
Company and its Subsidiaries have taken reasonable steps to investigate the past
and present condition and usage of the real property of the Company and its
Subsidiaries with regard to environmental matters.
9.16 Year 2000 Problem. The Company and its Subsidiaries have
reviewed the areas within their business and operations which could be adversely
affected by, and have developed or are developing a program to address on a
timely basis, the "Year 2000 Problem" (that is, the risk that computer
applications used by the Company and its Subsidiaries may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999). Based on such review and program, the
Company reasonably believes that the "Year 2000 Problem" will not have a
Material Adverse Effect.
9.17 Information. All information heretofore or contemporaneously
herewith furnished in writing by the Company or any Subsidiary to any Bank for
purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or on
behalf of the Company or any Subsidiary to any Bank pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading in light of the circumstances
under which made (it being recognized by the Agent and the Banks that (a) any
projections and forecasts provided by the Company are based on good faith
estimates and assumptions believed by the Company to be reasonable as of the
date of the applicable projections or assumptions and that actual results during
the period or periods covered by any such projections and forecasts will likely
differ from projected or forecasted results and (b) any information provided by
the Company or any Subsidiary with respect to any Person or assets acquired or
to be acquired by the Company or any Subsidiary shall, for all periods prior to
the date of such acquisition, be limited to the knowledge of the Company or the
acquiring Subsidiary after reasonable inquiry).
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and
thereafter until all obligations of the Company hereunder and under the other
Loan Documents are paid in full and all Letters of Credit have been terminated,
the Company agrees that, unless at any time the Required Banks shall otherwise
expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to each
Bank:tes and Other Information
10.1.1 Audit Report. Promptly when available and in any event within
90 days after the close of each Fiscal Year: (a) a copy of the annual audit
report of the Company and its Subsidiaries for such Fiscal Year, including
therein consolidated balance sheets of the Company and its Subsidiaries as of
the end of such Fiscal Year and consolidated statements of earnings and cash
flow of the Company and its Subsidiaries for such Fiscal Year certified without
qualification by Xxxxxx Xxxxxxxx LLP or other independent auditors of recognized
standing selected by the Company and reasonably acceptable to the Required
Banks, together with a written statement from such accountants to the effect
that in making the examination necessary for the signing of such annual audit
report by such accountants, they have not become aware of any Event of Default
or Unmatured Event of Default that has occurred and is continuing or, if they
have become aware of any such event, describing it in reasonable detail and (b)
consolidating balance sheets of the Company and its Subsidiaries as of the end
of such Fiscal Year and consolidating statements of earnings for the Company and
its Subsidiaries for such Fiscal Year, certified by the chief financial officer
of the Company.
10.1.2 Quarterly Reports. Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter (except the last Fiscal
Quarter) of each Fiscal Year, consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of the end of such Fiscal Quarter, together
with consolidated and consolidating statements of earnings and consolidated
statements of cash flow for such Fiscal Quarter and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such Fiscal
Quarter, certified by the chief financial officer of the Company.
10.1.3 Monthly Reports. Promptly when available and in any event
within 30 days after the end of each of the first two months of each Fiscal
Quarter, consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of the end of such month, together with consolidated and
consolidating statements of earnings for such month and for the period beginning
with the first day of the applicable Fiscal Year and ending on the last day of
such month, certified by the chief financial officer of the Company.
10.1.4 Compliance Certificates. Contemporaneously with the
furnishing of a copy of each annual audit report pursuant to Section 10.1.1 and
of each set of quarterly statements
pursuant to Section 10.1.2, (a) a duly completed compliance certificate in the
form of Exhibit B, with appropriate insertions, dated the date of such annual
report or such quarterly statements and signed by the chief financial officer of
the Company, containing a computation of each of the financial ratios and
restrictions set forth in Section 10.6 and to the effect that such officer has
not become aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing or, if there is any such event, describing it and the
steps, if any, being taken to cure it; and (b) an updated organizational chart
listing all Subsidiaries and the locations of their businesses.
10.1.5 Reports to SEC and to Shareholders. Promptly upon the filing
or sending thereof, copies of all regular, periodic or special reports of the
Company or any Subsidiary filed with the SEC (excluding exhibits thereto,
provided that the Company shall promptly deliver any such exhibit to the Agent
or any Bank upon request therefor); copies of all registration statements of the
Company or any Subsidiary filed with the SEC (other than on Form S-8); and
copies of all proxy statements or other communications made to shareholders
generally concerning material developments in the business of the Company or any
Subsidiary.
10.1.6 Notice of Default, Litigation and ERISA Matters. Promptly
upon becoming aware of any of the following, written notice describing the same
and the steps being taken by the Company or the Subsidiary affected thereby with
respect thereto:
(a) the occurrence of an Event of Default or an
Unmatured Event of Default;
(b) any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by the Company
to the Banks which has been instituted or, to the knowledge of the
Company, is threatened against the Company or any Subsidiary or to
which any of the properties of any thereof is subject which, if
adversely determined, might reasonably be expected to have a
Material Adverse Effect;
(c) the institution of any steps by any member of the
Controlled Group or any other Person to terminate any Pension Plan,
or the failure of any member of the Controlled Group to make a
required contribution to any Pension Plan (if such failure is
sufficient to give rise to a lien under Section 302(f) of ERISA) or
to any Multiemployer Pension Plan, or the taking of any action with
respect to a Pension Plan which could result in the requirement that
the Company furnish a bond or other security to the PBGC or such
Pension Plan, or the occurrence of any event with respect to any
Pension Plan or Multiemployer Pension Plan which could result in the
incurrence by any member of the Controlled Group of any material
liability, fine or penalty (including any claim or demand for
withdrawal liability or partial withdrawal from any Multiemployer
Pension Plan), or any notice that any Multiemployer Pension Plan is
in reorganization, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of an excise
tax, that any such plan is or has been funded at a rate less than
that required under Section 412 of the Code, that any such plan is
or may be terminated, or that any such plan is or may become
insolvent;
(d) any cancellation (without replacement) or material
change in any insurance maintained by the Company or any Subsidiary;
(e) any event (including any violation of any
Environmental Law or the assertion of any Environmental Claim) which
might reasonably be expected to have a Material Adverse Effect; or
(f) any setoff, claim (including any Environmental
Claim), withholding or other defense to which any of the collateral
granted under any Collateral Document, or the Agent's or the Banks'
rights with respect to any such collateral, are subject.
10.1.7 Subsidiaries. Promptly upon any change in the list of its
Subsidiaries from that set forth on Schedule 9.8 (or in the most recent notice
pursuant to this Section), notification of such change.
10.1.8 Management Reports. Promptly upon the request of the Agent or
any Bank, copies of all detailed financial and management reports submitted to
the Company by independent auditors in connection with each annual or interim
audit made by such auditors of the books of the Company.
10.1.9 Projections. As soon as practicable and in any event within
60 days after the commencement of each Fiscal Year, financial projections for
the Company and its Subsidiaries for such Fiscal Year prepared in a manner
consistent with those projections delivered by the Company to the Agent prior to
the Effective Date.
10.1.10 Other Information. From time to time such other information
concerning the Company and its Subsidiaries as the Agent or any Bank may
reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary
to keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, any Bank or the Agent or any
representative thereof upon reasonable prior notice to inspect the properties
and operations of the Company and of such Subsidiary; and permit, and cause each
Subsidiary to permit, at any reasonable time during normal business hours and
with reasonable notice (or at any time without notice if an Event of Default
exists), any Bank or the Agent or any representative thereof to visit any or all
of its offices, to discuss its financial matters with its officers and its
independent auditors (and the Company hereby authorizes such independent
auditors to discuss such financial matters with any Bank or the Agent or any
representative thereof whether or not any representative of the Company or any
Subsidiary is present), and to examine (and, at the expense of the Company or
the applicable Subsidiary, photocopy extracts from) any of its books or other
corporate records.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain,
with responsible insurance companies, such insurance as may be required by any
law or governmental regulation or court decree or order applicable to it and
such other insurance, to such extent and against such hazards and liabilities,
as is customarily maintained by companies similarly situated; and, upon request
of the Agent or any Bank, furnish to the Agent or such Bank a certificate
setting forth in reasonable detail the nature and extent of all insurance
maintained by the Company and its Subsidiaries.
10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a)
Comply, and cause each Subsidiary to comply, in all material respects with all
material applicable laws (including Environmental Laws), rules, regulations,
decrees, orders, judgments, licenses and permits; and (b) pay, and cause each
Subsidiary to pay, prior to delinquency, all Federal taxes and all other
material taxes and other governmental charges against it or any of its property,
as well as claims of any kind which, if unpaid, might become a Lien on any of
its property; provided that the foregoing shall not require the Company or any
Subsidiary to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set aside on
its books adequate reserves with respect thereto in accordance with GAAP.
10.5 Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 10.11) cause each Subsidiary to maintain and preserve, (a)
its existence and good standing in the jurisdiction of its incorporation and (b)
its qualification and good standing as a foreign corporation in each
jurisdiction where the nature of its business makes such qualification necessary
(except in those instances in which the failure to be qualified or in good
standing does not have a Material Adverse Effect).
10.6 Financial Covenants
10.6.1 Minimum Net Worth. Not permit its Net Worth at any time to be
less than the sum of (a) $30,700,000 plus (b) 75% of the sum of Consolidated Net
Income for each Fiscal Quarter, beginning with the Fiscal Quarter ending
December 31, 1998 and ending with the most recently-ended Fiscal Quarter for
which the Company has delivered financial statements (provided that, if
Consolidated Net Income is less than zero for any Fiscal Quarter, for purposes
of this Section 10.6.1 Consolidated Net Income will be deemed to be zero for
such quarter) plus (c) 100% of the net proceeds of any equity issued by the
Company or any of its Subsidiaries (on a consolidated basis) after the Effective
Date.
10.6.2 Minimum Interest Coverage. Not permit the Interest Coverage
Ratio for any Computation Period to be less than the applicable ratio set forth
below (provided that if the EWR Acquisition shall have occured, the numerator of
each such ratio shall be increased by 0.10):
COMPUTATION INTEREST
PERIOD ENDING: COVERAGE RATIO
-------------- --------------
Effective Date through 12/31/98 1.50 to 1.0
1/1/99 through 12/31/99 1.75 to 1.0
1/1/00 and thereafter 2.00 to 1.0.
10.6.3 Funded Debt to EBITDA Ratio. Not permit the Funded Debt to
EBITDA Ratio as of the last day of any Computation Period to exceed the
applicable ratio set forth below (provided that prior to the delivery by the
Company of the financial statements required by Section 10.1.2 and the
compliance certificate required by Section 10.1.4 for the period ending
September 30, 1998, the Company shall not permit Funded Debt to exceed
$24,000,000 or, if the EWR Acquisition shall have occurred, $30,000,000):
COMPUTATION FUNDED DEBT TO
PERIOD ENDING: EBITDA RATIO
-------------- ------------
9/30/98 through 3/31/99 4.00 to 1.0
4/1/99 and thereafter 3.75 to 1.0.
10.6.4 Senior Funded Debt to EBITDA Ratio. Not permit the Senior
Funded Debt to EBITDA Ratio as of the last day of any Computation Period to
exceed the applicable ratio set forth below (provided that prior to the delivery
by the Company of the financial statements required by Section 10.1.2 and the
compliance certificate required by Section 10.1.4 for the period ending
September 30, 1998, the Company shall not permit Senior Funded Debt to exceed
$21,000,000 or, if the EWR Acquisition shall have occurred, $26,250,000):
SENIOR FUNDED
COMPUTATION DEBT TO
PERIOD ENDING: EBITDA RATIO
-------------- ------------
9/30/98 through 3/31/99 3.50 to 1.0
4/1/99 and thereafter 3.25 to 1.0.
10.6.5 Debt to Capitalization Ratio. Not permit the ratio of (a)
Funded Debt to (b) the sum of Funded Debt plus Net Worth at any time to exceed
the applicable percentage set forth below during any period set forth below:
DEBT TO
CAPITALIZATION
PERIOD: PERCENTAGE
------ --------------
9/30/98 through 12/31/98 60%
1/1/99 through 12/31/99 55%
1/1/00 and thereafter 50%.
10.6.6 Capital Expenditures. The Company will not permit the
aggregate amount of all Capital Expenditures (excluding amounts, if any, paid to
consummate acquisitions permitted by Section 10.11(c) which constitute Capital
Expenditures) made by the Company and its Subsidiaries during any period of 12
consecutive months to exceed the product of 1.5 multiplied by the depreciation
and amortization of the Company and its Subsidiaries during the preceding period
of 12 consecutive months (calculated on a pro forma basis giving effect to
acquisitions and sales and other dispositions made subsequent to such preceding
12 months).
10.7 Limitations on Debt. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to exist any Debt, except:
(a) obligations in respect of the Loans, the L/C Applications and
the Letters of Credit;
(b) Subordinated Debt and unsecured seller Debt (including
contingent payments incurred in connection with a transaction
permitted by Section 10.11(c)) which represents all or part of the
purchase price payable in connection with a transaction permitted by
Section 10.11(c) and the existing Debt listed on Schedule 10.7(b);
provided that the aggregate principal amount of all such Debt shall
not at any time exceed $10,000,000;
(c) Debt arising under Capital Leases, Debt secured by Liens
permitted by subsection 10.8(c) or (d) and other Debt outstanding on
the date hereof and listed in Schedule 10.7(c), and refinancings of
any such Debt so long as the terms applicable to such refinanced
Debt are no less favorable to the Company or the applicable
Subsidiary than the terms in effect immediately prior to such
refinancing, provided that the aggregate amount of all such Debt at
any time outstanding shall not exceed $5,000,000;
(d) Debt of Subsidiaries owed to the Company;
(e) Hedging Obligations of the Company or any Subsidiary to any
Bank incurred in the ordinary course of business for bona fide
hedging purposes and not for speculation;
(f) unsecured Debt of the Company to Subsidiaries; and
(g) Debt to be Repaid; provided that all such Debt to be Repaid
shall be repaid on or before the Effective Date.
10.8 Liens. Not, and not permit any Subsidiary to, create or permit
to exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:
(a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested
in good faith by appropriate proceedings and, in each case, for
which it maintains adequate reserves;
(b) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics and materialmen and other
similar Liens imposed by law and (ii) Liens incurred in connection
with worker's compensation, unemployment compensation and other
types of social security (excluding Liens arising under ERISA) or in
connection with surety bonds, bids, performance bonds and similar
obligations) for sums not overdue or being contested in good faith
by appropriate proceedings and not involving any deposits or
advances or borrowed money or the deferred purchase price of
property or services, and, in each case, for which it maintains
adequate reserves;
(c) Liens identified in Schedule 10.8;
(d) subject to the limitation set forth in Section 10.7(c), (i)
Liens existing on property at the time of the acquisition thereof by
the Company or any Subsidiary (and not created in contemplation of
such acquisition) and (ii) Liens that constitute purchase money
security interests on any property securing debt incurred for the
purpose of financing all or any part of the cost of acquiring such
property, provided that any such Lien attaches to such property
within 60 days of the acquisition thereof and such Lien attaches
solely to the property so acquired;
(e) attachments, appeal bonds, judgments and other similar Liens,
for sums not exceeding $250,000 arising in connection with court
proceedings, provided the execution or other enforcement of such
Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith
and by appropriate proceedings;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in
any material respect with the ordinary conduct of the business of
the Company or any Subsidiary; and
(g) Liens in favor of the Agent for the benefit of the Banks
arising under the Loan Documents.
10.9 Operating Leases. Not permit the aggregate amount of all
rental payments made (or scheduled to be made) under Operating Leases (excluding
the Operating Leases listed on Schedule 10.9) by the Company and its
Subsidiaries (on a consolidated basis)in any Fiscal Year to exceed $250,000.
10.10 Restricted Payments. Not, and not permit any Subsidiary to,
(a) declare or pay any dividends on any of its capital stock (other than stock
dividends), (b) purchase or redeem any such stock or any warrants, units,
options or other rights in respect of such stock, (c) make any other
distribution to shareholders or (d) set aside funds for any of the foregoing;
provided that any Subsidiary may declare and pay dividends to the Company or to
any other wholly-owned Subsidiary.
10.11 Mergers, Consolidations, Sales. Not, and not permit any
Subsidiary to, be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets or any stock of any
class of, or any partnership or joint venture interest in, any other Person, or
sell, transfer, convey or lease all or any substantial part of its assets, or
sell or assign with or without recourse any receivables, except for (a) any such
merger or consolidation, sale, transfer, conveyance, lease or assignment of or
by any wholly-owned Subsidiary into the Company or into, with or to any other
wholly-owned Subsidiary; (b) any such purchase or other acquisition by the
Company or any wholly-owned Subsidiary of the assets or stock of any
wholly-owned Subsidiary; (c) any such purchase or other acquisition by the
Company or any wholly-owned Subsidiary of the assets or stock of any other
Person where (1) such assets (in the case of an asset purchase) are for use, or
such Person (in the case of a stock purchase) is engaged in the management,
processing, collection, handling and disposal of non-hazardous bio-solid wastes,
animal manures, and green or other organic waste or similar non-hazardous
waste-related business activities; (2)
immediately before or after giving effect to such purchase or acquisition, no
Event of Default or Unmatured Event of Default shall have occurred and be
continuing; (3) either (i) (x) the aggregate consideration to be paid by the
Company and its Subsidiaries (including any Debt assumed or issued in connection
therewith, the amount thereof to be calculated in accordance with GAAP) in
connection with such purchase or other acquisition (or any series of related
acquisitions) is not greater than $15,000,000 and (y) the aggregate
consideration to be paid in cash or by the assumption or issuance of Debt by the
Company and its Subsidiaries in connection with such purchase or acquisition (or
any series of related acquisitions) is not greater than $7,000,000 or (ii) the
Required Banks have consented to such purchase or acquisition; and (4) the
Company is in pro forma compliance with all the financial ratios and
restrictions set forth in Section 10.6; and (d) sales and dispositions of assets
(including the stock of Subsidiaries) so long as (1) the net book value of all
assets sold or otherwise disposed of in any Fiscal Year (other than assets
referred to in clause (2)) does not exceed $500,000 and (2) such assets are
listed on Schedule 10.11.
10.12 Use of Proceeds. Use the proceeds of the Loans solely to
finance the Company's working capital, for acquisitions permitted by Section
10.11, for capital expenditures and for other general corporate purposes; and
not use or permit any proceeds of any Loan to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
"purchasing or carrying" any Margin Stock.
10.13 Further Assurances. Take, and cause each Subsidiary to take,
such actions as are necessary, or as the Agent (or the Required Banks acting
through the Agent) may reasonably request, from time to time (including the
execution and delivery of guaranties, security agreements, pledge agreements,
financing statements and other documents, the filing or recording of any of the
foregoing, and the delivery of stock certificates and other collateral with
respect to which perfection is obtained by possession) to ensure that (i) the
obligations of the Company hereunder and under the other Loan Documents are
secured by substantially all of the assets (other than real property and, unless
the Required Banks (acting through the Agent) otherwise request in writing, any
motor vehicle subject to a statute requiring notation on a certificate of title
to perfect a security interest in such vehicle) of the Company and guaranteed by
all of the Subsidiaries (including, promptly upon the acquisition or creation
thereof, any Subsidiary acquired or created after the date hereof) by execution
of a counterpart of
the Guaranty and (ii) the obligations of each Guarantor under the Guaranty are
secured by substantially all of the assets (other than real property and, unless
the Required Banks (acting through the Agent) otherwise request in writing, any
motor vehicle subject to a statute requiring notation on a certificate of title
to perfect a security interest in such vehicle) of such Guarantor.
10.14 Transactions with Affiliates. Not, and not permit any
Subsidiary to, enter into, or cause, suffer or permit to exist any transaction,
arrangement or contract with any of its other Affiliates (other than the Company
and its Subsidiaries) which is on terms which are less favorable than are
obtainable from any Person which is not one of its Affiliates.
10.15 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.
10.16 Environmental Laws. Conduct, and cause each Subsidiary to
conduct, its operations and keep and maintain its property in material
compliance with all Environmental Laws (other than Immaterial Laws).
10.17 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services, if such contract requires
that payment be made by it regardless of whether or not delivery is ever made of
such materials, supplies or other property or services; provided that the
foregoing shall not prohibit the Company or any Subsidiary from entering into
options for the purchase of particular assets or businesses.
10.18 Inconsistent Agreements. Not, and not permit any Subsidiary
to, enter into any agreement containing any provision which (a) would be
violated or breached by any borrowing, or the obtaining of any Letter of Credit,
by the Company hereunder or by the performance by the Company or any Subsidiary
of any of its obligations hereunder or under any other Loan Document or (b)
would prohibit the Company or any Subsidiary from granting to the Agent, for the
benefit of the Banks, a Lien on any of its assets.
10.19 Business Activities. Not, and not permit any Subsidiary to,
engage in any line of business other than the management, processing,
collection, handling and disposal of non-
hazardous bio-solid waste, animal manures, and green or other organic waste or
similar non-hazardous waste-related business activities.
10.20 Advances and Other Investments. Not, and not permit any
Subsidiary to, make, incur, assume or suffer to exist any Investment in any
other Person, except (without duplication) the following:
(a) equity Investments existing on the Effective Date in
wholly-owned Subsidiaries identified in Schedule 9.8;
(b) equity Investments in Subsidiaries acquired after the
Effective Date in transactions permitted as acquisitions of stock or
assets pursuant to Section 10.11;
(c) in the ordinary course of business, contributions by the
Company to the capital of any of its Subsidiaries, or by any such
Subsidiary to the capital of any of its Subsidiaries;
(d) in the ordinary course of business, Investments by the Company
in any Subsidiary or by any of the Subsidiaries in the Company, by
way of intercompany loans, advances or guaranties, all to the extent
permitted by Section 10.7;
(e) Suretyship Liabilities permitted by Section 10.7;
(f) good faith deposits made in connection with prospective
acquisitions of stock or assets permitted by Section 10.11;
(g) loans to officers and employees not exceeding (i) $100,000 in
the aggregate to any single individual or (ii) $250,000 in the
aggregate for all such individuals;
(h) Cash Equivalent Investments; and
(i) bank deposits in the ordinary course of business; provided
that the aggregate amount of all such deposits (excluding (x)
amounts in payroll accounts or for accounts payable, in each case to
the extent that checks have been issued to third parties, and (y)
amounts maintained (in the ordinary course of business consistent
with past practice) in accounts of any Person which is acquired by
the Company or a Subsidiary in accordance with the terms hereof
during the 45 days following the date of such acquisition) which are
maintained with any bank other than a Bank shall not at any time
after January 7, 1999 exceed (x) in the case of
such deposits with any single bank, $100,000 for three consecutive
Business Days and (y) in the case of all such deposits, $1,000,000
for three consecutive Business Days;
provided that no Investment otherwise permitted by clause (b), (c), (d), (e),
(f) or (g) shall be permitted to be made if, immediately before or after giving
effect thereto, any Event of Default or Unmatured Event of Default shall have
occurred and be continuing.
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC.
The obligation of each Bank to make its Loans and of any Issuing
Bank to issue Letters of Credit is subject to the following conditions
precedent:
11.1 Effectiveness. The obligation of each Bank to make its initial
Loan and of any Issuing Bank to issue any Letter of Credit, whichever first
occurs, is, in addition to the conditions precedent specified in Section 11.2,
subject to the conditions precedent (and the date on which all such conditions
precedent have been satisfied or waived in writing by the Banks is called the
"Effective Date") that the Agent shall have received (a) all amounts which are
then due and payable pursuant to Section 5 and (to the extent billed) Section
14.6; (b) evidence satisfactory to the Agent that all Debt to be Repaid has been
(or concurrently with the initial credit extension hereunder will be) paid in
full and that all Liens securing such Debt have been (or concurrently with the
initial credit extension hereunder will be) terminated; and (c) all of the
following, each duly executed and dated the Effective Date (or such earlier date
as shall be satisfactory to the Agent), in form and substance satisfactory to
the Agent, and each (except for the Notes, of which only the originals shall be
signed) in sufficient number of signed counterparts to provide one for each
Bank:
11.1.1 Notes. The Notes.
11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing or ratifying the execution, delivery and
performance by the Company of this Agreement, the Notes and the other Loan
Documents to which the Company is a party; and certified copies of resolutions
of the Board of Directors of each Subsidiary authorizing or ratifying the
execution, delivery and performance by such Subsidiary of each Loan Document to
which such Subsidiary is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing
any necessary corporate action, consents and governmental approvals (if any)
required for the execution, delivery and performance by the Company and each
Subsidiary of the documents referred to in this Section 11.
11.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary of the Company and each Subsidiary of the
Company as of the Effective Date certifying the names of the officer or officers
of such entity authorized to sign the Loan Documents to which such entity is a
party, together with a sample of the true signature of each such officer (it
being understood that the Agent and each Bank may conclusively rely on each such
certificate until formally advised by a like certificate of any changes
therein).
11.1.5 Guaranty. The Guaranty executed by each Subsidiary as of the
Effective Date.
11.1.6 Security Agreement. The Security Agreement executed by the
Company and each Subsidiary as of the Effective Date, together with evidence,
satisfactory to the Agent, that all filings necessary to perfect the Agent's
Lien on any collateral granted under the Security Agreement have been duly made
and are in full force and effect.
11.1.7 Pledge Agreements. The Company Pledge Agreement and, with
respect to any Subsidiary that as of the Effective Date has one or more
Subsidiaries, a Subsidiary Pledge Agreement, in each case together with all
stock certificates, stock powers and other items required to be delivered in
connection therewith.
11.1.8 Opinion of Counsel for the Company and the Guarantors. The
opinion of Liddell, Sapp, Zivley, Hill & XxXxxx, L.L.P., counsel to the Company
and the Guarantors.
11.1.9 Other. Such other documents as the Agent or any Bank may
reasonably request.
11.2 Conditions. The obligation (a) of each Bank to make each Loan
and (b) of each Issuing Bank to issue each Letter of Credit is subject to the
following further conditions precedent that:
11.2.1 Compliance with Warranties, No Default, etc. Both before and
after giving effect to any borrowing and the issuance
of any Letter of Credit (but, if any Event of Default of the nature referred to
in Section 12.1.2 shall have occurred with respect to any other Debt, without
giving effect to the application, directly or indirectly, of the proceeds
thereof) the following statements shall be true and correct:
(a) the representations and warranties of the Company and
the Guarantors set forth in this Agreement (excluding Sections 9.6,
9.8 and 9.15) and the other Loan Documents shall be true and correct
in all material respects with the same effect as if then made
(except to the extent stated to relate to an earlier date, in which
case such representations and warranties shall be true and correct
in all material respects as of such earlier date);
(b) except as disclosed by the Company to the Agent and the
Banks pursuant to Section 9.6,
(i) no litigation (including derivative actions),
arbitration proceeding, labor controversy or governmental
investigation or proceeding shall be pending or, to the
knowledge of the Company, threatened against the Company or
any of its Subsidiaries which might reasonably be expected to
have a Material Adverse Effect or which purports to affect the
legality, validity or enforceability of this Agreement, the
Notes or any other Loan Document; and
(ii) no development shall have occurred in any
litigation (including derivative actions), arbitration
proceeding, labor controversy or governmental investigation or
proceeding disclosed pursuant to Section 9.6 which might
reasonably be expected to have a Material Adverse Effect; and
(c) no Event of Default or Unmatured Event of Default shall
have then occurred and be continuing, and neither the Company nor
any of its Subsidiaries shall be in violation of any law or
governmental regulation or court order or decree where such
violation or violations singly or in the aggregate might reasonably
be expected to have a Material Adverse Effect.
11.2.2 Confirmatory Certificate. If requested by the Agent or any
Bank (acting through the Agent), the Agent shall have received (in sufficient
counterparts to provide one to each Bank) a certificate dated the date of such
requested Loan or
Letter of Credit and signed by a duly authorized representative of the Company
as to the matters set out in Section 11.2.1 (it being understood that each
request by the Company for the making of a Loan or the issuance of a Letter of
Credit shall be deemed to constitute a warranty by the Company that the
conditions precedent set forth in Section 11.2.1 will be satisfied at the time
of the making of such Loan or the issuance of such Letter of Credit), together
with such other documents as the Agent or any Bank (acting through the Agent)
may reasonably request in support thereof.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT
12.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when
due of the principal of any Loan or any reimbursement obligation with respect to
any Letter of Credit; or default, and continuance thereof for five days, in the
payment when due of any interest, fee or other amount payable by the Company
hereunder or under any other Loan Document.
12.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of the Company or any Subsidiary in an aggregate
principal amount (for all such Debt so affected) exceeding $250,000 and such
default shall (a) consist of the failure to pay such Debt when due (subject to
any applicable grace period), whether by acceleration or otherwise, or (b)
accelerate the maturity of such Debt or permit the holder or holders thereof, or
any trustee or agent for such holder or holders, to cause such Debt to become
due and payable prior to its expressed maturity.
12.1.3 Other Material Obligations. Default in the payment when due,
or in the performance or observance of, any material obligation of, or condition
agreed to by, the Company or any Subsidiary with respect to any material
purchase or lease of goods or services where such default, singly or in the
aggregate with other such defaults might reasonably be expected to have a
Material Adverse Effect (except only to the extent that the existence of any
such default is being contested by the Company or such Subsidiary in good faith
and by appropriate proceedings and appropriate reserves have been made in
respect of such default).
12.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits in writing its general
inability or refusal to pay, debts as they become due; or the Company or any
Subsidiary applies for, consents to, or acquiesces in the appointment of a
trustee, receiver or other custodian for the Company or such Subsidiary or any
substantial part of the property thereof, or makes a general assignment for the
benefit of creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for the
Company or any Subsidiary or for any substantial part of the property thereof
and is not discharged within 60 days; or any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any bankruptcy or insolvency law,
or any dissolution or liquidation proceeding (except the voluntary dissolution,
not under any bankruptcy or insolvency law, of a Subsidiary), is commenced in
respect of the Company or any Subsidiary, and if such case or proceeding is not
commenced by the Company or such Subsidiary, it is consented to or acquiesced in
by the Company or such Subsidiary, or remains for 60 days undismissed; or the
Company or any Subsidiary takes any corporate action to authorize, or in
furtherance of, any of the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. (a) Failure
by the Company to comply with or to perform any covenant set forth in Sections
10.5 through 10.15; or (b) failure by the Company to comply with or to perform
any other provision of this Agreement (and not constituting an Event of Default
under any of the other provisions of this Section 12) and continuance of such
failure for 30 days after notice thereof to the Company from the Agent or any
Bank.
12.1.6 Warranties. Any warranty made by the Company herein is
breached or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice or other writing furnished by
the Company to the Agent or any Bank in connection herewith is false or
misleading in any material respect on the date as of which the facts therein set
forth are stated or certified.
12.1.7 Pension Plans. (i) Institution of any steps by the Company or
any other Person to terminate a Pension Plan if as a result of such termination
the Company could be required to make a contribution to such Pension Plan, or
could incur a liability or obligation to such Pension Plan, in excess of
$250,000; (ii) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA;
or (iii) there shall occur any withdrawal or partial withdrawal from a
Multiemployer Pension Plan and the withdrawal liability (without unaccrued
interest) to Multiemployer Pension Plans as a result of such withdrawal
(including any outstanding withdrawal liability that the Company and the
Controlled Group have incurred on the date of such withdrawal) exceeds $250,000.
12.1.8 Judgments. Final judgments which exceed an aggregate of
$250,000 shall be rendered against the Company, or any Subsidiary and shall not
have been paid, discharged or vacated or had execution thereof stayed pending
appeal within 30 days after entry or filing of such judgments.
12.1.9 Invalidity of Guaranty, etc. The Guaranty shall cease to be
in full force and effect with respect to any Guarantor, any Guarantor shall fail
(subject to any applicable grace period) to comply with or to perform any
applicable provision of the Guaranty, or any Guarantor (or any Person by,
through or on behalf of such Guarantor) shall contest in any manner the
validity, binding nature or enforceability of the Guaranty with respect to such
Guarantor.
12.1.10 Invalidity of Collateral Documents, etc. Any Collateral
Document shall cease to be in full force and effect with respect to the Company
or any Guarantor, the Company or any Guarantor shall fail (subject to any
applicable grace period) to comply with or to perform any applicable provision
of any Collateral Document to which such entity is a party, or the Company or
any Guarantor (or any Person by, through or on behalf of the Company or such
Guarantor) shall contest in any manner the validity, binding nature or
enforceability of any Collateral Document.
12.1.11 Change in Control. (a) Any Person or group of Persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
but excluding (i) the executive managers of the Company as of the Effective Date
and (ii) the Environmental Opportunity Fund) shall acquire beneficial ownership
(within the meaning of Rule 13d-3 promulgated under such Act) of 25% or more of
the outstanding shares of common stock of the Company; (b) during any 24-month
period, individuals who at the beginning of such period constituted the
Company's Board of Directors (together with any new directors whose election by
the Company's Board of Directors or whose nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
directors who either were directors at beginning of such period or whose
election or nomination was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company; or (c) a period of 60 consecutive days shall have
elapsed during which any of the individuals named in Schedule 12.1.11 shall have
ceased to hold executive offices with the Company at least equal in seniority to
such individual's present offices, as set out in such Schedule 12.1.11,
excluding any such individual who has been replaced by another individual or
individuals reasonably satisfactory to the Required Banks (it being understood
that any such replacement individual shall be deemed added to Schedule 12.1.11
on the date of approval thereof by the Required Banks).
12.2 Effect of Event of Default. If any Event of Default described
in Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable and the Company shall become
immediately obligated to deliver to the Agent cash collateral in an amount equal
to the outstanding face amount of all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing, the Agent (upon written request of the
Required Banks) shall declare the Commitments (if they have not theretofore
terminated) to be terminated and/or declare all Notes and all other obligations
hereunder to be due and payable and/or demand that the Company immediately
deliver to the Agent cash collateral in amount equal to the outstanding face
amount of all Letters of Credit, whereupon the Commitments (if they have not
theretofore terminated) shall immediately terminate and/or all Notes and all
other obligations hereunder shall become immediately due and payable and/or the
Company shall immediately become obligated to deliver to the Agent cash
collateral in an amount equal to the face amount of all Letters of Credit, all
without presentment, demand, protest or notice of any kind. The Agent shall
promptly advise the Company of any such declaration, but failure to do so shall
not impair the effect of such declaration. Notwithstanding the foregoing, the
effect as an Event of Default of any event described in Section 12.1.1 or
Section 12.1.4 may be waived by the written concurrence of all of the Banks, and
the effect as an Event of Default of any other event described in this Section
12 may be waived by the written concurrence of the Required Banks. Any cash
collateral delivered hereunder shall be held by the Agent (without liability for
interest thereon) and applied to obligations arising in connection with any
drawing under a Letter of Credit. After the expiration or termination of all
Letters of Credit, such cash collateral shall be applied by the Agent to any
remaining
obligations hereunder and any excess shall be delivered to the Company or as a
court of competent jurisdiction may elect.
SECTION 13 THE AGENT.
13.1 Appointment and Authorization. (a) Each Bank hereby
irrevocably (subject to Section 13.9) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
(b) Each Issuing Bank shall act on behalf of the Banks with
respect to any Letters of Credit issued by it and the documents associated
therewith. Each Issuing Bank shall have all of the benefits and immunities (i)
provided to the Agent in this Section 13 with respect to any acts taken or
omissions suffered by such Issuing Bank in connection with Letters of Credit
issued by it or proposed to be issued by it and the applications and agreements
for letters of credit pertaining to such Letters of Credit as fully as if the
term "Agent", as used in this Section 13, included such Issuing Bank with
respect to such acts or omissions and (ii) as additionally provided in this
Agreement with respect to the Issuing Banks.
13.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
13.3 Liability of Agent. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or
(ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.
13.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
and, if it so requests, confirmation from the Banks of their obligation to
indemnify the Agent against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Banks and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the Banks.
13.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default or Unmatured Event
of Default except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Agent for the account of the Banks, unless
the Agent shall have received written notice from a Bank or the
Company referring to this Agreement, describing such Event of Default or
Unmatured Event of Default and stating that such notice is a "notice of
default". The Agent will notify the Banks of its receipt of any such notice. The
Agent shall take such action with respect to such Event of Default or Unmatured
Event of Default as may be requested by the Required Banks in accordance with
Section 12; provided that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable or in the best interest of
the Banks.
13.6 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial or other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
13.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand the Agent-Related
Persons (to the extent not
reimbursed by or on behalf of the Company and without limiting the obligation of
the Company to do so), pro rata, from and against any and all Indemnified
Liabilities; provided that no Bank shall be liable for any payment to the
Agent-Related Person of any portion of the Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank shall reimburse the Agent upon demand for
its ratable share of any costs or out-of-pocket expenses (including reasonable
fees of attorneys for the Agent (including the allocable costs of internal legal
services and all disbursements of internal counsel)) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive repayment of the Loans, cancellation of the Notes,
any foreclosure under, or any modification, release or discharge of, any or all
of the Collateral Documents, any termination of this Agreement and the
resignation or replacement of the Agent.
For the purposes of this Section 13.7, "Indemnified Liabilities"
shall mean: any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
reasonable fees of attorneys for the Agent (including the allocable costs of
internal legal services and all disbursements of internal counsel)) of any kind
or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or the replacement of any Bank) be imposed on, incurred by or asserted
against any Agent-Related Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including (a) any case, action
or proceeding before any court or other governmental authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the benefit
of creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code, and including any appellate proceeding) related
to or arising out of this Agreement or the Commitments or the use of the
proceeds thereof, whether or not any Agent-Related Person, any Bank or any of
their respective officers, directors, employees, counsel, agents or
attorneys-in-fact is a party thereto.
13.8 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent, the Issuing Bank
hereunder and without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, BofA or its Affiliates may receive
information regarding the Company or its Affiliates (including information that
may be subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to their Loans, BofA and its
Affiliates shall have the same rights and powers under this Agreement as any
other Bank and may exercise the same as though BofA were not the Agent and
the Issuing Bank, and the terms "Bank" and "Banks" include BofA and its
Affiliates, to the extent applicable, in their individual capacities.
13.9 Successor Agent. The Agent may, and at the request of the
Required Banks shall, resign as Agent upon 30 days' notice to the Banks. If the
Agent resigns under this Agreement, the Required Banks shall, with (so long as
no Event of Default exists) the consent of the Company (which shall not be
unreasonably withheld or delayed), appoint from among the Banks a successor
agent for the Banks. If no successor agent is appointed prior to the effective
date of the resignation of the Agent, the Agent may appoint, after consulting
with the Banks and the Company, a successor agent from among the Banks. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent, and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 13 and
Sections 14.6 and 14.13 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is 30 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Banks shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Required Banks appoint a successor agent as provided for above. Notwithstanding
the foregoing, however, BofA may not be removed as the Agent at the request of
the Required Banks unless BofA shall also simultaneously be replaced as an
"Issuing Bank" hereunder pursuant to documentation in form and substance
reasonably satisfactory to BofA.
13.10 Withholding Tax
(a) If any Bank is a "foreign corporation, partnership
or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Bank agrees to deliver to
the Agent:
(i) if such Bank claims an exemption from, or a
reduction of, withholding tax under a United States tax
treaty, properly completed Internal Revenue Service ("IRS")
Forms 1001 and W-8 before the payment of any
interest in the first calendar year and before the payment of
any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under
this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States
trade or business of such Bank, two properly completed and
executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in
each succeeding taxable year of such Bank during which
interest may be paid under this Agreement, and IRS Form W-9;
and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Bank agrees to promptly notify the Agent of any change
in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS
Form 1001 and such Bank sells, assigns, grants a participation in,
or otherwise transfers all or part of the obligations of the Company
to such Bank, such Bank agrees to notify the Agent of the percentage
amount in which it is no longer the beneficial owner of such
obligations of the Company hereunder. To the extent of such
percentage amount, the Agent will treat such Bank's IRS Form 1001 as
no longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells,
assigns, grants a participation in, or otherwise transfers all or
part of the obligations of the Company to such Bank hereunder, such
Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of
the Code.
(d) If any Bank is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from
any interest payment to such Bank an amount equivalent to the
applicable withholding tax after taking into account such reduction.
If the forms or other documentation required by subsection (a) of
this Section are not delivered to the Agent, then the Agent may
withhold from any interest payment to such Bank not providing such
forms or other documentation an amount equivalent to the applicable
withholding tax.
(e) If the IRS or any other governmental authority of the
United States or any other jurisdiction asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for the
account of any Bank (because the appropriate form was not delivered
or was not properly executed, or because such Bank failed to notify
the Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify the Agent fully for all amounts
paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this
Section, together with all costs and expenses (including reasonable
fees of attorneys for the Agent (including the allocable costs of
internal legal services and all disbursements of internal counsel)).
The obligation of the Banks under this subsection shall survive the
repayment of the Loans, cancellation of the Notes, any termination
of this Agreement and the resignation or replacement of the Agent.
13.11 Collateral Matters. The Banks irrevocably authorize the Agent,
at its option and in its discretion, to release any Lien granted to or held by
the Agent under any Collateral Document (i) upon termination of the Commitments
and payment in full of all Loans and all other obligations of the Company
hereunder and the expiration or termination of all Letters of Credit; (ii)
constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; or (iii) subject to Section
14.1, if approved, authorized or ratified in writing by the Required Banks. Upon
request by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release particular types or items of collateral pursuant to this
Section 13.11.
SECTION 14 GENERAL
14.1 Waiver; Amendments. No delay on the part of the Agent or any
Bank in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any right,
power or remedy preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or the Notes shall in
any event be effective unless the same shall be in writing and signed and
delivered by Banks having an aggregate Percentage of not less than the aggregate
Percentage expressly designated herein with respect thereto or, in the absence
of such designation as to any provision of this Agreement or the Notes, by the
Required Banks, and then any such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No amendment, modification, waiver or consent shall change the
Percentage of any Bank without the consent of such Bank. No amendment,
modification, waiver or consent shall (i) extend or increase the amount of the
Commitments, (ii) extend the date for payment of any principal of or interest on
the Loans or any fees payable hereunder, (iii) reduce the principal amount of
any Loan, the rate of interest thereon or any fees payable hereunder, (iv)
release the Guaranty (other than with respect to a Guarantor which ceases to be
a Subsidiary as a result of a transaction permitted hereunder) or all or
substantially all of the collateral granted under the Collateral Document or (v)
reduce the aggregate Percentage required to effect an amendment, modification,
waiver or consent without, in each case, the consent of all Banks. No provisions
of Section 13 or other provision of this Agreement affecting the Agent in its
capacity as such shall be amended, modified or waived without the consent of the
Agent. No provision of this Agreement relating to the rights or duties of an
Issuing Bank in its capacity as such shall be amended, modified or waived
without the consent of such Issuing Bank.
14.2 Confirmations. The Company and each holder of a Note agree from
time to time, upon written request received by it from the other, to confirm to
the other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such Note.
14.3 Notices. Except as otherwise provided in Sections 2.2 and 2.3,
all notices hereunder shall be in writing (including facsimile transmission) and
shall be sent to the applicable party at its address shown on Schedule 14.3 or
at such other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent and receipt
of such facsimile is confirmed; notices sent by mail shall be deemed to have
been given three Business Days after the date when sent by registered or
certified mail, postage prepaid; and notices sent by hand delivery or overnight
courier service shall be deemed to have been given when received. For purposes
of Sections 2.2 and 2.3, the Agent shall be entitled to rely on telephonic
instructions from any person that the Agent in good faith believes is an
authorized officer or employee of the Company, and the Company shall hold the
Agent and each other Bank harmless from any loss, cost or expense resulting from
any such reliance.
14.4 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with GAAP, consistently applied; provided that if the Company
notifies the Agent that the Company wishes to amend any covenant in Section 10
to eliminate or to take into account the effect of any change in GAAP on the
operation of such covenant (or if the Agent notifies the Company that the
Required Banks wish to amend Section 10 for such purpose), then the Company's
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Company and the Required Banks.
14.5 Regulation U. Each Bank represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Agent (including the
reasonable fees and charges of counsel for the Agent and of local counsel, if
any, who may be retained by said counsel) in connection with the preparation,
execution, delivery and administration of this Agreement, the other Loan
Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendments,
supplements or waivers to any Loan Documents), and all reasonable out-of-pocket
costs and expenses (including reasonable attorneys' fees, court costs and other
legal expenses and allocated costs of staff counsel) incurred by
the Agent and each Bank after an Event of Default in connection with the
enforcement of this Agreement, the other Loan Documents or any such other
documents. Each Bank agrees to reimburse the Agent for such Bank's pro rata
share (based on its respective Percentage) of any such costs and expenses of the
Agent not paid by the Company. In addition, the Company agrees to pay, and to
save the Agent and the Banks harmless from all liability for, (a) any stamp or
other taxes (excluding income taxes and franchise taxes based on net income)
which may be payable in connection with the execution and delivery of this
Agreement, the borrowings hereunder, the issuance of the Notes or the execution
and delivery of any other Loan Document or any other document provided for
herein or delivered or to be delivered hereunder or in connection herewith and
(b) any fees of the Company's auditors in connection with any reasonable
exercise by the Agent and the Banks of their rights pursuant to Section 10.2.
All obligations provided for in this Section 14.6 shall survive repayment of the
Loans, cancellation of the Notes and any termination of this Agreement.
14.7 Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Company has
one or more Subsidiaries.
14.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.9 Assignments; Participations.
14.9.1 Assignments. Any Bank may, with the prior written consents of
the Company and the Agent (which consents shall not be unreasonably delayed or
withheld), at any time assign and delegate to one or more commercial banks or
other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an "Assignee"), all or any fraction of such Bank's
Loans and Commitment (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Bank's Loans and Commitment)
in a minimum aggregate amount equal to the lesser of (i) the amount of the
assigning Bank's remaining Commitment and (ii) $5,000,000; provided that (a) no
assignment and delegation may be made to any Person if, at the time of such
assignment and delegation, the Company would be obligated to pay any greater
amount under Section 7.6 or Section 8 to the Assignee than the Company is then
obligated to pay to the assigning Bank under such Sections (and if any
assignment is made in violation of the foregoing, the Company will not be
required to pay the incremental amounts) and (b) the Company and the Agent shall
be entitled to continue to deal solely and directly with such Bank in connection
with the interests so assigned and delegated to an Assignee until the date when
all of the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as
the Agent and the assigning Bank shall agree) shall have passed
after written notice of such assignment and delegation, together
with payment instructions, addresses and related information with
respect to such Assignee, shall have been given to the Company and
the Agent by such assigning Bank and the Assignee,
(y) the assigning Bank and the Assignee shall have
executed and delivered to the Company and the Agent an assignment
agreement substantially in the form of Exhibit G (an "Assignment
Agreement"), together with any documents required to be delivered
thereunder, which Assignment Agreement shall have been accepted by
the Agent, and
(z) the assigning Bank or the Assignee shall have paid
the Agent a processing fee of $3,500.
>From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Bank hereunder, and (y) the assigning Bank, to the
extent that rights and obligations hereunder have been assigned and delegated by
it pursuant to such Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after effectiveness of any assignment and
delegation, the Company shall execute and deliver to the Agent (for delivery to
the Assignee and the Assignor, as applicable) a new Note in the principal amount
of the Assignee's Percentage of the Commitment Amount and, if the assigning Bank
has retained a Commitment hereunder, a replacement Note in the principal amount
of the Percentage of the Commitment Amount retained by the assigning Bank (such
Note to be in exchange for, but not in payment of, the predecessor Note held by
such assigning Bank). Each such Note shall be dated the effective date of such
assignment. The assigning Bank shall xxxx the predecessor Note "exchanged" and
deliver it to the Company. Accrued interest on that part of the predecessor Note
being assigned shall be paid as provided in the Assignment Agreement. Accrued
interest and fees on that part of the predecessor Note not being assigned shall
be paid to the assigning Bank. Accrued interest and accrued fees shall be paid
at the same time or times provided in the predecessor Note and in this
Agreement. Any attempted assignment and delegation not made in accordance with
this Section 14.9.1 shall be null and void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or
any other provision of this Agreement, any Bank may at any time assign all or
any portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder).
14.9.2 Participations. Any Bank may at any time sell to one or more
commercial banks or other Persons participating interests in any Loan owing to
such Bank, the Note held by such Bank, the Commitment of such Bank, the direct
or participation interest of such Bank in any Letter of Credit or any other
interest of such Bank hereunder (any Person purchasing any such participating
interest being herein called a "Participant"); provided that any Bank selling
any such participating interest shall give notice thereof to the Company. In the
event of a sale by a Bank of a participating interest to a Participant, (x) such
Bank shall remain the holder of its Note for all purposes of this Agreement, (y)
the Company and the Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations hereunder and (z) all
amounts payable by the Company shall be determined as if such Bank had not sold
such participation and shall be paid directly to such Bank. No Participant shall
have any direct or indirect voting rights
hereunder except with respect to any of the events (excluding the events
described in clause (v) thereof) described in the fourth sentence of Section
14.1. Each Bank agrees to incorporate the requirements of the preceding sentence
into each participation agreement which such Bank enters into with any
Participant. The Company agrees that if amounts outstanding under this Agreement
and the Notes are due and payable (as a result of acceleration or otherwise),
each Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement, any Note and with
respect to any Letter of Credit to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement
or such Note; provided that such right of setoff shall be subject to the
obligation of each Participant to share with the Banks, and the Banks agree to
share with each Participant, as provided in Section 7.5. The Company also agrees
that each Participant shall be entitled to the benefits of Section 7.6 and
Section 8 as if it were a Bank (provided that no Participant shall receive any
greater compensation pursuant to Section 7.6 or Section 8 than would have been
paid to the participating Bank if no participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be a
contract made under and governed by the internal laws of the State of Illinois.
Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement. All obligations of the Company and rights of the Agent and
the Banks expressed herein or in any other Loan Document shall be in addition to
and not in limitation of those provided by applicable law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
14.12 Successors and Assigns. This Agreement shall be binding upon
the Company, the Banks and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Company, the Banks and the Agent
and the successors and assigns of the Banks and the Agent.
14.13 Indemnification by the Company.
(a) In consideration of the execution and delivery of this Agreement
by the Agent and the Banks and the agreement to extend the Commitments provided
hereunder, the Company hereby agrees to indemnify, exonerate and hold the Agent,
each Bank and each of the officers, directors, employees, Affiliates and agents
of the Agent and each Bank (each a "Bank Party") free and harmless from and
against any and all actions, causes of action, suits, losses, liabilities,
damages and expenses, including reasonable attorneys' fees and charges and,
without duplication, allocated costs of staff counsel (collectively, for
purposes of this Section 14.13, called the "Indemnified Liabilities"), incurred
by the Bank Parties or any of them as a result of, or arising out of, or
relating to (i) any tender offer, merger, purchase of stock, purchase of assets
or other similar transaction financed or proposed to be financed in whole or in
part, directly or indirectly, with the proceeds of any of the Loans, (ii) the
use, handling, release, emission, discharge, transportation, storage, treatment
or disposal of any Hazardous Substance at any property owned or leased by the
Company or any Subsidiary, (iii) any violation of any Environmental Laws with
respect to conditions at any property owned or leased by the Company or any
Subsidiary or the operations conducted thereon, (iv) the investigation, cleanup
or remediation of offsite locations at which the Company or any Subsidiary or
their respective predecessors are alleged to have directly or indirectly
disposed of hazardous substances or (v) the execution, delivery, performance or
enforcement of this Agreement or any other Loan Document by any of the Bank
Parties, except for any such Indemnified Liabilities arising on account of any
such Bank Party's gross negligence or willful misconduct. If and to the extent
that the foregoing undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. Nothing set forth above shall be construed to relieve any Bank Party from
any obligation it may have under this Agreement.
(b) All obligations provided for in this Section 14.13 shall survive
repayment of the Loans, cancellation of the Notes, any foreclosure under, or any
modification, release or discharge of any or all of the Collateral Documents and
any termination of this Agreement.
14.14 Interest. (a) It is the intention of the parties hereto that
each Bank shall conform strictly to usury laws applicable to it. Accordingly,
the parties hereto stipulate and agree that none of the terms and provisions
contained in this
Agreement or any Note shall ever be construed to create a contract to pay any
Bank for the use, forbearance or detention of money a rate in excess of the
Highest Lawful Rate applicable to such Bank, and that for purposes hereof,
"interest" shall include the aggregate of all charges or other consideration
which constitute interest under applicable laws and are contracted for, taken,
reserved, charged or received under this Agreement, the applicable Note or
otherwise in connection with the transactions contemplated by this Agreement.
Further, if the transactions contemplated hereby would be usurious as to any
Bank under the laws applicable to it, then notwithstanding anything to the
contrary in this Agreement or the applicable Note, or any agreement or document
entered into in connection herewith or therewith, it is agreed as follows: the
aggregate of all consideration which constitutes interest under the laws
applicable to such Bank that is contracted for, taken, reserved, charged or
received by such Bank under this Agreement or the applicable Note, or otherwise
in connection herewith or therewith, shall under no circumstances exceed the
maximum amount allowed by the laws applicable to such Bank, and any excess shall
be credited by such Bank on the principal amount of the indebtedness of the
Company owed to such Bank (or, if the principal amount of all such indebtedness
shall have been paid in full, to the extent such interest has been received by
such Bank it shall be refunded by such Bank to the Company). The provisions of
this Section 14.14(a) shall control over all other provisions of this Agreement,
the Notes and any other agreement or document which may be in apparent conflict
herewith. The parties further stipulate and agree that, without limitation of
the foregoing, all calculations of the rate or amount of interest contracted
for, taken, reserved, charged or received under this Agreement, each Note and
any other applicable agreement or document which are made for the purpose of
determining whether such rate or amount exceeds the Highest Lawful Rate shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading during the period of the full stated term of the
indebtedness of the Company to the applicable Bank, and if longer and if
permitted by applicable law, until payment in full, all interest at any time so
contracted for, taken, reserved, charged or received.
(b) If at any time the effective rate of interest which would
otherwise apply to any indebtedness evidenced by any Note issued to any Bank
would exceed the Highest Lawful Rate applicable to such Bank (taking into
account the interest rate applicable to such indebtedness pursuant to the other
provisions of this Agreement, plus all additional charges and consideration
which have been contracted for, taken, reserved, charged or received under this
Agreement or such Note (the "Additional Charges") which constitute interest with
respect to such indebtedness), the effective interest rate to apply to such
indebtedness shall be limited to the Highest Lawful Rate, but any subsequent
reductions in the interest rate applicable to such indebtedness shall not reduce
the effective interest rate to apply to such indebtedness below the Highest
Lawful Rate applicable to such Bank until the total amount of interest accrued
on such indebtedness equals the amount of interest which would have accrued if
the interest rate from time to time applicable to such indebtedness had at all
times been in effect with respect to such indebtedness pursuant to the other
provisions of this Agreement and if such Bank had collected all Additional
Charges called for under this Agreement and its Note. If at maturity or final
payment of any Note issued to any Bank the total amount of interest accrued on
such Note (including amounts designated as "interest" plus any Additional
Charges which constitute interest, and taking into account the limitations of
the first sentence of this Section 14.14(b)) is less than the total amount of
interest which would have accrued if the interest rate or interest rates
applicable to the indebtedness from time to time outstanding under such Note had
at all times been in effect pursuant to the other provisions of this Agreement,
then the Company agrees, to the fullest extent permitted by the laws applicable
to such Bank, to pay to such Bank an amount equal to the difference between (i)
the lesser of (1) the amount of interest which would have accrued on such Note
if the Highest Lawful Rate had at all times been in effect (but excluding, for
purposes of calculating such amount of interest, any Additional Charges which
constitute interest with respect to such Note), or (2) the amount of interest
which would have accrued on such Note if the interest rate or interest rates
applicable to the indebtedness from time to time outstanding under such Note had
at all times been in effect pursuant to the other provisions of this Agreement
(including amounts designated as "interest" plus any Additional Charges which
constitute interest with respect to such Note) less (ii) the amount of interest
actually accrued on such Note (including amounts designated as "interest" plus
any Additional Charges which constitute interest with respect to such Note).
14.15 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION,
IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER 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 COMPANY HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE COMPANY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
14.16 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
Delivered at Chicago, Illinois, as of the day and year first above written.
SYNAGRO TECHNOLOGIES, INC.
By
--------------------------------------------------
Title
---------------------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By
---------------------------------------------------
Title
----------------------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVING ASSOCIATION, as Issuing Bank and as a Bank
By
--------------------------------------------------
Title
---------------------------------------------
S-1
SCHEDULE 1.1
PRICING SCHEDULE
The Base Rate Margin, the Eurodollar Margin, the Non-Use Fee Rate
and the LC Fee Rate for Financial Letters of Credit and Non-Financial Letters of
Credit, respectively, shall be determined in accordance with the table below and
the other provisions of this Schedule 1.1.
XXXXX XXXXX XXXXX XXXXX XXXXX
X II III IV V
---------- ---------- ---------- ---------- ----------
Rate for
Non-Use Fee 0.350% 0.350% 0.400% 0.450% 0.500%
---------- ---------- ---------- ---------- ----------
Eurodollar Margin 1.500% 1.750% 2.000% 2.250% 2.500%
---------- ---------- ---------- ---------- ----------
Base Rate Margin
0 0.125% 0.125% 0.250% 0.375%
---------- ---------- ---------- ---------- ----------
LC Rate for
Non-Financial Letters of Credit
0.750% 0.875% 1.000% 1.125% 1.250%
---------- ---------- ---------- ---------- ----------
LC Rate for
Financial Letters of Credit
1.500% 1.750% 2.000% 2.250% 2.500%
---------- ---------- ---------- ---------- ----------
Level I applies when the Funded Debt to EBITDA Ratio is less than
2.0 to 1.
Level II applies when the Funded Debt to EBITDA Ratio is equal to or
greater than 2.0 to 1 but less than 2.5 to 1.
Level III applies when the Funded Debt to EBITDA Ratio is equal to
or greater than 2.5 to 1 but less than 3.0 to 1.
Level IV applies when the Funded Debt to EBITDA Ratio is equal to or
greater than 3.0 to 1 but less than 3.5 to 1.
Level V applies when the Funded Debt to EBITDA Ratio is equal to or
greater than 3.5 to 1.
Initially, the applicable Level shall be Level IV. The applicable
Level shall be adjusted, to the extent applicable, 45 days (or, in the case of
the last Fiscal Quarter of any Fiscal Year, 90 days) after the end of each
Fiscal Quarter based on the Funded Debt to EBITDA Ratio as of the last day of
such Fiscal Quarter; provided that
1
if the Company fails to deliver the financial statements required by Section
10.1.1 or 10.1.2, as applicable, and the related certificate required by Section
10.1.3 by the 45th day (or, if applicable, the 90th day) after any Fiscal
Quarter, Level V shall apply until such financial statements are delivered.
2
SCHEDULE 2.1
BANKS AND PERCENTAGES
Amount of
Bank Commitment Percentage
---- ---------- ----------
Bank of America National $40,000,000 100%
Trust and Savings Association
TOTALS $40,000,000 100%
1
SCHEDULE 14.3
ADDRESSES FOR NOTICES
SYNAGRO TECHNOLOGIES, INC.
--------------------------
0000 Xxx Xxxxxx, Xxx. 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Rome
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
---------------------------------
Agency Management Services
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx XxXxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
----------------------------------
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
1
November 2, 1998
Synagro Technologies, Inc.
0000 Xxx Xxxxxx, Xxx. 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Rome
Re: First Amendment
Ladies/Gentlemen:
Please refer to the Credit Agreement (the "Credit Agreement") dated as
of October 5, 1998 among Synagro Technologies, Inc., various financial
institutions and Bank of America National Trust and Savings Association, as
Agent. Capitalized terms used and not otherwise defined in this letter have the
respective meanings given to them in the Credit Agreement.
The Company, the Banks and the Agent hereby agree that the Credit
Agreement is amended as set forth below:
(1) Section 10.7 is amended by (i) deleting the word "and" after clause
(f); (ii) replacing the period at the end of clause (g) with a
semi-colon followed by the word "and"; and (iii) inserting the
following clause (h) at the end thereof:
(h) Debt to finance the payment of insurance premiums, provided
that (i) the amount of such Debt incurred with respect to any
insurance policy shall not exceed the aggregate amount of
premiums payable under such policy in the 12-month period
following the incurrence of such Debt and (ii) the interest
rate payable in respect of such Debt shall not exceed the
interest rate applicable to Base Rate Loans hereunder at the
time of such incurrence.
(2) Section 10.8 is amended by (i) deleting the word "and" after clause
(f); (ii) replacing the period at the end of clause (g) with a
semi-colon followed by the word "and"; and (iii) inserting the
following clause (h) at the end thereof:
(g) Liens securing Debt described in Section 10.7(h), provided
that any such Lien attaches only to the insurance policy
(including unearned premiums thereunder and proceeds thereof)
financed with the proceeds of such Debt.
Synagro Technologies, Inc.
November 2, 1998
Page 2
This letter amendment shall be governed by the laws of the State of
Illinois applicable to contracts made and to be performed entirely within such
State. Except as amended hereby, the Credit Agreement shall remain in full force
and effect and is ratified and confirmed in all respects.
Please evidence your agreement to the foregoing by signing and
returning a counterpart of this letter.
Very truly yours,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
-----------------------------
Title:
--------------------------
ACCEPTED AND AGREED
as of the date first
written above
SYNAGRO TECHNOLOGIES, INC.
By:
-----------------------------
Title:
--------------------------
SECOND AMENDMENT
THIS SECOND AMENDMENT dated as of November 13, 1998 (this "Amendment")
amends the Credit Agreement dated as of October 7, 1998 (as previously amended,
the "Credit Agreement") among Synagro Technologies, Inc. (the "Company"),
various financial institutions (the "Banks") and Bank of America National Trust
and Savings Association, as Agent (in such capacity, the "Agent"). Terms defined
in the Credit Agreement are, unless otherwise defined herein or the context
otherwise requires, used herein as defined therein.
WHEREAS, the Company, the Banks and the Agent have entered into the
Credit Agreement; and
WHEREAS, the parties hereto desire to amend the Credit Agreement in
certain respects as more fully set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 Amendments. Effective on (and subject to the occurrence of)
the Amendment Effective Date (as defined below), the Credit Agreement shall be
amended in accordance with Sections 1.1 through 1.6:
1.1 Amendment to Definition. The definition of "Interest Coverage
Computation Period" in Section 1.1 is amended in its entirety to read as
follows:
"Interest Coverage Computation Period means each of the
following periods: (a) the month ending October 31, 1998; (b) the
period of two consecutive months ending November 30, 1998; (c) the
period of three consecutive months ending December 31, 1998; (d) the
period of four consecutive months ending January 31, 1999; (e) the
period of five consecutive months ending February 28, 1999; (f) the
period of six consecutive months ending March 31, 1999; (g) the period
of seven consecutive months ending April 30, 1999; (h) the period of
eight consecutive months ending May 31, 1999; (i) the period of three
consecutive Fiscal Quarters ending June 30, 1999; and (j) each period
of four consecutive Fiscal Quarters ending on the last day of a Fiscal
Quarter on or after September 30, 1999."
1.2 Amendment of Section 10.1.4. Section 10.1.4 is amended in its
entirety to read as follows:
"10.1.4 Compliance Certificates. (a) Contemporaneously with
the furnishing of each monthly financial report
pursuant to Section 10.1.3 at any time prior to July 1, 1999, a duly
completed compliance certificate in the form of Exhibit B-1, with
appropriate insertions, dated the date of such financial report and
signed by the chief financial officer of the Company, containing a
computation of the Interest Coverage Ratio and to the effect that such
officer has not become aware of any Event of Default or Unmatured Event
of Default that has occurred and is continuing or, if there is any such
event, describing it and the steps, if any, being taken to cure it.
(b) Contemporaneously with the furnishing of a copy of each annual
audit report pursuant to Section 10.1.1 and of each set of quarterly
statements pursuant to Section 10.1.2, (i) a duly completed compliance
certificate in the form of Exhibit B-2, with appropriate insertions,
dated the date of such annual report or such quarterly statements and
signed by the chief financial officer of the Company, containing a
computation of each of the financial ratios and restrictions set forth
forth in Section 10.6 and to the effect that such officer has not
become aware of any Event of Default or Unmatured Event of Default that
has occurred and is continuing or, if there is any such event,
describing it and the steps, if any, being taken to cure it; and (ii)
an updated organizational chart listing all Subsidiaries and the
locations of their businesses."
1.3 Amendment of Section 10.6.1. Section 10.6.1 is amended by deleting
the amount "$30,700,000" and substituting "$30,450,000" therefor.
1.4 Amendment of Section 10.6.2. Section 10.6.2 is amended in its
entirety to read as follows:
"10.6.2 Minimum Interest Coverage. Not permit the Interest
Coverage Ratio to be less than the applicable ratio set forth below:
COMPUTATION INTEREST
PERIOD ENDING: COVERAGE RATIO
-------------- --------------
Effective Date through 10/31/98 1.50 to 1.0
11/30/98 through 5/31/99 1.60 to 1.0
6/30/99 through 12/31/99 1.85 to 1.0
3/31/00 and thereafter 2.10 to 1.0."
1.5 Amendment of Section 10.6.3. Section 10.6.3 is amended by deleting
the parenthetical clause therein.
1.6 Amendment of Section 10.6.4. Section 10.6.4 is amended by deleting
the parenthetical clause therein.
1.7 Amendment of Compliance Certificate. Exhibit B to the Credit
Agreement is amended to read in its entirety as set forth on Exhibit B to this
Amendment.
SECTION 2 Representations and Warranties. The Company represents and
warrants to the Agent and the Banks that, after giving effect to the
effectiveness hereof, (a) each warranty set forth in Section 9 (excluding
Sections 9.6 and 9.8) of the Credit Agreement is true and correct as of the date
of the execution and delivery of this Amendment by the Company, with the same
effect as if made on such date, and (b) no Event of Default or Unmatured Event
of Default exists.
SECTION 3 Effectiveness. The amendments set forth in Section 1 above
shall become effective on such date (the "Amendment Effective Date") when the
Agent shall have received counterparts of this Amendment executed by the Company
and the Required Banks.
SECTION 4 Miscellaneous.
4.1 Continuing Effectiveness, etc. As herein amended, the Credit
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. After the effectiveness of this Amendment, all
references in the Credit Agreement and the other Loan Documents to "Credit
Agreement" or similar terms shall refer to the Credit Agreement as amended
hereby.
4.2 Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Amendment.
4.3 Governing Law. This Amendment shall be a contract made under and
governed by the laws of the State of Illinois applicable to contracts made and
to be performed entirely within such state.
4.4 Successors and Assigns. This Amendment shall be binding upon the
Company, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Company, the Banks and the Agent and the
respective successors and assigns of the Banks and the Agent.
Delivered at Chicago, Illinois, as of the day and year first above
written.
SYNAGRO TECHNOLOGIES, INC.
By
------------------------------------------
Title
-------------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By
------------------------------------------
Title
-------------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVING ASSOCIATION, as Issuing Bank
and as a Bank
By
------------------------------------------
Title
-------------------------------------
EXHIBIT B-1
SYNAGRO TECHNOLOGIES, INC.
FINANCIAL COMPLIANCE CERTIFICATE
FOR PERIOD ENDED _____________ (the "Computation Date")
To: Bank of America National Trust
and Savings Association, as Agent
Reference is made to Section 10.1.4(a) of the Credit Agreement dated as
of October 7, 1998 (as amended or otherwise modified from time to time, the
"Credit Agreement") among Synagro Technologies, Inc. (the "Company"), various
financial institutions and Bank of America National Trust and Savings
Association, as Agent for the Banks. Capitalized terms used but not otherwise
defined herein are used as defined in the Credit Agreement.
The Company hereby certifies and warrants to you that the following is
a true and correct computations of the Minimum Interest Coverage ratio set forth
in Section 10.6.2 of the Credit Agreement:
---------------------------------------------------------------------------------------------------------
10.6.2 Minimum Interest Coverage
---------------------------------------------------------------------------------------------------------
Consolidated Net Income $____________
Plus: Interest Expense $____________
taxes $____________
amortization $____________
---------------------------------------------------------------------------------------------------------
Earnings before interest and taxes $_________(x)
---------------------------------------------------------------------------------------------------------
Interest Expense __________(y)
---------------------------------------------------------------------------------------------------------
Ratio of (x) to (y) ____ to ____
---------------------------------------------------------------------------------------------------------
Minimum Required
10/31/98 1.50 to 1.0
11/30/98 thru 5/31/99 1.60 to 1.0
6/30/99 thru 12/31/99 1.85 to 1.0
3/31/00 and thereafter: 2.10 to 1.0
---------------------------------------------------------------------------------------------------------
The Company further certifies to you that no Event of Default or
Unmatured Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by its duly authorized officer this ____ day of
_________, ____.
SYNAGRO TECHNOLOGIES, INC.
By
------------------------------------------
Title
---------------------------------------
EXHIBIT B-2
SYNAGRO TECHNOLOGIES, INC.
FINANCIAL COMPLIANCE CERTIFICATE
FOR PERIOD ENDED _____________ (the "Computation Date")
To: Bank of America National Trust
and Savings Association, as Agent
Reference is made to Section 10.1.4(b) of the Credit Agreement dated as
of October 7, 1998 (as amended or otherwise modified from time to time, the
"Credit Agreement") among Synagro Technologies, Inc. (the "Company"), various
financial institutions and Bank of America National Trust and Savings
Association, as Agent for the Banks. Capitalized terms used but not otherwise
defined herein are used as defined in the Credit Agreement.
The Company hereby certifies and warrants to you that the following are
true and correct computations of the financial ratios and restrictions set forth
in Section 10.6 of the Credit Agreement:
=========================================================================================================
10.6.1 Minimum Net Worth
---------------------------------------------------------------------------------------------------------
Initial minimum: $30,450,000
Plus: 75% of the sum of Consolidated Net
Income for each Fiscal Quarter (excluding
any Fiscal Quarter in which there is a
loss) from and after October 30, 1998 to
the Computation Date $___________
Plus: 100% of net proceeds of any equity issued
by the Company or any of its Subsidiaries
after October 7, 1998 $___________
---------------------------------------------------------------------------------------------------------
Total (Minimum Required) $___________
---------------------------------------------------------------------------------------------------------
Actual Net Worth $___________
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
10.6.2 Minimum Interest Coverage
---------------------------------------------------------------------------------------------------------
Consolidated Net Income $___________
Plus: Interest Expense $___________
taxes $___________
amortization $___________
---------------------------------------------------------------------------------------------------------
Earnings before interest and taxes $_________(x)
---------------------------------------------------------------------------------------------------------
Interest Expense __________(y)
---------------------------------------------------------------------------------------------------------
Ratio of (x) to (y) ____ to ____
---------------------------------------------------------------------------------------------------------
Minimum Required
10/31/98 1.50 to 1.0
11/30/98 thru 5/31/99 1.60 to 1.0
6/30/99 thru 12/31/99 1.85 to 1.0
3/31/00 and thereafter: 2.10 to 1.0
---------------------------------------------------------------------------------------------------------
10.6.3 Funded Debt to EBITDA Ratio
---------------------------------------------------------------------------------------------------------
Funded Debt $_________(x)
---------------------------------------------------------------------------------------------------------
Consolidated(1)/ Net Income $___________
Plus: Interest Expense $___________
Income tax expense $___________
Depreciation and amortization $___________
Plus: Add-back(2)/ $___________
---------------------------------------------------------------------------------------------------------
Total(3)/ $_________(a)
---------------------------------------------------------------------------------------------------------
Recyc Net Income $___________
Plus(4)/: Interest Expense $___________
Income tax expense $___________
Depreciation and
amortization $___________
---------------------------------------------------------------------------------------------------------
--------
(1)/ Excluding Recyc, Inc.
(2)/ For the Computation Periods ending 9/30/98 and 12/31/98, $900,000; for the
Computation Period ending 3/31/99, $600,000; and for the Computation
Period ending 6/30/99, $300,000.
(3)/ For the Computation Period ending 9/30/98, multiply the total by 1.33.
(4)/ To the extent deducted in determining Recyc Net Income.
---------------------------------------------------------------------------------------------------------
Total (Recyc EBITDA)(5)/ $_________ (b)
---------------------------------------------------------------------------------------------------------
Lesser of (b) and $1,983,000 $_________ (c)
---------------------------------------------------------------------------------------------------------
EBITDA(6)/ $_________ (y)
---------------------------------------------------------------------------------------------------------
Ratio of (x) to (y) ____ to ____
---------------------------------------------------------------------------------------------------------
Maximum allowed
9/30/98 thru 3/31/99: 4.00 to 1.0
4/1/99 and thereafter: 3.75 to 1.0
---------------------------------------------------------------------------------------------------------
10.6.4 Senior Funded Debt to EBITDA Ratio
---------------------------------------------------------------------------------------------------------
Funded Debt Minus: Debt described in $___________
Section 10.7(b) $___________
---------------------------------------------------------------------------------------------------------
Total $_________(x)
---------------------------------------------------------------------------------------------------------
Consolidated(7)/ Net Income $___________
Plus: Interest Expense $___________
Income tax expense $___________
Depreciation and
amortization $___________
Plus: Add-back(8)/ $___________
---------------------------------------------------------------------------------------------------------
Total(9)/ $_________(a)
---------------------------------------------------------------------------------------------------------
Recyc Net Income $___________
Plus(10)/: Interest Expense $___________
Income tax expense $___________
Depreciation and amortization $___________
---------------------------------------------------------------------------------------------------------
--------
(5)/ For the two months ending 9/30/98, the five months ending 12/31/98, the
eight months ending 3/31/99, and the eleven months ending 6/30/99,
multiply the total by 6, 2.4, 1.5, and 1.09, respectively.
(6)/ For the Computation Periods ending 9/30/98 and 12/31/98, the sum of (a)
plus (c); for Computation Periods ending thereafter, the sum of (a) plus
(b).
(7)/ Excluding Recyc, Inc.
(8)/ For the Computation Periods ending 9/30/98 and 12/31/98, $900,000; for the
Computation Period ending 3/31/99, $600,000; and for the Computation
Period ending 6/30/99, $300,000.
(9)/ For the Computation Period ending 9/30/98, multiply the total by 1.33.
(10)/ To the extent deducted in determining Recyc Net Income.
---------------------------------------------------------------------------------------------------------
Total (Recyc EBITDA)(11)/ $_________ (b)
---------------------------------------------------------------------------------------------------------
Lesser of (b) and $1,983,000 $_________ (c)
---------------------------------------------------------------------------------------------------------
EBITDA(12)/ $_________ (y)
---------------------------------------------------------------------------------------------------------
Ratio of (x) to (y) ____ to ____
---------------------------------------------------------------------------------------------------------
Maximum allowed
9/30/98 thru 3/31/99: 3.50 to 1.0
4/1/99 and thereafter: 3.25 to 1.0
---------------------------------------------------------------------------------------------------------
10.6.5 Debt to Capitalization Ratio
Funded Debt $_________(x)
Sum of (x) plus Net Worth $_________(y)
Ratio of (x) to (y) ____ to ____
Maximum allowed
9/30/98 thru 12/31/98: 60%
3/31/99 thru 12/31/99: 55%
3/31/00 and thereafter: 50%
---------------------------------------------------------------------------------------------------------
10.6.6 Capital Expenditures
---------------------------------------------------------------------------------------------------------
Aggregate amount of all Capital Expenditures
made by the Company and its Subsidiaries in
the preceding Fiscal Year $__________(x)
Depreciation and amortization of the Company
and its Subsidiaries in the preceding Fiscal Year $_________(a)
Product of (a) times 1.5 $__________(y)
Sum of (y) minus (x) (must be equal to or
greater than zero) $__________
---------------------------------------------------------------------------------------------------------
--------
(11)/ For the two months ending 9/30/98, the five months ending 12/31/98, the
eight months ending 3/31/99, and the eleven months ending 6/30/99,
multiply the total by 6, 2.4, 1.5, and 1.09, respectively.
(12)/ For the Computation Periods ending 9/30/98 and 12/31/98, the sum of (a)
plus (c); for Computation Periods ending thereafter, the sum of (a) plus
(b).
The Company further certifies to you that no Event of Default or
Unmatured Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by its duly authorized officer this ____ day of
___________, ____.
SYNAGRO TECHNOLOGIES, INC.
By
------------------------------------------
Title
---------------------------------------
ASSIGNMENT AGREEMENT
Reference is made to Section 14.9.1 of the Credit Agreement dated as of
October 7, 1998 (as amended, the "CREDIT AGREEMENT") among Synagro Technologies,
Inc., various financial institutions and Bank of America National Trust and
Savings Association, as agent (the "AGENT"). Unless otherwise defined herein or
the context otherwise requires, terms used herein have the meanings provided in
the Credit Agreement.
Bank of America National Trust and Savings Association (the "ASSIGNOR")
and Union Bank of California, N.A. (the "ASSIGNEE") hereby agree as follows:
The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, that interest in and to the
Assignor's rights and obligations under the Credit Agreement as of the date
hereof equal to 25% of all of the Loans, the Letters of Credit and the
Commitments, such purchase and assignment to be effective as of the effective
date set forth herein. After giving effect to such assignment and delegation,
the Assignor's and Assignee's Percentages and portions of Commitment Amount for
the purposes of the Credit Agreement will be as set forth opposite each such
Person's name on the signature pages hereof.
The effective date of this Agreement shall be December 4, 1998. The
Assignor hereby instructs the Agent to make all payments after the effective
date hereof in respect of the interest assigned hereby directly to the Assignee.
The Assignor and the Assignee agree that all interest and fees accrued up to,
but not including, the effective date of the assignment and delegation being
made hereby are the property of the Assignor, and not the Assignee. The Assignee
agrees that, upon receipt of any such interest or fees, the Assignee will
promptly remit the same to the Assignor.
The Assignee hereby confirms that it has received a copy of the Credit
Agreement and the exhibits related thereto, together with copies of the
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the Loans thereunder. The Assignee acknowledges and
agrees that it (i) has made and will continue to make such inquiries and has
taken and will take such care on its own behalf as would have been the case had
its Commitment been granted, the Letters of Credit been issued and its Loans
been made directly by the Assignee to or for the benefit of the Company without
the intervention of the Agent, the Assignor or any other Bank and (ii) has made
and will continue to make, independently and without reliance upon the Agent,
the Assignor or any other Bank and based on such documents and information as it
deems appropriate, its own credit analysis and decisions relating to the Credit
Agreement. The Assignee further acknowledges and agrees that the Agent makes no
representations or warranties about the creditworthiness of the Company or any
other party to the Credit Agreement or any other Loan Document or with respect
to the legality, validity, sufficiency or enforceability of the Credit Agreement
or any other Loan Document or the value of any security therefor.
The Assignor represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim.
The Assignee represents and warrants to the Agent and the Company that, as
of the date hereof, the Company will not be obligated to pay any greater amount
under Section 7.6 or Section 8 of the Credit Agreement than the Company is
obligated to pay to the Assignor under such Sections.
Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Agent:
(a) the Assignee (i) shall be deemed automatically to have become a
party to the Credit Agreement and have all the rights and
obligations of a "Bank" under the Credit Agreement as if it were an
original signatory thereto to the extent specified in the second
paragraph hereof; and (ii) agrees to be bound by the terms and
conditions set forth in the Credit Agreement as if it were an
original signatory thereto; and
(b) the Assignor shall be released from its obligations under the Credit
Agreement to the extent specified in the second paragraph hereof.
The Agent hereby waives the processing fee referred to in Section 14.9.1
of the Credit Agreement.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitments:
(A) Address for Notices:
Institution Name: Union Bank of California, N.A.
Address: Energy Capital Services
000 X. Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
(B) Payment Instructions:
Union Bank of California, N.A.
0000 Xxxxxx Xx.
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
ABA# 000-000-000
Acct# 070-196431
Attention: Commercial Loan Operations
Ref: Synagro Technologies
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of December 4, 1998.
PERCENTAGE = 25% UNION BANK OF CALIFORNIA, N.A.
----------
AMOUNT OF
COMMITMENT = $10,000,000
By:
Name Printed:
Title:
ADJUSTED PERCENTAGE = 75% BANK OF AMERICA NATIONAL TRUST
-------------------
AMOUNT OF AND SAVINGS ASSOCIATION
---------
COMMITMENT = $30,000,000
By:
Name Printed:
Title:
ACCEPTED AND CONSENTED TO
as of December 4, 0000
XXXX XX XXXXXXX NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
By:
Name Printed:___________________
Title:
CONSENTED TO
as of December 4, 1998
SYNAGRO TECHNOLOGIES, INC.
By:
Name Printed:___________________
Title:
