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Exhibit 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is executed this 29day of
September, 1997 ("CLOSING DATE"), between VALLEY NATIONAL GASES, INC., a West
Virginia corporation (the "COMPANY"), VALLEY NATIONAL GASES INCORPORATED, a
Pennsylvania corporation ("VNGI"), VALLEY NATIONAL GASES DELAWARE, INC., a
Delaware corporation ("VNGDI"), and BANK ONE, INDIANA, NA, a national banking
association with its principal office in Indianapolis, Indiana (the "BANK").
RECITALS
1. The Company and the Bank are parties to a Credit Agreement, dated
October 4, 1996 (as the same has been amended, modified and supplemented prior
to the Closing Date and as in effect immediately prior to the execution of this
Agreement by the Bank and the Company, the "ORIGINAL AGREEMENT").
2. The Company is a wholly-owned Subsidiary of VNGDI, and VNGDI is a
wholly-owned Subsidiary of VNGI .
3. The Company, VNGDI and VNGI (referred to herein collectively, as the
"CREDIT PARTIES", and individually as a "CREDIT PARTY") has requested the Bank
to amend, and as so amended, restate the Original Agreement, subject to and in
accordance with the terms of this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein, and each act performed and to be performed hereunder, the
Bank and the Company agree to amend, and as so amended, restate, the Original
Agreement as follows:
ARTICLE I
DEFINITION OF TERMS
SECTION 1.01. ACCOUNTING TERMS -- DEFINITIONS. All accounting and
financial terms used in this Agreement are used with the meanings such terms
would be given in accordance with GAAP except as may be otherwise specifically
provided in this Agreement. The following terms have the meanings indicated
when used in this Agreement with the initial letter capitalized:
"ACQUISITION SELLER DEBT" means, collectively (i) the Existing Acquisition
Seller Debt, and (ii) any deferred purchase price of a New Acquisition
payable by the Company to the Acquisition Sellers or any of them with
respect to that New Acquisition evidenced by or payable under the terms of
a promissory note or non-compete agreement or other Debt instrument.
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"ACQUISITION SELLERS" means, collectively (i) the Existing Acquisition
Sellers, and (ii) any and all Persons from whom the Company acquires a New
Acquisition, and when used in the singular form, means any of the
Acquisition Sellers, as the context so requires.
"ADDITIONAL EBITDA AMOUNT" means such amount as may be approved by the
Bank in its sole discretion of EBITDA of a Related Business Entity
acquired in a New Acquisition for the twelve (12) calendar month period
immediately preceding the New Acquisition Closing Date for such New
Acquisition or for such other twelve (12) calendar month period preceding
such New Acquisition Closing Date as may be agreed and approved by the
Bank, provided that, such amount is subject to redetermination by the Bank
at its sole discretion to reflect elimination of expenses of such Related
Business Entity by virtue of the acquisition.
"ADVANCE" means a disbursement of proceeds of the Revolving Loan.
"AFFILIATE" means, with respect to any Person, any officer, shareholder or
director of such Person and any Person or group acting in concert in
respect of the Person in question that, directly or indirectly, controls
or is controlled by or is under common control with such Person.
"AGREEMENT" means this Amended and Restated Credit Agreement, as amended,
modified, supplemented and/or restated from time to time and at any time.
"APPLICABLE SPREAD" means that number of percentage points to be taken
into account in determining any LIBOR-based Rate and any Prime-based Rate
as provided in this Agreement, which number shall be determined by
reference to the Ratio of Total Funded Debt to EBITDA in accordance with
the following table:
Ratio of Total Funded If Determining a If Determining a
Debt to EBITDA Prime-based Rate LIBOR-based Rate
-------------- ---------------- ----------------
4.00 or above 0.25% 2.25%
3.50 to 3.99 0.25% 2.25%
3.00 to 3.49 0% 2.00%
2.50 to 2.99 0% 1.75%
2.00 to 2.49 0% 1.50%
less than 2.00 0% 1.25%
The Applicable Spread shall be determined on the Closing Date on the
basis of the Ratio of Total Funded Debt to EBITDA in effect on the
Closing Date as provided in the definition of Ratio of Total Funded
Debt to EBITDA in this Agreement, and shall be redetermined and
adjusted concurrently with any adjustment to the Ratio of Total
Funded Debt to EBITDA as provided in the definition of Ratio of Total
Funded Debt to EBITDA in this Agreement, with prospective effect
until so redetermined and adjusted.
"APPLICABLE UNUSED COMMITMENT FEE PERCENTAGE" means the percentage per
annum determined by reference to the Ratio of Total Funded Debt to EBITDA
in accordance with the following table:
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Ratio of Total Funded Applicable Unused Commitment
Debt to EBITDA Fee Percentage
-------------- --------------
4.00 or above 0.375%
3.50 to 3.99 0.375%
3.00 to 3.49 0.375%
2.50 to 2.99 0.25%
2.00 to 2.49 0.25%
less than 2.00 0.25%
The Applicable Unused Commitment Fee Percentage shall be determined
on the Closing Date on the basis of the Ratio of Total Funded Debt to
EBITDA in effect on the Closing Date as provided in the definition of
Ratio of Total Funded Debt to EBITDA in this Agreement, and shall be
redetermined and adjusted concurrently with any adjustment to the
Ratio of Total Funded Debt to EBITDA as provided in the definition of
Ratio of Total Funded Debt to EBITDA in this Agreement, with
prospective effect until so redetermined and adjusted.
"APPLICATION FOR REVOLVING LOAN ADVANCE" means a written application of
the Company for a disbursement of proceeds of the Revolving Loan
substantially in the form of EXHIBIT A attached hereto.
"AUTHORIZED OFFICER" means the President or the Chief Financial Officer of
the Company or such other officer whose authority to perform acts to be
performed only by an Authorized Officer under the terms of this Agreement
is evidenced to the Bank by a certified copy of an appropriate resolution
of the Board of Directors of the Company.
"BANK" has the meaning ascribed to such term in the preamble to this
Agreement.
"BANKING DAY" means a day on which the principal office of the Bank in the
City of Indianapolis, Indiana, is open for the purpose of conducting
substantially all of the Bank's business activities.
"CAPITAL EXPENDITURES" for any period shall mean the aggregate amount of
all expenditures (whether paid in cash or accrued as a liability) of the
Company and its Subsidiaries, computed on a consolidated basis, during
such period that to the extent required by GAAP are required to be
included in or reflected as property, plant or equipment or similar fixed
asset account in any Financial Statements, including any acquisition,
construction or installation of properties or for any additions and
improvements thereto or any replacement thereof and the amount capitalized
under any Capital Lease, less the net cash proceeds from any dispositions
to the extent specifically permitted under this Agreement.
"CAPITAL LEASE" shall mean any lease of property (whether real, personal
or mixed) which, to the extent required by GAAP, is accounted for as a
capital lease or a Capital Expenditure on the consolidated balance sheet
of the Company and its Subsidiaries.
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"CASH CAPITAL EXPENDITURES" means those Capital Expenditures that are not
financed with new Debt (including Debt incurred under this Agreement) or
through Capital Leases.
"CASH COLLATERAL" means any and all cash (or qualified investment property
as may be acceptable to the Bank in its sole discretion) required or
permitted to be pledged by any Person to the Bank under this Agreement as
security for all or any part of the Obligations, which shall be held by
the Bank, as secured party, in a cash or securities collateral account
maintained with the Bank or its designee ("COLLATERAL ACCOUNT") under
which the Bank is granted a pledge, security interest and lien in and to
the Collateral Account, the cash and any and all other investment property
or other property at any time held in the Collateral Account, and all
proceeds and substitutions of any of the foregoing (collectively, the
"COLLATERAL ACCOUNT PROPERTY"), pursuant to a pledge agreement, account
control agreement, and such other security instruments as may required by
the Bank to perfect and maintain perfection of its interest in the
Collateral Account Property, all in form and substance satisfactory to the
Bank in all respects.
"CLOSING DATE" has the meaning ascribed to such term in the preamble to
this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means, with respect to any corporation, the common stock of
such corporation, and any class of capital stock of such corporation now
or hereafter authorized having the right to share in distributions either
of earnings or assets of such corporation without limit as to amount or
percentage.
"COMPANY" has the meaning ascribed to such term in the preamble to this
Agreement.
"COMPANY'S AUDITORS" means one of the six (6) largest independent
certified public accounting firms in the U.S.
"COMPANY PLEDGE AGREEMENT" has the meaning ascribed to such terms in
Section 4.01(e)(2) of this Agreement.
"COMPANY SECURITY AGREEMENT" means the Security Agreement, dated October
4, 1996, executed by the Company in favor of the Bank, as the same has
been and hereafter may be amended, modified, supplemented and/or restated
from time to time and at any time.
"CONSOLIDATED NET INCOME" means, for any period, the net income of the
Credit Parties and their respective Subsidiaries, computed on a
consolidated basis and in accordance with GAAP.
"CONSOLIDATED NET WORTH" means, as of the date any determination thereof
is to be made, the net worth of the Credit Parties and their respective
Subsidiaries, computed on a consolidated basis in accordance with GAAP as
of such date.
"CONVERTIBLE SECURITIES" means evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for, with
or without payment of additional consideration, shares of Common Stock,
either immediately or upon the arrival of a specified date or the
happening of a specified event.
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"CREDIT ENHANCEMENT" means, in reference to the prohibited purposes of
Letters of Credit described in Section 2.03(a) of this Agreement, the
enhancement or support of or security for any credit extended or to be
extended by any Person to the Company, including any Debt of the Company
for borrowed money, Capital Lease obligations, and any guarantees,
endorsements and other contingent obligations of the Company with respect
to indebtedness, liabilities or obligations of other Persons; provided,
that, the term "CREDIT ENHANCEMENT" shall not include Acquisition Seller
Debt.
"CREDIT PARTY" and "CREDIT PARTIES" have the respective meanings ascribed
to such terms in the Recitals to this Agreement.
"DEBT" means, with reference to any Person, all indebtedness, liabilities
and obligations, contingent or otherwise, which in accordance with GAAP
should be classified upon such Person's balance sheet as liabilities, but
in any event including (without duplication) liabilities secured by any
lien on property owned or acquired by such Person (whether or not the
liability secured thereby shall have been assumed and whether or not such
Person is personally liable for the payment thereof), obligations under
leases which have been (or which in accordance with GAAP should be)
capitalized for financial reporting purposes, and all guarantees,
endorsements and other contingent obligations of such Person with respect
to indebtedness, liabilities or obligations of others.
"DOANSCO" means Doansco, Inc., an Ohio corporation, being a Subsidiary of
the Company.
"DRAFT" means a drawing or other demand for payment under a Letter of
Credit.
"EBITDA" means, with respect to the Credit Parties and their respective
Subsidiaries for any period, computed on a consolidated basis, the amount
of Consolidated Net Income, plus, without duplication and to the extent
deducted in determining the amount of Consolidated Net Income, the sum of
interest expense, income tax expense, depreciation and amortization
expense, determined in accordance with GAAP.
For purposes of determining EBITDA on a pro forma basis to determine
the effect of a New Acquisition on compliance with the covenants in
subsections 5.01(g) of this Agreement (EXCLUDING the covenant in
subsection 5.01(g)(2) of this Agreement) and to determine the Applicable
Spread and the Applicable Unused Commitment Fee Percentage for any period
of twelve (12) months or four fiscal quarters of the Company that ends
("PERIOD ENDING DATE"): (i) on any New Acquisition Closing Date, EBITDA
for such period will be deemed to include the Additional EBITDA Amount
calculated with respect to the Related Business Entity acquired on such
New Acquisition Closing Date; and (ii) within one year after any New
Acquisition Closing Date, EBITDA for such period will be deemed to include
an amount equal to (A) the Additional EBITDA Amount calculated with
respect to the Related Business Entity acquired on such New Acquisition
Closing Date, MINUS (B) 1/12 of such Additional EBITDA Amount for each
full calendar month that has elapsed between such New Acquisition Closing
Date and the Period Ending Date, MINUS (c) 1/30 of such Additional EBITDA
Amount for each day of any partial calendar month that has elapsed between
such New Acquisition Closing Date and the Period Ending Date.
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"ENVIRONMENTAL LAWS" means all federal, state and local laws and
implementing regulations, now or hereafter effective during the term of
this Agreement, relating to pollution or protection of the environment,
including laws or regulations relating to or permitting emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment (including without limitation ambient air, surface water,
ground water, or land), or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, industrial wastes, or hazardous substances. Such
laws shall include, but not be limited to: (a) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42
U.S.C. ss.9601 ET SEQ.; (b) the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. ss.6901 ET SEQ., including the statutes regulating
underground storage tanks, 42 U.S.C. 6991-6991h; (c) the Clean Air Act, as
amended, 42 U.S.C. 7401 ET SEQ.; (d) the Federal Water Pollution Control
Act, as amended, 33 U.S.C. ss.1251 ET SEQ., including the statute
regulating the National Pollutant Discharge Elimination System, 33 U.S.C.
ss.1342; and (e) Indiana Code, Title 13 Environment, as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXISTING ACQUISITION SELLERS" means, collectively, the Persons identified
on EXHIBIT B attached hereto.
"EXISTING ACQUISITION SELLER DEBT" means, collectively, the Debt owed by
the Company to the Existing Acquisition Sellers, respectively, identified
on EXHIBIT B attached hereto.
"EVENT OF DEFAULT" means any of the events described in Section 7.01 of
this Agreement.
"FINANCIAL STATEMENTS" includes, but is not limited to, balance sheets,
profit and loss statements, and cash flow statements, prepared in
accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO I" means, with respect to the Credit Parties
and their respective Subsidiaries for any period a ratio of EBITDA to the
sum of the following for the Credit Parties and their respective
Subsidiaries, computed on a consolidated basis and determined in
accordance with GAAP (i) the amount of interest which was due and payable
in cash or was paid in cash during such period, plus (ii) the amount of
Cash Capital Expenditures made during such period, plus (iii) the amount
of scheduled payments of Debt which were due and payable in cash or were
paid during such period, plus (iv) the amount of income taxes which were
due or paid during such period, plus (v) the amount of dividends that were
paid in cash during such period.
"FIXED CHARGE COVERAGE RATIO II" means, with respect to the Credit Parties
and their respective Subsidiaries for any period a ratio of EBITDA to the
sum of the following for the Credit Parties and their respective
Subsidiaries, computed on a consolidated basis and determined in
accordance with GAAP (i) the amount of interest which was due and payable
in cash or was paid in cash during such period, plus (ii) the amount of
scheduled payments of Debt which were due and payable in cash or were paid
during such period, plus (iii) the amount of income taxes which were due
or paid during such period, plus (iv) the amount of dividends that were
paid in cash during such period.
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"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, which shall include the
official interpretations thereof by the Financial Accounting Standards
Board, consistently applied (from and after the date hereof) and for the
period as to which such accounting principles are to apply. Except as
otherwise provided in this Agreement, to the extent applicable, all
computations and determinations as to accounting or financial matters and
all Financial Statements to be delivered pursuant to this Agreement shall
be made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and, to the extent applicable, all
accounting or financial terms shall have the meanings ascribed to such
terms by GAAP.
"GOVERNMENT ACTS" has the meaning ascribed to such term in subsection
2.03(e) of this Agreement.
"GUARANTIES" means, collectively, the Parent Guaranties and the Subsidiary
Guaranties, and the term "Guaranty" means any of the Guaranties,
individually.
"GUARANTORS" means, collectively, VNGDI, VNGI, Doansco, Toledo Oxygen and
any other Subsidiary of the Company which hereafter unconditionally
guaranties the Obligations pursuant to a Guaranty executed and delivered
by such Subsidiary in favor of the Bank, and "GUARANTOR means any of the
Guarantors, individually.
"HAZARDOUS SUBSTANCE" means any hazardous or toxic substance regulated by
any Environmental Laws, including but not limited to the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act and the Toxic Substance Control Act, or by
any federal, state or local governmental agencies having jurisdiction over
the control of any such substance including but not limited to the United
States Environmental Protection Agency.
"INTERCREDITOR AGREEMENTS" means one or more intercreditor and
subordination agreements between the Bank, the Company and the Existing
Acquisition Sellers, in form and substance the same as attached hereto as
EXHIBIT C, as the same may be amended, modified, extended, renewed,
supplemented, replaced and/or restated from time to time and at any time.
"LETTERS OF CREDIT" means all standby letters of credit issued by the Bank
pursuant to Section 2.03 of this Agreement.
"LETTER OF CREDIT EXPOSURE" means, as of the date such amount is to be
determined, the sum of:
(a) the aggregate face amounts of all Letters of Credit that have
not expired by their terms or have not been surrendered by the
beneficiary prior to the expiration thereof (including the face
amounts of any Letters of Credit that have expired by their
terms but have not been surrendered by the beneficiary and as to
which the beneficiary asserts a right to present and/or have
honored Drafts); LESS any portion of such face amounts that has
been exhausted by the payment or acceptance of Drafts thereunder
or otherwise; PLUS
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(b) the total dollar amount of (1) the amount of all Drafts under
Letters of Credit which have been honored by the Bank or which
the Bank has otherwise been required to pay but with respect to
which the Bank has not yet received reimbursement from the
Company, including without limitation, the principal amounts of
all outstanding Letter of Credit Loans, and (2) the amount of
all Drafts under Letters of Credit which have been presented to
the Bank but not honored by the Bank, which the Bank (in its
sole discretion) determines it may yet honor or be required to
honor or the amount of which it may otherwise be required to
pay.
"LETTER OF CREDIT LOAN" has the meaning ascribed to such term in
subsection 2.03(d) of this Agreement.
"LIBOR-BASED RATE" means a variable rate at which interest may accrue on
all or a portion of either of the Loans under the terms of this Agreement,
which rate is determined by reference to the London Interbank Offered
Rate.
"LOANS" means, collectively, the Revolving Loan and the Term Loan and,
when used in the singular form, means any of the Loans, as the context
requires.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Revolving Note,
the Term Note, the Company Security Agreement, the Company Pledge
Agreement, the Parent Guaranties, the Parent Pledge Agreements, the Parent
Security Agreements, the Subsidiary Guaranties, the Subsidiary Security
Agreements, the Intercreditor Agreements, any and all Reimbursement
Agreements and all other instruments, agreements and documents executed
and delivered or to be delivered by any Person pursuant to or by virtue of
this Agreement, as each may be amended, modified, extended, renewed,
supplemented and/or restated from time to time and at any time, and when
used in the singular form, means any of the Loan Documents, as the context
requires.
"LONDON INTERBANK OFFERED RATE" means the per annum rate of interest, as
determined by the Bank, at which dollar deposits in immediately available
funds are offered to the principal banks in the London interbank market by
other principal banks in that market two Banking Days prior to the
commencement of a period of either one month, two months, three months, or
six months for which the Company shall have requested a quotation of the
rate in amounts equal to the amount for which the Company shall have
requested a quotation of the rate.
"MAXIMUM AVAILABILITY" means $34,250,000.
"NEW ACQUISITION" means the acquisition by the Company from any Person of
the assets and goodwill of such Person which comprise a Related Business
Entity, or of all or substantially all of the stock, partnership interest,
or other ownership interest of any type whatsoever of such Person in a
Related Business Entity if such Related Business Entity is merged into the
Company with the Company being the surviving entity, in a transaction or
series of transactions closed after the Closing Date, PROVIDED THAT (i)
the consummation of such acquisition on a pro forma basis will not cause
the occurrence of an Event of Default or an Unmatured Event of Default;
and (ii) Financial Statements are maintained for such Related Business
Entity for such periods preceding the acquisition as may be reasonably
required by the Bank.
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"NEW ACQUISITION CLOSING DATE" means the date on which a New Acquisition
is consummated.
"NOTES" means, collectively, the Revolving Note and the Term Note, and
when used in the singular, means any of the Notes, as the context
requires.
"OBLIGATIONS" means all present and future indebtedness, obligations and
liabilities, and all renewals and extensions thereof, now or hereafter
owed to the Bank by the Company, whether arising under, by virtue of or
pursuant to any of this Agreement, the Notes, the Reimbursement
Agreements, any other Loan Documents or otherwise, together with all
costs, expenses and reasonable attorneys' fees (including the reasonable
allocated costs of staff counsel) incurred by the Bank in the enforcement
or collection thereof, whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, joint and several, now exist or hereafter
arise, or were prior to acquisition thereof by the Bank owed to some other
Person.
"OFFICER'S CERTIFICATE" means a certificate in the form included as a part
of EXHIBIT A attached hereto signed by the President or Chief Financial
Officer of the Company, confirming that all of the representations and
warranties contained in Section 3.01 of this Agreement are true and
correct as of the date of such certificate except as specified therein and
with the further exceptions that: (i) the representation contained in
subsection 3.01(d) of this Agreement shall be construed so as to refer to
the latest Financial Statements which have been furnished to the Bank as
of the date of any such certificate, (ii) the representations contained in
subsection 3.01(k) (with respect to Hazardous Substances) will be
construed so as to apply not only to the Credit Parties, but also to their
respective Subsidiaries, whether now owned or hereafter acquired, (iii)
the representation contained in subsection 3.01(l) of this Agreement shall
be deemed to be amended to reflect the existence of any Subsidiary
hereafter formed or acquired by the Credit Parties with the consent of the
Bank, and (iv) all other representations will be construed to have been
amended to conform with any changes of which the Credit Parties shall have
previously given the Bank notice in writing. The Officer's Certificate
shall further confirm that no Event of Default or Unmatured Event of
Default shall have occurred and be continuing as of the date of the
Officer's Certificate or shall describe any such event which shall have
occurred and be then continuing and the steps being taken by the Credit
Parties to correct it.
"PARENT GUARANTIES" and "PARENT GUARANTY" have the respective meanings
ascribed to such terms in Section 4.01(c)(1) of this Agreement.
"PARENT PLEDGE AGREEMENTS" and "PARENT PLEDGE AGREEMENT" have the
respective meanings ascribed to such terms in Section 4.01(e)(1) of this
Agreement.
"PARENT SECURITY AGREEMENTS" and "PARENT SECURITY AGREEMENT" have the
respective meanings ascribed to such terms in Section 4.01(d)(1) of this
Agreement.
"PERIOD ENDING DATE" has the meaning ascribed to such term in the text of
the definition of EBITDA in this Section 1.01.
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"PERSON" shall mean an individual, a corporation, a limited or general
partnership, a limited liability company, a joint venture, a trust or
unincorporated organization, a joint stock company or other similar
organization, a government or any political subdivision thereof, a court,
or any other legal entity, whether acting in an individual, fiduciary or
other capacity.
"PLAN" means an employee pension benefit plan as defined in ERISA.
"PREPAYMENT PREMIUM" means the excess, if any, as determined by the Bank
of: (i) the present value at the time of prepayment of the interest
payments which would have been payable on account of an amount prepaid
from the date of prepayment until the end of the period during which
interest would have accrued at a LIBOR-based Rate but for prepayment over
(ii) the present value at the time of prepayment of interest payments
calculated at the rate (the "REINVESTMENT RATE") which the Bank then
estimates it would receive upon reinvesting the principal amount of the
prepayment in an obligation which presents a credit risk substantially
similar (as determined in accordance with the commercial credit rating
system then used by the Bank) to that which is then presented by the Loan
for a period approximately equal to the balance of the period during which
interest would accrue on the portion of the Loan prepaid at a LIBOR-based
Rate, but for prepayment. The discount rate used by the Bank in
determining such present values shall be the Reinvestment Rate.
"PRIME-BASED RATE" means any variable rate at which interest may accrue on
all or a portion of either of the Loans under the terms of this Agreement,
which rate is determined by reference to the Prime Rate.
"PRIME RATE" means a variable per annum interest rate equal at all times
to the rate of interest established and quoted by the Bank as its prime
rate, such rate to change contemporaneously with each change in such
established and quoted rate, provided that it is understood that the Prime
Rate shall not necessarily be representative of the rate of interest
actually charged by the Bank on any loan or class of loans.
"RATIO OF TOTAL FUNDED DEBT TO EBITDA" shall mean, with respect to the
Credit Parties and their respective Subsidiaries for any period, the ratio
of Total Funded Debt at the close of that period to EBITDA for that
period, computed on a consolidated basis and determined in accordance with
GAAP. For purposes of determining the Applicable Spread and the
Applicable Unused Commitment Fee, the Ratio of Total Funded Debt to EBITDA
shall be determined on the Closing Date on the basis of the consolidated
Financial Statements of the Credit Parties and their respective
Subsidiaries provided to the Bank prior to the Closing Date for the
preceding twelve (12) calendar month period ending June 30, 1997, and
thereafter shall be redetermined and adjusted from and after the Closing
Date as necessary as follows:
(i) QUARTERLY ADJUSTMENTS. For purposes of determining the
Applicable Spread and the Applicable Unused Commitment Fee, the
Ratio of Total Funded Debt to EBITDA shall be redetermined and
adjusted as necessary on the basis of the consolidated Financial
Statements of the Credit Parties and their respective
Subsidiaries for the most recent preceding four fiscal quarters
of the Company provided to the Bank pursuant to the requirements
of subsection 5.01(b) of this Agreement (a "QUARTERLY
ADJUSTMENT"), with prospective effect until the next adjustment
date. Quarterly
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Adjustments shall be made on the first interest payment date
which follows receipt by the Bank of the consolidated Financial
Statements for the last month of the first fiscal quarter of the
Company ending after the Closing Date, and thereafter on the
first interest payment date which follows receipt by the Bank of
the consolidated Financial Statements upon which such adjustment
is based (a "QUARTERLY ADJUSTMENT DATE"), but no Quarterly
Adjustment shall be effective as to any LIBOR-based Rate elected
prior to the Quarterly Adjustment Date until the expiration of
the period of time for which such LIBOR-based Rate shall have
been elected by the Company.
(ii) NEW ACQUISITION ADJUSTMENTS. For purposes of
determining the Applicable Spread and the Applicable Unused
Commitment Fee, the Ratio of Total Funded Debt to EBITDA shall
be redetermined and adjusted as necessary on each New
Acquisition Closing Date on the basis of the consolidated
Financial Statements of the Credit Parties and their respective
Subsidiaries for the most recent twelve (12) calendar month
period that precedes the New Acquisition Closing Date provided
to the Bank pursuant to the requirements of subsection 5.01(b)
of this Agreement (a "NEW ACQUISITION ADJUSTMENT"), with
prospective effect until the next adjustment date, but no New
Acquisition Adjustment shall be effective as to any LIBOR-based
Rate elected prior to the New Acquisition Date until the
expiration of the period of time for which such LIBOR-based Rate
shall have been elected by the Company.
Notwithstanding the foregoing, in the event that the Credit Parties fail
to deliver when due the Financial Statements and compliance certificates
required under subsection 5.01(b) of this Agreement for any month which
ends a fiscal quarter of the Company and fail to cure such default within
ten (10) days after notice of such default by the Bank, then the
Applicable Unused Commitment Fee Percentage and the Applicable Spread
shall be adjusted (without prior notice by the Bank to the Company) to the
largest number shown in the table applicable to such definition from such
due date until the first interest payment date which follows delivery to
the Bank of such Financial Statements. It is noted that the tables
defining Applicable Unused Commitment Fee Percentage and the Applicable
Spread provide for a Ratio of Total Funded Debt to EBITDA greater than
that which may be permissible under the terms of subsection 5.01(g) of
this Agreement. For the avoidance of doubt, it is agreed that it is the
intent of the parties that the Bank shall be free to exercise all remedies
otherwise provided for in this Agreement in the event of the violation by
the Credit Parties as stated in subsection 5.01(g) this Agreement,
notwithstanding the determination of the Applicable Unused Commitment Fee
Percentage and the Applicable Spread in accordance with and by reference
to this definition.
"REIMBURSEMENT AGREEMENT" has the meaning ascribed to such term in
subsection 2.03(a) of this Agreement.
"REINVESTMENT RATE" has the meaning ascribed to such term in the text of
the definition of "Prepayment Premium" in this Section.
"RELATED BUSINESS ENTITY" means an operating business entity, division or
unit engaged in one or more lines of business in which the Company is
engaged as of the Closing Date, being the packaging and wholesale
distribution of industrial gas and welding, propane and fire
extinguishment equipment and supplies.
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"REMAINING AVAILABILITY" means, at any time a determination thereof is to
be made, that amount which results by subtracting from the Maximum
Availability the sum of (i) the principal balance of the Revolving Loan
outstanding at such time, and (ii) the aggregate Letter of Credit Exposure
at such time.
"REVOLVING LOAN" has the meaning ascribed to such term in subsection
2.02(a) of this Agreement.
"REVOLVING LOAN MATURITY DATE" means the earlier of (i) the Scheduled
Revolving Loan Maturity Date, and (ii) that date upon which the Bank
accelerates payment of the Revolving Loan in accordance with Section 7.02
of this Agreement.
"REVOLVING NOTE" has the meaning ascribed to such term in subsection
2.02(b) of this Agreement.
"SECURITIES COMMISSION" means the Securities and Exchange Commission or
any other Federal agency from time to time administering the Securities
Act of 1933, as amended.
"SCHEDULED REVOLVING LOAN MATURITY DATE" means October 4, 2000.
"SCHEDULED TERM LOAN MATURITY DATE" means October 4, 2003.
"SUBORDINATION AGREEMENT" has the meaning ascribed to such term in Section
5.02(d)(4) of this Agreement.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, joint venture or other business entity over which such Person
exercises control, provided that it shall be conclusively presumed that
such Person exercises control over any such entity 51% or more of the
equity interest in which is owned by such Person, directly or indirectly.
"SUBSIDIARY GUARANTIES" means, collectively, the written guaranties
executed and delivered to the Bank by each of Doansco and Toledo Oxygen
pursuant to the requirements of Section 4.01(c)(2) of this Agreement and
by any other Subsidiary of the Company pursuant to the requirements of
Section 4.01(f) of this Agreement, as the same may be amended, modified,
extended, renewed, supplemented, replaced and/or restated from time to
time and at any time, and the term "SUBSIDIARY GUARANTY" means any of the
Subsidiary Guaranties.
"SUBSIDIARY SECURITY AGREEMENTS" means, collectively the written security
agreements executed and delivered to the Bank by each of Doansco and
Toledo Oxygen pursuant to the requirements of Section 4.01(d)(2) of this
Agreement and by any other Subsidiary of the Company pursuant to the
requirements of Section 4.01(f) of this Agreement, as the same may be
amended, modified, extended, renewed, supplemented, replaced and/or
restated from time to time and at any time, and the term "Subsidiary
Security Agreement" means any of the Subsidiary Security Agreements.
"TERM LOAN" has the meaning ascribed to such term in subsection 2.04 of
this Agreement.
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"TERM LOAN MATURITY DATE" means the earlier of (i) the Scheduled Term Loan
Maturity Date, and (ii) that date upon which the Bank accelerates payment
of the Term Loan in accordance with Section 7.02 of this Agreement.
"TERM NOTE" has the meaning ascribed to such term in subsection 2.04(b) of
this Agreement.
"TOLEDO OXYGEN" means The Toledo Oxygen and Equipment Company, an Ohio
corporation, being a Subsidiary of the Company.
"TOTAL FUNDED DEBT" means, with respect to the Credit Parties and their
respective Subsidiaries, as of the date any determination thereof is to be
made, all interest-bearing Debt of the Credit Parties (including all
Acquisition Seller Debt) and their respective Subsidiaries, computed on a
consolidated basis and determined in accordance with GAAP.
"UNMATURED EVENT OF DEFAULT" means any event specified in Section 7.01 of
this Agreement, which is not initially an Event of Default, but which
would, if uncured, become an Event of Default with the giving of notice or
the passage of time or both.
"VNGI" has the meaning ascribed to such term in the Recitals to this
Agreement.
"VNGDI" has the meaning ascribed to such term in the Recitals to this
Agreement.
ARTICLE II
BORROWING TERMS
SECTION 2.01. GENERAL STATEMENT. Subject to and in accordance with the
terms of this Agreement, and in reliance upon the representations, warranties,
covenants and agreements of the Company made in this Agreement and the other
Loan Documents, the Bank will make the Loans and issue the Letters of Credit
described in this Article II.
SECTION 2.02. THE REVOLVING LOAN.
(a) THE COMMITMENT -- USE OF PROCEEDS. The Bank agrees, subject to the
terms and conditions of this Agreement, to make Advances to the Company on a
revolving basis (the "REVOLVING LOAN") from time to time from and after the
Closing Date until the Revolving Loan Maturity Date, in an amount not exceeding
in the aggregate at any time outstanding the Maximum Availability. Proceeds of
the Revolving Loan may be used by the Company only to fund working capital
requirements, Capital Expenditures and New Acquisitions and to refinance
existing Debt of the Company.
The Revolving Loan under this Agreement is a continuation, on amended
term, of the "Revolving Loan" extended to the Company by the Bank under the
Original Agreement (the "PRIOR REVOLVING LOAN") and the Company affirms,
acknowledges and agrees that the principal balance of the Revolving Loan as of
the Closing Date is $13,853,675.72, being the unpaid principal amount of the
Prior Revolving Loan immediately prior to the execution of this Agreement
($9,937,291.78) after taking into account the $4,052,380.90 in principal
being applied against the Revolving Loan with
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proceeds of the Term Loan concurrently with the execution of this Agreement
pursuant to Section 2.04 of this Agreement.
(b) METHOD OF BORROWING. The obligation of the Company to repay the
Revolving Loan shall be evidenced by a promissory note executed by the Company
to the Bank in the form of EXHIBIT D attached hereto (as the same may be
amended, modified, extended, renewed, supplemented, replaced and/or restated
from time to time and at any time, the "REVOLVING NOTE"). So long as no Event
of Default or Unmatured Event of Default shall have occurred and be continuing
and until the Revolving Loan Maturity Date, the Company may borrow, repay
(subject to the requirements of Section 2.06 of this Agreement) under the
Revolving Note on any Banking Day, provided that Company shall not be entitled
to receive and the Bank shall not be obligated to make any Advance: (i) at any
time an Event of Default or an Unmatured Event of Default has occurred or is
continuing; (ii) if the amount of such Advance would exceed the Remaining
Availability; or (iii) if after making such Advance the principal balance of
the Revolving Loan would exceed the Maximum Availability. Each Advance under
the Revolving Loan shall be conditioned upon receipt by the Bank from the
Company of an Application for Revolving Loan Advance and an Officer's
Certificate, provided that the Bank may, at its discretion, make a disbursement
upon the oral request of the Company made by an Authorized Officer, or upon a
request transmitted to the Bank by telecopy or by any other form of written
electronic communication (all such requests for Advances being hereafter
referred to as "INFORMAL REQUESTS"). In so doing, the Bank may rely on any
informal request which shall have been received by it in good faith from a
Person reasonably believed to be an Authorized Officer. Each informal request
shall be promptly confirmed by a duly executed Application for a Revolving Loan
Advance and Officer's Certificate if the Bank so requires and shall in and of
itself constitute the representation of the Company that no Event of Default or
Unmatured Event of Default has occurred and is continuing or would result from
the making of the requested Advance, that the requested Advance would not
exceed the Remaining Availability, and that the making of the requested Advance
would not cause the principal balance of the Revolving Loan to exceed the
Maximum Availability. All borrowings and reborrowings and all repayments shall
be in amounts of not less than Fifty Thousand Dollars ($50,000), except for
repayment of the entire principal balance of the Revolving Loan and except for
special prepayments of principal required under the terms of Section 2.06 of
this Agreement. Upon receipt of an Application for a Revolving Loan Advance, or
at the Bank's discretion upon receipt of an informal request for an Advance and
upon compliance with any other conditions of lending stated in Section 6.01 of
this Agreement applicable to the Revolving Loan, the Bank shall disburse the
amount of the requested Advance to the Company. All Advances by the Bank and
payments by the Company shall be recorded by the Bank on its books and records,
and the principal amount outstanding from time to time, plus interest payable
thereon, shall be determined by reference to the books and records of the Bank.
The Bank's books and records shall be presumed PRIMA FACIE to be correct as to
such matters.
(c) INTEREST ON THE REVOLVING LOAN. The principal amount of the Revolving
Loan outstanding from time to time shall bear interest until the Revolving Note
Maturity Date at a rate per annum equal to the Prime Rate plus the Applicable
Spread; PROVIDED THAT, at the option of the Company, exercised from time to
time as provided in subsection 2.05(a) of this Agreement, interest may accrue
prior to the Revolving Loan Maturity Date on any Advance or on the entire
outstanding balance of the Revolving Loan as to which no LIBOR-based Rate
previously elected remains in effect, at a rate per annum equal to a
LIBOR-based Rate for a period of one month, two months, three months or six
months, plus the Applicable Spread. Notwithstanding the foregoing, the Company
will not be permitted to elect any LIBOR-based Rate for a period extending
beyond the Scheduled Revolving Loan Maturity Date.
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After the Revolving Loan Maturity Date, and until paid in full, the principal
amount of the Revolving Loan shall bear interest at a per annum rate equal to
the Prime Rate plus Two Percent (2%). Accrued interest shall be due and payable
monthly on the last Banking Day of October, 1997, and on the last Banking Day
of each successive calendar month thereafter until the Revolving Loan Maturity
Date, at which time the entire unpaid principal balance of the Revolving Loan
and all unpaid, accrued interest thereon, shall be due and payable in full
without demand. After the Revolving Loan Maturity Date, interest shall be
payable as accrued and without demand.
(d) EXTENSIONS OF SCHEDULED REVOLVING LOAN MATURITY DATE. The Bank may,
upon the request of the Company, but at the Bank's sole discretion, extend the
Scheduled Revolving Loan Maturity Date from time to time to such date or dates
as the Bank may elect by notice in writing to the Company, and upon any such
extension, the date to which the Scheduled Revolving Loan Maturity Date is then
extended will become the "Scheduled Revolving Loan Maturity Date" for purposes
of this Agreement. The Bank agrees to respond within forty-five (45) days to a
written request for an extension of the Scheduled Revolving Loan Maturity Date
made by the Company in accordance with Section 8.02 of this Agreement and made
within one hundred eighty (180) days prior to the Scheduled Revolving Loan
Maturity Date, provided that any failure by the Bank to respond within such
period shall be deemed to be a denial of such request unless otherwise agreed
to in writing by the Bank.
(e) FACILITY FEE. In addition to interest accruing on the Revolving Loan,
the Company shall pay to the Bank a facility fee for each partial or full
calendar quarter from and after the Closing Date until the Revolving Loan
Maturity Date equal to the Applicable Unused Commitment Fee Percentage per
annum on the daily average "Unused Revolving Loan Commitment" (as hereinafter
defined). As used herein, the term "UNUSED REVOLVING LOAN COMMITMENT" means, as
of the time of any determination thereof is to be made, the positive excess, if
any, which results by subtracting from the Maximum Availability the sum of the
then outstanding principal amount of the Revolving Loan plus the then existing
aggregate Letter of Credit Exposure. Facility fees for each calendar quarter
shall be due and payable within ten (10) days following the Bank's submission
of a statement of the amount due. Such fees may be debited by the Bank when due
to any demand deposit account of the Company carried with the Bank without
further authority.
SECTION 2.03. STANDBY LETTERS OF CREDIT.
(a) STANDBY LETTERS OF CREDIT -- GENERAL. At any time that the Company is
entitled to an Advance under the Revolving Loan, the Bank agrees, subject to
the terms and conditions of this Agreement, to issue upon the application of
the Company and for the account of the Company a standby letter of credit for
the purpose of supporting payment of all or any part of the Acquisition Seller
Debt or for any other general business purpose other than Credit Enhancement
(each a "LETTER OF CREDIT"), PROVIDED THAT:
(1) The aggregate Letter of Credit Exposure shall not at any time
exceed Fifteen Million Dollars ($15,000,000);
(2) The Company shall not request and the Bank shall have no
obligation to issue any Letter of Credit: (i) at any time any Event of
Default or Unmatured Event Default shall have occurred and be continuing;
(ii) at any time after the Revolving Loan Maturity Date; (iii) if, after
giving effect to such issuance, the aggregate Letter of Credit Exposure
would exceed
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Fifteen Million Dollars ($15,000,000); (iv) if the face amount of such
Letter of Credit would exceed the Remaining Availability; or (v) for any
purpose than to secure payment of all or any part of the Acquisition
Seller Debt;
(3) The Bank in no event shall be obligated to issue any Letter of
Credit: (i) having an expiration date later than seven (7) years and
thirty (30) days from the date of issuance; or (ii) if the issuance of
such Letter of Credit on the terms requested would be contrary to, or in
violation of the policies of the Bank or any requirement of applicable
law;
(4) The form of the requested Letter of Credit shall be satisfactory
to the Bank in the reasonable exercise of the Bank's discretion; and
(5) The Bank shall have received from the Company an application and
reimbursement agreement for the Letter of Credit in form and substance
satisfactory to the Bank in all respects (as the same may be amended,
modified, extended, renewed, supplemented, replaced and/or restated from
time to time and at any time, "REIMBURSEMENT AGREEMENT"), duly executed by
an Authorized officer.
(b) LETTER OF CREDIT PROCEDURES. Whenever the Company desires the issuance
of a Letter of Credit, it shall deliver to the Bank not later than 11:30 a.m.
(Dallas, Texas time) at least three Banking Days (or such shorter period as may
be agreed to by the Bank in any particular instance) in advance of the proposed
date of issuance a Reimbursement Agreement duly executed by an Authorized
Officer. Each Reimbursement Agreement shall include a precise description of
the documents and the verbatim text of any certificate to be presented by the
proposed beneficiary with, or as a part of any Draft; provided that the Bank,
in its sole judgment, may require changes in the description of any such
documents and the text of such certificates; and provided further that, at the
discretion of the Bank, each Letter of Credit shall provide that payment
against a conforming Draft is not required to be made thereunder prior to the
close of business on the third Banking Day following presentment of such Draft.
(c) DRAWS UNDER LETTERS OF CREDIT. Upon presentation of a Draft under any
Letter of Credit by the beneficiary thereof, the Bank shall notify the Company
of the receipt thereof ("Draft Notice") not later than one Banking Day prior to
the date on which the Bank intends to honor such Draft. The Draft Notice may be
given by telephone or telecopy. Failure to give the Draft Notice or to give the
Draft Notice in a timely manner shall not in any way affect or limit the
payment obligation of the Company hereunder. Upon receipt of the Draft Notice,
the Company shall make or cause to be made an irrevocable deposit with the Bank
not later than 1:00 p.m., Dallas, Texas time, one (1) Banking Day prior to the
day on which the Draft is to be honored, in an amount equal to the full amount
which is to be paid under such Draft, in good and collected funds (the
"REIMBURSEMENT AMOUNT"), specifying that it is depositing such money for the
sole purpose of funding the payment of such Draft.
In determining whether to honor any Draft, the Bank shall be responsible
only to determine that the documents and certificates required to be delivered
with such Draft under the appropriate Letter of Credit have been delivered and
that on their faces they are in substantial compliance with the requirements of
that Letter of Credit. In the event of any conflict between the terms of any
Reimbursement Agreement and the terms of this Agreement, the terms of this
Agreement shall control; and the terms of a Reimbursement Agreement shall not
be deemed to be in conflict with the terms of this Agreement solely by reason
of the fact that it addresses one or more subject matters that are
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addressed by this Agreement and contains provisions that are different from
those set forth in this Agreement.
(d) REIMBURSEMENT OBLIGATIONS OF THE COMPANY. The Company hereby agrees to
reimburse the Bank, on demand, the amount paid by the Bank to settle its
obligations in respect of each Draft under each Letter of Credit (whether such
amount is paid by virtue of the Bank's honor of any Draft or otherwise) to the
extent that a Reimbursement Amount is not available to the Bank for that
purpose, which reimbursement obligation shall be immediate and automatic,
without the necessity of any further act or the execution of any additional
document, instrument, or agreement. Any Reimbursement Amount that is not paid
in full when due shall be deemed to be and shall constitute a demand loan made
to the Company by the Bank on such due date in the principal amount of the
unpaid Reimbursement Amount (each such loan being referred to herein as a
"LETTER OF CREDIT LOAN", and collectively as "LETTER OF CREDIT LOANS"), which
Letter of Credit Loans shall bear interest, until paid in full, at a per annum
rate equal to the Prime Rate plus Two Percent (2%). A demand for payment of
each Reimbursement Amount and Letter of Credit Loan shall be deemed to have
been made by the Bank on the date of the corresponding payment by the Bank to
settle its obligations under a Draft. Nothing herein is intended to preclude
the Company from requesting an Advance to the extent available under the
Revolving Loan to pay any Reimbursement Amount.
The obligation of the Company to reimburse the Bank in respect of drawings
made under the Letters of Credit shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement and the
applicable Reimbursement Agreement (if and to extent the terms of such
Reimbursement Agreement do not conflict with this Agreement) under all
circumstances, and notwithstanding any of the following circumstances:
(1) any lack of validity or enforceability of any Letter of Credit;
(2) the existence of any claim, set-off, defense or other right which the
Company may have at any time against a beneficiary or any transferee
of any Letter of Credit or (or any Persons for whom any such
transferee may be acting), or any other Person, whether in connection
with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between
the Company and the beneficiary of any Letter of Credit;
(3) any draft, demand, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(4) payment by the Bank under any Letter of Credit against presentation
of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(5) any other circumstance or happening whatsoever which is similar to
any of the foregoing; or
(6) the fact that an Event of Default or Unmatured Event of Default shall
have occurred and be continuing;
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PROVIDED HOWEVER, that the Company shall not be obligated to reimburse the Bank
for any wrongful payment or disbursement made or to be made by the Bank under
any Letter of Credit as a result of acts or omissions constituting gross
negligence or willful misconduct on the part of the Bank. Payment of a Draft
that does not comply with the terms of the Letter of Credit against which it is
presented shall not in any event be deemed to be wrongful or an act or omission
constituting gross negligence or willful misconduct on the part of the Bank if
such payment is made at the specific written request of the Company in which
the Company waives the non-compliance of the Draft.
Upon a written request by the Company made in accordance with the terms of
Section 8.02 of this Agreement, the Bank will undertake to provide to the
Company copies of all instruments and documents constituting a Draft with the
Draft Notice, and in the event the Company has any knowledge (however obtained)
of any claim of non-compliance with the Company's instructions or with the
terms of the Letter of Credit, or of discrepancies or other irregularities, the
Company shall immediately notify the Bank thereof in writing, and the Company
shall be deemed to have waived any such claim or defense against the Bank
related thereto or arising therefrom unless such notice is given. The Company
shall be deemed to have knowledge of any such claim that is apparent on the
face of copies of instruments and documents constituting a Draft that are
provided to the Company pursuant to the preceding sentence.
Unless specified to the contrary in the Reimbursement Agreement for a
Letter of Credit, or any amendment to a Letter of Credit, the Company agrees
that the Bank and its correspondents may receive and accept any Draft drawn or
presented under such Letter of Credit or other document otherwise in order,
issued or purportedly issued by an agent, executor, trustee in bankruptcy,
receiver or other representative of the party who is authorized under such
Letter of Credit to issue such Draft or other document, as complying with the
terms of such Letter of Credit.
INDEMNITY. The Company agrees to protect, indemnify and save the Bank
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees and
allocated costs of internal counsel) which the Bank may incur or be subject to
as a consequence, direct or indirect, of (a) the issuance of the Letters of
Credit, other than as a result of the negligence or willful misconduct of the
Bank, as determined by a court of competent jurisdiction, or (b) the failure of
the Bank to honor a drawing under any Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any present or future DE JURE or
DE FACTO government or governmental authority (all such acts or omissions
herein called "GOVERNMENT ACTS").
As between the Company, on the one hand, and the Bank, on the other, the
Company assume all risks of the acts and omissions of, or misuse of the Letters
of Credit by the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Bank shall not be
responsible and shall have no liability (a) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of such Letters
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (b) for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (c) for failure of the beneficiary of
any such Letter of Credit to comply fully with the terms and conditions of the
agreement pursuant to which the Letter of Credit was procured and pursuant to
which the beneficiary is entitled to draw upon such Letter of Credit; (d) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or
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otherwise, whether or not they be in cipher; (e) for errors in interpretation
of technical terms; (f) for any loss or delay in the transmission or otherwise
of any document required in order to make a Draft under any such Letter of
Credit or of the proceeds thereof; (g) for the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any Draft under
such Letter of Credit; (h) for any consequences arising from causes beyond the
control of the Bank, including, without limitation, any Government Acts; and
(i) for any action taken or omitted by the Bank under or in connection with the
Letters of Credit, if taken or omitted in good faith. None of the above shall
affect, impair, or prevent the vesting of any of the Bank's rights or powers
hereunder.
Following the occurrence of an Event of Default or an Unmatured Event of
Default which is continuing, the Company agrees that any action taken by the
Bank, if taken in good faith, under or in connection with any of the Letters of
Credit, Reimbursement Agreements and Drafts, shall be binding on the Company
and shall not subject the Bank to any resulting liability to the Company. In
furtherance thereof, the Bank shall have the full right and authority,
following an Event of Default or Unmatured Event of Default which is
continuing, to (i) clear and resolve any questions of non-compliance of
documents, (ii) to give any instructions as to acceptance or rejection of any
documents or goods, and (iii) to grant any extensions of the maturity of, time
of payment for, or time of presentation of, any drafts, acceptances, or
documents.
(f) LETTER OF CREDIT FEES. The Company covenants and agrees to pay to the
Bank, on the date each Letter of Credit is issued, and on each anniversary of
the issue date for as long as the Letter of Credit is outstanding, a commission
equal to the "Applicable LOC Fee Percentage" (as hereinafter defined) times the
maximum amount available to be drawn under the Letter of Credit as of the date
such commission is due. As used herein, the term "APPLICABLE LOC FEE
PERCENTAGE" means, with respect to any Letter of Credit (i) One-Half Percent
(0.5%), if the reimbursement obligation of the Company to the Bank under the
Reimbursement Agreement and this Agreement for such Letter of Credit is fully
secured by Cash Collateral, and (ii) Three-Quarters Percent (0.75%), if the
reimbursement obligation of the Company to the Bank under the Reimbursement
Agreement and this Agreement for such Letter of Credit is not fully secured by
Cash Collateral. The commission shall be deemed fully earned and nonrefundable
when due. The Company shall pay the Bank's standard transaction fees with
respect to any transactions occurring on account of any Letter of Credit.
Transaction fees shall be payable upon completion of the transaction as to
which they are charged. All such commissions and fees may be debited by the
Bank to any deposit account of the Company carried with the Bank without
further authority, and in any event, shall be paid by the Company within ten
(10) days following billing.
SECTION 2.04 THE TERM LOAN.
(a) THE TERM LOAN -- GENERAL. The Bank agrees, subject to the terms and
conditions of this Agreement, to loan to the Company the principal amount of
Fifteen Million Three Hundred Fifty Thousand Dollars ($15,350,000.00) for the
term period beginning on the Closing Date and ending on the Term Loan Maturity
Date (the "TERM LOAN").
The Term Loan under this Agreement is a continuation, on amended terms, of
the "Term Loan" extended to the Company by the Bank under the Original
Agreement (the "PRIOR TERM LOAN") and the Company affirms, acknowledges and
agrees that the principal balance of the Term Loan as of the Closing Date is
$15,350,000.00, being the unpaid principal amount of the Prior Term Loan
immediately prior to the execution of this Agreement ($11,297,619.10) plus a
supplemental principal advance of
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$4,052,380.90 being made under the Term Loan and applied against the
outstanding principal balance of the Revolving Loan concurrently with the
execution of this Agreement.
(b) THE TERM NOTE. The obligation of the Company to repay the Term Loan
shall be evidenced by a promissory note executed by the Company to the Bank in
the form of EXHIBIT E attached hereto (as the same may be amended, modified,
extended, renewed, supplemented, replaced and/or restated from time to time and
at any time, the "TERM NOTE"). The principal of the Term Loan shall be
repayable in equal monthly installments of $213,195.00 each, which monthly
installments shall be due and payable on the last Banking Day of October, 1997,
and on the last Banking Day of each successive calendar month thereafter until
the Term Loan Maturity Date, at which time the entire principal balance of the
Term Loan and all unpaid, accrued interest thereon, shall be due and payable in
full without demand. Subject to the contemporaneous payment of any Prepayment
Premium which would become due on account of any proposed prepayment, the
principal of the Term Loan may be prepaid at any time in whole or in part,
provided that any partial prepayment shall be in an amount which is an integral
multiple of Fifty Thousand Dollars ($50,000) and provided further that all
partial prepayments shall be applied to the latest maturing installments of
principal payable under the Term Loan in inverse order of maturity.
(c) INTEREST ON THE TERM LOAN. The principal balance of the Term Loan
outstanding from time to time shall bear interest from the Closing Date until
the Term Loan Maturity Date at a rate per annum equal to the Prime Rate plus
the Applicable Spread, PROVIDED THAT, at the option of the Company exercised
from time to time as provided in subsection 2.05(a) of this Agreement, interest
may accrue prior to the Term Loan Maturity Date on the entire outstanding
balance of the Term Loan or on any portion thereof as to which no LIBOR-based
Rate previously selected remains in effect at a rate per annum equal to a
LIBOR-based Rate for a period of one month, two months, three months or six
months, plus the Applicable Spread. The Company will not be permitted to elect
any LIBOR-based Rate for a period extending beyond the Scheduled Term Loan
Maturity Date. After the Term Loan Maturity Date, interest will accrue on the
Term Loan at a rate per annum equal to the Prime Rate plus Two Percent (2%).
Prior to the Term Loan Maturity Date, interest shall be due and payable on the
last Banking Day of each month in addition to the installments of principal due
on such dates. After the Term Loan Maturity Date, interest shall be payable as
accrued and without demand.
(d) USE OF PROCEEDS OF THE TERM LOAN. The proceeds of the Term Loan shall
be used in their entirety to refinance existing Debt of the Company.
SECTION 2.05. PROVISIONS APPLICABLE TO BOTH OF THE LOANS. The following
provisions are applicable to both of the Loans:
(a) PROCEDURES FOR ELECTING LIBOR-BASED RATES -- CERTAIN EFFECTS OF
ELECTION. LIBOR-based Rates may be elected only in accordance with the
following procedures, shall be subject to the following conditions, and the
election of a LIBOR-based Rate shall have the following consequences in
addition to other consequences stated in this Agreement:
(1) The LIBOR-based Rate may be elected only for Loans or portions of
Loans in a minimum amount of $1,000,000.00. No more than five (5)
LIBOR-based Rate elections may be in effect under a Loan at any one time.
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(2) No LIBOR-based Rate may be elected at any time that an Event of
Default or Unmatured Event of Default has occurred and is continuing.
(3) Voluntary prepayment prior to scheduled maturity of all or any
portion of a Loan on which interest is accruing at a LIBOR-based Rate
shall be subject to contemporaneous payment of the Prepayment Premium if,
at the time of prepayment, the Reinvestment Rate is less than the
LIBOR-based Rate at which interest accrues on the Loan. A Prepayment
Premium shall also be due and payable on prepayment of all or any portion
of either Loan prior to scheduled maturity because of acceleration of
maturity on account of an Event of Default if, at the time of acceleration
of maturity, the Reinvestment Rate is less than the LIBOR-based Rate at
which interest is accruing on the Loan. If any portion of the principal
balance of the Revolving Loan is required to be prepaid in order to reduce
the balance of the Revolving Loan on account of the requirement of Section
2.06 of this Agreement, and while interest is accruing on such portion at
a LIBOR-based Rate, then a Prepayment Premium shall be due and payable in
addition to the principal amount required to be prepaid, if, at the time
such principal payment is required, Reinvestment Rate is less than the
LIBOR-based Rate at which interest is accruing on such portion of the
Loan. If at the time of any voluntary or mandatory prepayment of any
portion of the principal of any Loan, interest accrues at both a
LIBOR-based Rate or Rates and at a Prime-based Rate on portions of the
Loan, then any prepayment of principal will be applied first to the
portion of the Loan on which interest accrues at the Prime-based Rate and
next to the portion or portions at which interest accrues at a LIBOR-based
Rate or Rates, and if interest accrues on the Loan at more than one
LIBOR-based Rate, first to that portion or those portions on which
interest accrues at a Rate or Rates which results in no Prepayment Premium
or the lowest Prepayment Premium or Premiums.
(4) On any Banking Day, the Company may request a quotation of the
LIBOR-based Rates then in effect from the Bank. As soon as possible, and
in any event before the close of business on the next following Banking
Day, the Bank shall quote such LIBOR-based Rates. The Company shall then
have until the end of the Banking Day on which such quotation is given or
within such shorter time as the Bank may specify, to exercise its option
to elect any LIBOR-based Rate quoted, subject to all other conditions and
limitations stated in this Agreement. The period for which any LIBOR-based
Rate is effective shall begin on the second Banking Day following the day
on which the quotation is given.
(5) An election of a LIBOR-based Rate may be communicated to the Bank
on behalf of the Company only by an Authorized Officer. Such election may
be communicated by telephone or by telecopy or any other form of written
electronic communication, or by a writing delivered to the Bank. At the
request of the Bank, the Company shall confirm any election in writing and
such written confirmation shall be signed by an Authorized Officer. The
Bank shall be entitled to rely on any oral or written electronic
communication of an election of a LIBOR-based Rate which is received by an
appropriate Bank employee from anyone reasonably believed in good faith by
such employee to be an Authorized Officer.
(6) The Bank may elect not to quote a LIBOR-based Rate (the
"Unavailable LIBOR-based Rate") to any of its customers otherwise eligible
for the Unavailable LIBOR-based Rate on any day (the Unavailability Date")
on which the Bank has determined that it is not practical to quote the
Unavailable LIBOR-based Rate because of the unavailability of sufficient
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funds to the Bank for appropriate terms at rates approximating the then
relevant London Interbank Offered Rate, or because of legal or regulatory
changes which make it impractical or burdensome for the Bank to lend money
at the Unavailable LIBOR-based Rate. In such event, and provided that no
Event of Default or Unmatured Event of Default has occurred and is
continuing, the Company shall be entitled by written notice given to the
Bank within ten (10) days of the Unavailability Date to continue the
LIBOR-based Rate or Rates then accruing on any portion or portions of the
Loans (regardless of when the such LIBOR-based Rate or Rates otherwise are
scheduled to expire), until the earlier of (i) that date which is ninety
(90) days after the Unavailability Date, (ii) that date upon which the
Bank resumes quoting the Unavailable LIBOR-based Rate; and (iii) the
occurrence of an Event of Default or Unmatured Event of Default.
(7) If, as a result of any regulatory change, the basis of taxation
of payments to the Bank of the principal of or any interest on any Loan
bearing interest at a LIBOR-based Rate or any other amounts payable
hereunder in respect thereof, other than taxes imposed on the overall net
income of the Bank, is changed, or any reserve, special deposit, or
similar requirement relating to any extensions of credit or other assets
of or any deposits with or other liabilities of the Bank are imposed,
modified, or deemed applicable, and the Bank reasonably determines that,
by reason thereof, the cost to it of making, issuing, or maintaining any
Loan at a LIBOR-based Rate is increased by an amount deemed by it to be
material, then the Company shall pay promptly upon demand to the Bank such
additional amounts as the Bank reasonably determines will compensate for
such increased costs ("Increased Costs"); provided, however, that (i) the
Bank shall give the Company ninety (90) days' prior written notice of the
Bank's intention to collect Increased Costs from the Company ("Increased
Cost Notice"), and the Bank shall not be entitled to pass-through to or
collect from the Company Increased Costs incurred by the Bank prior to
that date which is the ninetieth (90th) day after the delivery of the
Increased Cost Notice to the Company by the Bank, and (ii) the Company
shall not be the only borrower of the Bank that is singled out from a
group of similarly situated borrowers of the Bank subject to this type of
provision that is requested to remit Increased Costs. Any determination by
the Bank of Increased Costs made pursuant to the provisions of this
section shall be final, absent manifest error.
(b) CALCULATION OF INTEREST. Interest on each of the Loans shall be
calculated on the basis that an entire year's interest is earned in 360 days.
(c) MANNER OF PAYMENT - APPLICATION. All payments of principal and
interest on the Loans shall be payable at the principal office of the Bank in
Indianapolis, Indiana, in funds available for the Bank's immediate use in that
city and no payment will be considered to have been made until received in such
funds. Unless otherwise agreed to, in writing, or otherwise required by
applicable law, payments will be applied first to accrued, unpaid interest,
then to principal, and any remaining amount to any unpaid collection costs,
late charges and other charges, provided, however, upon delinquency or other
default, the Bank reserves the right to apply payments among principal,
interest, late charges, collection costs and other charges at its discretion.
All prepayments shall be applied to the indebtedness owing hereunder in such
order and manner as the Bank may from time to time determine in its sole
discretion.
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(d) AUTOMATIC DEBIT. The Bank may debit when due all payments of principal
and interest due under the terms of this Agreement to any deposit account of
the Company carried with the Bank without further authority.
SECTION 2.06. MANDATORY PREPAYMENT. If at any time a determination thereof
is to be made, the sum of (a) the principal balance of the Revolving Loan
outstanding at such time, PLUS (b) the aggregate Letter of Credit Exposure
existing at such time, exceeds the Maximum Availability, the Company shall
immediately repay the Revolving Note in an aggregate principal amount, together
with such additional amount as may be necessary, equal to such excess. If an
Event of Default or an Unmatured Event of Default has occurred and is
continuing and the Bank shall have notified the Company of its election to take
any action specified in Section 7.02 of this Agreement, the Maximum
Availability shall be automatically reduced to $0 without any action on the
part of or the giving of notice to the Company by the Bank.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES. To induce the Bank to make
the Loans, each of the Credit Parties represents and warrants to the Bank that:
(a) ORGANIZATION OF THE COMPANY. The Company is a corporation organized,
existing and in good standing under the laws of the State of West Virginia.
VNGI is a corporation organized, existing and in good standing under the laws
of the State of Pennsylvania. VNGDI is a corporation organized, existing and in
good standing under the laws of the State of Delaware. Doansco and Toledo
Oxygen each is a corporation organized, existing and in good standing under the
laws of the State of Ohio. Each of the Credit Parties and their respective
Subsidiaries is qualified to do business in every jurisdiction in which: (i)
the nature of the business conducted or the character or location of properties
owned or leased, or the residences or activities of employees make such
qualification necessary; and (ii) failure so to qualify might impair its title
to material properties or its right to enforce material contracts or result in
its exposure to liability for material penalties in such jurisdiction. No
jurisdiction in which the Credit Parties or any of their respective
Subsidiaries is not qualified to do business has asserted that the Credit
Parties or any of their respective Subsidiaries is required to be qualified
therein. The principal office and chief executive office of the Company is
located at 00 00xx Xxxxxx, Xxxxxxxx, Xxxx Xxxxxxxx 00000-0000. The principal
office and chief executive office of VNGI is located at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000. The principal office and chief executive office
of VNGDI is located at 0000 X. Xxxxxx Xxxxxxx, Xxxxx, Xxxxxxxx 00000. The
principal office and chief executive office of Doansco is located at 0000
Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000. The principal office and chief
executive office of Toledo Oxygen is located at 0000 Xxx Xxxxxx, Xxxxxx, Xxxx
00000. Neither the Credit Parties nor any of their respective Subsidiaries nor
any Guarantor conducts any material operations or keeps any material amounts of
property at any location other than the locations specified in the Security
Agreement or Guarantor Security Agreement to which it is a party. Neither the
Credit Parties nor any of their respective Subsidiaries nor any Guarantor has
done business under any name other than its present corporate name at any time
during the six years
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preceding the date of this Agreement except as disclosed in the Security
Agreement or Guarantor Security Agreement to which it is a party.
(b) AUTHORIZATION; NO CONFLICT. The execution, delivery and performance of
this Agreement and all of the other Loan Documents to which it is a party are
within the corporate powers of each of the Credit Parties and each Guarantor,
have been duly authorized by all necessary corporate action, have received any
required governmental or regulatory agency approvals and do not and will not
contravene or conflict with any provision of law or of its articles of
incorporation or its by-laws or of any agreement binding upon it or its
properties.
(c) VALIDITY AND BINDING NATURE. This Agreement and all of the other Loan
Documents to which it is a party are the legal, valid and binding obligations
of each of the Credit Parties and each Guarantor, enforceable against it in
accordance with their respective terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
and other laws enacted for the relief of debtors generally and other similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles which may affect the availability of specific performance and other
equitable remedies.
(d) FINANCIAL STATEMENTS (i) The Credit Parties have delivered to the Bank
their audited, consolidated Financial Statements as of June 30, 1996, and for
the fiscal year of the Company then ended and their unaudited consolidated
interim Financial Statements as of July 31, 1997, and for the month and partial
fiscal year then ended, which Financial Statements have been prepared in
accordance with GAAP except, as to the interim statements, for the absence of a
statement of cash flows, footnotes and adjustments normally made at year end
which are not material in amount. Such Financial Statements present fairly the
financial position of the Credit Parties and their respective Subsidiaries as
of the dates thereof and the results of its and their operations for the
periods covered. (ii) Since the date of the most current Financial Statement
provided by the Credit Parties to the Bank there has been no material adverse
change in the financial position of the Credit Parties or their respective
Subsidiaries or in the results of its and their operations.
(e) LITIGATION AND CONTINGENT LIABILITIES. No litigation, arbitration
proceedings or governmental proceedings are pending or to the best of the
knowledge of the Credit Parties threatened against the Credit Parties or their
respective Subsidiaries or any Guarantor which would, if adversely determined,
materially and adversely affect the financial position or continued operations
of the Credit Parties or their respective Subsidiaries or any Guarantor. None
of the Credit Parties or their respective Subsidiaries or any Guarantor has any
material contingent liabilities not provided for or disclosed in the Financial
Statements referred to in subsection 3.01(d) of this Agreement or on EXHIBIT F
attached hereto.
(f) LIENS. None of the assets of the Credit Parties or their respective
Subsidiaries or any Guarantor are subject to any mortgage, pledge, title
retention lien, or other lien, encumbrance or security interest except for
liens and security interests described in subsections 5.02(b)(1) through (7) of
this Agreement.
(g) EMPLOYEE BENEFIT PLANS. Each Plan maintained by the Credit Parties and
their respective Subsidiaries and each Guarantor is in material compliance with
ERISA, the Code, and all applicable rules and regulations adopted by regulatory
authorities pursuant thereto, and the Credit Parties and their respective
Subsidiaries and each Guarantor each has filed all reports and returns required
to be
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filed by ERISA, the Code and such rules and regulations. No Plan maintained by
the Credit Parties or any of their respective Subsidiaries and each Guarantor
and no trust created under any such Plan has incurred any "accumulated funding
deficiency" within the meaning of Section 412(c)(1) of the Code, and the
present value of all benefits vested under each Plan did not exceed, as of the
last annual valuation date, the value of the assets of the respective Plans
allocable to such vested benefits. None of the Credit Parties or any of their
respective Subsidiaries or any Guarantor has any knowledge that any "reportable
event" as defined in ERISA has occurred with respect to any Plan.
(h) PAYMENT OF TAXES. The Credit Parties and each of its respective
Subsidiaries and each Guarantor has filed all federal, state and local tax
returns and tax related reports which the Credit Parties and its respective
Subsidiaries and each Guarantor are required to file by any statute or
regulation and all taxes and any tax related interest payments and penalties
that are due and payable have been paid, except for such as are being contested
in good faith and by appropriate proceedings and as to which appropriate
reserves have been established. Adequate provision has been made for the
payment when due of all tax liabilities which have been incurred, but are not
as yet due and payable.
(i) INVESTMENT COMPANY ACT. None of the Credit Parties or their respective
Subsidiaries or any Guarantor is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(j) REGULATION U. None of the Credit Parties or their respective
Subsidiaries or any Guarantor is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System. Not more than twenty-five
percent (25%) of the assets of the Credit Parties or their respective
Subsidiaries or any Guarantor consists of margin stock, within the
contemplation of Regulation U, as amended.
(k) HAZARDOUS SUBSTANCES. Except as disclosed on EXHIBIT G attached
hereto, to the best knowledge of each of the Credit Parties (i) no premises
owned or occupied by or under lease to any of the Credit Parties or their
respective Subsidiaries or any Guarantor have ever been used, and as of the
date of this Agreement, no such premises are being used for any activities
involving the use, treatment, transportation, generation, storage or disposal
of any Hazardous Substances except in compliance with Environmental Laws, and
(ii) no Hazardous Substances have been released on any such premises in
violation of any Environmental Law, nor is there any threat of release of any
Hazardous Substances on any such premises.
(l) SUBSIDIARIES. The Company has no Subsidiaries as of the Closing Date,
other than Doansco and Toledo Oxygen. VNGI has no Subsidiaries as of the
Closing Date, other than VNGDI. VNGDI has no Subsidiaries as of the Closing
Date, other than the Company.
(m) EXISTING SELLER ACQUISITION DEBT. The nature and outstanding balances
of the Existing Seller Acquisition Debt identified on EXHIBIT B attached hereto
is true and accurate in all respects and the Company is not in default with
respect to any of the Existing Acquisition Seller Debt.
(n) REAL ESTATE LEASES. None of the Credit Parties or their respective
Subsidiaries or any Guarantor is in default under any of its leases of real
estate.
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(o) PARENT ASSETS. Neither of VNGI nor VNGDI own any assets other than
cash, intercompany receivables and Common Stock of their respective
Subsidiaries.
ARTICLE IV
SECURITY FOR OBLIGATIONS
SECTION 4.01. COLLATERAL FOR THE OBLIGATIONS. Until paid in full, the
Obligations will be secured by the following:
(a) COMPANY SECURITY AGREEMENT. The Obligations are and shall remain
secured by a first priority security interest and lien in and to all personal
property of the Company, tangible and intangible, now owned and existing or
hereafter acquired or arising, including, without limitation, all equipment,
inventory, accounts receivable and general intangibles and all proceeds
thereof, which security interest has been created the Company Security
Agreement, subject only to liens and security interests described in the
exceptions enumerated in subsections 5.02(b)(1) through (7) of this Agreement.
In the event the Company owns or acquires tangible or intangible personal
property that the Bank deems is or may not be covered as collateral by the
Company Security Agreement or in which the Bank deems its security interest
therein is or may not be perfected, the Company covenants and agrees promptly
upon the request of the Bank to execute such other security instruments and
documents and take such other actions as the Bank may require to grant to the
Bank a perfected security interest therein, all of which security instruments
and documents shall be in form and substance satisfactory to the Bank in all
respects.
The Company and the Bank agree that effective as of the Closing Date, the
Company Security Agreement is amended by replacing the definition of the term
"CREDIT AGREEMENT" in subsection (b) of page 2 of the Company Security
Agreement in its entirety as follows:
"(b) "CREDIT AGREEMENT" shall mean the Amended and Restated Credit
Agreement, dated September __, 1997, executed and delivered by Debtor to
Secured Party, as the same may be amended, modified, supplemented and/or
restated from time to time and at any time."
(b) REAL ESTATE. Upon request by the Bank, the Company covenants and
agrees, within ten (10) days after receiving such request, to grant to the Bank
as security for the Obligations security interests and liens on all real estate
and improvements, including all fixtures, equipment, furnishings, systems, and
related property located thereon (collectively, the "REAL ESTATE") now owned or
hereafter acquired and owned by the Company for a period of 90 consecutive
days, including all proceeds thereof, pursuant to real estate mortgages or
deeds of trust in form and substance satisfactory to the Bank in all respects
duly executed, acknowledged and delivered to the Bank in recordable form. Upon
request by the Bank, the Company covenants and agrees, within ten (10) days
after receiving such request, to grant to the Bank security interest and lien
in and to all of the Company's right, title and interest in any Real Estate as
a lessee thereof pursuant to leasehold mortgages or deeds of trust in form and
substance satisfactory to the Bank in all respects duly executed, acknowledged
and delivered to the Bank in recordable form. The Company further covenants and
agrees to provide to the Bank at or prior to the execution and delivery of any
real estate mortgages or deeds of trust or leasehold mortgages or deeds of
trust, at the Company's expense: (i) evidence satisfactory to the Bank showing,
in the case of
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owned Real Estate, that such Real Estate is owned in fee simple by the Company
free and clear of all liens, encumbrances and exceptions which are not
acceptable to the Bank, and in the case of leased Real Estate, showing the
Company's leasehold interest therein; and (ii) a Phase I environmental
assessment (and where reasonably deemed appropriate by the Bank based upon
information disclosed in such assessment, a Phase II environmental assessment)
prepared by a registered engineer or environmental consultant acceptable to the
Bank confirming there are no material environmental problems associated with
such Real Estate.
(c) GUARANTIES.
(1) PARENT GUARANTIES. The Obligations will be further secured by the
unconditional guaranty of each of VNGI and VNGDI pursuant to a written guaranty
executed and delivered by each Guarantor in favor of the Bank, each in the form
attached hereto and made a part hereof for all purposes as EXHIBIT H-1 and H-2
(referred to herein as the same may be amended, modified, extended, renewed,
supplemented, replaced and/or restated from time to time and at any time,
collectively as the "PARENT GUARANTIES" and individually as a "PARENT
GUARANTY"). Pursuant to its Parent Guaranty, VNGI shall also unconditionally
guaranty all of the obligations of VNGDI arising under, pursuant to or in
connection with the Parent Guaranty executed by VNGDI.
(2) SUBSIDIARY GUARANTIES. The Obligations will be further secured by the
unconditional guaranty of Doansco and Toledo Oxygen pursuant to a written
guaranty executed and delivered by each of them in favor of the Bank, each in
the form attached hereto and made a part hereof for all purposes as EXHIBIT I
or such other form as hereafter is required by the Bank.
(d) ADDITIONAL SECURITY AGREEMENTS.
(1) PARENT SECURITY AGREEMENTS. The obligations of each of VNGI and VNGDI
arising under, pursuant to, or by virtue of its respective Parent Guaranty
shall be secured by a first priority security interest and lien in and to all
of its personal property, tangible and intangible, whether now owned and
existing or hereafter acquired or arising, including, without limitation, all
equipment, inventory, accounts receivable and general intangibles and all
proceeds thereof, which security interest will be created by a written security
agreement executed and delivered by each of VNGI and VNGDI to the Bank, each in
the form attached hereto and made a part hereof for all purposes as EXHIBIT J
(referred to herein as the same may be amended, modified, extended, renewed,
supplemented, replaced and/or restated from time to time and at any time,
collectively as the "PARENT SECURITY AGREEMENTS" and individually as a "PARENT
SECURITY AGREEMENT"), subject only to liens and security interests described in
the exceptions enumerated in subsections 5.02(b)(1) through (7) of this
Agreement.
(2) SUBSIDIARY SECURITY AGREEMENTS. The obligations of each of Doansco and
Toledo Oxygen arising under, pursuant to, or by virtue of its respective
Subsidiary Guaranty shall be secured by a first priority security interest and
lien in and to all of its personal property, tangible and intangible, whether
now owned and existing or hereafter acquired or arising, including, without
limitation, all equipment, inventory, accounts receivable and general
intangibles and all proceeds thereof, which security interest will be created
by a written security agreement executed and delivered by each of them to the
Bank, each in the form attached hereto and made a part hereof for all purposes
as EXHIBIT K or such other form as hereafter is required by the Bank, subject
only to liens and security
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interests described in the exceptions enumerated in subsections 5.02(b)(1)
through (7) of this Agreement.
(e) PLEDGE AGREEMENTS.
(1) PARENT PLEDGE AGREEMENTS. The obligations of each of VNGI and VNGDI
arising under, pursuant to, or by virtue of its respective Parent Guaranty
shall be further secured by a first priority pledge of and security interest
and lien in and to all of the capital stock of VNGDI owned by VNGI and all of
the capital stock of the Company owned by VNGDI, whether now existing or
hereafter arising or acquired, and whether now or hereafter issued and
outstanding, and all proceeds thereof, which pledge, security interest and lien
will be created by a pledge agreement executed by each of VNGI and VNGDI in
form and substance the same as attached hereto as EXHIBIT L-1 and L-2 (referred
to herein as the same may be amended, modified, extended, renewed,
supplemented, replaced and/or restated from time to time and at any time,
collectively as the "PARENT PLEDGE AGREEMENTS" and individually as the "PARENT
PLEDGE AGREEMENTS"), subject only to liens and security interests described in
the exceptions enumerated in subsections 5.02(b)(1) through (7) of this
Agreement.
(2) COMPANY PLEDGE AGREEMENT. The Obligations will be further secured by a
first priority pledge of and security interest and lien in and to all of the
capital stock of each of Doansco and Toledo Oxygen owned by the Company,
whether now existing or hereafter arising or acquired, and whether now or
hereafter issued and outstanding, and all proceeds thereof, which pledge,
security interest and lien will be created by a pledge agreement in form and
substance the same as attached hereto as EXHIBIT M (as the same may be amended,
modified, extended, renewed, supplemented, replaced and/or restated from time
to time and at any time, the "COMPANY PLEDGE AGREEMENT"), subject only to liens
and security interests described in the exceptions enumerated in subsections
5.02(b)(1) through (7) of this Agreement.
(f) ADDITIONAL SUBSIDIARIES. As a condition to consenting to the creation
of any additional Subsidiaries of the Company in addition to Doansco and Toledo
Oxygen, the Bank reserves the right to require (i) the Company to amend the
Pledge Agreement to include a pledge of and security interest and lien in and
to all of the capital stock of each such Subsidiary on the same terms and
conditions as provided in Section 4.01(e)(2) with respect to the pledge of the
capital stock of Doansco and Toledo Oxygen, and (ii) any such Subsidiaries to
become Guarantors and to execute and deliver in favor of the Bank Subsidiary
Guaranties and Subsidiary Security Agreements on the same terms and conditions
as provided in Section 4.01(c)(2) and (d)(2) with respect to Doansco and Toledo
Oxygen.
ARTICLE V
Affirmative and
NEGATIVE COVENANTS OF THE CREDIT PARTIES
SECTION 5.01. AFFIRMATIVE COVENANTS OF THE CREDIT PARTIES. Until all
Obligations terminate or are paid and satisfied in full, and for so long as the
Company is entitled to receive any Advance or any Letter of Credit Exposure
exists, each of the Credit Parties shall strictly observe, and shall cause each
of their respective Subsidiaries and each Guarantor to observe, the following
covenants:
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(a) CORPORATE EXISTENCE. The Credit Parties and their respective
Subsidiaries and each Guarantor shall preserve its corporate existence.
(b) REPORTS, CERTIFICATES AND OTHER INFORMATION. The Credit Parties shall
furnish or cause to be furnished to the Bank copies of the following Financial
Statements, certificates and other information:
(1) ANNUAL STATEMENTS. As soon as available and in any event within
one hundred and twenty (120) days after the close of each fiscal year of
the Company, annual audited consolidated Financial Statements for the
Credit Parties and their respective Subsidiaries, audited by the Company's
Auditors, showing the financial condition and results of operations of the
Credit Parties and their respective Subsidiaries as at the close of such
fiscal year and for such fiscal year, all prepared in accordance with
GAAP, accompanied by an opinion of the Company's Auditors, which opinion
shall be without qualification and shall state that such audited Financial
Statements present fairly the financial position of the Credit Parties and
their respective Subsidiaries on a consolidated basis as of the date of
such Financial Statements and the results of its and their operations and
changes in its and their financial position for the period covered
thereby, and that their examination in connection with such Financial
Statements has been made in accordance with GAAP.
(2) INTERIM MONTHLY STATEMENTS. As soon as available and in any event
within thirty (30) days after the end of each calendar month ending after
the Closing Date (other than a calendar month which ends a fiscal quarter
of the Company), unaudited consolidated Financial Statements for the
Credit Parties and their respective Subsidiaries showing its and their
financial condition and results of operations as at, and for such calendar
month and year-to-date, all in reasonable detail, and certified to the
Bank by the respective President, Chief Financial Officer, or Treasurer of
each of the Credit Parties, together with comparable prior year-to-date
Financial Statements as at the end of same calendar month of the prior
year.
(3) INTERIM QUARTERLY STATEMENTS. As soon as available and in any
event within forty-five (45) days after the close of each fiscal quarter
of the Company ending after the Closing Date, unaudited consolidated
Financial Statements of the Credit Parties and their respective
Subsidiaries showing its and their financial condition and results of
operations as at, and for such fiscal quarter and year-to-date, all in
reasonable detail, prepared in accordance with GAAP (except that footnote
disclosures normally included in Financial Statements prepared in
accordance with GAAP may be condensed or omitted if and to the extent such
condensation or omission is consistent with past practices of the Credit
Parties, and if the information so omitted is not necessary for a fair
presentation of the results for such fiscal quarter), and certified to the
Bank by the respective President, Chief Financial Officer, or Treasurer of
each of the Credit Parties, together with comparable prior year-to-date
Financial Statements as at the end of same fiscal quarter of the prior
year.
(4) CERTIFICATES. Contemporaneously with the furnishing of each set
of Financial Statements provided for in subsections 5.01(b)(1) and (2) of
this Agreement, an Officer's Certificate.
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(5) ORDERS. Prompt notice of any orders in any material proceedings
to which the Company or any of its Subsidiaries is a party, issued by any
court or regulatory agency, federal or state, and if the Bank should so
request, a copy of any such order.
(6) NOTICE OF DEFAULT OR LITIGATION. Immediately upon learning of the
occurrence of an Event of Default or Unmatured Event of Default, or the
institution of or any adverse determination in any litigation, arbitration
proceeding or governmental proceeding which is material to the Company or
any of its Subsidiaries, or the occurrence of any event which could have a
material adverse effect upon the Company or any of its Subsidiaries,
written notice thereof describing the same and the steps being taken with
respect thereto.
(7) COMPLIANCE CERTIFICATES. Within forty-five (45) days after the
end of each calendar month ending after the Closing Date that is also the
end of a calendar quarter, a certificate of the Chief Financial Officer or
other appropriate officer of the Company demonstrating compliance with the
financial covenants stated in subsection 5.01(g) of this Agreement. Such
certificate shall relate the covenants to the month-end figures and shall
otherwise be in such form and provide such detail as may be reasonably
satisfactory to the Bank.
(8) REGISTRATION STATEMENTS AND REPORTS. Promptly upon filing with
the Securities Commission or any state securities regulatory authority,
copies of all registration statements and all periodic and special reports
required or permitted to be filed under federal or state securities laws
and regulations.
(9) OTHER INFORMATION. Within thirty (30) days after the Bank's
request, such other information concerning the Credit Parties and their
respective Subsidiaries as the Bank may from time to time request,
including, without limitation, consolidating Financial Statements of the
Credit Parties and their respective Subsidiaries.
(c) BOOKS, RECORDS AND INSPECTIONS. Each of the Credit Parties and their
Subsidiaries and each Guarantor shall maintain complete and accurate books and
records, and permit access thereto by the Bank for purposes of inspection,
copying and audit, and the Credit Parties and each of their respective
Subsidiaries and each Guarantor shall permit the Bank to inspect its properties
and operations at all reasonable times.
(d) INSURANCE. In addition to any insurance required by any other Loan
Documents to which it is a party, the Credit Parties and their respective
Subsidiaries and each Guarantor shall maintain such insurance as may be
required by law and such other insurance, to such extent and against such
hazards and liabilities, as is customarily maintained by companies similarly
situated. The Credit Parties and their respective Subsidiaries and each
Guarantor agrees to name the Bank as additional insured and lender's loss payee
on any such insurance policy under a standard lender's loss payable clause and
to provide a copy of any such policy to the Bank.
(e) TAXES AND LIABILITIES. The Credit Parties and their respective
Subsidiaries and each Guarantor shall pay when due all taxes, license fees,
assessments and other liabilities except such as are being contested in good
faith and by appropriate proceedings and for which appropriate reserves have
been established.
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(f) COMPLIANCE WITH LEGAL AND REGULATORY REQUIREMENTS. The Credit Parties
and their respective subsidiaries and each Guarantor shall maintain material
compliance with the applicable provisions of all federal, state and local
statutes, ordinances and regulations and any court orders or orders of
regulatory authorities issued thereunder.
(g) FINANCIAL COVENANTS. The Credit Parties shall observe each of the
following financial covenants:
(1) CONSOLIDATED NET WORTH. The Credit Parties and their respective
Subsidiaries shall at all times from and after the Closing Date maintain
Consolidated Net Worth at a level not less than (i) $19,050,900.00, PLUS
(ii) Forty Percent (40%) of the cumulative Consolidated Net Income for
each fiscal quarter of the Company ending after July 1, 1997, provided,
that, such amount shall in no event be less than zero.
(2) FIXED CHARGE COVERAGE RATIOS.
(a) As of the close of each fiscal quarter of the Company ending
after the Closing Date, the Credit Parties and their respective
Subsidiaries, for the period of the four consecutive fiscal quarters
which end on such close, shall have a Fixed Charge Coverage Ratio I
of not less than 1.1:1, subject to the terms of subsection 5.01(g)(4)
of this Agreement.
(b) As of the close of each fiscal quarter of the Company ending
after the Closing Date, the Credit Parties and their respective
Subsidiaries, for the period of the four consecutive fiscal quarters
which end on such close, shall have a Fixed Charge Coverage Ratio II
of not less than 1.3:1, subject to the terms of subsection 5.01(g)(4)
of this Agreement.
(3) RATIO OF TOTAL FUNDED DEBT TO EBITDA. As of the close of each
fiscal quarter of the Company ending after the Closing Date, the Credit
Parties and their respective Subsidiaries, for the period of the four
consecutive fiscal quarters which end on such close, shall have a Ratio of
Total Funded Debt to EBITDA of not greater than (i) 4.00:1 until Xxxxx 00,
0000, (xx) 3.75 from March 31, 1999, until March 30, 2000, and (iii) 3.50
from March 31, 2000, and thereafter.
(h) PRIMARY BANKING RELATIONSHIP. Within ninety (90) days after the
Closing Date, the Company shall maintain its primary concentration and deposit
accounts with the Bank, provided, that, the Company shall use its best effort
to effect same prior to such date.
(i) EMPLOYEE BENEFIT PLANS. The Credit Parties and their respective
Subsidiaries and each Guarantor shall maintain any Plan in material compliance
with ERISA, the Code, and all rules and regulations of regulatory authorities
pursuant thereto and shall file all reports required to be filed pursuant to
ERISA, the Code, and such rules and regulations.
(j) HAZARDOUS SUBSTANCES. If any of the Credit Parties or any of their
respective Subsidiaries or any Guarantor should commence the use, treatment,
transportation, generation, storage or disposal of any Hazardous Substance in
reportable quantities in its operations in addition to those noted
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in EXHIBIT G attached hereto, the Credit Parties shall immediately notify the
Bank of the commencement of such activity with respect to each such Hazardous
Substance. The Credit Parties shall cause any Hazardous Substances which are
now or may hereafter be used or generated in the operations of the Credit
Parties or any of their respective Subsidiaries or any Guarantor in reportable
quantities to be accounted for and disposed of in compliance with all
Environmental Laws and other applicable federal, state and local laws and
regulations. The Credit Parties shall notify the Bank immediately upon
obtaining knowledge that:
(1) any premises which have at any time been owned or occupied by or
have been under lease to any of the Credit Parties or any of their
respective Subsidiaries or any Guarantor are the subject of an
environmental investigation by any federal, state or local governmental
agency having jurisdiction over the regulation of any Hazardous
Substances, the purpose of which investigation is to quantify the levels
of Hazardous Substances located on such premises, or
(2) any of the Credit Parties or any of their respective Subsidiaries
or any Guarantor has been named or is threatened to be named as a party
responsible for the possible contamination of any real property or ground
water with Hazardous Substances, including, but not limited to the
contamination of past and present waste disposal sites.
If any of the Credit Parties or any of their respective Subsidiaries
or any Guarantor is notified of any event described in subsections
5.01(j)(1) or (2) above, the Credit Parties shall immediately engage or
cause such Subsidiary or such Guarantor to engage a firm or firms of
engineers or environmental consultants appropriately qualified to
determine as quickly as practical the extent of contamination and the
potential financial liability of the Credit Parties or such Subsidiary or
such Guaranty with respect thereto, and the Bank shall be provided with a
copy of any report prepared by such firm or by any governmental agency as
to such matters as soon as any such report becomes available to the Credit
Parties, and the Credit Parties shall immediately establish reserves in
the amount of the potential financial liability of the Credit Parties or
such Subsidiary or such Guarantor identified by such environmental
consultants or engineers. The selection of any engineers or environmental
consultants engaged pursuant to the requirements of this Section shall be
subject to the approval of the Bank, which approval shall not be
unreasonably withheld.
SECTION 5.02. NEGATIVE COVENANTS OF THE CREDIT PARTIES. Until all
Obligations terminate or are paid and satisfied in full, and so long as
the Company is entitled to receive any Advance or any Letter of Credit
exists, the Credit Parties shall strictly observe, and shall cause each of
their respective Subsidiaries and each Guarantor to strictly observe, the
following covenants:
(a) RESTRICTED PAYMENTS. Except as provided in the next
sentence, none of the Credit Parties or any of their respective
Subsidiaries shall (i) purchase or redeem any shares of their
respective capital stock or declare or pay any dividends thereon
except for dividends payable entirely in capital stock, or (ii) make
any other distributions to shareholders as shareholders, or set aside
any funds for any such purpose, or prepay, purchase or redeem any
subordinated indebtedness of the Company. Notwithstanding the
foregoing, if no Event of Default or Unmatured Event of Default has
occurred and is continuing at the time of such payment and if no
Event of Default or Unmatured Event of Default would result from such
payment, the Credit Parties and their respective Subsidiaries may pay
cash dividends to shareholders on their respective capital stock (i)
in an unlimited amount with respect to
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shareholders which are Credit Parties or their respective Subsidiaries, and (ii)
not to exceed an aggregate of $250,000 in any calendar year with respect to
shareholders which are not Credit Parties or their respective Subsidiaries.
(b) LIENS. Neither the Credit Parties nor any of their respective
Subsidiaries nor any Guarantor shall create or permit to exist any mortgage,
pledge, title retention lien or other lien, encumbrance or security interest
(all of which are hereafter referred to in this subsection as a "lien" or
"liens") with respect to any property or assets now owned or hereafter acquired,
including, without limitation any of their respective rights, title and
interests in and to any Real Estate, whether leased or owned, except:
(1) liens in favor of the Bank created pursuant to the requirements of
this Agreement or otherwise;
(2) any lien or deposit with any governmental agency required or
permitted to qualify it to conduct business or exercise any privilege,
franchise or license, or to maintain self-insurance or to obtain the
benefits of or secure obligations under any law pertaining to worker's
compensation, unemployment insurance, old age pensions, social security or
similar matters, or to obtain any stay or discharge in any legal or
administrative proceedings, or any similar lien or deposit arising in the
ordinary course of business;
(3) any mechanic's, worker's, repairmen's, carrier's, warehousemen's
or other like liens arising in the ordinary course of business for amounts
not yet due and for the payment of which adequate reserves have been
established, or deposits made to obtain the release of such liens;
(4) easements, licenses, minor irregularities in title or minor
encumbrances on or over any real property which do not, in the judgment of
the Bank, materially detract from the value of such property or its
marketability or its usefulness in its business;
(5) liens for taxes and governmental charges which are not yet due or
which are being contested in good faith and by appropriate proceedings and
for which appropriate reserves have been established;
(6) liens created by or resulting from any litigation or legal
proceeding which is being contested in good faith and by appropriate
proceedings and for which appropriate reserves have been established;
(7) those liens in favor of Acquisition Sellers which secure
Acquisition Seller Debt, including those liens in favor of Existing
Acquisition Sellers which secure Acquisition Seller Debt as described on
EXHIBIT N attached hereto; PROVIDED THAT (i) the maximum aggregate amount
of Acquisition Seller Debt secured by such liens shall be $6,500,000 and
(ii) the Acquisition Seller holding any such lien is a party to (a) the
Intercreditor Agreements, or (b) other intercreditor and subordination
agreement with the Bank and the Company in substance and form the same as
the Intercreditor Agreements and in all events satisfactory to the Bank in
all respects; and
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(8) liens on property that secure only Debt incurred for
the purchase price of such property, but only to the extent such
Debt is permitted under Section 5.02(m)(iii) of this Agreement
and to the extent such Debt is not greater than the fair market
value of such property.
(c) GUARANTIES. Neither the Credit Parties nor any of their
respective Subsidiaries nor any Guarantor shall be a guarantor or
surety of, or otherwise be responsible in any manner with respect to
any undertaking of any other person or entity, whether by guaranty
agreement or by agreement to purchase any obligations, stock, assets,
goods or services, or to supply or advance any funds, assets, goods
or services, or otherwise, except for:
(1) guaranties in favor of the Bank;
(2) guaranties by endorsement of instruments for deposit
made in the ordinary course of business; and
(3) those specific existing guaranties listed on EXHIBIT O
attached hereto.
(d) LOANS OR ADVANCES. Neither the Credit Parties nor any of
their respective Subsidiaries nor any Guarantor shall make or permit
to exist any loans or advances to any other Person, except for:
(1) extensions of credit or credit accommodations to
customers or vendors made by it in the ordinary course of its
business as now conducted;
(2) reasonable salary advances to non-executive employees,
and other advances to agents and employees for anticipated
expenses to be incurred on its behalf of the course of
discharging their assigned duties;
(3) loans made to its employees in accordance with its
customary employee loan program, provided that, the amount of
each loan made to any such employee shall not exceed a principal
amount in excess of such employee's salary for two (2) pay
periods for a term not to exceed twelve (12) pay periods for
such employee;
(4) loans or advances made between the Credit Parties and
their respective Subsidiaries, provided that (i) no Event of
Default or Unmatured Event of Default exists and remains uncured
or would be caused by the making of such loan or advance, (ii)
such loans and advances shall not be evidenced by any promissory
note or be secured by any collateral, and (iii) loans and
advances by VNGI and VNGDI to the Company shall be junior and
subordinate to the Obligations pursuant to a subordination
agreement executed by VNGI and VNGDI in form and substance the
same as attached hereby as EXHIBIT P (as the same may be
amended, modified, supplemented and/or restated from time to
time and at any time, the "SUBORDINATION AGREEMENT").
(5) the specific items listed on EXHIBIT Q attached hereto.
(e) MERGERS, CONSOLIDATIONS, SALES, ACQUISITION OR FORMATION OF
SUBSIDIARIES. Neither the Credit Parties nor any of their respective
Subsidiaries nor any Guarantor shall (i) be a party
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to any consolidation or to any merger or purchase the capital stock
of or otherwise acquire any equity interest in any other business
entity other than New Acquisitions (with respect to the Company),
(ii) acquire any material part of the assets of any other business
entity other than New Acquisitions (with respect to the Company),
except in the ordinary course of business, or (iii) sell, transfer,
convey or lease all or any material part of its assets, except in the
ordinary course of business, or sell or assign with or without
recourse any receivables. VNGI shall not cause to be created or
otherwise acquire any Subsidiary other than VNGDI without the prior
written consent of the Bank. VNGDI shall not cause to be created or
otherwise acquire any Subsidiary other than the Company without the
prior written consent of the Bank. The Company shall not cause to be
created or otherwise acquire any Subsidiary without the prior written
consent of the Bank, which consent shall not be unreasonably
withheld. Without limiting the generality of the foregoing sentence,
the Company shall not consummate any New Acquisition which would
cause a new Subsidiary of the Company to exist without the prior
written consent of the Bank, and the Bank reserves the right to
require as condition of such consent that concurrently with or within
thirty (30) days following consummation of such New Acquisition: (i)
that the Company amend the Company Pledge Agreement to include a
pledge of and security interest and lien in and to all of the capital
stock of each such Subsidiary as provided in Section 4.01(f) of this
Agreement, and deliver to the Bank all of the original stock
certificates of such Subsidiary, together with executed blank stock
powers therefor; and (ii) that any such Subsidiaries become
Guarantors and execute and deliver in favor of the Bank Subsidiary
Guaranties and Subsidiary Security Agreements as provided in Section
4.01(f) of this Agreement. No Subsidiary of the Company shall cause
to be created or otherwise acquire any Subsidiary without the prior
written consent of the Bank.
(f) MARGIN STOCK. The Company shall not use or cause or permit
the proceeds of the Loans to be used, either directly or indirectly,
for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System,
as amended from time to time.
(g) OTHER AGREEMENTS. Neither the Credit Parties nor any of
their respective Subsidiaries nor any Guarantor shall enter into any
agreement containing any provision which would be violated or
breached in material respect by the performance of its obligations
under this Agreement or under any other Loan Document to which it is
a party.
(h) JUDGMENTS. Neither the Credit Parties nor any of their
respective Subsidiaries nor any Guarantor shall permit any uninsured
judgment or monetary penalty rendered against it in any judicial or
administrative proceeding to remain unsatisfied for a period in
excess of forty-five (45) days unless such judgment or penalty is
being contested in good faith by appropriate proceedings and
execution upon such judgment has been stayed, and unless an
appropriate reserve has been established with respect thereto.
(i) PRINCIPAL OFFICE. Neither the Credit Parties nor any of
their respective Subsidiaries nor any Guarantor shall change the
location of its principal office unless it gives not less than ten
(10) days prior written notice of such change to the Bank.
(j) HAZARDOUS SUBSTANCES. Neither the Credit Parties nor any of
their respective Subsidiaries nor any Guarantor shall allow or permit
to continue the release or threatened release of any Hazardous
Substance on any premises owned or occupied by or under lease to
Credit Parties nor any of their respective Subsidiaries nor any
Guarantor, except as permitted by and in accordance with that
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certain permit No. 25656 issued by the Allegheny Health Department,
State of Pennsylvania, a copy of which is attached hereto as EXHIBIT
R.
(k) LEASE OBLIGATIONS. Neither Credit Parties nor any of their
respective Subsidiaries nor any Guarantor shall incur obligations
under any Capital Leases.
(l) ADDITIONAL DEBT. Neither Credit Parties nor any of their
respective Subsidiaries nor any Guarantor shall create, incur, assume
or suffer to exist any Debt or liability on account of deposits or
advances or for borrowed money or for the deferred purchase price of
any property or services or for Capital Lease obligations, except (i)
Acquisition Seller Debt, (ii) the Obligations, (iii) Debt incurred to
finance the acquisition of property and secured only by a security
interest in the property so acquired, provided that, the amount of
all such Debt outstanding shall not exceed $1,000,000 in the
aggregate at any time, and (iv) the existing Debt for borrowed money
disclosed on EXHIBIT S attached hereto.
(m) RESTRICTIONS PARENT ASSETS. Neither VNGI nor VNGDI shall own
any assets other than cash, intercompany receivables, and Common
Stock of their respective Subsidiaries, without the prior written
consent of the Bank.
ARTICLE VI
LENDING CONDITIONS
SECTION 6.01. CONDITIONS OF LENDING. The obligation of the Bank
to make any Advance, to make the Term Loan and to issue any Letters
of Credit shall be subject to fulfillment of each of the following
conditions precedent:
(a) NO DEFAULT. No Event of Default or Unmatured Event of
Default shall have occurred and be continuing, and the
representations and warranties of the Credit Parties contained in
Section 3.01 of this Agreement shall be true and correct as of the
date of this Agreement and as of the date of each Advance, except
that after the date of this Agreement: (i) the representations
contained in subsection 3.01(d)(ii) of this Agreement will be
construed so as to refer to the latest Financial Statements furnished
to the Bank by the Credit Parties pursuant to the requirements of
this Agreement, (ii) the representations contained in subsection
3.01(k) (with respect to Hazardous Substances) will be construed so
as to apply not only to the Credit Parties, but also to their
respective Subsidiaries, (iii) the representation contained in
subsection 3.01(l) of this Agreement will be construed so as to
except any Subsidiary which may hereafter be formed or acquired by
the Credit Parties with the consent of the Bank, and (iv) all other
representations will be construed to have been amended to conform
with any changes of which the Bank shall previously have been given
notice in writing by the Credit Parties.
(b) DOCUMENTS AND OTHER ITEMS TO BE FURNISHED AT CLOSING. The
Bank shall have received contemporaneously with the execution of this
Agreement (or such later date as indicated below), the following,
each duly executed, currently dated (as applicable) and in form and
substance satisfactory to the Bank:
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(1) The Term Note, the Revolving Note, and the Company Pledge
Agreement, duly executed and delivered by the Company to
the Bank, together with the original stock certificates of
each of Doansco and Toledo Oxygen and blank stock powers
therefor duly executed and delivered by the Company to the
Bank.
(2) The Parent Guaranties, the Parent Security Agreements and
the Parent Pledge Agreements, duly executed and delivered
by VNGI and VNGDI, respectively to the Bank, together with
the original stock certificates of each of VNGDI and the
Company and blank stock powers therefor duly executed and
delivered by the Company to the Bank.
(3) The Subsidiary Guaranties and the Subsidiary Security
Agreements, duly executed and delivered by Doansco and
Toledo Oxygen, respectively to the Bank.
(4) The Subordination Agreement, duly executed and delivered to
the Bank by the Credit Parties.
(5) Within thirty (30) days after the Closing Date, a
certificate of the Secretaries of each of the Credit
Parties, Doansco and Toledo Oxygen:
(i) certifying the adoption at a duly called meeting of
its Board of Directors of the resolutions authorizing
the execution, delivery and performance, respectively,
of this Agreement and the other Loan Documents
provided for in this Agreement to which it is a party;
(ii) certifying the names of the officer or officers
authorized to sign this Agreement and the other Loan
Documents provided for in this Agreement to which it
is a party, together with a sample of the true
signature of each such officer; and
(iii) certifying as complete and correct its Articles of
Incorporation and Bylaws as then in effect (or in the
case of the Company certifying as complete and correct
all amendments or its Articles of Incorporation and
By-laws since October 4, 1996 or a certification that
no amendments have been adopted and its Articles of
Incorporation and By-laws as in effect on October 4,
1996 remain in full force and effect without change).
(6) Within thirty (30) days after the Closing Date, a copy of
the file-marked Articles of Incorporation of each of VNGI,
VNGDI, Doansco and Toledo Oxygen certified as complete and
correct by the Secretary of State of the state of its
incorporation.
(7) Within thirty (30) days after the Closing Date, a currently
dated certificate of existence of VNGI, VNGDI, Doansco, and
Toledo Oxygen issued by the
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Secretary of State of the state of its incorporation and
certificates of good standing for each other state in which
any of them engages in business.
(8) Certificates evidencing the existence of all insurance
required under the terms of this Agreement or any other
Loan Documents.
(9) Payment to the Bank of all legal fees and expenses of Xxxxx
& Xxxxxxx, special counsel to the Bank, in connection with
the negotiation, preparation and closing of this Agreement
and the other Loan Documents.
(10) Such other UCC Financing Statements, UCC searches and other
documents as the Bank may reasonably require.
(c) DOCUMENTS TO BE FURNISHED AT TIME OF EACH ADVANCE. The Bank
shall have received the following prior to making any Advance, each
duly executed and currently dated, unless waived at the Bank's
discretion as provided in subsection 2.02(b) of this Agreement:
(1) An Application for a Revolving Loan Advance.
(2) An Officer's Certificate.
(3) Such other documents as the Bank may reasonably require.
ARTICLE VII
EVENTS OF DEFAULT--ACCELERATION
SECTION 7.01. EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default under this Agreement:
(a) NONPAYMENT OF THE LOANS. Default in the payment when due of
any amount payable under the terms of either of the Notes, or
otherwise payable to the Bank or any other holder of the Notes under
the terms of this Agreement.
(b) NONPAYMENT OF OTHER DEBT. Default by any Credit Party or any
Guarantor in the payment when due, whether by acceleration or
otherwise, of any other material Debt for borrowed money, or default
in the performance or observance of any obligation or condition with
respect to any such other Debt if the effect of such default is to
accelerate the maturity of such other Debt or to permit the holder or
holders thereof, or any trustee or agent for such holders, to cause
such Debt to become due and payable prior to its scheduled maturity,
unless the Credit Party or the Guarantor is contesting the existence
of such default in good faith and by appropriate proceedings.
(c) OTHER MATERIAL OBLIGATIONS. Subject to the expiration of any
applicable grace period, default by any Credit Party or any Guarantor
in the payment when due, or in the performance or observance of any
material obligation of, or condition agreed to by any Credit Party or
any Guarantor with respect to any material purchase or lease of
goods, securities or services except only to the extent
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that the existence of any such default is being contested in good
faith and by appropriate proceedings and that appropriate reserves
have been established with respect thereto.
(d) BANKRUPTCY, INSOLVENCY, ETC. Any Credit Party or any
Guarantor admitting in writing its inability to pay its debts as they
mature or an administrative or judicial order of dissolution or
determination of insolvency being entered against any Credit Party or
any Guarantor; or any Credit Party or any Guarantor applying for,
consenting to, or acquiescing in the appointment of a trustee or
receiver for it or any of its property, or any Credit Party or any
Guarantor making a general assignment for the benefit of creditors;
or, in the absence of such application, consent or acquiescence, a
trustee or receiver being appointed for any Credit Party or any
Guarantor or for a substantial part of its property and not being
discharged within sixty (60) days; or any bankruptcy, reorganization,
debt arrangement, or other proceeding under any bankruptcy or
insolvency law, or any dissolution or liquidation proceeding being
instituted by or against any Credit Party or any Guarantor, and, if
involuntary, being consented to or acquiesced in by any Credit Party
or any Guarantor or remaining for sixty (60) days undismissed.
(e) WARRANTIES AND REPRESENTATIONS. Any warranty or
representation made by any Credit Party or any Guarantor in this
Agreement or any other Loan Document to which it is a party proving
to have been false or misleading in any material respect when made,
or any schedule, certificate, financial statement, report, notice, or
other writing furnished by any Credit Party or any Guarantor to the
Bank proving to have been false or misleading in any material respect
when made or delivered, provided that the foregoing shall not be
deemed to be an Event of Default until the Bank gives such Credit
Party or such Guarantor ten (10) days' prior written notice of same.
(f) VIOLATIONS OF NEGATIVE AND FINANCIAL COVENANTS. Failure by
the Credit Parties or any of them to comply with or perform any
covenant stated in subsection 5.01(g) or Section 5.02 of this
Agreement.
(g) NONCOMPLIANCE WITH OTHER PROVISIONS OF THIS AGREEMENT.
Failure of any Credit Party or any Guarantor to comply with or
perform any covenant or other provision of this Agreement or any
other Loan Document to which it is a party or to perform any other
Obligation (which failure does not constitute an Event of Default
under any of the preceding provisions of this Section 7.01) and
continuance of such failure for thirty (30) days after notice thereof
to such Credit Party or such Guarantor from the Bank.
(h) GUARANTY DEFAULTS. Any Guarantor shall default in the due
observance or performance of any covenant, condition or agreement on
its part to be observed or performed under the terms of its Guaranty
and continuance of such default for ten (10) days after written
notice thereof to the Guarantor by the Bank.
(i) TERMINATION OF GUARANTIES. The termination or purported
termination of any of the Guaranties.
(j) DEFAULT UNDER OTHER LOAN DOCUMENTS. The occurrence of any
"Default" or "Event of Default" as such terms are defined in any of
the Loan Documents other than this Agreement.
SECTION 7.02. EFFECT OF EVENT OF DEFAULT. If any Event of
Default described in Section 7.01 of this Agreement shall occur,
maturity of the Loans shall immediately be accelerated
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and the Notes and the Loans evidenced thereby, and all other
indebtedness and any other payment Obligations of the Company to the
Bank shall become immediately due and payable, and the obligation of
the Bank to make any Advance or issue any Letter of Credit shall
immediately terminate, all without notice of any kind. When any other
Event of Default has occurred and is continuing, the Bank or any
other holder of the Notes may accelerate payment of the Loans and
declare the Notes and all other payment Obligations due and payable,
whereupon maturity of the Loans shall be accelerated and the Notes
and the Loans evidenced thereby, and all other payment Obligations
shall become immediately due and payable and the obligation of the
Bank to make any Advance or issue any Letter of Credit shall
immediately terminate, all without notice of any kind. The Bank or
such other holder shall promptly advise the Company of any such
declaration, but failure to do so shall not impair the effect of such
declaration. The remedies of the Bank specified in this Agreement or
in any other Loan Document shall not be exclusive, and the Bank may
avail itself of any other remedies provided by law as well as any
equitable remedies available to the Bank.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. WAIVER -- AMENDMENTS. No delay on the part of the
Bank, or any holder of the Notes 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 any 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 of the provisions of this
Agreement or the other Loan Documents or otherwise of the Obligations
shall be effective unless such amendment, modification, waiver or
consent is in writing and signed by the Bank.
SECTION 8.02. NOTICES. Any notice given under or with respect to
this Agreement to any Credit Party or the Bank shall be in writing
and, if delivered by hand or sent by overnight courier service, shall
be deemed to have been given when delivered and, if mailed, shall be
deemed to have been given five (5) days after the date when sent by
registered or certified mail, postage prepaid, and addressed to such
Credit Party or the Bank (or other holder of the Notes) at its
address shown below, or at such other address as any such party may,
by written notice to the other party to this Agreement, have
designated as its address for such purpose. The addresses referred to
are as follows:
The Company: Valley National Gases, Inc.
00 00xx Xxxxxx Xxxxxxxx,
Xxxx Xxxxxxxx 00000-0000
Attention: President
VNGI: Valley National Gases Incorporated 0000 Xxxxxxxxx
Xxxxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Attention:
President
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VNGDI: Valley National Gases Delaware, Inc.
0000 Xxxxx XxXxxx Xxxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: President
The Bank: Bank One, Indiana, XX
Xxxx Xxx Xxxxxx/Xxxxx - Xxxxx 0000 lll Monument
Circle X.X. Xxx 0000 Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Manager, Regional Department A
SECTION 8.03. COSTS, EXPENSES AND TAXES. The Company agrees to pay
(without duplication), all of the following fees, costs and expenses
incurred by the Bank: (i) all reasonable costs and expenses in connection
with the negotiation, preparation, printing, typing, reproduction,
execution and delivery of the Loan Documents and any and all other
documents furnished pursuant hereto or in connection herewith, and all
investigation of and due diligence regarding the Company and the security
for the Obligations undertaken and performed with respect thereto,
including without limitation the reasonable fees and out-of-pocket
expenses of Messrs. Xxxxx & Xxxxxxx, special counsel to the Bank (or, but
not as well as the reasonable allocated costs of staff counsel) as well as
the fees and out-of-pocket expenses of counsel, independent public
accountants and other outside experts retained by the Bank, and in
connection with the foregoing and the administration of this Agreement,
(ii) all reasonable costs and expenses in connection with the negotiation,
preparation, printing, typing, reproduction, execution and delivery of any
amendments or modifications of (or supplements to) any of the foregoing
and any and all other documents furnished pursuant thereto or in
connection therewith, and all investigation of and due diligence regarding
the Company and the security for the Obligations undertaken and performed
with respect thereto, including without limitation the reasonable fees and
out-of-pocket expenses of counsel retained by the Bank relative thereto
(or, but not as well as the reasonable allocated costs of staff counsel)
as well as the fees and out-of-pocket expenses of counsel, independent
public accountants and other outside experts retained by the Bank, and in
connection with the foregoing and the administration of this Agreement,
(iii) all search fees, appraisal fees and expenses, title insurance policy
fees, costs and expenses and filing and recording fees and taxes and, (iv)
all costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses of the Bank), if any, in connection with the
enforcement of this Agreement, any Note and/or any other Loan Documents or
other agreement furnished pursuant hereto or thereto or in connection
herewith or therewith. In addition, the Company shall pay any and all
stamp, transfer and other similar taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement,
or any of the other Loan Documents or the issuance of any Note or the
making of any of the Loans, and agrees to save and hold the Bank harmless
from and against any and all liabilities with respect to or resulting from
any delay in paying, or omission to pay, such taxes. Any portion of the
foregoing fees, costs and expenses which remains unpaid following the
Bank's statement and request for payment thereof shall bear interest from
the date of such statement and request to the date of payment at a per
annum rate equal to the Prime Rate plus Two Percent (2%).
SECTION 8.04. SEVERABILITY. If any provision of this Agreement or any
other Loan Document is determined to be illegal or unenforceable, such
provision shall be deemed to be severable
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from the balance of the provisions of this Agreement or such Document and
the remaining provisions shall be enforceable in accordance with their
terms.
SECTION 8.05. CAPTIONS. Section captions used in this Agreement are
for convenience only and shall not affect the construction of this
Agreement.
SECTION 8.06. GOVERNING LAW/VENUE. Except as may otherwise be
expressly provided in any other Loan Document, this Agreement and all
other Loan Documents are made under and will be governed in all cases by
the substantive laws of the State of Indiana, notwithstanding the fact
that Indiana conflicts of law rules might otherwise require the
substantive rules of law of another jurisdiction to apply. EACH CREDIT
PARTY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON THE COMPANY AND
AGREES THAT ALL SERVICE OF PROCESS MAY BE MADE BY MESSENGER, BY CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, OR BY REGISTERED MAIL DIRECTED TO SUCH
CREDIT PARTY AT THE ADDRESS STATED IN SECTION 8.02 OF THIS AGREEMENT.
NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF THE BANK TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 8.07. PRIOR AGREEMENTS, ETC. This Agreement supersedes all
previous agreements and commitments made by the Bank and the Credit
Parties with respect to the Loans and all other subjects of this
Agreement, including, without limitation, any oral or written proposals or
commitments made or issued by the Bank.
SECTION 8.08. SUCCESSORS AND ASSIGNS. This Agreement and the other
Loan Documents shall be binding upon and shall inure to the benefit of the
Credit Parties and the Bank and their respective successors and assigns,
provided that the Credit Parties' rights under this Agreement shall not be
assignable without the prior written consent of the Bank.
SECTION 8.09. WAIVER OF JURY TRIAL. THE CREDIT PARTIES AND THE BANK
HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE CREDIT PARTIES AND
THE BANK ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK
TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.
SECTION 8.10. ARBITRATION. The Bank and the Credit Parties agree that
upon the written demand of either party, whether made before or after the
institution of any legal proceedings, but prior to the rendering of any
judgment in that proceeding, all disputes, claims and controversies
between them, whether individual, joint, or class in nature, arising from
this Agreement, any other Loan Document or otherwise, including without
limitation contract disputes and tort claims, shall be resolved by binding
arbitration pursuant to the Commercial Rules of the American Arbitration
Association. Any arbitration proceeding held pursuant to this arbitration
provision shall be conducted in the city nearest the Company's address
having an AAA regional office, or at any other place selected by mutual
agreement of the parties. No act to take or dispose of any collateral
shall constitute a waiver of this arbitration agreement or be prohibited
by this arbitration agreement. This arbitration provision shall not
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limit the right of either party during any dispute, claim or controversy
to seek, use, and employ ancillary, or preliminary rights and/or remedies,
judicial or otherwise, for the purposes of realizing upon, preserving,
protecting, foreclosing upon or proceeding under forcible entry and
detainer for possession of, any real or personal property, and any such
action shall not be deemed an election of remedies. Such remedies include,
without limitation, obtaining injunctive relief or a temporary restraining
order, invoking a power of sale under any deed of trust or mortgage,
obtaining a writ of attachment or imposition of a receivership, or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to
Article 9 of the Uniform Commercial Code or when applicable, a judgment by
confession of judgment. Any disputes, claims or controversies concerning
the lawfulness or reasonableness of an act, or exercise of any right or
remedy concerning any collateral, including any claim to rescind, reform,
or otherwise modify any agreement relating to the collateral, shall also
be arbitrated; provided, however that no arbitrator shall have the right
or the power to enjoin or restrain any act of either party. Judgment upon
any award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this arbitration provision shall preclude either
party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches and
similar doctrines which would otherwise be applicable in an action brought
by a party shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the commencement
of any action for these purposes. The Federal Arbitration Act (Title 9 of
the United States Code) shall apply to the construction, interpretation,
and enforcement of this arbitration provision.
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IN WITNESS WHEREOF, the Bank and the Company have by their duly
authorized officers executed this Agreement on the date first set forth
above.
VALLEY NATIONAL GASES, INC.,
a West Virginia corporation
By: /s/ XXXXXXXX X. XXXXX
---------------------------
Printed: Xxxxxxxx X. Xxxxx
-----------------------
Title: President
-------------------------
(the "Company")
VALLEY NATIONAL GASES INCORPORATED
a Pennsylvania corporation
By: /s/ XXXXXXXX X. XXXXX
---------------------------
Printed: Xxxxxxxx X. Xxxxx
-----------------------
Title: President
-------------------------
("VNGI")
VALLEY NATIONAL GASES DELAWARE, INC.
a Delaware corporation
By: /s/ XXXXXXXX X. XXXXX
---------------------------
Printed: Xxxxxxxx X. Xxxxx
-----------------------
Title: President
-------------------------
("VNGDI")
BANK ONE, INDIANA, NA
By: /s/ XXXXXX XXXXXXX
----------------------------
Printed: Xxxxxx Xxxxxxx
-----------------------
Title: Assistant Vice-President
-------------------------
(the "Bank")
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