THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into
as of November 3, 1999, among CHI ENERGY, INC., a Delaware corporation having
its chief executive office and principal place of business at 000 Xxxxxxxxxx
Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (the "Borrower"), each of the financial
institutions identified as Lenders on Schedule 1 hereto (together with each of
their respective successors and assigns, each, a "Lender," and collectively, the
"Lenders"), and XXXXXX UNITED BANK, a bank organized under the laws of the State
of New Jersey, acting in the manner and to the extent described in Article X (in
such capacity, the "Agent").
W I T N E S S E T H :
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WHEREAS, the Borrower and Lyon Credit Corporation, as predecessor in
interest to Xxxxxx United Bank, entered into a Loan and Security Agreement dated
as of March 31, 1998 (as heretofore amended, supplemented or otherwise modified,
the "Original Loan Agreement");
WHEREAS, the Borrower has requested Xxxxxx United Bank to amend and
restate the terms and conditions of the Original Loan Agreement to, among other
things, increase the amount and extend the term of the credit facility and to
provide that Xxxxxx United Bank act as agent for itself and other lenders under
such increased and extended facility, and Xxxxxx United Bank has agreed to amend
and restate the Original Loan Agreement upon the terms and subject to the
conditions herein set forth; and
WHEREAS, upon the terms and subject to the conditions set forth
herein, (a) the Lenders are willing to (i) make revolving credit loans to the
Borrower and (ii) purchase participations in letters of credit caused to be
issued by the Agent for the account of the Borrower and certain of its
Subsidiaries and (b) the Agent is willing to cause to be issued letters of
credit for the account of the Borrower and certain of its Subsidiaries;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings and the terms and conditions contained herein, the Borrower, the
Lenders and the Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
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SECTION I.1. General Definitions. As used herein, the following terms
shall have the meanings herein specified (to be equally applicable to both the
singular and plural forms of the terms defined):
"Affiliate" means, as to any Person, any other Person who directly or
indirectly controls, is under common control with, is controlled by or is a
director or officer of such Person. As used in this definition, "control"
(including its correlative meanings, "controlled by" and "under common control
with") means possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of voting
securities or partnership or other ownership interests, by contract or
otherwise).
"Agent" has the meaning specified in the introductory paragraph.
"Agreement" means this Amended and Restated Loan and Security
Agreement, as amended, supplemented or otherwise modified from time to time.
"Annual Term Loan Amortization" means, for any consecutive four
calendar quarter period, (i) the Projected Adjusted Consolidated Unrestricted
Cash Flow for such consecutive four calendar quarter period divided by (ii) the
aggregate Projected Adjusted Consolidated Unrestricted Cash Flow for the period
commencing on the Availability Expiration Date and ending on the Term Loan
Maturity Date, as determined from the final Projected Cash Flow Statement
delivered by the Borrower prior to the Availability Expiration Date multiplied
by (iii) the outstanding principal amount of the Term Loans on the Availability
Expiration Date.
"Auditors" means PricewaterhouseCoopers LLP, another "Big Five" firm
of independent public accountants, or another nationally-recognized firm of
independent public accountants selected by the Borrower and satisfactory to the
Agent in its reasonable discretion.
"Availability Expiration Date" means the earlier of (i) the Initial
Availability Expiration Date, as such date may be extended from time to time
under Section 2.4, and (ii) the date of termination of the Lenders' obligation
to make Revolving
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Credit Loans or of the Agent to use its best efforts to cause Letters of Credit
to be issued pursuant to the terms hereof.
"Base Rate" means the prime, base or equivalent rate of interest
announced from time to time by The Chase Manhattan Bank in New York City (which
may not be the lowest rate of interest charged by such bank).
"Blocked Account" means the account maintained with the Blocked
Account Bank, account number 00000000, which is the bank account established for
the benefit of the Agent under the Blocked Account Agreement.
"Blocked Account Agreement" means the amended and restated blocked
account agreement among the Agent, CHI Finance and the Blocked Account Bank,
substantially in the form of Exhibit F hereto, as amended, supplemented or
otherwise modified from time to time.
"Blocked Account Bank" means BankBoston, N.A. or any successor bank
acceptable to the Agent.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York, New York are required or permitted by law
to close.
"Business Plan" means a business plan for the Borrower and its
Subsidiaries, as updated from time to time under Section 7.1(k)(vi), in form and
substance satisfactory to the Required Lenders, consisting of a projected
balance sheet, a related cash flow statement and a profit and loss statement,
together with appropriate supporting details, a statement of the underlying
assumptions (which shall be fair in the context of the conditions existing at
the time of delivery of, and projected for the period covered by, such Business
Plan) and the calculation of the Projected Adjusted Consolidated Cash Flow for
all periods covered thereby (which calculation shall be prepared in good faith,
on the basis of such assumptions and in accordance with Exhibit P), and which is
prepared to show quarterly financial information for the first year and annual
financial information for each year thereafter.
"Capital Expenditures" means expenditures (or commitments to make
expenditures that are required to be recorded as capital expenditures in
accordance with GAAP) for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful life of
more than one year, and shall include all such commitments and payments in
respect of expenditures for any fixed assets or improvements, replacements,
substitutions or additions of or to Facilities covered by Capitalized Lease
Obligations, operating leases and leasehold improvements.
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"Capitalized Lease Obligations" means any rental obligation which,
under GAAP, is or will be required to be capitalized on the books of the lessee,
taken at the amount thereof accounted for as indebtedness (net of interest
expense) in accordance with GAAP.
"Cash Equivalents" means (i) securities issued, guaranteed or insured
by the United States or any of its agencies with maturities of not more than six
months from the date acquired; (ii) certificates of deposit with maturities of
not more than six months from the date acquired, issued by a U.S. federal or
state chartered commercial bank of recognized standing, which has capital and
unimpaired surplus in excess of $500,000,000 and which bank or its holding
company has a short-term commercial paper rating of at least A-2 or the
equivalent by Standard & Poor's Corporation or at least P-2 or the equivalent by
Xxxxx'x Investors Service, Inc.; (iii) repurchase agreements and reverse
repurchase agreements with terms of not more than seven days from the date
acquired, for securities of the type described in clause (i) above and entered
into only with commercial banks having the qualifications described in clause
(ii) above; and (iv) commercial paper, other than commercial paper issued by the
Borrower or any of its Affiliates, issued by any Person incorporated under the
laws of the United States or any state thereof and rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Xxxxx'x Investors Service, Inc., in each case with
maturities of not more than six months from the date acquired.
"Change of Control" means one or more of the following events:
(a) the shareholders of the Borrower shall approve any plan or
proposal for the liquidation or dissolution of the Borrower;
(b) the shareholders of the Borrower shall approve any plan or
proposal for a merger or consolidation to which the Borrower is a
party and as a result of which either
(i) the Tangible Net Worth of the survivor or successor
entity is less than that required under Section 8.1, or
(ii) the shareholders of the Borrower, as a group, as
constituted immediately before the merger or consolidation, cease to
own a sufficient
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amount of the voting stock of the Borrower with rights to elect a
majority of the members of the Borrower's board of directors, except
as the result of a public offering of the Borrower's capital stock;
or
(c) any of the Persons serving as the chairman, the chief
executive officer, the president, the controller or the chief
accounting officer of the Borrower on the Closing Date shall cease to
remain in such office and shall not be replaced temporarily or
permanently within sixty days by a Person reasonably acceptable to
the Agent, provided that (i) the Agent shall have fifteen days from
the date the Agent receives notification of such proposed replacement
officer to give or decline its consent (which consent shall not be
unreasonably withheld) and (ii) if the Agent timely gives notice that
it does not consent to a proposed replacement officer within such
sixty-day period, the Borrower shall have an additional 120 days to
propose another replacement officer.
"CHI Finance" means CHI Finance, Inc., a Delaware corporation.
"Closing Date" means the date of execution and delivery of this
Agreement.
"Code" has the meaning specified in Section 1.3.
"Collateral" means the Receivables of the Borrower (other than
Restricted Receivables), the Inventory, the Equipment, the collateral pledged
under the Pledge Agreement, all proceeds thereof and all other property
identified as security for the Obligations under the Loan Documents.
"Collections" means (i) all cash, funds, checks, notes, instruments
and any other form of remittance tendered by account debtors in payment of
Receivables of the Borrower and its Subsidiaries, other than Restricted
Receivables and (ii) all other proceeds of Collateral.
"Confidential Information" means information that the Borrower or any
of its Affiliates furnishes to the Agent or any Lender that is designated by the
Borrower or such Affiliate as being confidential, but does not include any such
information that is or becomes generally available to the public or that is or
becomes available to the Agent or such Lender from a source other than the
Borrower or such Affiliate which is not known at such time by the Agent or such
Lender, as the case may be, to be subject to a confidentiality restriction.
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"Contingent Obligation" means any direct, indirect, contingent or
non-contingent guaranty or obligation for the Indebtedness of another, except
endorsements in the ordinary course of business.
"Contribution Agreement" means the amended and restated contribution,
subrogation and indemnity agreement among the Pledgors (other than the
Borrower), substantially in the form of Exhibit H hereto, as amended,
supplemented or otherwise modified from time to time.
"Default" means any of the events specified in Section 9.1, whether
or not any of the requirements for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Defaulting Lender" has the meaning specified in Section 2.9.
"Depository Account Agreement" means the amended and restated
depository account agreement among the Agent, the Borrower, CHI Finance and the
Depository Account Bank, substantially in the form of Exhibit G hereto, as
amended, supplemented or otherwise modified from time to time.
"Depository Account Bank" means BankBoston or any successor bank
acceptable to the Lender.
"Depository Accounts" means the accounts maintained with the
Depository Bank, account numbers 223-91453 and 224-00347, which are the bank
accounts of the Borrower and CHI Finance, respectively, established under the
Depository Account Agreement.
"Designated Subsidiary" means (i) each of the Subsidiaries of the
Borrower indicated as such on Schedule 6.1(g) and (ii) each other Subsidiary
(other than Excluded Future Subsidiaries) of the Borrower, whether now existing
or hereafter organized, the loss of whose business, operations, assets or income
could reasonably be expected to have a Material Adverse Effect.
"Dollars" and the sign "$" mean freely transferable lawful currency
of the United States.
"Electric Utility" means a public utility, an electric utility or an
electric utility holding company or a Subsidiary of any thereof or an Affiliate
of an electric utility holding company, as those terms are used in PUHCA, PURPA,
the rules or regulations implementing PUHCA or PURPA or under any other
Requirement of Law.
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"Environmental Laws" means all federal, state and local statutes,
laws (including, without limitation, common or case law), rulings, regulations
or governmental, administrative or judicial policies, directives, orders or
interpretations applicable to the business or property of the Borrower relating
to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata) including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act and all other laws and regulations relating to emissions,
discharges, releases or threatened releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of any Hazardous Materials.
"Equipment" means all items of machinery, equipment, furniture,
fixtures, conveyors, tools, materials, storage and handling equipment, hydraulic
presses, cutting equipment, computer equipment and hardware, including, without
limitation, central processing units, terminals, drives, memory units, printers,
keyboards, screens, peripherals and input or output devices, molds, dies, stamps
and other equipment of every kind and nature and wherever situated now or
hereafter owned by the Borrower or in which the Borrower may have any interest
as lessee or otherwise (but not including any equitable interest held by the
Borrower directly or indirectly in any Subsidiary), together with all additions
and accessions thereto, all replacements and all accessories and parts therefor,
all manuals, blueprints, know-how, warranties and records in connection
therewith, all rights against suppliers, warrantors, manufacturers, sellers or
others in connection therewith, and together with all substitutes for any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, 29
U.S.C. "" 1000 et seq., amendments thereto, successor statutes and regulations
or guidelines promulgated thereunder.
"ERISA Affiliate" means any entity required to be aggregated with the
Borrower under Section 414(b), (c), (m) or (o) of the Internal Revenue Code.
"Event of Default" means the occurrence of any of the events
specified in Section 9.1.
"Excluded Existing Subsidiary" means a Subsidiary of the Borrower
which, as of the Closing Date, (i) has no ongoing business operations and (ii)
has a net worth of less than $5,000.
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"Excluded Future Subsidiaries" means any Subsidiary formed or
acquired, directly or indirectly, by the Borrower after the Closing Date that
(i) has acquired or developed a Facility, a majority of the purchase price or
investment cost of which is paid with the proceeds of Permitted Indebtedness or
equity capital contributed by a Person that is not an Affiliate of the Borrower,
or by Persons who are shareholders or directors of the Borrower as of the
Closing Date, after the Closing Date and (ii) does not have a negative projected
cash flow for any fiscal year based on the criteria specified in the definition
of Projected Adjusted Consolidated Cash Flow, as applied to such Subsidiary.
"Existing Indebtedness" means the Indebtedness of the Borrower
existing on the Closing Date as specified in Schedule 7.2(a).
"Facility" means a power plant, industrial infrastructure asset,
hydroelectric generating plant or other alternative energy plant and related
facilities including, without limitation, landfill gas facilities owned or
leased (whether existing or under construction) by the Borrower or any of its
Subsidiaries, in each case with related rights under power purchase contracts,
sales and service agreements, leases, easements, permits and similar contractual
rights.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by it.
"Federal Reserve Board" has the meaning specified in Section 6.1(q).
"FERC" means the Federal Energy Regulatory Commission and any Person
succeeding to the functions thereof.
"Financial Covenants" means those covenants set forth in Article
VIII.
"Financial Statements" means the consolidated balance sheets and
statements of cash flow (including detail as to capital expenditures made for
(i) Facilities existing on the Closing Date and (ii) other acquisition or
development
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expenditures), profits and losses and shareholders' equity of the Borrower and
its Subsidiaries for the period specified, prepared in accordance with GAAP and
consistently with prior practices.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination. Whenever any accounting
term is used herein which is not otherwise defined, it shall be interpreted in
accordance with GAAP.
"Governing Documents" means the certificate of incorporation and
by-laws, partnership or limited liability company operating agreement, or other
organizational or governing documents of the Borrower or any of its
Subsidiaries.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions thereof or
pertaining thereto.
"Guaranty" means the amended and restated guaranty made by each
Pledgor (other than the Borrower) in favor of the Agent for the ratable benefit
of the Lenders, substantially in the form of Exhibit D hereto, as amended,
supplemented or otherwise modified from time to time.
"Hazardous Materials" means any and all pollutants and contaminants
and any and all toxic, caustic, radioactive or hazardous materials, substances
or wastes that are regulated under any Environmental Laws.
"HUB" means Xxxxxx United Bank, a bank organized under the laws of
the State of New Jersey, in its individual capacity.
"Indebtedness" means as of the date of determination thereof (without
duplication), (i) all obligations of a Person to borrow money or for borrowed
money of any kind or nature, including, without limitation, funded and unfunded
debt, and obligations in respect of currency and interest rate hedging or swap
agreements or arrangements therefor, regardless of whether the same is evidenced
by any note, debenture, bond or other instrument, (ii) all obligations of a
Person to pay the deferred purchase price of property or services (other than
current trade accounts payable under normal trade terms and which arise in the
ordinary course of business and are not delinquent), (iii) all obligations of a
Person to acquire or for the acquisition or use of any fixed asset, including,
without limitation, Capitalized
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Lease Obligations, or improvements which are payable over a period longer than
one year, regardless of the term thereof or the Person or Persons to whom the
same are payable, (iv) the then outstanding amount of withdrawal or termination
liability incurred under ERISA, (v) all Indebtedness of others secured by a Lien
on any asset of a Person whether or not the Indebtedness is assumed by such
Person, (vi) all Indebtedness of others to the extent guaranteed by a Person and
(vii) all obligations of a Person in respect of letters of credit, bankers
acceptances or similar instruments issued or accepted by banks or other
financial institutions for the account of such Person.
"Initial Availability Expiration Date" means December 31, 2001.
"Insolvency Event" means, with respect to any Person, the occurrence
of any of the following: (a) such Person shall be adjudicated insolvent or
bankrupt, or shall generally fail to pay or admit in writing its current
inability to pay its debts as they become due, (b) such Person shall seek
dissolution or reorganization or the appointment of a receiver, trustee,
custodian or liquidator for it or a substantial portion of its property, assets
or business or to effect a plan or other arrangement with its creditors, (c)
such Person shall make a general assignment for the benefit of its creditors, or
consent to or acquiesce in the appointment of a receiver, trustee, custodian or
liquidator for a substantial portion of its property, assets or business, (d)
such Person shall file a voluntary petition under any bankruptcy, insolvency or
similar law, or (e) such Person, or a substantial portion of its property,
assets or business shall become the subject of (i) an involuntary proceeding or
petition for its liquidation, dissolution or reorganization, or (ii) the
appointment of a receiver, trustee, custodian or liquidator.
"Intercompany Note" means the subordinated promissory note dated June
23, 1993 in the original principal amount of $176,572,853.53 by the Borrower in
favor of CHI Finance, as amended, supplemented or otherwise modified from time
to time.
"Interest Reserve" means, as of any date during the period August 1
through December 31 of each year, an amount equal to (i) the amount of interest,
calculated at the Base Rate then in effect plus 1.50%, that would accrue during
such period on an outstanding amount of Revolving Credit Loans assumed at all
times during such period to be equal to (a) the Maximum Amount of the Facility
less (b) the aggregate amount of all outstanding Letters of Credit less (ii) the
amount on deposit in the Blocked Account on such date.
"Internal Revenue Code" means the Internal Revenue Code
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of 1986, as amended, any successor statute and any regulations or guidelines
promulgated thereunder.
"Internal Revenue Service" or "IRS" means the United States Internal
Revenue Service and any successor agency.
"Inventory" means all present and future goods intended for sale,
lease or other disposition by the Borrower, including, without limitation, all
raw materials, work in process, finished goods, goods in the possession of
outside processors or other third parties, goods consigned to the Borrower to
the extent of its interest therein as consignee, materials and supplies of any
kind, nature or description which are or might be used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of any such
goods, all documents of title or documents representing the same and all
records, files and writings with respect thereto.
"Investment" in any Person means, as of the date of determination
thereof, the amount paid or committed to be paid or the value of property
contributed or committed to be contributed by the Person making the Investment
on its account for or in connection with its acquisition of (i) any stock,
bonds, notes, debentures, limited liability company, partnership or other equity
or ownership interest, or right to acquire or participate in profits or gains
accruing with respect to any thereof, or any other security of the Person in
whom such Investment is made or (ii) any Indebtedness by reason of a loan,
advance, extension of credit, guaranty or other similar obligation of any debt,
liability or indebtedness of such Person in whom the Investment is made. In
determining the aggregate amount of Investments outstanding at any particular
time, (i) a guaranty shall be valued at not less than the principal amount
outstanding; (ii) returns of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution) shall
be deducted; (iii) earnings, whether as dividends, interest or otherwise, shall
not be deducted; and (iv) decreases in the market value shall not be deducted
unless such decreases are computed in accordance with GAAP.
"L/C Cash Collateral Account" means the interest-bearing cash
collateral account established by the Borrower with the Blocked Account Bank at
its office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Account No.
00-000-00000, in the name of the Borrower but under the sole dominion and
control of the Agent and subject to the terms of this Agreement.
"Letter of Credit Agreement" means the collective reference to any
and all agreements from time to time entered into by the Agent and a bank or
financial institution (each, an "issuing bank") pursuant to which the Agent
causes such issuing
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bank to issue Letters of Credit for the account or benefit of the Borrower or
any of its Affiliates.
"Letters of Credit" means all letters of credit issued under Section
2.11(a) hereof or under the Original Loan Agreement for the account or benefit
of the Borrower or any of its Affiliates.
"Liabilities" of a Person as of the date of determination thereof
means the liabilities of such Person on such date as determined in accordance
with GAAP. Liabilities to Affiliates shall be treated as Liabilities except
where eliminated by consolidation in financial statements prepared in accordance
with GAAP or as otherwise provided herein.
"Lien" means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title or other encumbrance or preferential arrangement having
substantially the same economic effect as any of the foregoing, whether
voluntary or imposed by law.
"Loan Documents" means this Agreement and all documents and
instruments delivered or to be delivered by the Borrower or any Affiliate under
or in connection with this Agreement or the or the Letters of Credit issued
under the Original Loan Agreement as each of the same may be amended,
supplemented or otherwise modified from time to time, including, without
limitation, the Notes, the Pledge Agreement, the Subordination Agreement, the
Support Letter, the Blocked Account Agreement, the Depository Account Agreement
and the Letter of Credit Agreement.
"Loans" means the Revolving Credit Loans and the Term Loans.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature, whether singly or in conjunction
with any one or more other events, acts, conditions or occurrences, whether or
not related, (i) a material and adverse effect on the business, operations,
results of operations, assets, liabilities or condition (financial or otherwise)
of the Borrower individually, or the Borrower and its Subsidiaries in the
aggregate, (ii) the Projected Unrestricted Adjusted Consolidated Cash Flow of
the Borrower (including, for these purposes only, amounts available in the
Depository Accounts and the Blocked Account) would be insufficient to repay, in
accordance with their terms, the outstanding Loans and the reimbursement or cash
collateralization obligations of the Borrower with respect to the Letters of
Credit (which, for purposes hereof, (a) before the Availability Expiration Date,
shall be deemed to be in an amount equal to the Maximum Amount of
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the Facility and (b) thereafter, shall be the total of (I) the actual
outstanding amount of the Term Loans, (II) the actual aggregate amount of
outstanding Letters of Credit and (III) the drawn but unreimbursed amounts of
Letters of Credit that have not been funded by the Lenders under Section 2.11(f)
less all amounts then on deposit in the L/C Cash Collateral Account or otherwise
held by the Agent as cash collateral for the Letters of Credit), (iii) a
material impairment of the Borrower's ability to perform its obligations under
the Loan Documents to which it is a party including, without limitation, as a
result of any drawing or payment under a Letter of Credit with respect to which
cash collateral has not been deposited in the L/C Cash Collateral Account for
the full amount thereof, or of the Agent to enforce the Obligations or realize
upon the Collateral or (iv) a material and adverse effect on the value of the
Collateral or the amount which the Agent would be likely to receive (after
giving consideration to delays in payment and costs of enforcement) in the
liquidation of the Collateral, provided that, for purposes of clause (iv)
hereof, a material and adverse effect shall be determined after giving
consideration to, among other things, the amount of Loans and Letters of Credit
outstanding hereunder at the time of determination.
"Material Contract" means the contracts specified in Schedule 6.1(ae)
or any other contract or agreement including, without limitation, any contract
relating to the operation of a Facility or any related power supply contract or
disbursement agreement to which the Borrower or any of its Subsidiaries is a
party (other than the Loan Documents) for which breach, nonperformance,
cancellation or failure to renew could have a Material Adverse Effect.
"Maximum Amount of the Facility" means Thirty-Five Million Dollars
($35,000,000) less the amount of any reduction of the Lenders' commitments under
Section 2.1(d).
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate has
contributed within the past six years or with respect to which the Borrower or
any ERISA Affiliate may incur any liability.
"Non-Recourse Debt" means Indebtedness (including refinancings
thereof) of the Borrower or any of its Affiliates that is incurred solely to
finance or acquire a Facility or group of Facilities, or any interest therein,
so long as (i) such Indebtedness is without recourse to (a) the Borrower or such
Affiliate other than any single-purpose entity whose existence is solely related
to such Facility or group of Facilities, or (b) any assets of the Borrower or
such Affiliate other than (I) any such Facility or group of Facilities, (II) the
income
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from and proceeds of any such Facility or group of Facilities or (III) the
capital stock or other equity interests of the Affiliates that own the Facility
or group of Facilities and (ii) neither the Borrower nor any Subsidiary of the
Borrower has any actual or contingent recourse obligation to or for the benefit
of the obligor under such Indebtedness which, directly or indirectly, supports
the repayment of such Indebtedness.
"Notes" means the Revolving Credit Notes and the Term Notes.
"Notice of Borrowing" has the meaning specified in Section 2.2.
"Obligations" means all loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Agent or any of
the Lenders of any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, which may arise under, out of, or in
connection with, this Agreement, the Notes, the other Loan Documents or any
other agreement executed in connection herewith or therewith, whether or not for
the payment of money, whether arising by reason of an extension of credit,
opening, guaranteeing or confirming of a letter of credit (including, but not
limited to, the Letters of Credit), loan, guaranty, indemnification or in any
other manner, whether direct or indirect (including, without limitation, those
acquired by assignment, purchase, discount or otherwise), whether absolute or
contingent, due or to become due, now due or hereafter arising and however
acquired. The term includes, without limitation, all interest (including
interest accruing on or after an Insolvency Event, whether or not an allowed
claim), charges, expenses, commitment, facility, closing, collateral management,
letter of credit or other fees, attorneys' fees, and any other sum properly
chargeable to the Borrower under this Agreement, the Notes, the other Loan
Documents or any other agreement executed in connection herewith or therewith.
"Original Loan Agreement" has the meaning specified in the first
Recital.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA (other than a Multiemployer Plan) which the
Borrower or any ERISA Affiliate sponsors or maintains, or to which it makes, is
making or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time within the immediately preceding five plan years.
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"Permitted Indebtedness" means (without duplication) (i) the
Obligations, (ii) Existing Indebtedness, (iii) Indebtedness of the Borrower and
its Subsidiaries created in the ordinary course of business in an aggregate
amount not exceeding $250,000 at any time, (iv) Indebtedness of the Borrower to
any of its Subsidiaries and of any of its Subsidiaries to the Borrower or
another Subsidiary of the Borrower which, in the case of Indebtedness owed by
(A) the Borrower or (B) a Subsidiary of the Borrower to another Subsidiary of
the Borrower that is not a Pledged Subsidiary, has been subordinated to the
Obligations (or the guaranty thereof) on terms and under documents in form and
substance satisfactory to the Agent, (v) Indebtedness incurred to refinance
Indebtedness outstanding on the Closing Date (with no capitalized interest or
increased principal), provided that the terms and conditions are, in the
reasonable opinion of the Agent, no less favorable to the Borrower or any
Subsidiary of the Borrower than those of the Indebtedness being refinanced, (vi)
Indebtedness constituting leases permitted by Sections 7.2(r) and (s), (vii)
Non-Recourse Debt incurred in connection with Permitted Investments, (viii)
Contingent Obligations (other than guaranties by the Borrower of Indebtedness
permitted under clause (ix) hereof) to the extent permitted under Section
7.2(b), (ix) Indebtedness and Contingent Obligations of an Excluded Future
Subsidiary and (x) to the extent they constitute Indebtedness, obligations to
match employee contributions under a Plan established under Section 401(k) of
ERISA (or any similar Plan), so long as such obligation is not deferred past the
date when due under applicable law or regulation.
"Permitted Investments" means (i) Investments made in Affiliates of
the Borrower before the Closing Date, (ii) Investments in Affiliates of the
Borrower with the proceeds of any offering of capital stock of the Borrower,
(iii) Investments in Affiliates of the Borrower in the form of loans or advances
from the Borrower representing capitalized labor costs for services performed by
the Borrower to such Affiliates in the ordinary course of business, (iv)
Investments made solely with the proceeds of Non-Recourse Debt and any
refinancings thereof that constitute Non-Recourse Debt, or partly with the
proceeds of Non-Recourse Debt if the balance of such Investments is comprised
entirely of other Permitted Investments, (v) Investments consisting of cash in
wholly-owned Subsidiaries of the Borrower after the Closing Date not to exceed
$500,000 in the aggregate outstanding at any time (not including in such amount
Investments permitted under the other clauses hereof), (vi) Investments in
Pledged Subsidiaries or Excluded Future Subsidiaries which are consistent with
the Business Plan and any update to the Business Plan delivered under Section
7.1(k)
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(vi) approved by the Required Lenders, (vii) Investments specified in Schedule
7.2(k), (vii) Investments of the adjusted consolidated net income as reported by
the Borrower for the year ended December 31, 1998, to the extent that it exceeds
that which was projected under the Business Plan delivered on the Closing Date,
(ix) Investments specified in the Business Plan delivered on the Closing Date or
in any update to the Business Plan delivered under Section 7.1(k)(vi) approved
by the Required Lenders and (x) Investments by Subsidiaries and Affiliates of
the Borrower of cash in accounts subject to restrictions under the terms of (A)
instruments of Permitted Indebtedness, (B) the Governing Documents of such
Affiliates or (C) contracts for the sale of electric power.
"Permitted Liens" means (i) Liens for taxes, assessments and other
governmental charges not due and payable or which can be paid without penalty or
in installments, or which are currently being contested in good faith by
appropriate proceedings, provided that the Borrower shall have set aside on its
books adequate reserves in accordance with GAAP with respect to any such tax,
assessment or other governmental charge so being contested, (ii) workmen's,
repairmen's, mechanics', materialmen's, warehousemen's and carriers' Liens and
other similar Liens arising in the ordinary course of business for charges not
delinquent for more than sixty days or which are currently being contested in
good faith by appropriate proceedings, provided that the Borrower shall have set
aside on its books adequate reserves in accordance with GAAP with respect to
such Liens so being contested, (iii) Liens in respect of judgments or awards
with respect to which the Borrower shall in good faith currently be prosecuting
an appeal or proceedings for review and with respect to which the Borrower shall
have secured a stay of execution pending such appeal or proceedings for review,
provided that the Borrower shall have set aside on its books adequate reserves
in accordance with GAAP with respect to any such judgments or awards, (iv) other
Liens incurred in the ordinary course of the Borrower's business or incidental
to the ownership of its property and assets which were not incurred in
connection with Indebtedness for borrowed money and which do not, either
individually or in the aggregate, materially detract from the value of such
property or assets or materially impair the use thereof in the operation of its
business, (v) existing Liens specified in Schedule 7.2(c), but only to secure
Indebtedness in the maximum principal amount secured thereby on the Closing
Date, (vi) any Lien securing any obligation incurred in connection with the
renewing, extending or refunding of any obligation secured by a Lien permitted
by clause (v) above or clause (x) below, provided that the principal amount of
the obligation so secured is not increased and such Lien is not extended to
other assets, (vii) Liens in favor of the Agent for the ratable benefit of the
Lenders, (viii) Liens securing Permitted Indebtedness of the type
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described in clause (iii) or (x) of the definition of Permitted Indebtedness,
provided that such Liens do not extend to any property other than the property
then being acquired with the proceeds of such Indebtedness, (ix) Liens securing
Non-Recourse Debt, (x) Liens on amounts deposited or prepaid in connection with
contractual obligations or for the purchase of goods or services in the ordinary
course of business, (xi) Liens on assets of Excluded Future Subsidiaries which
secure Permitted Indebtedness, (xii) Liens in favor of Electric Utilities
securing obligations under power purchase contracts, such as the obligation to
repay the excess of the contract's scheduled rate over the avoided cost rate to
the extent the Lien securing such obligation is secured solely by the related
Facility and the income and proceeds therefrom, and (xiii) Liens securing other
Indebtedness not exceeding $250,000 in the aggregate at any time.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
joint stock company, association, corporation, institution, entity, party or
government (including, without limitation, any division, agency or department
thereof) or any other legal entity, whether acting in an individual, fiduciary
or other capacity, and, as applicable, the successors, heirs and assigns of
each.
"Plan" means any employee benefit plan, as defined in Section 3(3) of
ERISA, maintained or contributed to by the Borrower or any ERISA Affiliate with
respect to which any of them may incur liability.
"Pledge Agreement" means the amended and restated pledge agreement
made by the Borrower and the other Pledgors in favor of the Agent for the
ratable benefit of the Lenders, substantially in the form of Exhibit E hereto,
as amended, supplemented or otherwise modified from time to time.
"Pledged Subsidiary" means, at any time, a Subsidiary of the Borrower
whose capital stock or other equity interests are subject at such time to the
Lien created under the Pledge Agreement.
"Pledgors" means the Borrower and each of its Subsidiaries specified
as an "Owner" in Schedule 5.1(a)(ii).
"Prohibited Transaction" has the meaning specified in Section
6.1(z)(v).
"Projected Adjusted Consolidated Cash Flow" means, for any Person,
for any period, the sum, calculated in accordance with Exhibit P, of (i)
Projected Adjusted Consolidated Net Income of such Person and its consolidated
Subsidiaries for such period
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plus (ii) the aggregate amount of all projected non-cash charges deducted in
arriving at such Projected Adjusted Consolidated Net Income less (iii) the
aggregate amount of all projected non-cash credits included in arriving at such
Projected Adjusted Consolidated Net Income less (iv) all projected Capital
Expenditures for such period less (v) principal payments projected or required
to be made on account of Permitted Indebtedness.
"Projected Adjusted Consolidated Net Income" means, for any period,
the projected aggregate net income (or loss) of any Person and its consolidated
Subsidiaries for such period on account of the operations of Facilities which
have achieved commercial operation and whose financing has converted from a
construction loan to a permanent term loan financing arrangement determined in
conformity with GAAP and calculated in accordance with Exhibit P.
"Projected Adjusted Consolidated Unrestricted Cash Flow" means, for
any Person, for any period, the sum, calculated in accordance with Exhibit P, of
(i) the Projected Adjusted Consolidated Cash Flow of such Person and its
consolidated Subsidiaries for such period less (ii) the amount of such Projected
Adjusted Consolidated Cash Flow projected to be restricted for use by, or
transfer to, the Borrower during such period under the terms of instruments of
Permitted Indebtedness or Requirements of Law applicable to the Borrower or any
of its Subsidiaries plus (iii) actual cash flow corresponding to Projected
Adjusted Consolidated Cash Flow from prior periods originally projected to be
restricted under clause (ii) hereof that has ceased to be so restricted and is
available for distribution to the Borrower.
"Projected Cash Flow Statement" means a statement, substantially in
the form of Exhibit P hereto, setting forth the Projected Adjusted Consolidated
Unrestricted Cash determined as of the date of such statement, which shall be
prepared by the chief accounting officer of the Borrower.
"Projected Minimum Coverage Ratio" means, at any time, the ratio,
calculated in accordance with Exhibit P, of (i) the Projected Adjusted
Consolidated Unrestricted Cash Flow projected to be received by the Borrower for
the period commencing on the Availability Expiration Date until the Term Loan
Maturity Date and discounted at a discount rate equal from time to time to the
current applicable interest rate under Section 4.1 plus the amount of all of the
Borrower's and its Subsidiaries' cash on hand that is not restricted for use by
the Borrower or such Subsidiaries under the terms of Instruments of Permitted
Indebtedness or Requirements of Law applicable to the Borrower or such
Subsidiaries to (ii) the aggregate amount of the outstanding Obligations and the
undrawn amount of all outstanding Letters of Credit at such time.
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"Property" means any real property owned, leased or controlled by the
Borrower.
"Proportionate Share" of a Lender means a fraction, expressed as a
decimal, obtained by (a) prior to the Availability Expiration Date, dividing its
Revolving Credit Commitment by the aggregate Revolving Credit Commitments of all
the Lenders or (b) after the Availability Expiration Date, dividing the amount
of its Term Loan by the aggregate amount of all Term Loans then outstanding.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended, any successor statute and any regulations or guidelines promulgated
thereunder.
"PURPA" means the Public Utility Regulatory Policies Act of 1978, as
amended, any successor statute and regulations or guidelines promulgated
thereunder.
"Qualification" or "Qualified" means, with respect to any report of
independent public accountants covering financial statements, a material
qualification to such report (i) resulting from a limitation on the scope of
examination of such financial statements or the underlying data or (ii) as to
the capability of the Borrower to continue operations as a going concern.
"Receivables" means all present and future accounts, contract rights,
promissory notes, chattel paper, documents, tax refunds, rights to receive tax
refunds, rights to receive fees, bonds, certificates, insurance policies,
insurance proceeds, patents, patent applications, copyrights (registered and
unregistered), royalties, licenses, customer lists, rights of indemnification,
contribution and subrogation, leases, drafts, computer tapes, programs and
software, trade secrets, computer service contracts, trademarks, trade names,
service marks and names, logos, goodwill, deposits, cash, cash equivalents,
causes of action, choses in action, judgments, designs, blueprints, plans,
know-how, all other general intangibles, claims against third parties of every
kind or nature, investment securities, notes, drafts, acceptances, letters of
credit, rights to receive payments under letters of credit, deposit and other
accounts (including, without limitation, the Depository Accounts, the Blocked
Account and the L/C Cash Collateral Account), book accounts, credits and
reserves and all forms of obligations whatsoever owing, instruments, documents
of title, leasehold rights in any goods and books, ledgers, files and records
with respect to any collateral or security, together with all right, title,
security and guaranties with respect to each Receivable.
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"Replacement Lender" means a financial institution proposed by the
Borrower in accordance with Section 2.9 that is satisfactory to the Agent in its
sole discretion which has agreed to acquire and assume all or a part of a
Defaulting Lender's Loans and Revolving Credit Commitments under Section 2.9.
"Reportable Event" means any of the events described in Section 4043
of ERISA and the regulations thereunder, other than a reportable event for which
the thirty-day notice requirement to the PBGC has been waived.
"Required Lenders" means those Lenders the sum of whose outstanding
(i) prior to the Availability Expiration Date, Revolving Credit Commitments and
(ii) after the Availability Expiration Date, Term Loans, exceeds 70% or more of
the sum of the total outstanding Revolving Credit Commitments or Term Loans, as
the case may be, at such time.
"Requirement of Law" means (a) the Governing Documents, (b) any law,
treaty, rule or regulation or determination of an arbitrator, court or other
Governmental Authority, or (c) any franchise, license, lease, permit,
certificate, authorization, qualification, easement, right of way, or other
right or approval binding on the Borrower or any of its property.
"Restricted Receivables" means Receivables of the Borrower or any
Affiliates of the Borrower specified in Schedule 2.15 and the proceeds thereof
which, under the terms of instruments of Permitted Indebtedness or any
Requirement of Law applicable to such Subsidiary or Affiliate, (i) are required
to be free and clear of all Liens and (ii) in the case of proceeds, are required
to be used for a purpose contrary to the requirements of Section 2.15.
"Revolving Credit Commitment" means, with respect to a Lender, its
commitment to make Revolving Credit Loans and to participate in Letters of
Credit up to the amount set forth opposite its name on Schedule 1 under the
heading "Revolving Credit Commitment," as such amount may be decreased from time
to time in accordance with Section 2.1(d).
"Revolving Credit Loans" has the meaning specified in Section 2.1(a).
"Revolving Credit Note" means an amended and restated or other
revolving credit promissory note of the Borrower payable to the order of a
Lender, substantially in the form of Exhibit A hereto, as amended, supplemented
or otherwise modified from time to time.
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"Solvency Certificate" means the solvency certificate of each of the
Borrower and the Designated Subsidiaries, substantially in the form of Exhibit I
hereto.
"Solvent" means, when used with respect to any Person, that as of the
date as to which such Person's solvency is to be measured:
(a) the fair saleable value of its assets is in excess of the
total amount of its liabilities (including, without limitation,
contingent liabilities as valued in accordance with applicable law)
as they become absolute and matured;
(b) it has sufficient capital to conduct its business; and
(c) it is able to meet its debts as they mature.
"Subordination Agreement" means the amended and restated
subordination agreement made by CHI Finance in favor of the Agent for the
ratable benefit of the Lenders, substantially in the form of Exhibit Q hereto,
as amended, supplemented or otherwise modified from time to time.
"Subsidiary" means, as to any Person, a corporation or other entity
in which that Person directly or indirectly owns or controls the shares of stock
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or appoint other managers of such corporation or other
entity.
"Support Letter" means the amended and restated letter agreement
executed by Xxxxxx X. Xxxxx, substantially in the form of Exhibit J hereto, as
amended, supplemented or otherwise modified from time to time.
"Tangible Net Worth" means, as at any date for the determination
thereof, with respect to any Person, (i) total assets determined under GAAP less
(ii) intangible assets including, without limitation, goodwill, patents, patent
rights, trademarks, trade names, copyrights, design rights, franchises, bond
discounts, underwriting expenses, treasury stock, organization expenses, and
other similar items (other than the value of power purchase agreements and FERC
licensing costs), less (iii) total Liabilities determined under GAAP.
"Term Loan" has the meaning specified in Section 2.10(a).
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"Term Loan Maturity Date" means the earlier of (i) the date occurring
five years from the Availability Expiration Date and (ii) the date of any
acceleration of the Term Loans under Section 9.2(a).
"Term Note" means a promissory note of the Borrower payable to the
order of a Lender, substantially in the form of Exhibit B hereto, as amended,
supplemented or otherwise modified from time to time.
"Termination Event" means (i) a Reportable Event with respect to any
Pension Plan or Multiemployer Plan; (ii) the withdrawal of the Borrower or any
ERISA Affiliate from a Pension Plan during a plan year in which it was a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA); (iii) the
providing of notice of intent to terminate a Pension Plan in a distress
termination (as described in Section 4041(c) of ERISA); (iv) the institution by
the PBGC of proceedings to terminate a Pension Plan or Multiemployer Plan; (v)
any event or condition (a) which is reasonably likely to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan, or (b) that is
reasonably likely to result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA; or (vi) the partial or complete withdrawal, within the
meaning of Sections 4203 and 4205 of ERISA, of the Borrower or any ERISA
Affiliate from a Multiemployer Plan.
"Termination Notice" has the meaning specified in Section 2.4.
SECTION I.2. Accounting Terms and Determinations. Unless otherwise
defined or specified herein, all accounting terms used in this Agreement shall
be construed in accordance with GAAP, applied on a basis consistent in all
material respects with the Financial Statements delivered to the Agent on or
before the Closing Date. All accounting determinations for purposes of
determining compliance with Article VIII shall be made in accordance with GAAP
as in effect on the Closing Date and applied on a basis consistent in all
material respects with the Financial Statements delivered to the Agent on or
before the Closing Date. The Financial Statements required to be delivered
hereunder from and after the Closing Date, and all financial records, shall be
maintained in accordance with GAAP. If GAAP shall change from the basis used in
preparing the Financial Statements delivered to the Agent on or before the
Closing Date, the certificates required to be delivered pursuant to Section
7.1(k) demonstrating compliance with the covenants contained herein shall
include calculations setting forth the adjustments necessary to demonstrate how
the Borrower is in compliance with the financial covenants based upon GAAP as in
effect on the Closing Date.
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SECTION I.3. Other Terms; Headings. Terms used herein that are
defined in the Uniform Commercial Code, from time to time, in effect in the
State of New York (the "Code") shall have the meanings given in the Code. Each
of the words "hereof," "herein," and "hereunder" refer to this Agreement as a
whole. An Event of Default shall "continue" or be "continuing" unless and until
such Event of Default has been waived in accordance with Section 11.11.
References to Articles, Sections, Annexes, Schedules and Exhibits are internal
references to this Agreement, and to its attachments, unless otherwise
specified. The headings and the Table of Contents are for convenience only and
shall not affect the meaning or construction of any provision of this Agreement.
ARTICLE II
THE CREDIT FACILITIES
---------------------
SECTION II.1. The Revolving Credit Loans.
(a) Subject to the terms and conditions set forth in this Agreement,
on and after the Closing Date until (but excluding) the Availability Expiration
Date, each Lender severally agrees to make loans to the Borrower (the "Revolving
Credit Loans") in an aggregate principal amount (including such Lender's
Proportionate Share of the aggregate amount of all outstanding Letters of
Credit) not to exceed its Proportionate Share of the lesser of (i) the Maximum
Amount of the Facility and (ii) 87% of the Projected Adjusted Consolidated
Unrestricted Cash Flow at such time projected to be received by the Borrower for
the period commencing on the Availability Expiration Date until the Term Loan
Maturity Date and discounted at a discount rate equal from time to time to the
current applicable interest rate under Section 4.1.
(b) Subject to the right of the Borrower to convert all Revolving
Credit Loans to Term Loans under Section 2.10, each Revolving Credit Loan shall
be payable in full, with all interest accrued thereon, on the Availability
Expiration Date. The Borrower may borrow, repay and reborrow Revolving Credit
Loans, in whole or in part, in accordance with the terms hereof.
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(c) The proceeds of the Revolving Credit Loans shall be used by the
Borrower only for working capital purposes including, without limitation, for
(i) the type of expenditures reflected in the Business Plan, including, without
limitation, operating and maintenance expenses, general and administrative
expenses, development expenses (including the acquisition and development of,
and investment in, Facilities to the extent permitted under this Agreement), and
Capital Expenditures and (ii) expenses caused by waterflow shortfalls or other
unexpected events, and, in all cases, to the extent not otherwise prohibited by
this Agreement.
(d) Upon not less than three Business Days' prior notice from the
Borrower to the Agent, the Borrower may reduce permanently, in whole or in part,
the commitment of the Lenders to make Revolving Credit Loans and to purchase
participations in Letters of Credit caused to be issued by the Agent, and of the
Agent to cause to be issued Letters of Credit, provided that (i) any partial
reduction shall be in an integral multiple of $1,000,000, (ii) any such notice
shall be irrevocable once given and (iii) any reduction of such commitment in
full shall be subject to the payment of the fee specified in Section 4.7, if
such reduction occurs prior to the first anniversary of the Closing Date.
SECTION II.2. Procedures for Borrowing of Revolving Credit Loans;
Disputes.
(a) So long as the conditions for borrowing contained in Section 5.1
or 5.2 (whichever section is applicable) are satisfied, upon notice from the
Borrower to the Agent, substantially in the form of Exhibit O (a "Notice of
Borrowing") received by the Agent as set forth in Section 2.5, Revolving Credit
Loans shall be made to the Borrower to the extent of each Lender's Proportionate
Share of the requested Borrowing.
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(b) Within two Business Days after the making of each Revolving
Credit Loan (other than the initial Revolving Credit Loans), the Agent will
provide each Lender with copies of the documentation furnished by the Borrower
supporting such Revolving Credit Loan. In the event that any Lender reasonably
determines in good faith that such documentation does not comply with the
requirements of Section 5.2 of this Agreement in any material respect, such
Lender shall promptly so notify the Agent and the Borrower. Failure to give any
such notice within five days after its receipt of such documentation shall
preclude a Lender from giving such notice with respect to the applicable
Revolving Credit Loan (but not any future Revolving Credit Loan). Upon receipt
of any such notice, the Agent and the Lender giving the same shall promptly
endeavor to resolve the discrepancies raised by such Lender. In the event the
discrepancies are not resolved to the Lender's reasonable satisfaction, and the
Lender so notifies the Agent and the Borrower in writing, such Lender shall have
no obligation to make available to the Agent its Proportionate Share of any
later Revolving Credit Loan until the discrepancy is resolved and, so long as
the discrepancy is unresolved, the Borrower shall have the right to replace such
Lender with a Replacement Lender in accordance with the procedures specified in
Section 2.9. Upon resolution of any such discrepancy or if the Required Lenders
determine that the discrepancy is immaterial or otherwise agree to waive such
discrepancy, the applicable Lender shall promptly remit all withheld amounts to
the Agent.
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SECTION II.3. Disbursement of Revolving Credit Loans. Except as
provided in Section 2.11(f), the proceeds of the Revolving Credit Loans shall be
transmitted by the Agent as requested by the Borrower in each applicable Notice
of Borrowing.
SECTION II.4. Term. Each Lender's obligation under Sections 2.1(a)
and 2.11(a) and (f) to make Revolving Credit Loans and to purchase
participations in letters of credit caused to be issued by the Agent, and the
Agent's obligation to use its best efforts to cause to be issued Letters of
Credit, shall commence on the Closing Date and extend through the Initial
Availability Expiration Date, unless sooner terminated by the terms hereof,
provided that the Availability Expiration Date shall be extended for successive
one-year periods beyond the then-effective expiration date unless the Borrower
notifies the Agent and the Lenders, or the Agent notifies the Borrower, in
writing at least ninety and no more than one hundred fifty days prior to the
then effective Availability Expiration Date that it does not wish to extend the
Availability Expiration Date. Without limitation of the preceding sentence, each
Lender's obligations under Sections 2.1(a) and 2.11(a) and (f) to make Revolving
Credit Loans and to purchase participations in Letters of Credit shall terminate
if such terminating Lender notifies the Agent, the Borrower and the other
Lenders in writing (a "Termination Notice") at least one hundred fifty and no
more than two hundred ten days prior to the then effective Availability
Expiration Date that it wishes to terminate such obligations, provided that each
non-terminating Lender shall have, upon receipt of a timely Termination Notice
from a terminating Lender, an additional five Business Days to deliver a
Termination Notice to the Agent and the other Lenders, which Termination Notice
shall be fully effective to terminate such Lender's obligations under Section
2.1(a) and 2.11(a) and (f) to make Revolving Credit Loans and to purchase
participations in Letters of Credit, and provided, further, that no Termination
Notice shall be effective if delivered less than one hundred forty-five days
prior to the then effective Availability Expiration Date.
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SECTION II.5. Notices of Borrowing.
(a) Each Revolving Credit Loan shall be requested by the Borrower
pursuant to a Notice of Borrowing given to the Agent no later than 11:00 a.m.
(New York time) on the third Business Day prior to the proposed date of such
Revolving Credit Loan (which date shall be a Business Day). Each request for a
Revolving Credit Loan shall be made by telephone, confirmed immediately by
telecopier in a Notice of Borrowing signed by a Secretary or Assistant Secretary
of the Borrower, and shall specify therein (i) the proposed date of such
Revolving Credit Loan, (ii) the proposed aggregate principal amount of such
Revolving Credit Loan, (iii) the proposed use of the proceeds of such Revolving
Credit Loan and (iv) that the Projected Minimum Coverage Ratio as of the date
thereof is not less than the ratio projected in the Business Plan as of such
date or, if such ratio is less than such projected ratio, a calculation of the
Projected Minimum Coverage Ratio as of such date taking into account the
aggregate principal amount of the proposed Revolving Credit Loan, which ratio
shall not be less than 1.15:1.00).
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(b) Promptly after receipt of a Notice of Borrowing, the Agent shall
provide each Lender with a copy thereof.
SECTION II.6. Disbursement of Funds; Evidence of Debt to Lenders;
Account Statements; Adjustments.
(a) Subject to the satisfaction of the conditions for each Revolving
Credit Loan under Section 5.1 (for the initial Revolving Credit Loan) and
Section 5.2 (for each other Revolving Credit Loan), each Lender shall, before
11:00 a.m. (New York time) on the requested date of such Revolving Credit Loan,
make available to the Agent at the Agent's address, in United States dollars and
immediately available funds, such Lender's Proportionate Share of such Revolving
Credit Loan. After the Agent's receipt of such funds, the Agent will make such
received funds available to the Borrower by 2:00 p.m. (New York time) on the
proposed date of the applicable Revolving Credit Loan by wire transfer to the
Borrower. Unless the Agent receives contrary written notice prior to the date of
any such borrowing of Revolving Credit Loans, the Agent is entitled to assume
that each Lender will make available its Proportionate Share of the borrowing
and in reliance upon that assumption, but without any obligation to do so, may
advance such Proportionate Share on behalf of such Lender. The Agent shall
promptly notify the Borrower of the Agent's receipt of each Lender's
Proportionate Share, provided that the Agent's failure to provide such notice to
the Borrower shall not limit or otherwise affect any of the rights of the Agent
hereunder. If and to the extent that such Lender shall not have made such amount
available to the Agent, but the Agent has made such amount available to the
Borrower, such Lender and the Borrower severally agree to pay and repay the
Agent forthwith on demand such corresponding amount and to pay interest thereon,
for each day from the date such amount is transferred by the Agent to the
Borrower until the date such amount is paid or repaid to the Agent, at (i) in
the case of the Borrower, the interest rate applicable at such time to such
Revolving Credit Loan and (ii) in the case of each Lender, for the period from
the date such amount was wire transferred to the Borrower to (and including)
three days after demand therefor by the Agent to such Lender, at the Federal
Funds Rate and, following such third day, at the interest rate applicable at
such time to such Revolving Credit Loan, provided, that such Lender shall not be
required to pay to the Agent the principal of any amount not made available to
the Agent by such Lender and any interest payable by such Lender thereon to the
extent such principal and interest have been repaid by the Borrower. If a Lender
shall pay to the Agent any or all of such amount, such amount so paid shall
constitute a Revolving Credit Loan by such Lender to the Borrower for purposes
of this Agreement.
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(b) The Agent shall maintain in its records one or more accounts
evidencing the Obligations and the amounts of Loans made by each Lender and of
principal and interest payable and paid to each Lender from time to time under
this Agreement. In any legal action or proceeding in respect of this Agreement,
the Agent's records shall be conclusive evidence of the existence and amounts of
the Obligations, absent manifest error. The Agent shall provide the Borrower and
the Lenders with statements of the accounts maintained by it hereunder promptly
following the making of each Revolving Credit Loan, the receipt of each payment
to the Agent under this Agreement and any other adjustments made by the Agent to
such accounts from time to time.
(c) If the Agent inadvertently distributes to a Lender under Section
2.7 an amount in excess of the amount then due such Lender by the Agent under
Section 2.7, then such Lender shall repay to the Agent forthwith, on demand,
such excess amount distributed to such Lender together with interest thereon,
for each day from the date such amount is distributed to such Lender until the
date such Lender repays such amount to the Agent, at the Federal Funds Rate.
SECTION II.7. Payments.
The Borrower shall make each payment hereunder not later than 11:00
a.m. (New York time) on the day when due, in Dollars, to the Agent at the
Agent's address in immediately available funds. The Agent will promptly after
receiving payments from the Borrower hereunder cause like funds to be
distributed to the Lenders, ratably, at their addresses and in accordance with
the terms of this Agreement.
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SECTION II.8. Sharing of Payments. If any Lender shall obtain any
payment on account of any of the Obligations (whether voluntary, involuntary,
through the exercise of any right of set-off or otherwise), such Lender shall
forthwith purchase from the other Lenders such participations in the Obligations
as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and each such Lender shall repay to
the purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender's ratable share (according to the proportion
of (i) the amount of such Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect to the total amount so recovered;
and provided, further that this Section shall not apply with respect to any fees
payable solely to the Agent or any other fees that are intended to be for the
benefit of less than all of the Lenders. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all of its rights of payment
(including, without limitation, the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. Notwithstanding anything contained
herein to the contrary, the sharing provisions of this Section shall not apply
to any payments received by any Lender from or on behalf of the Borrower or the
Agent that is not made pursuant to the express terms and provisions of this
Agreement.
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SECTION II.9. Defaulting Lenders.
(a) A Lender who fails to pay the Agent its Proportionate Share of
any Revolving Credit Loans duly made available by the Agent on such Lender's
behalf, or who fails to pay any other amount owing by it to the Agent, is a
defaulting lender (a "Defaulting Lender"). The Agent may recover all such
amounts owing by a Defaulting Lender on demand. If the Defaulting Lender does
not pay such amounts on the Agent's demand, the Agent shall promptly notify the
Borrower and the Borrower shall pay such amounts with all accrued interest
thereon until the date of payment within five Business Days or, in the case of a
Revolving Credit Loan deemed to be made on account of a drawing under a Letter
of Credit, within thirty days. In addition, the Defaulting Lender and the
Borrower shall pay (without duplication) the Agent interest on such amount for
each day from the date it was made available by the Agent to the Borrower to the
date it is recovered by the Agent at a rate per annum equal to (x) the overnight
Federal Funds Rate, if paid by the Defaulting Lender, or (y) the then applicable
rate of interest calculated under Section 4.1, if paid by the Borrower; plus, in
each case, the expenses and losses, if any, incurred as a result of the
Defaulting Lender's failure to perform its obligations. The Borrower shall
reimburse a Defaulting Lender for all interest paid by such Defaulting Lender to
the Agent under the preceding sentence which the Borrower has not paid to the
Agent under the preceding sentence so long as the Borrower has paid all
Obligations to the Agent and the other Lenders then due and payable and no Event
of Default has occurred and is continuing. The Borrower may, by notice (a
"Replacement Notice") in writing to the Agent and such Defaulting Lender, (A)
request the Defaulting Lender to cooperate with the Borrower in obtaining a
Replacement Lender; (B) request the non-Defaulting Lenders to acquire and assume
all or a portion of the Defaulting Lender's Loans and Revolving Credit
Commitments, but none of such Lenders shall be obligated to do so; or (C)
propose a Replacement Lender. If a Replacement Lender shall be accepted by the
Agent or one or more of the non-Defaulting Lenders shall agree to acquire and
assume all or part of the Defaulting Lender's Loans and Revolving Credit
Commitment, then such Defaulting Lender shall assign, in accordance with Section
11.8, all or part, as the case may be, of its Revolving Credit Commitment,
Loans, Notes and other rights and obligations under this Agreement and all other
Loan Documents to such Replacement Lender or non-Defaulting Lenders, as the case
may be, in exchange for payment of the principal amount or the portion thereof
so assigned and all interest and fees accrued on the portion thereof so
assigned, plus all or part, as the case may be, of the other Obligations then
due and payable to the Defaulting Lender; provided, however, that (i) such
assignment shall be on the terms and conditions set forth in Section 11.8, and
(ii) prior to any such assignment, the Borrower shall have (x) paid to such
Defaulting Lender all amounts properly demanded and theretofore unpaid by the
Borrower under Section 4.9
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(less costs and expenses incurred by the Borrower directly as a result of the
actions of the Defaulting Lender) and (y) paid to the Agent all amounts properly
demanded and theretofore unpaid by the Borrower under Sections 4.1, 4.4 and 4.5
(but not Section 4.7). If the Replacement Lender and non-Defaulting Lenders
shall only be willing to acquire less than all of the Defaulting Lender's
outstanding Loans and Revolving Credit Commitment, the Revolving Credit
Commitment of the Defaulting Lender shall not terminate, but shall be reduced
proportionately, and the Defaulting Lender shall continue to be a "Lender"
hereunder with a reduced Revolving Credit Commitment and Proportionate Share.
Upon the effective date of such assignment, the Borrower shall issue replacement
Notes to such Replacement Lender, non-Defaulting Lenders and the Defaulting
Lender, as the case may be, in exchange for the Notes of the Defaulting Lender
theretofore outstanding, and such Replacement Lender shall, if not already a
Lender, become a "Lender" for all purposes under this Agreement and the other
Loan Documents.
(b) The failure of any Lender to fund its Proportionate Share of any
Revolving Credit Loan shall not relieve any other Lender of its obligation to
fund its Proportionate Share of such Revolving Credit Loan. Conversely, no
Lender shall be responsible for the failure of another Lender to fund such other
Lender's Proportionate Share of a Revolving Credit Loan.
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(c) The Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by the Borrower to the Agent for the Defaulting
Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing of
any payments hereunder. Amounts payable to a Defaulting Lender shall instead be
paid to or retained by the Agent. The Agent may hold and, in its discretion,
re-lend to the Borrower the amount of all such payments received or retained by
it for the account of such Defaulting Lender, provided that, the Defaulting
Lender shall be entitled to interest at the Federal Funds Rate on all such
amounts held by the Agent for the account of such Defaulting Lender from the
initial date on which such amount is so held by the Agent until the date on
which such amount is released to such Defaulting Lender. For purposes of voting
or consenting to matters with respect to the Loan Documents and determining
Proportionate Shares, such Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitment and Loans shall be deemed to be zero,
provided that, with respect to any action hereunder requiring the consent of all
the Lenders, the Agent agrees to provide a Defaulting Lender with two Business
Days' prior notice before taking such action, and provided, further, that the
failure of the Agent to provide a Defaulting Lender with such notice shall not
limit or otherwise affect any such action taken by the Agent. This Section shall
remain effective with respect to such Lender until (x) the Defaulting Lender has
paid all amounts required to be paid to the Agent hereunder or (y) the Required
Lenders, the Agent and the Borrower shall have waived such Lender's default in
writing. The operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, or relieve or excuse the
performance by the Borrower of its duties and obligations hereunder.
SECTION II.10. Conversion to Term Loan.
(a) Subject to and upon the satisfaction of the terms and conditions
specified in subsection (b) below, the Borrower may, on the Availability
Expiration Date, convert the amount of all, but not less than all, outstanding
Revolving Credit Loans of each Lender to a Term Loan of such Lender (as such
amount may be increased from time to time under Section 2.11(c), each, a "Term
Loan").
(b) The right of the Borrower to convert all outstanding Revolving
Credit Loans to Term Loans is subject to the satisfaction of each of the
following conditions:
(i) The Agent shall have received written notice from the
Borrower before the Availability Expiration Date requesting such
conversion and specifying the aggregate principal amount of the Term
Loans (which shall be equal to the amount of all outstanding
Revolving Credit Loans on the Availability Expiration Date). The
Agent shall promptly notify each of the Lenders of such request.
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(ii) The Lenders shall have each received a Term Note,
payable to it and duly executed by the Borrower with appropriate
insertions as to the date and principal amount.
(iii) The aggregate principal amount of all outstanding
Revolving Credit Loans, before giving effect to the conversion, shall
be greater than $2,000,000.
(iv) The Agent shall have received a certificate of the
Borrower, in form and substance satisfactory to the Agent, duly
executed by the chief accounting officer of the Borrower, as of the
date of such conversion, truthfully stating that (A) the
representations and warranties contained in Article VI are true and
correct, except to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct as of such
earlier date and (B) no Default has occurred and is continuing or
would result after giving effect to the conversion.
(v) No material provision of this Agreement or any other
Loan Document shall for any reason have ceased to be valid and
binding on the Borrower or any other Pledgor or party thereto or
shall have been declared to be null and void by any court,
Governmental Authority or administrative body.
(vi) The Agent shall have received a board resolution
authorizing such conversion, certified by the Secretary or an
Assistant Secretary of the Borrower, in form and substance
satisfactory to the Agent.
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SECTION II.11. Letters of Credit.
(a) Subject to the terms and conditions set forth in this Agreement,
on and after the Closing Date until (but excluding) the Availability Expiration
Date, the Agent, upon the request of the Borrower, shall use its best efforts to
cause a bank or financial institution acceptable to the Agent and the Borrower
to issue Letters of Credit for the account or benefit of the Borrower or any of
its Affiliates. Each Letter of Credit shall be requested in accordance with the
Borrower's or such Affiliate's ordinary business requirements in the operation
and development of Facilities to support equity commitments or obligations of
such Person under power purchase or other material project agreements, each with
(i) a tenor and containing terms acceptable to the Borrower, the Agent and the
issuer of such Letter of Credit and (ii) in the case of a Letter of Credit
issued for the account or benefit of an Affiliate that is not wholly owned by
the Borrower, a purpose and benefit to the Borrower reasonably acceptable to the
Lender. The Agent shall not be required to use its best efforts to cause, and
the Borrower shall not request, the issuance of any Letter of Credit if (i)
after giving effect thereto, the maximum aggregate amount of all Letters of
Credit and Revolving Credit Loans outstanding at such time would exceed the
lesser of (A) the Maximum Amount of the Facility and (B) 87% of the Projected
Adjusted Consolidated Unrestricted Cash Flow at such time projected to be
received by the Borrower for the period commencing on the Availability
Expiration Date until the Term Loan Maturity Date and discounted at a discount
rate equal from time to time to the current applicable interest rate under
Section 4.1; or (ii) a default of any Lender's obligations to fund under this
Section 2.11 exists, or any Lender is a Defaulting Lender, unless the Agent has
entered into satisfactory arrangements with the Borrower to eliminate the
Agent's risk with respect to such Lender, including cash collateralization of
such Lender's Proportionate Share of the Obligations in respect of Letters of
Credit.
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(b) Unless otherwise previously agreed in writing by the Borrower and
the Agent, the initial term of any Letter of Credit shall not exceed one
calendar year from the date of issuance, subject to automatic renewal unless
notice to the contrary is given by the Agent or the issuing bank in writing by
the applicable date specified in such Letter of Credit. Each Letter of Credit
shall state that, except as otherwise provided therein, such Letter of Credit is
governed by the Uniform Customs and Practice for Documentary Credits (as most
recently published by the International Chamber of Commerce). Notwithstanding
the purpose of any Letter of Credit or any reference therein or herein to an
Affiliate of the Borrower, each Letter of Credit shall be deemed issued for the
account of the Borrower and the obligations arising in connection therewith
shall be part of the Obligations.
(c) Subject to the agreement of the beneficiary thereof, any Letter
of Credit outstanding after the earlier of (i) the occurrence and continuance of
an Event of Default or (ii) the fifth anniversary of the Availability Expiration
Date, may be reduced, in whole or in part, in an amount to be advanced by the
Agent, from funds made available by the Lenders, to such beneficiary for the
account of the Borrower (or any Subsidiary of the Borrower for whose account
such Letter of Credit was issued). The amount of such advance by each Lender
shall be added to the then outstanding balance of such Lender's respective Term
Loan and shall be deemed a part thereof. The proceeds of such advance shall be
held by a depository for the account of such beneficiary and, to the extent such
proceeds are no longer required as collateral by such beneficiary, shall
thereupon be returned to each of the Lenders for application to such Lender's
Term Loan, in inverse order of maturity or, if such Term Loan has been paid in
full, for deposit to the L/C Cash Collateral Account.
(d) Immediately upon issuance or amendment of any Letter of Credit in
accordance with the procedures set forth in this Section 2.11, each Lender shall
be deemed to have irrevocably and unconditionally purchased and received from
the Agent, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's Proportionate Share, of the
liability and obligations under and with respect to such Letter of Credit and
the Letter of Credit Agreement (including, without limitation, all obligations
of the Borrower with respect thereto, other than amounts owing to the Agent
consisting of fees payable in connection with the issuance of Letters of Credit)
and any security therefor or guaranty pertaining thereto.
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(e) Whenever the Borrower desires the issuance of a Letter of Credit,
the Borrower shall deliver to the Agent a written notice no later than 1:00 P.M.
New York City time at least five Business Days (or such shorter period as may be
agreed to by the Agent) in advance of the proposed date of issuance of a letter
of credit request in substantially the form attached as Exhibit K (a "Letter of
Credit Request"). The transmittal by the Borrower of each Letter of Credit
Request shall be deemed to be a representation and warranty by the Borrower that
the Letter of Credit may be issued in accordance with and will not violate any
of the requirements of this Section 2.11. Prior to the date of issuance of each
Letter of Credit, the Borrower shall provide to the Agent a precise description
of the documents and the text of any certificate to be presented by the
beneficiary of such Letter of Credit which, if presented by such beneficiary on
or prior to the expiration date of such Letter of Credit, would require the
issuing bank to make payment under such Letter of Credit. The Agent, in its
reasonable judgment, may require changes in any such documents and certificates.
A Letter of Credit Request may be given in writing or electronically with prompt
written confirmation. Any electronic Letter of Credit Request shall be deemed to
have been prepared by, or under the supervision of, the chief accounting officer
of the Borrower.
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(f) In the event of any request for drawing under any Letter of
Credit by the beneficiary thereof prior to the Availability Expiration Date, (i)
the Borrower shall be deemed to have timely given a Notice of Borrowing to the
Agent to make Revolving Credit Loans on the date on which such drawing is
honored in an amount equal to the amount of such drawing and (ii) without regard
to satisfaction of the applicable conditions specified in Section 5.2 and the
other terms and conditions of borrowings contained herein, the Lenders shall, on
the date of such drawing, make Revolving Credit Loans in the amount of such
drawing, the proceeds of which shall be applied directly by the Agent to
reimburse the issuing bank for the amount of such drawing or payment. If for any
reason, proceeds of Revolving Credit Loans are not received by the Agent on such
date in an amount equal to the amount of such drawing, the Borrower and the
non-funding Lender shall be obligated to and shall reimburse the Agent as
provided in Section 2.6(a), on the Business Day immediately following the date
of such drawing in the case of the non-funding Lender and within thirty days in
the case of the Borrower, in an amount in same day funds equal to the excess of
the amount of such drawing over the amount of such Loans, if any, which are so
received, plus accrued interest on such amount at the rate set forth in Section
4.1. In the event of a request for drawing under any Letter of Credit by the
beneficiary thereof after the Availability Expiration Date but prior to the Term
Loan Maturity Date, the amount of such drawing shall be payable by the Borrower
on demand (to be paid from cash on deposit in the L/C Cash Collateral Account to
the extent available) and, until paid by the Borrower, shall bear interest
applicable to Term Loans under Section 4.1(ii).
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(g) As among the Borrower, the Agent and each Lender, the Borrower
assumes all risks of the acts and omissions of the Agent and the issuing bank 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, neither the
Agent nor any of the Lenders shall be responsible (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effects of any document submitted by
any party in connection with the application for and issuance of or any drawing
honored under such Letters of Credit even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged,
(ii) 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, (iii) for failure of the beneficiary
of any such Letter of Credit to comply fully with conditions required in order
to draw upon such Letter of Credit, (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, telecopy or otherwise, whether or not they be in cipher, (v) for errors
in interpretation of technical terms, (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit, or of the proceeds thereof, (vii) for the
misapplication by the beneficiary of any such Letter of Credit, of the proceeds
of any drawing honored under such Letter of Credit, and (viii) for any
consequences arising from causes beyond the control of the issuing bank, the
Agent or the Lenders. None of the above shall affect, impair, or prevent the
vesting of any of the Agent's rights or powers hereunder. Any action taken or
omitted to be taken by the Agent under or in connection with any Letter of
Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create any liability of the Agent to the Borrower or any
Lender.
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(h) The obligations of the Borrower to reimburse the Agent for
drawings honored under the Letters of Credit and the obligations of the Lenders
under this Section 2.11 shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances
including, without limitation, the following circumstances: (i) any lack of
validity or enforceability of this Agreement, any Letter of Credit, any Letter
of Credit Agreement or any other agreement or instrument relating thereto; (ii)
the existence of any claim, setoff, defense or other right which the Borrower or
any Affiliate of the Borrower may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons or entities for whom any such
beneficiary or transferee may be acting), the Agent, any Lender or any other
Person, whether in connection with this Agreement, the other Loan Documents, the
transactions contemplated herein or therein or any unrelated transaction; (iii)
any draft, demand, certificate or other documents 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; (iv) the
surrender or impairment of any security for the performance or observance of any
of the terms of any of the Loan Documents; (v) payment by the issuing 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;
(vi) failure of any drawing under a Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of any drawing; or (vii) the
fact that a Default or Event of Default shall have occurred and be continuing.
Any action taken or omitted to be taken by an issuing bank in connection with
any payment under a Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create any liability of the
Agent or the issuing bank to the Borrower or any Lender or of any Lender to the
Borrower.
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SECTION II.12. Amortization of Term Loan; Cash Collateralization of
Letters of Credit.
(a) Commencing on the Availability Expiration Date, the Borrower
shall pay to the Agent for the ratable benefit of the Lenders, in consecutive
quarterly installments commencing on the last Business Day of the calendar
quarter immediately following the Availability Expiration Date, and on the last
Business Day of each calendar quarter thereafter, 25% of the Annual Term Loan
Principal Amortization for each consecutive four calendar quarter period
commencing with such initial calendar quarter, which payments shall continue
until the repayment in full of the principal outstanding amount of the Term
Loans and any accrued and unpaid interest thereon, and the cash
collateralization in full of the undrawn amount of all outstanding Letters of
Credit; provided, however, that all such amounts shall be repaid or
cash-collateralized in full on or before the Term Loan Maturity Date. The
amounts required to be paid hereunder may be reduced by all prepayments and
deposits received by the Agent under Section 2.13 and the amount of all letters
of credit issued in replacement of the Letters of Credit, in each case after the
Availability Expiration Date.
(b) All payments received by the Lenders under subsection (a) hereof
or under Section 4.1(ii) shall be (i) applied first to any accrued and unpaid
interest on the Term Loans and then to the outstanding principal amount of the
Term Loans and (ii) upon the repayment in full of the Term Loans, deposited into
the L/C Cash Collateral Account to be held and applied as provided in Section
9.2(d).
(c) If requested by the Borrower, the Agent will, so long as no
Default has occurred and is continuing, from time to time, (i) invest amounts on
deposit in the L/C Cash Collateral Account in such Cash Equivalents in the name
of the Agent as the Borrower may select and (ii) invest interest paid on the
Cash Equivalents referred to in clause (i) hereof, and reinvest other proceeds
of any such Cash Equivalents that may mature or be sold, in each case in such
Cash Equivalents in the name of the Agent as the Borrower may select. Interest
and proceeds that are not invested or reinvested as provided above shall be
deposited and held in the L/C Cash Collateral Account.
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(d) No amount (including interest and other income earned on any
Investments) shall be paid or released to or for the account of, or withdrawn by
or for the account of, the Borrower or any other Person from the L/C Cash
Collateral Account until the payment in full of all the Obligations, provided
that interest and other income earned on Investments may, upon the written
request of the Borrower (but in no event more frequently than once each calendar
quarter), be applied toward payment of the Obligations specified by the Borrower
in such written request, and provided further that, so long as all the
Obligations have been paid in full and the Borrower has deposited in the L/C
Cash Collateral Account an amount not less than the aggregate then undrawn
amount of the outstanding Letters of Credit, all investment income will be paid
to the Borrower when received.
(e) The L/C Cash Collateral Account shall be subject to such
applicable laws, and such applicable regulations of the Federal Reserve Board
and of any other appropriate Governmental Authority, as may now or hereafter be
in effect.
SECTION II.13. Maximum Amount of the Facility; Mandatory Prepayments;
Optional Prepayments.
(a) In no event shall the sum of the aggregate outstanding principal
balances of the Revolving Credit Loans (plus the Interest Reserve) or the Term
Loans, as the case may be, and the aggregate undrawn amount of all outstanding
Letters of Credit exceed the Maximum Amount of the Facility.
(b) In addition to any prepayment required as a result of an Event of
Default hereunder, the Borrower shall make mandatory prepayments as follows:
(i) not later than thirty days after the receipt by the
Borrower or any of its Designated Subsidiaries of any proceeds of a
sale permitted under Section 7.2(g)(iii) or (vi) that occurs after
the Availability Expiration Date, the Borrower shall prepay or cause
such Designated Subsidiary to prepay to the Agent for the ratable
benefit of the Lenders an amount equal to all net proceeds of all of
such sales (other than proceeds that may not be so applied under the
terms of instruments of Permitted Indebtedness or any Requirement of
Law applicable to the Borrower or such Designated Subsidiary) in
excess of $100,000 in the aggregate in any fiscal year (except, if
any such sale is of Equipment, to the extent such proceeds are used
within thirty days of receipt thereof to purchase replacement
equipment of equal or greater value in
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which equipment the Agent has been granted a perfected first priority
security interest for the benefit of the Lenders, satisfactory proof
of which shall have been given to the Agent within such thirty-day
period), which payments shall be ratably applied to the Term Loans in
inverse order of maturity;
(ii) immediately upon discovery by or notice to the
Borrower that the lending limit specified in Section 2.13(a) has been
exceeded, the Borrower shall prepay to the Agent an amount sufficient
to reduce the outstanding balances to the applicable maximum allowed
amount, without the necessity of a demand by the Agent; and
(iii) immediately upon the release of any proceeds held by
a beneficiary of such proceeds as provided in Section 2.11(c), the
Borrower shall prepay to the Agent for the ratable benefit of the
Lenders an amount equal to all such proceeds, which amount shall be
ratably applied to the Term Loans in inverse order of maturity.
(c) The Borrower shall have the right at any time to make prepayments
of the Loans, or deposit cash in the L/C Cash Collateral Account before any date
on which such deposit is required, in each case without premium or penalty,
except as provided in Section 4.7, upon irrevocable notice given to the Agent
prior to 11:00 A.M., New York City time, at least two Business Days prior to the
date of such prepayment or deposit, specifying the date and amount thereof. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein. Any prepayment of the Loans under this
Section shall be applied as reasonably specified by the Borrower in such notice
or, if an Event of Default has occurred and is continuing, as the Required
Lenders shall elect in their sole discretion.
(d) The entire outstanding principal amount of the Revolving Credit
Loans, subject to Section 2.10, together with all accrued and unpaid interest
thereon and fees related thereto, shall become due and payable on the
Availability Expiration Date, provided that the Revolving Credit Loans may be
converted to Term Loans subject to the satisfaction by the Borrower of the
requirements of Section 2.10.
(e) The entire outstanding principal amount of the Term Loans,
together with all accrued and unpaid interest thereon, shall become due and
payable on the Term Loan Maturity Date.
SECTION II.14. Payment Procedures.
(a) The Borrower hereby authorizes the Agent to charge the Borrower
with the amount of all interest, fees, expenses and other payments to be made
hereunder and under the other Loan Documents by adding such amount to the
Obligations. The Agent may, but shall not be obligated to, discharge the
Borrower's payment obligations hereunder by so increasing the amount of the
Obligations.
(b) Whenever any payment or other transfer of funds to be made
hereunder shall be stated to be due or made on a day that is not a Business Day,
such payment or transfer may be made on the next succeeding Business Day, and,
if applicable, such extension of time shall be included in the computation of
the amount of interest due hereunder.
SECTION II.15. Collection of Receivables; Application of Collections;
Deposit to Blocked Account.
(a) The Borrower and CHI Finance shall maintain the Depository
Accounts in accordance with the terms of the Depository Account Agreement, to
which the Borrower and CHI Finance shall, except as provided in Section 9.3,
remit all Collections. CHI Finance shall maintain the Blocked Account in
accordance with the terms of the Blocked Account Agreement. All Collections, in
addition to all other cash received by the Borrower and CHI Finance from any
other source including, without limitation, all cash dividends, partnership or
similar distributions and other similar forms of payment made on account of
equity interests, shall promptly upon receipt be deposited into the Depository
Accounts (with the allocation of deposits between the two Depository Accounts to
be made in the reasonable discretion of the Borrower). On the last Business Day
of each month, the aggregate amount of all funds in the Depository Accounts in
excess of $3,000,000 shall be wire transferred to the Blocked Account for
application under Section 2.15(b).
(b) Until the Availability Expiration Date, the Agent shall, so long
as no Event of Default has occurred and is continuing, instruct the Blocked
Account Bank to disburse on the first Business Day of each month amounts held in
the Blocked Account (to the extent the disbursement of such amounts would not
cause the aggregate amount of the outstanding principal balance of the Revolving
Credit Loans plus the aggregate amount of all outstanding Letters of Credit plus
the Interest Reserve to exceed $35,000,000 in the following order of priority:
(i) first, for deposit into the Depository Accounts (with
the allocation of deposits between the
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two Depository Accounts to be made in the reasonable discretion of
the Borrower) an aggregate amount, based on evidence satisfactory to
the Agent submitted to it by the Borrower (including, without
limitation, the reports specified in Section 7.1(k)(iii) and the
statements specified in Section 7.1(k)(iv)) necessary to restore the
aggregate balances in the Depository Accounts to $3,000,000, after
giving effect to all Collections received by the Borrower and CHI
Finance and deposited by them in the Depository Accounts in the
preceding month;
(ii) second, to be applied to the payment of accrued and
unpaid fees and expenses payable to the Agent under or in connection
with this Agreement and the other Loan Documents;
(iii) third, to be ratably applied to the payment of
accrued and unpaid interest, fees and expenses payable to the Lenders
under or in connection with this Agreement and the other Loan
Documents; and
(iv) fourth, to be ratably applied to the payment of such
portion of the principal amount of the Revolving Credit Loans then
outstanding, if any, as the Borrower requests in writing.
Amounts remaining unapplied in the Blocked Account on the first Business Day of
each month shall be invested in a manner similar to that provided in Section
2.12(c). Notwithstanding anything to the contrary set forth above, upon the
occurrence and during the continuance of an Event of Default, the Agent may
apply any and all such amounts for deposit in the L/C Cash Collateral Account or
for ratable payment of such of the Obligations and in such order as it may elect
in its sole and absolute discretion.
(c) Commencing on the Availability Expiration Date, subject to
Section 8.3, the Agent shall, so long as no Event of Default has occurred and is
continuing, instruct the Blocked Account Bank to disburse on the first Business
Day of each month amounts held in the Blocked Account in the following order of
priority:
(i) first, for deposit into the Depository Accounts (with
the allocation of deposits between the two Depository Accounts to be
made in the reasonable discretion of the Borrower), an aggregate
amount, based on evidence satisfactory to the Agent submitted to it
by the Borrower (including, without limitation, the reports specified
in Section 7.1(k)(iii) and the statements specified in Section
7.1(k)(iv)) necessary to restore the aggregate balances in the
Depository Accounts to $3,000,000, after giving effect to all
Collections received by the Borrower and CHI Finance deposited in the
Depository Accounts in the preceding month;
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(ii) second, to be applied to the payment of accrued and
unpaid fees and expenses payable to the Agent under or in connection
with this Agreement and the other Loan Documents;
(iii) third, to be applied ratably to the ratable payment
of accrued and unpaid interest, fees and expenses payable to the
Lenders under or in connection with this Agreement and the other Loan
Documents;
(iv) fourth, to be applied ratably to the payment or
prepayment, as the case may be, of the principal amount then due
under the Term Loans;
(v) fifth, to be applied ratably to prepay such portion of
the principal amount of the Term Loans then outstanding, if any, as
the Borrower requests in writing; and
(vi) sixth, if the Term Loans have been paid in full, to
be deposited in the L/C Cash Collateral Account to the extent
required by Section 2.12(a).
Amounts remaining unapplied in the Blocked Account on the first Business Day of
each month shall be invested in a manner similar to that provided in Section
2.12(c). Notwithstanding anything to the contrary set forth above, upon the
occurrence and during the continuance of an Event of Default, the Agent may
apply any and all such amounts for deposit in the L/C Cash Collateral Account or
for payment of such of the Obligations and in such order as it may elect in its
sole and absolute discretion.
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ARTICLE III
SECURITY
--------
SECTION III.1. General. As security for all of the Obligations, the
Borrower hereby reaffirms, ratifies and grants to the Agent for the ratable
benefit of the Lenders a Lien on all of its right, title and interest in and to
Receivables, other than Restricted Receivables, Inventory, Equipment and (except
as specified below) all other property in all of its forms, tangible and
intangible, wherever located and whether now owned or hereafter acquired, and
all additions and accessions thereto and substitutions and replacements therefor
and improvements thereon, and all proceeds (whether or not cash) and products
thereof including, without limitation, all proceeds of insurance covering the
same and all tort claims in connection therewith, provided that the Borrower (i)
shall be deemed to have granted the Agent for the ratable benefit of the Lenders
a Lien on its right, title and interest in and to each of its Receivables that
no longer constitute Restricted Receivables immediately upon the date that each
such Receivable becomes so unrestricted and (ii) has granted to the Agent for
the ratable benefit of the Lenders a Lien only on the capital stock or other
equity interests of the Borrower in the Pledged Subsidiaries. As further
security for the Obligations, and to provide other assurances to the Agent and
the Lenders, the Agent acknowledges receipt, for the ratable benefit of the
Lenders, of, among other things:
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(a) the Pledge Agreement;
(b) the Support Letter;
(c) the Blocked Account Agreement; and
(d) the Depository Account Agreement.
SECTION III.2. Further Security. The Borrower also grants to the
Agent for the ratable benefit of the Lenders, as further security for all of the
Obligations, a security interest in all of its right, title and interest in and
to all property of the Borrower in the possession of or deposited with or in the
custody of the Agent, any Lender, or any Affiliate of the Agent or any Lender,
or any representative, agent or correspondent of the Agent or any Lender and in
all present and future deposit accounts (as that term is defined in the Code)
including, without limitation, the Depository Accounts, the Blocked Account and
the L/C Cash Collateral Account. For purposes of this Agreement, any property in
which the Agent, any Lender or any such Affiliate has any security or title
retention interest shall be deemed to be in the custody of the Agent, such
Lender or of such Affiliate.
SECTION III.3. Termination. Upon (i) the termination of this
Agreement and the indefeasible payment in full of all Obligations and (ii) (A)
the acknowledgment in writing of all beneficiaries of Letters of Credit as to
the termination of each Letter of Credit or (B) the deposit in the L/C Cash
Collateral Account of an amount not less than 105% of the aggregate then undrawn
amount of the outstanding Letters of Credit, the Agent shall promptly deliver to
the Borrower upon the Borrower's request and at the Borrower's expense, releases
and satisfactions of all financing statements, notices of assignment and other
registrations of security and the Borrower shall deliver to the Agent and the
Lenders a general release of all of the Agent's and the Lenders' liabilities and
obligations under all Loan Documents and an acknowledgment that the same have
been terminated (except for (a) those provisions which are expressly stated to
survive the termination of this Agreement and (b) any obligations with respect
to outstanding Letters of Credit secured by cash collateral). For purposes of
this Section 3.3, the Obligations shall be deemed to be indefeasibly paid in
full (a) if the Borrower (or, if final payment is made by another Person, such
other Person) is Solvent on the date of such payment, after giving effect
thereto or (b) in all other cases, ninety-one days after such final payment in
full.
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SECTION III.4. Recourse to Security. Recourse to security shall not
be required for any Obligation hereunder and the Borrower hereby waives any
requirement that the Agent exhaust any right or take any action against any of
the Collateral before proceeding to enforce the Obligations against the
Borrower.
SECTION III.5. Special Provisions Relating to Receivables and Related
Matters.
(a) Receivables Documents. Upon the occurrence and continuance of an
Event of Default, the Borrower shall deliver to the Agent the following, all in
form, content and scope satisfactory to the Agent:
(i) (A) copies or the originals of each signed note,
letter of credit or other instrument for the payment of money which
evidences a Receivable of the Borrower, (B) any power therefor
executed in blank, duly endorsed to the order of the Agent, and (C) a
schedule listing its Receivables so evidenced; and
(ii) such endorsements or assignments of its Receivables
and other information relating to the Receivables of the Borrower as
the Agent may from time to time reasonably request, and the originals
of any such document or instrument, including, without limitation,
those referred to in clause (i) above, delivered to the Agent shall
be held as collateral by the Agent.
(b) Disputes. Except in the ordinary course of business, the Borrower
shall not, from and after the Closing Date, settle or adjust any Receivable, or
grant any credit or allowance with respect thereto, except, so long no Event of
Default has occurred and is continuing, the Borrower may settle or adjust
Receivables, or grant such credits or allowances, involving a disputed amount
not to exceed $1,000,000 in the aggregate, without the Required Lenders'
consent. The Agent may, with the consent of the Required Lenders (if sought by
the Agent), following the occurrence and continuance of an Event of Default and
after giving written notice of its intent to act in accordance herewith, settle
or adjust disputes or claims directly with account debtors for amounts and upon
terms which it considers advisable.
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SECTION III.6. Special Provisions Relating to Equipment.
(a) Location. Each item of Equipment of the Borrower with a book or
fair market value in excess of $50,000, now owned or hereafter acquired, will be
kept at a location shown on Schedule 3.6(a) and may not be moved for a period of
more than sixty days to a location not specified in such Schedule unless the
Borrower has given the Agent at least thirty days' prior written notice thereof
and the Required Lenders have given their prior written consent thereto, which
shall not be unreasonably withheld or delayed. In no event shall any Equipment
be moved outside the United States or Canada. The Borrower shall at all times
hereafter keep correct and accurate records itemizing and describing the
location, kind, type, age and condition of Equipment, the Borrower's cost
therefor and accumulated depreciation thereof and retirements, sales, or other
dispositions thereof, all of which records shall be available on demand during
the Borrower's usual business hours to any of the officers, employees or agents
of the Agent.
(b) Repair. The Borrower shall keep all of its Equipment in good
repair and good operating condition in accordance with industry standards in all
material respects (normal wear and tear excepted), and will make all repairs and
replacements when and where necessary and practical, consistent with the
then-current Business Plan, will not waste or destroy it or any part thereof,
and will not be negligent in the care or use thereof. The Borrower shall repair
and maintain all Equipment in accordance with industry practices in all material
respects and in a manner sufficient to continue the operation of its business as
heretofore conducted. The Borrower shall keep accurate lists and records of all
the Equipment. The Equipment shall be used in accordance with law and the
manufacturer's instructions and shall be kept separate from and shall not be
annexed or affixed to or become part of any Property or any other realty.
(c) Disposal. Where the Borrower is permitted to dispose of any
Equipment under this Agreement or by any consent thereto hereafter given by the
Required Lenders, the Borrower shall do so at arm's length, in good faith and by
obtaining the maximum amount of recovery practicable therefor and without
impairing the operating integrity or value of the remaining Equipment in any
material respect.
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ARTICLE IV
INTEREST, FEES AND EXPENSES
---------------------------
SECTION IV.1. Interest. The Borrower shall pay to the Agent for the
ratable benefit of the Lenders interest on the Loans calculated monthly in
arrears at an interest rate per annum equal to (i) a fluctuating rate equal to
the Base Rate then in effect, plus 1.50%, with respect to the Revolving Credit
Loans, which shall change each day as the Base Rate changes, and (ii) a
fluctuating rate equal to the Base Rate then in effect, plus 3.50%, with respect
to the Term Loan, in each case to be payable in arrears on the first Business
Day of each month, commencing with the month immediately following the Closing
Date, on the Availability Expiration Date, and on the Term Loan Maturity Date.
SECTION IV.2. Interest After Event of Default. Upon the occurrence
and during the continuance of an Event of Default, interest on the Revolving
Credit Loans shall be payable on the dates referred to in Section 4.1 and on
demand at a rate per annum equal to the rate in effect under Section 4.1(i) plus
2%.
SECTION IV.3. Facility Fee. The Borrower shall pay to the Agent on
the Closing Date a non-refundable facility fee in the amount set forth in the
letter agreement of even date herewith between the Borrower and the Agent.
SECTION IV.4. Unused Line Fee. The Borrower shall, for the period
from the Closing Date through the Availability Expiration Date, pay in arrears
to the Agent for the ratable benefit of the Lenders on the first Business Day of
each month, commencing December, 1999, and on the Availability Expiration Date,
in arrears, an unused line fee equal to .375% per annum of the difference
between (i) the Maximum Amount of the Facility, and (ii) the average daily
outstanding amount of (A) the Revolving Credit Loans and (B) the aggregate
undrawn amount of all outstanding Letters of Credit during such month or portion
thereof; provided, however, that the unused line fee shall be reduced by an
amount equal to .375% of the difference between (i) the aggregate Proportionate
Share of all Defaulting Lenders (if any) and (ii) the average daily outstanding
amount of Revolving Credit Loans made by such Defaulting Lenders during such
month or portion thereof, and all unused line fees shall thereafter be payable
only to non-defaulting Lenders.
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SECTION IV.5. Letter of Credit Fees. The Borrower shall promptly pay
to the Agent, for the account of HUB or any other issuer of Letters of Credit,
all issuance fees, fronting fees, transfer fees and other customary fees and
charges reasonably charged by HUB or such other issuing bank in connection with
the issuance or administration of each Letter of Credit and a letter of credit
fee in the amount set forth in the letter agreement of even date herewith
between the Borrower and the Agent.
SECTION IV.6. Agency Fees. The Borrower shall pay to the Agent for
its own account such closing fees and other fees as may from time to time be
agreed between the Borrower and the Agent.
SECTION IV.7. Early Termination Fee. The Borrower shall have the
right to terminate this Agreement at any time on thirty days' prior written
notice to the Agent, provided that on the date of such termination all
Obligations, including, without limitation, all interest and fees payable to the
date of such termination, including, without limitation, the accrued and unpaid
amount of any agency or similar fees, shall be paid in full, and an amount equal
to the amount of all outstanding Letters of Credit shall be on deposit in the
L/C Cash Collateral Account. If (i) the Borrower gives such notice to terminate
or (ii) the obligations of the Agent to cause Letters of Credit to be issued,
and of the Lenders to purchase participations in Letters of Credit or to make
Revolving Credit Loans, terminate pursuant to Section 9.2(b), in each case prior
to December 31, 2000, the Borrower shall, in addition to all accrued and unpaid
agency and other fees payable under or in connection with this Agreement, pay a
fee to the Agent for the ratable benefit of the Lenders in an amount equal to
$120,000; provided, however, that the Borrower shall not be required to pay the
fee under this Section if the Borrower terminates this Agreement and pays the
Obligations in full (which shall include, without limitation, all Obligations
payable under Section 4.9) within thirty days following the imposition of any
claim for indemnification by any Lender under Section 4.9, (B) the Agent resigns
or (C) the Agent does not hold at least 50.1% of the aggregate Loans outstanding
at any time).
SECTION IV.8. Calculations. All calculations of interest and fees
hereunder shall be made by the Agent, on the basis of a year of 365 or 366 (as
applicable) days for the actual number of days elapsed in the period for which
such interest or fees are payable. Each determination by the Agent of an
interest rate, fee or other payment hereunder shall be final, conclusive and
binding for all purposes, absent manifest error.
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SECTION IV.9. Indemnification in Certain Events. If, after the
Closing Date, either (i) any change in or in the interpretation of any law or
regulation is introduced, including, without limitation, with respect to reserve
requirements, applicable to any of the Lenders or any other banking or financial
institution from which any of the Lenders borrows funds or obtains credit, (ii)
any of the Lenders complies with any future guideline or request from any
central bank or other Governmental Authority or (iii) any of the Lenders
determines that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof has or would
have the effect described below, or any of the Lenders complies with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, and in the case of any
event set forth in this clause (iii), such adoption, change or compliance has or
would have the direct or indirect effect of reducing the rate of return on any
of the Lender's capital as a consequence of its obligations hereunder to a level
below that which such Lender could have achieved but for such adoption, change
or compliance (taking into consideration such Lender's policies as the case may
be with respect to capital adequacy) by an amount deemed by such Lender to be
material, and any of the foregoing events described in clauses (i), (ii) and
(iii) increases any Lender's cost of funding or maintaining the Loans, or
reduces the amount receivable in respect thereof by any of the Lenders, then the
Borrower shall, upon demand by the Agent, pay to the Agent for the account of
the applicable Lender additional amounts sufficient to indemnify such Lender
against such increase in cost or reduction in amount receivable. Upon the
occurrence of any event giving rise to the application of this Section involving
an amount in excess of $25,000 in the aggregate, or $10,000 per Lender, the
applicable Lender shall, if requested by the Borrower, use reasonable efforts to
avoid or minimize the increase of costs or reduction in the amount receivable
resulting from such event so long as such avoidance or minimization can be made
in such a manner that such Lender, in its sole determination, suffers no
economic, legal or regulatory disadvantage.
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ARTICLE V
CONDITIONS PRECEDENT
--------------------
SECTION V.1. Conditions to Initial Revolving Credit Loans and Initial
Letter of Credit. The obligation of the Agent to cause to be issued the initial
Letter of Credit or of the Lenders to make the initial Revolving Credit Loans or
purchase participations in such Letters of Credit hereunder is subject to the
satisfaction of the following conditions prior to or concurrent with such
initial Revolving Credit Loans or Letter of Credit:
(a) the Agent shall have received the following, each dated the date
of the initial Revolving Credit Loans or Letter of Credit or as of such earlier
date acceptable to the Agent, in form and substance satisfactory to the Agent
and, except for the Revolving Credit Notes, in sufficient copies for each
Lender:
(i) a Revolving Credit Note to the order of each Lender,
duly executed by the Borrower;
(ii) the Pledge Agreement, duly executed by each of the
Pledgors and acknowledged by each of the Borrower's Subsidiaries
specified in Schedule 5.1(a)(ii), together with original certificates
evidencing the shares of stock or other equity interests pledged
thereunder and undated transfer powers therefor, executed in blank,
and the original promissory notes pledged thereunder (including,
without limitation, the Intercompany Note) and undated note powers
therefor, executed in blank;
(iii) the Guaranty, duly executed by each of the Pledgors;
(iv) the Contribution Agreement, duly executed by each of
the Pledgors;
(v) the Blocked Account Agreement, duly executed by the
Agent, CHI Finance and the Blocked Account Bank;
(vi) the Depository Account Agreement, duly executed by
the Agent, the Borrower, CHI Finance and the Depository Account Bank;
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(vii) acknowledgment copies of Uniform Commercial Code
financing statements (naming the Agent as secured party and each of
the Pledgors as debtors) and termination statements, in form and
substance satisfactory to the Agent, duly filed in all jurisdictions
that the Agent deems necessary or desirable to perfect and protect
the Liens created hereunder and under the other Loan Documents;
(viii) completed requests for information, dated on or
before the date of the initial Revolving Credit Loans or Letter of
Credit, listing all effective financing statements that name each of
the Pledgors as debtor, together with copies of such financing
statements;
(ix) the Support Letter, duly executed by Xxxxxx X. Xxxxx;
(x) the Subordination Agreement, duly executed by CHI
Finance;
(xi) a Solvency Certificate of each of the Borrower and
the other Pledgors, duly executed by the chief accounting officer of
the Borrower or such Pledgor, as the case may be;
(xii) a completed perfection certificate, substantially in
the form of Exhibit L, signed by a Responsible Officer of the
Borrower and each other Pledgor;
(xiii) (A) the audited Financial Statements for the fiscal
year ended December 31, 1998 certified by PricewaterhouseCoopers LLP,
(B) a certificate executed by the chief accounting officer of the
Borrower certifying that since December 31, 1998, no change, event,
occurrence or development or event involving a prospective change in
the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of the Borrower or
otherwise has occurred which has had or could reasonably be expected
to have a Material Adverse Effect, and that all information provided
by or on behalf of the Borrower to the Agent hereunder or in
connection herewith is true and correct in all respects and (C) an
internally-prepared balance sheet and profit and loss statement of
CHI Finance for the six-month period ended June 30, 1999, certified
by the chief accounting officer of CHI Finance;
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(xiv) the opinion of counsel for the Borrower and the
other Pledgors, substantially in the form of Exhibit M hereto, which
the Borrower hereby requests its counsel to provide;
(xv) evidence satisfactory to the Agent of all insurance
policies required by this Agreement and the other Loan Documents,
together with loss payee endorsements for all such policies naming
the Agent as lender loss payee or assignee and, in the case of such
policies covering the Facilities, as an additional insured;
(xvi) a copy of the Business Plan, covering the
eleven-year period commencing with the fiscal year of the Borrower
ending December 31, 1999, accompanied by a certificate executed by
the Borrower's chief accounting officer certifying to the Agent that
the Business Plan has been prepared in good faith based upon the
assumptions contained therein and all information currently available
and, as of the date of such certificate, he is not aware of any
information contained in the Business Plan which is false or
misleading;
(xvii) a copy of the Governing Documents of the Borrower
and each other Pledgor and a copy of the resolutions of the board of
directors of the Borrower and each other Pledgor authorizing the
execution, delivery and performance of this Agreement, the other Loan
Documents and the transactions contemplated hereby and thereby,
attached to which is a certificate of the Secretary or an Assistant
Secretary of the Borrower or such Pledgor certifying (A) that such
copies of the Governing Documents and resolutions are true, complete
and accurate copies thereof, have not been amended or modified since
the date of such certificate and are in full force and effect and (B)
the incumbency, names and true signatures of the officers of the
Borrower or such Pledgor authorized to sign the Loan Documents to
which it is or is to be a party;
(xviii) a certified copy of the certificate of the
Secretary of State of the state of incorporation of the Borrower and
each other Pledgor, dated within five days of the Closing Date,
listing the certificate of incorporation of the Borrower or such
other Pledgor and each amendment thereto on file in such official's
office and certifying that such amendments are the only amendments to
such certificate of incorporation on file in that office;
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(xix) a good standing certificate from the Secretary of
State of each state in which the Borrower, each Pledgor and each
Pledged Subsidiary is incorporated or qualified as a foreign
corporation or limited partnership, each dated within five days of
the Closing Date;
(xx) a certified copy of the employment agreement between
the Borrower and Xxxxxx X. Xxxxx, which shall be for an initial term
expiring on December 31, 2002, subject to subsequent automatic
renewal absent notice to the contrary, together with evidence
satisfactory to the Agent that Xxxxxx X. Xxxxx has been elected to
the board of directors of the Borrower commencing November 7, 1997;
(xxi) copies of any other material agreements, or other
documents or instruments evidencing obligations of the Borrower due
to any Person other than the Agent and the Lenders;
(xxii) an environmental assessment of the Facilities and
other real property of the Borrower and its Subsidiaries, in form and
substance satisfactory to the Agent, prepared by Xxxxxx Xxxxx, the
Borrower's Director of Engineering and Construction, or another
certified environmental engineer satisfactory to the Agent;
(xxiii) such agreements and instruments as any issuer of
Letters of Credit deems necessary to issue letters of credit; and
(xxiv) such other agreements and instruments as the Agent
reasonably deems necessary.
(b) There shall be no pending or threatened litigation, proceeding,
inquiry or other action seeking an injunction or other restraining order,
damages or other relief with respect to the transactions contemplated by this
Agreement, the other Loan Documents, or the transactions contemplated hereby or
thereby or the Borrower's business, prospects, operations, assets, liabilities
or conditions (financial or otherwise), except where such litigation,
proceeding, inquiry or other action could not reasonably be expected to have a
Material Adverse Effect.
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(c) The Borrower shall have paid all accrued fees and expenses of the
Agent in connection with the negotiation, preparation, execution and delivery of
the Loan Documents (including, without limitation, all of the Agent's
examination, audit, appraisal, environmental assessment, recording and travel
expenses and the fees and expenses of counsel to the Agent) and all other fees
required to be paid by the Borrower on or before the Closing Date under Article
IV.
(d) Except for (i) the filing of financing and termination statements
under the Code specified in Section 5.1(a)(vii) and (ii) consents or
authorizations which have been obtained and are specified in Schedule 6.1(f), no
consent or authorization of, filing with or other act by or in respect of, any
Governmental Authority or any other Person shall be required in connection with
the execution, delivery, performance, validity or enforceability of this
Agreement, the Notes or the other Loan Documents or the consummation of the
transactions contemplated hereby or thereby or the continuing operations of the
Borrower or any of its Subsidiaries following the consummation of such
transactions.
(e) (i) No change, occurrence, event or development or event
involving a prospective change that could reasonably be expected to have a
Material Adverse Effect shall have occurred and be continuing since December 31,
1998, and (ii) there shall not have occurred a substantial impairment of the
financial markets generally that could reasonably be expected to affect
materially and adversely the transactions contemplated hereby, in each case as
determined by the Agent in its sole discretion.
(f) The Agent and its counsel shall have performed (i) a review
satisfactory to the Agent of all of the Material Contracts and other assets of
the Borrower, the financial condition of the Borrower, including, without
limitation, all of its tax, litigation, environmental, ERISA and other
liabilities (including contingent liabilities and all liabilities of the
Borrower under its chapter 11 plan), and the corporate and capital structure of
the Borrower; (ii) site visits and reference checks; and (iii) a collateral
review, in each case with results satisfactory to the Agent.
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(g) The Borrower shall be in compliance in all material respects with
all Requirements of Law and Material Contracts.
(h) There shall exist no Default, and the representations and
warranties contained in this Agreement and the other Loan Documents shall be
true and correct immediately prior to, and after giving effect to, the Revolving
Credit Loans to be made or Letters of Credit to be issued on the Closing Date
and the application of the proceeds thereof.
SECTION V.2. Conditions Precedent to Each Revolving Credit Loan and
Each Letter of Credit. The obligation of the Lenders to make any Revolving
Credit Loans other than the initial Revolving Credit Loans or to purchase
participations in any Letters of Credit caused to be issued by the Agent, and of
the Agent to cause to be issued any Letters of Credit, in each case other than
the initial Letter of Credit, are subject to the following conditions precedent:
(a) all representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct on and as of the date of
such Revolving Credit Loan or Letter of Credit as if then made, other than
representations and warranties that expressly relate solely to an earlier date,
in which case they shall be true and correct as of such earlier date;
(b) no Default shall have occurred and be continuing, or would result
from the making of, the requested Revolving Credit Loan or Letter of Credit as
of the date of such request;
(c) no Material Adverse Effect shall have occurred or shall be
reasonably likely to occur, after giving effect to the making of such Revolving
Credit Loan or the issuance of such Letter of Credit, as a result of any drawing
or payment under a Letter of Credit with respect to which the Agent has not
received for the ratable benefit of the Lenders cash collateral for the full
amount thereof; and
(d) the Projected Minimum Coverage Ratio, as of the date of such
Revolving Credit Loans and taking into account the aggregate principal amount of
such Revolving Credit Loans, is not less than 1:15 to 1.00.
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SECTION V.3. Determinations Under Section 5.1. For purposes of
determining compliance with the conditions specified in Section 5.1, each Lender
shall be deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter required thereunder to be consented to or
approved by or to be acceptable or satisfactory to the Lenders unless the Agent
and the Borrower shall have received written notice from such Lender prior to
the initial Revolving Credit Loans or Letter of Credit specifying its objection
thereto.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION VI.1. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) Organization, Good Standing and Qualification. Each of the
Borrower and its Subsidiaries (i) is a corporation or partnership duly
organized, validly existing and (if a corporation or limited partnership) in
good standing under the laws of the state of its organization specified in
Schedule 6.1(a), (ii) has the power and authority to own its properties and
assets and to conduct the business in which it now is, or proposes to be,
engaged and (iii) except for CHI-Dexter, Inc. and CHI-Black River, Inc. (which
are not qualified or authorized to do business in the State of New York), is
duly qualified, authorized to do business and (if a corporation or limited
partnership) in good standing in each jurisdiction where it now is, or proposes
to be, engaged in business. Schedule 6.1(a) specifies each jurisdiction in which
the Borrower and its Subsidiaries is qualified to do business as a foreign
corporation or limited partnership as of the Closing Date.
(b) Locations of Offices, Records and Collateral. The address of the
principal place of business and chief executive office of each of the Borrower
and the other Pledgors is the address specified in the introductory paragraph of
this Agreement (other than Essex Company, whose principal place of business and
chief executive office is located in Andover, Massachusetts), and the books and
records of the Borrower and all of its chattel paper are maintained at, the
address of the Borrower specified in the introductory paragraph of this
Agreement and the other locations specified in Schedule 6.1(b). Records of the
Borrower's Receivables are maintained at the offices specified in Schedule
6.1(b). There is no jurisdiction in which the Borrower has any Collateral valued
in excess of $50,000 in the aggregate other than those jurisdictions specified
in Schedule 6.1(b).
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(c) Authority. Each of the Borrower and the other Pledgors has the
requisite corporate power and authority to execute, deliver and perform its
obligations under each of the Loan Documents. All corporate action necessary for
the execution, delivery and performance by the Borrower and each other Pledgor
of the Loan Documents (including the consent of shareholders where required) has
been taken.
(d) Enforceability. This Agreement is and, when executed and
delivered, each other Loan Document to which the Borrower and each other Pledgor
is a party will be, the legal, valid and binding obligation of the Borrower or
such Pledgor enforceable in accordance with its terms, except as enforceability
may be limited by (i) bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) general principles of equity.
(e) No Conflict. The execution, delivery and performance of each Loan
Document by the Borrower and each other Pledgor do not and will not contravene
(i) any of the Governing Documents of the Borrower or such Pledgor, (ii) any
Requirement of Law or (iii) any Material Contract, and will not, except as
expressly specified herein, result in the imposition of any Liens upon any of
its properties.
(f) Consents and Filings. No consent, authorization or approval of,
or filing with or other act by, any Governmental Authority or other Person is
required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement or any other Loan Document, the consummation of
the transactions contemplated hereby or thereby or the continuing operations of
the Borrower or any of its Subsidiaries following such consummation, except (i)
those that have been obtained or made and are specified in Schedule 6.1(f) and
(ii) the filing of financing and termination statements under the Code.
(g) Subsidiaries; Ownership. As of the Closing Date, the Borrower has
no Subsidiaries and owns no capital stock or other equity interests, directly or
indirectly, of any other Person except as specified in Schedule 6.1(g). The
capital stock of the Borrower and its Subsidiaries is owned by the Persons and
in the amounts specified in Schedule 6.1(g). Each Designated Subsidiary and
Excluded Existing Subsidiary is designated as such on Schedule 6.1(g).
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(h) Affiliate Transactions. Except as specified in Schedule 6.1(h),
neither the Borrower nor any of its Subsidiaries is a party to or bound by any
agreement or arrangement (whether oral or written) to which any Affiliate of the
Borrower or such Subsidiary is a party except (i) in the ordinary course of and
pursuant to the reasonable requirements of the Borrower's or such Subsidiary's
business and (ii) upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary than it could obtain in a comparable arm's-length
transaction with an unaffiliated Person.
(i) Financial Data. The Borrower has provided to the Agent complete
and accurate copies of audited Financial Statements for the fiscal year ended
December 31, 1998. Such statements have been prepared in accordance with
accounting principles consistently applied throughout the period involved and
fairly present the results of operations and profits and losses of the Borrower
for the period covered. Except as specified in such Financial Statements or
Schedule 6.1(i), neither the Borrower nor any of its Designated Subsidiaries
has, as of the Closing Date, any Contingent Obligation, or liability for taxes,
unrealized losses, unusual forward or long-term commitments or long-term leases,
in each case involving an amount in excess of $50,000. During the period from
December 31, 1998 to and including the date hereof, there has been no sale,
transfer or other disposition by the Borrower or any of its Subsidiaries of any
part of its business or property and no purchase or other acquisition of any
business or property (including any capital stock of any other Person) with a
book or fair market value in excess of $1,000,000 in the aggregate for all such
sales, transfers or other dispositions. Since December 31, 1998, (i) there has
been no change, occurrence, development or event which has had or could
reasonably be expected to have a Material Adverse Effect and (ii) none of the
capital stock of the Borrower has been redeemed, retired, purchased or otherwise
acquired for value by the Borrower.
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(j) Accuracy and Completeness of Information. All data, reports and
information heretofore or contemporaneously furnished by or on behalf of the
Borrower in writing to the Agent, any of the Lenders or the Auditors for
purposes of or in connection with this Agreement or any other Loan Document, or
any transaction contemplated hereby or thereby, are true and accurate in all
material respects on the date as of which such data, reports and information are
dated or certified and not incomplete by omitting to state any material fact
necessary to make such data, reports and information not misleading at such
time. There are no facts now known to any officer of the Borrower which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect and which have not been specified herein, in the Financial
Statements, or in any certificate, opinion or other written statement made or
furnished by the Borrower to the Agent or any of the Lenders.
(k) No Joint Ventures or Partnerships. As of the Closing Date, the
Borrower is not engaged in any joint venture or partnership with any other
Person except as specified in Schedule 6.1(k).
(l) Corporate and Trade Name. During the past five years, the
Borrower has not been known by or used any corporate, trade or fictitious name
other than Consolidated Hydro, Inc., CHI and CHI Energy, Inc.
(m) No Actual or Pending Material Modification of Business. Except as
specified in the Business Plan delivered to the Agent on the Closing Date, there
exists no actual or, to the best of the Borrower's knowledge, threatened
termination, cancellation, limitation, modification or change in or of the
business relationship of the Borrower or any of its Subsidiaries with any
customer or group of customers whose purchases individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect.
(n) No Broker's or Finder's Fees. No broker or finder brought about
the obtaining, making or closing of the financial accommodations afforded
hereunder or in connection herewith by the Agent or the Lenders. No broker's or
finder's fees or commissions will be payable by the Borrower to any Person in
connection with the transactions contemplated by this Agreement.
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(o) Investment Company. The Borrower is not an "investment company,"
or an "affiliated Person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended. Neither the making of any Revolving Credit Loan or the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated by this Agreement or the
other Loan Documents will violate any provision of such Act or any rule,
regulation or order of the Securities and Exchange Commission thereunder.
(p) Public Utility.
(i) Neither the Borrower nor any of its Subsidiaries (by
reason of any action or inaction or by reason of the ownership or
operation by it or any Affiliate of any Facility or otherwise) is
subject to any type of financial, organizational or rate regulation
as an Electric Utility or to be regulated as a "public utility
company" or a company which is a "holding company" of a "public
utility company" subject to registration with the Securities and
Exchange Commission or to regulation under PUHCA.
(ii) Neither the Agent or the Lenders, nor any of their
Affiliates will, solely (i.e., without regard to any other activity
or operation) by reason of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated
hereby and thereby, be or deemed to be, or subject to regulation as a
"public utility company" or a company which is a "holding company" of
a "public utility company" subject to registration with the
Securities and Exchange Commission or to regulation under PUHCA or
any other Requirement of Law regulating utilities or independent
power procedures.
(iii) Each Facility owned by the Borrower or any of its
Affiliates on the Closing Date is (A) a "qualifying facility" within
the meaning of the PURPA regulations, eligible for the benefit of the
exemptions provided by 18 C.P.R. " 292.601 or an "exempt wholesale
generator" under the National Energy Policy Act of 1992 or (B) exempt
from all regulation under PUHCA.
(q) Margin Stock. The Borrower does not own any "margin stock" as
that term is defined in Regulation U of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") and the proceeds of Revolving
Credit Loans will be used only for the purposes contemplated hereunder.
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(r) Taxes and Tax Returns.
(i) The Borrower has properly completed and timely filed
all income tax returns it is required to file up to and including for
the year ended December 31, 1998. The information filed is complete
and accurate in all material respects. To the best of the Borrower's
knowledge, after due inquiry, all deductions taken in such income tax
returns are appropriate and in accordance with applicable laws and
regulations.
(ii) Except as specified in Schedule 6.1(r), all taxes,
assessments, fees and other governmental charges for periods
beginning prior to the date hereof have been timely paid (or, if not
yet due, adequate reserves therefor have been established) and the
Borrower has no liability for taxes in excess of the amounts so paid
or reserves so established, except for those outstanding taxes
secured by Permitted Liens.
(iii) Except as specified in Schedule 6.1(r), (A) no
deficiencies for taxes have been claimed, proposed or assessed by any
taxing or other Governmental Authority against the Borrower and no
tax Liens have been filed other than Permitted Liens and (B) there
are no pending or threatened audits, investigations or claims for or
relating to any liability of the Borrower for taxes and there are no
matters under discussion with any Governmental Authority which could
result in an additional liability of the Borrower for taxes beyond
amounts reserved therefor in accordance with GAAP. Except as is
required solely for the use by the Borrower of net operating loss
carryforwards, no extension of a statute of limitations relating to
taxes, assessments, fees or other governmental charges is in effect
as of the Closing Date with respect to the Borrower.
(iv) As of the Closing Date, the Borrower is not a party
to and has no obligations under any written tax sharing agreement or
agreement regarding payments in lieu of taxes.
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(s) No Judgments or Litigation. Except as specified in Schedule
6.1(s), no judgments, orders, writs or decrees are outstanding against the
Borrower or any of its Subsidiaries or otherwise involving any Facility, nor is
there pending or threatened any litigation, contested claim, investigation,
arbitration, or governmental proceeding by or against the Borrower or any of its
Subsidiaries or otherwise involving any Facility that (i) individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect or (ii)
purports to affect the legality, validity or enforceability of this Agreement,
the Notes or any other Loan Document or the consummation of the transactions
contemplated hereby or thereby.
(t) Real Property. Except as specified in Schedule 6.1(t), as of the
Closing Date, the Borrower does not own or lease any real property.
(u) Title to Property. The Borrower has (i) good and marketable fee
simple title to or valid leasehold interests in all of its real property and
(ii) good and marketable title to all of its other property, in each case free
and clear of Liens other than those Liens permitted by Section 7.2(c).
(v) No Other Indebtedness. After giving effect to the closing of this
Agreement and the transactions contemplated hereby, (A) the Borrower and its
Subsidiaries have no Indebtedness other than Indebtedness that is permitted
under Section 7.2(a) and (B) CHI Finance has no indebtedness, liabilities or
Contingent Obligations of any kind except as permitted under Section
7.2(b)(iii).
(w) Investments; Contracts. Except as specified in the Business Plan
or Schedule 6.1(i), neither the Borrower nor any of its Subsidiaries (i) has
committed to make any Investment to be paid from Projected Adjusted Consolidated
Unrestricted Cash Flow generated after the Availability Expiration Date and
involving an amount in excess of $1,000,000 in the aggregate, (ii) is a party to
any indenture, agreement, contract, instrument or lease or subject to any
charter, by-law or other corporate restriction or any injunction, order,
restriction or decree, which would materially and adversely affect its business,
operations, assets or financial condition, (iii) is a party to any "take or pay"
contract or (iv) has any material contingent or long-term liability, including,
without limitation, management contracts (excluding employment contracts of
full-time individual officers or employees and severance plans for former
officers or employees previously disclosed to the Agent in writing).
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(x) No Defaults. After giving effect to the closing of the
transactions contemplated herein, neither the Borrower nor any of its
Subsidiaries is in default under any term of any Material Contract or
Requirement of Law, which default could reasonably be expected to have a
Material Adverse Effect or otherwise cause an Event of Default to occur, nor has
the Borrower or any of its Subsidiaries received notice of any such default.
(y) Rights in Collateral; Priority of Liens. All of the Collateral is
owned or leased by the Borrower or the Pledgors, as applicable, free and clear
of any and all Liens, other than Permitted Liens. Upon the proper filing of the
financing statements and the termination statements specified in Section
5.1(a)(vii), the Liens granted pursuant to the Loan Documents constitute valid
and enforceable first, prior and perfected Liens on the Collateral.
(z) ERISA.
(i) Except as specified in Schedule 6.1(z), as of the
Closing Date, neither the Borrower nor any ERISA Affiliate maintains
or contributes to any Plan.
(ii) The Borrower and each ERISA Affiliate have fulfilled
all contribution obligations for each Plan (including obligations
related to the minimum funding standards of ERISA and the Internal
Revenue Code), and no application for a funding waiver or an
extension of any amortization period pursuant to Sections 303 and 304
of ERISA or Section 412 of the Internal Revenue Code has been made
with respect to any Plan.
(iii) No Termination Event has occurred nor has any other
event occurred that is likely to result in a Termination Event.
Neither the Borrower or any ERISA Affiliate, nor any fiduciary of any
Plan, is subject to any direct or indirect liability with respect to
any Plan under any Requirement of Law or agreement.
(iv) Neither the Borrower nor any ERISA Affiliate is
required to or reasonably expects to be required to provide security
to any Plan under Section 307 of ERISA or Section 401(a)(29) of the
Internal Revenue Code.
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(v) The Borrower and each ERISA Affiliate are in
compliance in all respects with any applicable provisions of ERISA
with respect to all Plans. There has been no prohibited transaction
as defined in Section 406 of ERISA or Section 4975 of the Internal
Revenue Code (a "Prohibited Transaction") with respect to any Plan or
any Multiemployer Plan. The Borrower and each ERISA Affiliate have
made when due any and all payments required to be made under any
agreement relating to a Multiemployer Plan or any Requirement of Law
pertaining thereto. With respect to each Plan and Multiemployer Plan,
the Borrower and each ERISA Affiliate have not incurred any liability
to the PBGC and have not had asserted against them any penalty for
failure to fulfill the minimum funding requirements of ERISA.
(vi) Each Plan which is intended to qualify under Section
401(a) of the Internal Revenue Code has received a favorable
determination letter from the IRS and no event has occurred which
would cause the loss of such qualification.
(vii) Neither the Borrower nor any ERISA Affiliate has
instituted or intends to institute proceedings to terminate any Plan.
(aa) Intellectual Property. Neither the Borrower nor any of its
Subsidiaries has any patents, trademarks, trade names, service marks or
copyrights, or any applications therefor or licenses thereof. To the best of the
Borrower's knowledge, neither the Borrower nor any of its Subsidiaries has
infringed any patent, trademark, service-xxxx, tradename, copyright, license or
other right owned by any other Person by the sale or use of any product,
process, method, substance, part or other material presently contemplated to be
sold or used, where such sale or use could reasonably be expected to have a
Material Adverse Effect and no claim or litigation is pending, or to the best of
the Borrower's knowledge, threatened against or affecting the Borrower or any of
its Subsidiaries that contests its right to sell or use any such product,
process, method, substance, part or other material.
(bb) Labor Matters. There are no collective bargaining agreements to
which the Borrower or any of its Subsidiaries is a party as of the Closing Date.
There are no existing or threatened strikes, lockouts or other disputes relating
to any collective bargaining or similar agreement to which the Borrower or any
of its Subsidiaries is a party which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(cc) Compliance with Environmental Laws. Except as specified in
Schedule 6.1(ac), (i) neither the Borrower nor any of its Subsidiaries is the
subject of a judicial or administrative proceeding or investigation relating to
the violation of any Environmental Law or asserting potential liability arising
from the release or disposal by any Person of any Hazardous Materials, (ii)
neither the Borrower nor, to the best of its knowledge after due inquiry, any of
its Subsidiaries has filed or received any notice under any Environmental Law
concerning the treatment, storage, disposal, spill or release or threatened
release of any Hazardous Materials at, on, beneath or adjacent to property owned
or leased by it, or the release or threatened release at any other location of
any Hazardous Material generated, used, stored, treated, transported or released
by or on behalf of the Borrower or any of its Subsidiaries and (iii) the
Borrower has no knowledge of any contingent liability of the Borrower or any of
its Subsidiaries for any release of any Hazardous Materials, which proceedings,
investigations notices and liabilities involve an amount in excess of $1,000,000
in the aggregate.
(dd) Licenses and Permits. Each of the Borrower and its Subsidiaries
has obtained, and holds in full force and effect, all franchises, licenses,
leases, permits, certificates, authorizations, qualifications, easements, rights
of way and other rights and approvals which are material to and necessary or
advisable for the operation of its business as now conducted and as proposed to
be conducted.
(ee) Material Contracts. Set forth on Schedule 6.1(ae) is a complete
and accurate list of all Material Contracts, as of the date hereof, showing the
parties, subject matter and term thereof. Each such contract has been duly
authorized, executed and delivered by the Borrower or its Subsidiary, as the
case may be, and each other party thereto. Each Material Contract is in full
force and effect and is binding upon and enforceable against all parties thereto
in accordance with its terms, and there exists no continuing default under such
contract by any party thereto which would enable any party to terminate the same
or be excused from performance thereunder.
(ff) Business and Properties. The business of the Borrower or any of
its Subsidiaries is not affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy or other casualty (whether or not covered by
insurance) that could reasonably be expected to have a Material Adverse Effect.
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(gg) Business Plan. The Business Plan and the Financial Statements
described in Section 6.1(i) delivered to the Agent on the Closing Date were
prepared in good faith on the basis of assumptions which were fair in the
context of the conditions existing at the time of delivery thereof and projected
for the period covered thereby, and, with respect to the Business Plan,
represented, at the time of delivery, the Borrower's best estimate of its future
financial performance.
(hh) Pledged Subsidiaries. The Pledged Subsidiaries constitute all
Subsidiaries of the Borrower, other than Excluded Existing Subsidiaries, whose
capital stock or other equity interests are not subject to restrictions
including, without limitation, terms of instruments of Permitted Indebtedness,
prohibiting the creation of a Lien thereon in favor of the Agent or the Lenders.
(ii) Instruments. The Borrower has furnished to the Agent the
originals of all letters of credit, promissory notes and other instruments in
its favor and such endorsements or assignments required by the Agent, and there
exist no other such instruments as of the Closing Date.
(jj) Survival of Representations. All representations made by the
Borrower in this Agreement and in any other Loan Document executed and delivered
by it in connection herewith shall survive the execution and delivery hereof and
thereof and the closing of the transactions contemplated hereby and thereby.
ARTICLE VII
COVENANTS OF THE BORROWER
-------------------------
SECTION VII.1. Affirmative Covenants. Until the satisfaction of all
Obligations in full, the termination of the Revolving Credit Commitments and the
Agent's obligation to cause to be issued Letters of Credit, and the expiration
or full cash collateralization of all Letters of Credit:
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(a) Corporate Existence. The Borrower shall, and shall cause each of
its Subsidiaries to, (i) maintain its corporate existence (if it is a
corporation) or its status as a partnership (if it is a partnership), (ii)
qualify to transact business as a foreign corporation or partnership where the
nature or extent of its business or the ownership of its property requires it to
be so qualified and (iii) maintain in full force and effect all licenses, bonds,
franchises, leases, trademarks and qualifications to do business, and all
patents, contracts and other rights and privileges necessary or advisable to the
profitable conduct of its businesses or the performance of its obligations under
this Agreement and the other Loan Documents, except to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
(b) Maintenance of Property. The Borrower shall, and shall cause each
of its Designated Subsidiaries to, keep all property useful, necessary and
material to its business in good working order and condition (ordinary wear and
tear excepted) as may be required or appropriate.
(c) Affiliate Transactions. The Borrower shall conduct transactions
with its Affiliates on an arm's-length basis or other basis no less favorable to
the Borrower than could be obtained in a comparable arm's-length transaction
with a Person that is not an Affiliate of the Borrower.
(d) Taxes and other Claims. The Borrower shall, and shall cause each
of its Subsidiaries to, pay and discharge when due (i) all federal, state and
local tax assessments and other governmental charges and levies imposed against
the Borrower or such Subsidiary or any of its property; and (ii) all lawful
claims that, if unpaid, might by law become a Lien upon its property; provided,
however, that any such tax assessment, charge, levy or claim need not be paid if
it is being contested, in good faith, by appropriate proceedings diligently
conducted and if an adequate reserve or other appropriate provision shall have
been made therefor as required in accordance with GAAP.
(e) Government Regulations. The Borrower shall, and shall cause each
of its Subsidiaries to, comply with all applicable federal, state, local or
foreign laws and regulations, including, without limitation, those relating to
environmental matters, employee matters (including the collection, payment and
deposit of employees' income, unemployment and social security taxes) and with
respect to pension liabilities, except where the failure to comply would not
have a Material Adverse Effect.
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(f) Insurance. The Borrower shall, and shall cause each of its
Subsidiaries to, maintain adequate insurance on all property and assets of the
Borrower or such Subsidiary (including, without limitation, the Collateral) and
its Subsidiaries (including, without limitation, the Facilities), including
fire, theft, burglary, pilferage, casualty, general liability, worker's
compensation, public liability, business interruption, third party property
damage and replacement value insurance under such policies of insurance, with
such insurance companies, in such amounts and covering such risks as are at all
times reasonably satisfactory to the Agent, all of which policies covering (i)
the Collateral shall name the Agent as loss payee and (ii) the Facilities (to
the extent available) shall name the Agent as an additional insured.
(g) Books and Records; Inspections. The Borrower shall, and shall
cause each of its Subsidiaries to, (i) maintain adequate books and records
(including, without limitation, computer printouts and programs) in accordance
with GAAP and otherwise reflecting all financial transactions of the Borrower or
such Subsidiary, (ii) maintain books and records (including, without limitation,
computer printouts and programs) pertaining to the Collateral in such detail,
form and scope as is consistent with good business practice and (iii) provide
the Agent and its agents access to the premises of the Borrower or such
Subsidiary at any reasonable time and from time to time, during normal business
hours and upon reasonable notice under the circumstances, and at any reasonable
time on and after the occurrence of a Default, for the purposes of (A)
inspecting and verifying the Collateral, (B) inspecting and copying (at the
Borrower's expense) any and all records pertaining thereto, and (C) discussing
the affairs, finances and business of the Borrower or any of its Subsidiaries
with any officers or directors of the Borrower or any of its Subsidiaries or
with the Auditors.
(h) Notification Requirements. The Borrower shall timely give to each
Lender the following notices and other documents:
(i) Notice of Defaults. Promptly, and in any event within
five Business Days after becoming aware of the occurrence of a
Default, a certificate of the chief accounting officer of the
Borrower specifying the nature thereof and the Borrower's proposed
response thereto, each in reasonable detail.
(ii) Proceedings, Adverse Changes and other Events.
Promptly, and in any event within ten Business Days after the
Borrower becomes aware of any of the following, (A) notice of (I) any
proceeding being
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instituted or threatened to be instituted by or against the Borrower
or any of its Subsidiaries in any federal, state, local or foreign
court or before any commission or other regulatory body (federal,
state, local or foreign) which has or could reasonably be expected to
have a Material Adverse Effect, (II) any order, judgment or decree
which has or could reasonably be expected to have a Material Adverse
Effect being entered against the Borrower or any of its Subsidiaries
or any of its properties or assets, (III) any actual change,
development or event including, without limitation, any investigation
or proceeding before any Governmental Authority which has had or
could reasonably be expected to have a Material Adverse Effect, (IV)
a change in the location of any of the Collateral from the places
indicated in or permitted by this Agreement or any other Loan
Document, or (V) a proposed or actual change of the Borrower's or any
of its Designated Subsidiaries' or any Pledgor's name, identity or
corporate structure, and (B) a written statement describing such
proceeding, order, judgment, decree, change, development or event and
any action being taken with respect thereto by the Borrower or such
Subsidiary.
(iii) ERISA Notices.
(A) Promptly, and in any event within ten
Business Days after a Termination Event has occurred, a
written statement of the chief accounting officer of the
Borrower describing such Termination Event and any action
that is being taken with respect thereto by the Borrower
or any ERISA Affiliate, and any action taken or threatened
by the Internal Revenue Service, the Department of Labor
or the PBGC;
(B) promptly, and in any event within ten
Business Days after the filing thereof with the Internal
Revenue Service, a copy of each funding waiver request
filed with respect to any Plan subject to the funding
requirements of Section 412 of the Internal Revenue Code
and all communications received by the Borrower or any
ERISA Affiliate with respect to such request;
(C) promptly, and in any event within ten
Business Days after receipt by the Borrower or any ERISA
Affiliate of the PBGC's intention to terminate a Pension
Plan or to have a trustee appointed to administer a
Pension Plan, a copy of each such notice;
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(D) promptly, and in any event within ten
Business Days after the occurrence thereof, notice
(including the nature of the event and, when known, any
action taken or threatened by the Internal Revenue Service
or the PBGC with respect thereto) of:
(I) any Prohibited Transaction which
could subject the Borrower or any ERISA
Affiliate to a civil penalty assessed pursuant
to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Internal Revenue Code in
connection with any Plan, or any trust created
thereunder,
(II) any cessation of operations (by
the Borrower or any ERISA Affiliate) at a
facility in the circumstances described in
Section 4062(e) of ERISA,
(III) a failure by the Borrower or
any ERISA Affiliate to make a payment to a Plan
required to avoid imposition of a Lien under
Section 302(f) of ERISA or Section 412(n) of
the Internal Revenue Code,
(IV) the adoption of an amendment to
a Plan requiring the provision of security to
such Plan pursuant to Section 307 of ERISA or
Section 401(a)(29) of the Internal Revenue
Code, or
(V) any change in the actuarial
assumptions or funding methods used for any
Plan, where the effect of such change is
materially to increase or reduce the unfunded
benefit liability or obligation to make
periodic contributions;
(E) promptly upon the request of the Agent,
each annual report (IRS Form 5500 series) and all
accompanying schedules, the most recent actuarial reports,
the most recent financial information concerning the
financial status of each Plan administered or maintained
by the Borrower or any ERISA Affiliate, and schedules
showing the amounts contributed to each such Plan by or on
behalf of the Borrower or any ERISA Affiliate in which any
of its personnel participate or from which such
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personnel may derive a benefit, and each Schedule B
(Actuarial Information) to the annual report filed by the
Borrower or any ERISA Affiliate with the Internal Revenue
Service with respect to each such Plan;
(F) promptly upon the filing thereof, copies of
any Form 5310, or any successor or equivalent form to Form
5310, filed with the PBGC in connection with the
termination of any Plan, and copies of any standard
termination notice or distress termination notice filed
with the PBGC in connection with the termination of any
Pension Plan;
(G) promptly, and in any event within ten
Business Days after receipt thereof by the Borrower or any
ERISA Affiliate, notice and demand for payment of
withdrawal liability under Section 4201 of ERISA with
respect to a Multiemployer Plan;
(H) promptly, and in any event within ten
Business Days after receipt thereof by the Borrower or any
ERISA Affiliate, notice by the Department of Labor of any
penalty, audit, investigation or any purported violation
of ERISA with respect to a Plan;
(I) promptly, and in any event within ten
Business Days after receipt thereof by the Borrower or any
ERISA Affiliate, notice by the Internal Revenue Service or
the Treasury Department of any income tax deficiency or
delinquency, excise tax penalty, audit or investigation
with respect to a Plan; and
(J) promptly, and in any event within ten
Business Days after receipt thereof by the Borrower or any
ERISA Affiliate, notice of any administrative or judicial
complaint, or the entry of a judgment, award or settlement
agreement, in either case with respect to a Plan that
could have a Material Adverse Effect.
(iv) Material Contracts. Promptly, and in any event within
ten Business Days after (A) any Material Contract is terminated or
amended (other than amendments which are ministerial or
non-substantive in nature as determined by the Agent in its sole
discretion) or (B) any new Material Contract is entered into,
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a written statement describing such event, with copies of
amendments or new contracts, and an explanation of any
actions being taken with respect thereto.
(v) Environmental Matters. Promptly, and in any event
within ten Business Days after receipt by the Borrower or any of its
Subsidiaries thereof, copies of each (A) written notice that any
violation of any Environmental Law may have been committed or is
about to be committed by the Borrower or such Subsidiary, (B) written
notice that any administrative or judicial complaint or order has
been filed or is about to be filed against the Borrower or such
Subsidiary alleging violations of any Environmental Law or requiring
the Borrower or such Subsidiary to take any action in connection with
the release of toxic or Hazardous Materials into the environment, or
(C) written notice from a Governmental Authority or other Person
alleging that the Borrower or such Subsidiary may be liable or
responsible for costs associated with a response to or cleanup of a
release of a Hazardous Material into the environment or any damages
caused thereby, which notices involve an amount in excess of
$1,000,000 in the aggregate.
(i) Casualty Loss. The Borrower shall (i) provide written notice to
the Agent, within ten Business Days, of any damage to, the destruction of or any
other loss to any asset or property owned or used by the Borrower or any
condemnation, confiscation or other taking, in whole or in part, or any use that
otherwise diminishes so as to render impracticable or unreasonable the use of
such asset or property owned or used by the Borrower together with the amount of
the damage, destruction, loss or diminution in value, in each case if the amount
involved exceeds $200,000 (a "Casualty Loss") and (ii) diligently file and
prosecute its claim or claims for any award or payment in connection with a
Casualty Loss.
(j) Instruments. The Borrower shall furnish to the Agent the
originals of all letters of credit, promissory notes and other instruments in
its favor and such endorsements or assignments as the Agent may reasonably
request.
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(k) Financial Reporting. The Borrower shall deliver to the Agent and
each Lender the following:
(i) Annual Financial Statements. As soon as available, but
not later than one hundred twenty days after the end of each fiscal
year of the Borrower, beginning with the fiscal year ending December
31, 1999, (A) the Borrower's annual audited Financial Statements; (B)
to the extent not included in the Financial Statements delivered
pursuant to clause (A) above, a comparison in reasonable detail to
the prior year's financial statements in form satisfactory to the
Agent; (C) the Auditors' unqualified opinion, a "Management Letter"
and a statement indicating (I) that, in conducting the audit for such
opinion, nothing came to the attention of the Auditors (without
making any special examination for the purpose of such statement)
causing them to believe that the Borrower was not in compliance with
Section 8.1, 8.2 or 8.4 insofar as it relates to accounting matters,
provided that the Auditors shall not be liable in respect of such
statement by reason of any failure to obtain knowledge of any such
Default that would not be disclosed in the course of an audit
examination conducted in accordance with GAAP and (II) if, in the
opinion of the Auditors, any such Default referred to in the
foregoing clause (I) shall exist, the nature and status thereof shall
be included; and (D) to the extent not included in the Financial
Statements delivered pursuant to clause (A) above, a narrative
discussion of the Borrower's financial condition and results of
operations and the liquidity and capital resources for such fiscal
year, prepared by the chief accounting officer of the Borrower.
(ii) Quarterly Financial Statements. As soon as available,
but not later than sixty days after the end of the first three
quarters of each fiscal year of the Borrower, commencing with the
first fiscal quarter ending September 30, 1999, quarterly Financial
Statements as at the end of such quarter, certified by the chief
accounting officer of the Borrower, together with a compliance
certificate signed by the chief accounting officer of the Borrower,
substantially in the form of Exhibit N hereto, with an attached
schedule of calculations demonstrating compliance with the Financial
Covenants.
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(iii) Monthly Revenue Reports. As soon as available, but
not later than thirty days after the end of each month, commencing
with the month of September 1999, a report setting forth on a
Facility-by-Facility basis the power production and the revenues of
the Facilities during such month, and otherwise in form satisfactory
to the Agent, together with a comparison to the revenues projected in
the then-current Business Plan for such month, certified by the chief
accounting officer of the Borrower.
(iv) Weekly Depository Account and other Statements. On
the first Business Day of each week, commencing with the week
beginning November 8, 1999, (i) copies of statements reflecting all
activity in the Depository Accounts and the Blocked Account during
the preceding week, including, without limitation, opening and
closing balances, and (ii) a statement of all other bank accounts
maintained by the Borrower or its Subsidiaries, substantially in the
form of the weekly "Corporate Bank Account Balances" report delivered
by the Borrower to Lyon Credit Corporations under the Original Loan
Agreement, which report shall list all such accounts by bank, owner,
account number and amount on deposit.
(v) Excluded Future Subsidiaries. As soon as available,
but not later than sixty days after the end of each of the first
three fiscal quarters of each fiscal year (or 120 days after the end
of each fiscal year) of the Borrower, a certificate of the chief
accounting officer of the Borrower (A) identifying each Excluded
Future Subsidiary that has had negative cash flow in the preceding
fiscal quarter based on the criteria specified in the definition of
Projected Adjusted Consolidated Cash Flow and (B) specifying the
amount of such negative cash flow.
(vi) Projections. Not later than thirty days after the end
of each fiscal year of the Borrower, an update (calculated in
accordance with Exhibit P) to the cash flow projections contained in,
and any other modifications required to maintain the accuracy of, the
Business Plan of the Borrower, in form and substance satisfactory to
the Required Lenders, for the period commencing with the next fiscal
year of the Borrower and covering the period ending on the earlier of
the eleventh anniversary of (A) the date thereof and (B) the
Availability Expiration Date (which projections shall be prepared on
a quarterly basis for the first year of such eleven-year period and
on an annual basis thereafter), certified by the chief accounting
officer of the Borrower.
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(vii) Shareholder and SEC Reports. As soon as available,
but not later than five days after the same are sent or filed, as the
case may be, copies of all financial statements and reports that the
Borrower sends to all of its shareholders or files with the
Securities and Exchange Commission or any other Governmental
Authority.
(viii) Other Financial Information. Promptly after the
request by the Agent therefor, such additional financial statements
and other related data and information as to the business, prospects,
operations, results of operations, assets, liabilities or condition
(financial or otherwise) of the Borrower or any of its Subsidiaries
as the Agent may from time to time reasonably request.
(l) Punctual Payment. The Borrower shall timely pay the principal and
interest and any other amount due under this Agreement and the other Loan
Documents.
(m) ERISA. The Borrower shall, and shall cause each of its ERISA
Affiliates to, (i) maintain each Plan intended to qualify under Section 401(a)
of the Internal Revenue Code so as to satisfy the qualification requirements
thereof; (ii) contribute, or require that contributions be made, in a timely
manner (A) to each Plan in amounts sufficient (I) to satisfy the minimum funding
requirements of Section 302 of ERISA or Section 412 of the Internal Revenue
Code, if applicable, (II) to satisfy any other Requirements of Law and (III) to
satisfy the terms and conditions of each such Plan, and (B) to each Foreign Plan
in amounts sufficient to satisfy the minimum funding requirements of any
applicable law or regulation, without any application for a waiver from any such
funding requirements; (iii) cause each Plan or Foreign Plan to comply in all
material respects with applicable law (including, without limitation, all
applicable statutes, orders, rules and regulations); and (iv) pay in a timely
manner, in all material respects, all required premiums to the PBGC. As used in
this Section, "Foreign Plan" means a plan that provides retirement or health
benefits and that is maintained by, or otherwise contributed to, the Borrower
for the benefit of employees outside the United States.
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(n) Environmental Matters. The Borrower shall, and shall cause each
of its Subsidiaries to, conduct its business so as to comply in all respects
with all applicable Environmental Laws in all jurisdictions in which it is doing
business including, without limitation, compliance with the terms and conditions
of all permits and governmental authorizations, except to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
(o) Payment of Dividends and Distributions. Subject to contractual
restrictions applicable to Subsidiaries of the Borrower that are in effect on
the Closing Date or are contained in instruments of Permitted Indebtedness or
the Governing Documents applicable to such Subsidiaries, the Borrower shall
cause each of its Subsidiaries (other than Excluded Future Subsidiaries) (i) to
declare and pay cash dividends, partnership or similar distributions or similar
forms of payment made on account of equity interests, as the case may be, so as
to maximize the amount of cash distributable to the Borrower from time to time.
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(p) Certain Subsidiary Guaranties and Pledges. If any Person (i)
becomes a wholly owned Subsidiary of the Borrower after the Closing Date, (ii)
is a wholly owned Subsidiary of the Borrower whose capital stock or other equity
interests are, on the Closing Date, prohibited from being subjected to any Lien
in favor of the Agent for the benefit of the Lenders which prohibition
thereafter ceases to exist or (iii) is a wholly owned Excluded Existing
Subsidiary on the Closing Date and thereafter becomes a Subsidiary that is not
an Excluded Existing Subsidiary, then the Borrower shall (A) promptly notify the
Agent thereof, (B) within 120 days thereof (or in the case of CHI Canada, Inc.,
within thirty days thereof), cause the owner of the capital stock or other
equity interests of such Subsidiary (other than an Excluded Future Subsidiary),
if it is theretofore not a Pledgor, to execute and deliver to the Agent a
counterpart of the Guaranty, the Contribution Agreement and the Pledge Agreement
and (C) take, and cause such Subsidiary to take, all such further actions and
execute all such further documents and instruments as may be required to grant
and perfect in favor of the Agent for the ratable benefit of the Lenders, a
first priority Lien (or, if such Subsidiary is acquired, a Lien subject to any
existing Liens) on all the shares of capital stock or the equity interests of
such Subsidiary including, without limitation, the delivery to the Agent, of all
such other documents and instruments as the Agent may reasonably request
including, without limitation, a Notice in the form of Annex II thereto, duly
executed by the applicable Pledgor and Pledged Subsidiary, a Supplement to the
Pledge Agreement in the form of Annex III thereto, duly executed by the
applicable Pledgor, and an Acknowledgment and Consent in the form attached
thereto, duly executed by the applicable Pledged Subsidiary; provided, however,
that (I) none of the foregoing requirements shall apply with respect to any
Subsidiary that is restricted from entering into the Guaranty or whose shares or
other equity interests may not be pledged under the Pledge Agreement based upon
restrictions contained in an instrument of Permitted Indebtedness applicable to
such Subsidiary and (II) if any such Subsidiary becomes an Excluded Future
Subsidiary after the actions specified in clause (B) hereof have been taken, the
Agent shall release (x) such Subsidiary from the Guaranty and (y) the capital
stock or other equity interests of such Subsidiary from the Lien of the Pledge
Agreement, and such Subsidiary shall thereafter cease to be deemed a party to
the Contribution Agreement.
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(q) CHI Canada; CHI-Dexter, Inc. and CHI-Black River, Inc.. The
Borrower shall, (i) on or before December 31, 1999, cause the capital stock of
CHI Canada, Inc. to cease to be subject to any restriction on the creation of a
Lien thereon in favor of the Agent and (ii) on or before March 3, 2000, cause
each of CHI-Dexter, Inc. and CHI-Black River, Inc. to qualify and become
authorized to do business, and to be in good standing, in each jurisdiction in
which it is or proposes to be engaged in business.
(r) Solvency. The Borrower shall, and shall cause each of its
Designated Subsidiaries to, maintain a Solvent Condition at all times.
(s) Further Assurances. The Borrower shall take all such further
actions and execute all such further documents and instruments as the Agent may
at any time determine in its reasonable discretion to be necessary or desirable
to carry out and consummate the transactions contemplated by the Loan Documents
and to perfect or protect the Liens (and the priority status thereof) of the
Agent on the Collateral.
SECTION VII.2. Negative Covenants. Until the satisfaction of all
Obligations in full, the termination of the Revolving Credit Commitments and the
Agent's obligation to cause to be issued Letters of Credit, and the expiration
or full cash collateralization of all Letters of Credit:
(a) Indebtedness. The Borrower will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Indebtedness other than Permitted Indebtedness.
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(b) Contingent Obligations. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, incur, assume, or
suffer to exist any Contingent Obligation, other than (i) Contingent Obligations
that constitute Permitted Indebtedness, (ii) Contingent Obligations incurred in
the ordinary course of business and of a type consistent with the Borrower's or
such Subsidiary's prior practices and not exceeding $1,000,000 in the aggregate
at any time, (iii) Contingent Obligations arising under guaranties or
indemnities incurred in connection with the acquisition, sale or financing of
assets or property, if such acquisition, sale or financing is otherwise
permitted hereunder (other than any Contingent Obligations with respect to
Non-Recourse Debt unless such Contingent Obligations are included in the
definition of Non-Recourse Debt), in each case so long as such Contingent
Obligations are not required by GAAP to be disclosed on the Borrower's or such
Subsidiary's financial statements or in any financial statement or report
delivered by the Borrower or such Subsidiary to its shareholders or to the
Securities and Exchange Commission, or (iv) Contingent Obligations specified in
Schedule 7.2(b) hereto.
(c) Liens, etc. The Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on or with respect to any of its assets or any interest therein
of any character whether now owned or hereafter acquired other than Permitted
Liens. If, notwithstanding the foregoing provision of this Section, the Borrower
or any of its Subsidiaries creates, assumes or suffers to exist any Lien (other
than a Permitted Lien) on its property or assets (including, without limitation,
property which is acquired after the date hereof) not expressly permitted by
this Section, the Borrower will, or will cause such Subsidiary to,
simultaneously therewith make effective provision to secure the Obligations
equally and ratably with all other indebtedness so secured (but shall not take
any steps to secure such other indebtedness equally and ratably with the
Obligations) and will promptly provide written notice thereof to the Agent.
Nothing in this subsection is intended to relieve the Borrower from its
obligations set forth in the first sentence of this Section.
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(d) Consolidation and Merger. The Borrower will not, and will not
permit any of its Designated Subsidiaries to, wind up, liquidate or dissolve its
affairs or enter into any transaction of merger or consolidation, or agree to do
any of the foregoing at any future time, except (i) any wholly-owned Subsidiary
of the Borrower may be merged or consolidated with or into the Borrower
(provided that the Borrower shall be the continuing or surviving corporation) or
with or into any one or more wholly-owned Subsidiaries of the Borrower and (ii)
any group of wholly-owned Subsidiaries of the Borrower may be merged or
consolidated with or into each other, provided that, (A) if the Borrower is a
party to such merger or consolidation, it shall be the continuing or surviving
corporation and its Tangible Net Worth shall, immediately after giving effect to
such merger or consolidation, not be reduced as a result thereof and (B) if a
Pledgor or a Pledged Subsidiary and another Subsidiary of the Borrower that is
not a Pledgor or a Pledged Subsidiary are the parties to such merger or
consolidation, such Pledgor or Pledged Subsidiary shall be the continuing or
surviving corporation (unless, in the case that a non-Pledgor is a party to such
merger or consolidation, it simultaneously therewith becomes a Pledgor and a
party to the Guaranty) and its Tangible Net Worth shall, immediately after
giving effect to such merger or consolidation, not be reduced as a result
thereof.
(e) Corporate Changes, etc. Except to the extent otherwise expressly
permitted under this Agreement, the Borrower will not, and will not permit any
of its Subsidiaries to, (A) amend, alter or modify its Governing Documents or
its corporate or capital structure or status in a manner that could reasonably
be expected to have a Material Adverse Effect or (B) except in the case of the
Borrower or any Excluded Future Subsidiary, issue any capital stock or warrants,
options or rights to purchase capital stock.
(f) Change of Business. Except to the extent otherwise expressly
permitted under this Agreement, the Borrower will not, and will not permit any
of its Subsidiaries to, make any material change in the nature of its business
as carried on at the date hereof or enter into any new type of business except
as specified in the Business Plan delivered to the Agent under Section
5.1(a)(xvi).
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(g) Sales, etc. of Assets. The Borrower will not, and will not permit
any of its Designated Subsidiaries to, directly or indirectly, sell, lease,
transfer or otherwise dispose of any assets, or grant any option or other right
to purchase, lease or otherwise acquire any assets, except for the sale or other
disposition of (i) water from its impoundments at rates that compensate for any
lost power production revenues, to the extent required under local or state law
or ordinances and permitted under the permits and licenses governing a Facility,
(ii) inventory and spare parts and other assets not necessary to the conduct of
its business which are sold or otherwise disposed of in the ordinary course of
business, (iii) assets (A) the costs of operation or maintenance of which are,
in the reasonable determination of the Agent, greater than the revenues related
thereto or (B) which are specified in Schedule 7.2(g), the proceeds of which
shall be applied in accordance with the provisions of Section 2.13(b)(i), (iv)
equipment, if the proceeds thereof are used within thirty days of receipt
thereof to purchase replacement equipment of equal or greater value to the
extent permitted under Section 2.13(b)(i), (v) assets by Persons that become
Subsidiaries of the Borrower after the Closing Date if the Borrower shall have
given the Agent evidence satisfactory to the Agent that the net present value of
the amount to be paid for the assets sold exceeds the net book value or the net
present value thereof, the proceeds of which shall be deposited in the
Depository Accounts and applied in accordance with the provisions of Section
2.15(a) and (b), (vi) the assets or capital stock or other equity interests of
an Excluded Future Subsidiary if (A) written notice of such sale or other
disposition shall have been given by the Borrower to the Agent not less than
fifteen days before such sale or other disposition and (B) the Borrower shall
have given the Agent evidence satisfactory to the Agent that the net present
value of the amount to be paid for such assets or equity interests exceeds the
net book value or the net present value thereof, (vii) assets identified in
writing to the Agent at least ten days before sale, that are to be sold for
their fair market value in cash, not to exceed $200,000 in the aggregate in any
fiscal year, the proceeds of which shall be applied in accordance with the
provisions of Section 2.15(a) and (b), (viii) assets (A) to a Pledgor or (B) by
a Subsidiary of the Borrower that is not a Pledgor or a Pledged Subsidiary to
another Subsidiary of the Borrower, (ix) assets by CHI Finance to any Person
that becomes, by operation of law or otherwise, a party to the Guaranty
simultaneously with its acquisition of such assets and (x) emissions offsets or
other emissions reductions credits to the extent they are not required for the
operation of the Facilities under applicable Requirements of Law.
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(h) Cancellation of Debt. The Borrower will not, and will not permit
any of its Subsidiaries, other than Excluded Future Subsidiaries, to, cancel any
claim or debt owed to it, except (i) for consideration in the ordinary course of
business, (ii) cancellation of debt from a Pledgor to a Subsidiary of the
Borrower that is not a Pledgor, (iii) cancellation of debt that occurs by
operation of law in a transaction permitted under Section 7.2(d) and (iv)
cancellation of debt owed by a Subsidiary of the Borrower whose continued
existence is not required under Section 7.1(a).
(i) Loans to Other Persons. The Borrower will not, and will not
permit any of its Subsidiaries, other than Excluded Future Subsidiaries, to,
make any loan or otherwise advance any credit to any Person, except for loans
and advances (i) constituting Permitted Investments and (ii) made in the
ordinary course of business in an amount not exceeding $50,000 as to any Person,
and $250,000 as to all Persons, outstanding at any one time.
(j) Dividends, Stock Redemptions, Exchange, etc. The Borrower will
not, directly or indirectly, declare or pay any dividends on, or purchase,
redeem or retire any shares of any class of its capital stock (other than the
retirement of shares of the Borrower's Class B Common Stock upon the conversion
of such shares into shares of the Borrower's Class A Common Stock), or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of its capital stock or any warrants, options or rights
to purchase any such capital stock, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower other than (i)
dividends payable in shares of its common stock and (ii) so long as no Default
exists or would result therefrom (A) exchanges of capital stock of the Borrower
for capital stock of an Affiliate of the Borrower and (B) the repurchase of
capital stock of the Borrower, or warrants, options or rights therefor
(including, without limitation, employee stock options) not to exceed $100,000
in the aggregate for each fiscal year of the Borrower commencing with the fiscal
year of the Borrower ending December 31, 1998 ("Permitted Distributions"),
provided that any amount of Permitted Distributions that is not made by the
Borrower in any fiscal year may be carried forward to future fiscal years.
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(k) Investments. The Borrower will not, and will not permit any of
its Subsidiaries, other than Excluded Future Subsidiaries, to, directly or
indirectly, make or hold any Investment in any Person (whether in cash,
securities or other property of any kind) other than Permitted Investments.
(l) CHI Finance. The Borrower will not permit CHI Finance to,
directly or indirectly, create, incur, assume or suffer to exist any
indebtedness, liabilities or Contingent Obligations except as permitted under
Section 7.2(b)(iii).
(m) Fiscal Year. The Borrower will not change its fiscal year from a
year ending on December 31.
(n) Accounting Changes. The Borrower will not at any time make or
permit any change in accounting policies or reporting practices, except as
required or permitted by GAAP.
(o) No Prohibited Transactions Under ERISA. The Borrower will not,
and will not permit any of its ERISA Affiliates to, directly or indirectly:
(i) engage in any prohibited transaction which could
reasonably be expected to result in a civil penalty or excise tax
described in Section 406 of ERISA or 4975 of the Internal Revenue
Code for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the
Department of Labor;
(ii) permit to exist with respect to any Pension Plan any
accumulated funding deficiency (as defined in Sections 302 of ERISA
and 412 of the Internal Revenue Code), whether or not waived;
(iii) terminate any Pension Plan where such event would
result in any liability of the Borrower or any ERISA Affiliate under
Title IV of ERISA;
(iv) fail to make any required contribution or payment to
any Multiemployer Plan;
(v) fail to pay any required installment or any other
payment required under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other payment;
(vi) amend a Pension Plan resulting in an increase in
current liability for the plan year such that the Borrower or any
ERISA Affiliate is required to provide security to such Plan under
Section 307 of ERISA or Section 401(a)(29) of the Internal Revenue
Code; or
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(vii) withdraw from any Multiemployer Plan where such
withdrawal is reasonably likely to result in any liability of any
such entity under Title IV of ERISA.
(p) Unusual Terms of Sale. The Borrower will not, and will not permit
any of its Designated Subsidiaries to, sell any material goods or services to
customers on consignment terms or on any other unusual terms of sale that are
not in the ordinary course of business or in accordance with prior practice.
(q) Prepayments and Amendments of Material Contracts. Except as
specified in Schedule 7.2(q), the Borrower will not, and will not permit any of
its Subsidiaries, other than Excluded Future Subsidiaries, to, (i) prepay
(except (A) as required under the terms of the governing instrument or (B) in
the case of prepayments by Subsidiaries, to allow or accelerate distributions to
the Borrower), redeem, purchase, defease or otherwise satisfy prior to the
scheduled maturity thereof in any manner, or make any payment in violation of
any subordination terms of, any Indebtedness, other than the prepayment of the
Loans in accordance with the terms of this Agreement, or (ii) amend, modify,
cancel or terminate, or permit the amendment, modification, cancellation or
termination of, any of the Material Contracts, except in the event that any such
amendment, modification, cancellation or termination could not reasonably be
expected to have a Material Adverse Effect.
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(r) Leases. The Borrower will not, and will not permit any of its
Subsidiaries, other than Excluded Future Subsidiaries, to, enter into or permit
to remain in effect (i) any agreements to rent or lease any real or personal
property except for (A) leases existing on the date hereof and specified in
Schedule 7.2(r), and replacement leases for the same or comparable assets at
prevailing market rates, (B) leases in connection with Facilities whose
acquisition or expansion is otherwise permitted hereunder, (C) leases permitted
under Section 7.2(s) and (D) other leases entered into in the ordinary course of
business of the Borrower and its Subsidiaries, provided that the aggregate
amount of all payments by the Borrower and its Subsidiaries for all such leases
(other than leases permitted under clause (ii) hereof) under this clause (D)
during any twelve-month period commencing on or after the Closing Date shall not
exceed $500,000 or (ii) any agreements to rent or lease as lessee any personal
property for a period in excess of three years other than in connection with any
Facility site lease renewal or any Facility site leases executed in connection
with Facilities developed after the Closing Date to the extent permitted under
the Business Plan.
(s) Leasebacks. The Borrower will not, and will not permit any of its
Subsidiaries, other than Excluded Future Subsidiaries, to, enter into any
arrangement with any lender or investor providing for the leasing to the
Borrower or such Subsidiary of any property (i) which at the time has been or is
to be sold or transferred by the Borrower or such Subsidiary to such lender or
investor or to any Person to whom funds have been or are to be advanced by such
lender or investor on the security of such property or rental obligations of the
Borrower or such Subsidiary; or (ii) which has been or is being acquired from
another Person by such lender or investor or, if real property, on which one or
more buildings have been or are to be constructed by such lender or investor,
for the purpose of leasing the same to the Borrower or such Subsidiary except
for (A) leasebacks existing on the date hereof and specified in Schedule 7.2(s),
and leases of the same property from other owners and (B) leasebacks which would
constitute Non-Recourse Debt if the related lease obligations constituted
Indebtedness.
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(t) Purchase or Sale Agreements. The Borrower will not, and will not
permit any of its Subsidiaries, other than Excluded Future Subsidiaries, to,
enter into or be a party to any contract for the purchase or use of materials,
supplies or other property or for the performance of services if such contract
requires that payment for such materials, supplies or other property or the use
thereof, or for such services, shall be made by the Borrower or such Subsidiary
regardless of whether or not delivery is ever made of such materials, supplies
or other property, or such services are performed.
(u) Blocked Account and Depository Account Agreements. The Borrower
will not, and will not permit CHI Finance to, amend, modify or change, or
consent or otherwise agree to any amendment, modification or change to, the
Blocked Account Agreement or the Depository Account Agreement, except as
provided therein.
(v) Negative Pledge. The Borrower will not, and will not permit any
of its Subsidiaries to, enter into or suffer to exist any agreement prohibiting
or conditioning the creation or assumption of any Lien upon any of its assets,
except for (i) restrictions in existence on the Closing Date in connection with
Existing Indebtedness, and (ii) similar types of restrictions which may be
incurred with respect to Permitted Indebtedness.
(w) Use of Proceeds. The Borrower will not use any portion of the
proceeds of any Revolving Credit Loan in violation of Section 2.1(c) or for the
purpose of purchasing or carrying any "margin stock" (as defined in Regulation U
of the Federal Reserve Board) in any manner which violates the provisions of
Regulation T, U or X of such Board or for any other purpose in violation of any
applicable statute or regulation, or of the terms and conditions of this
Agreement.
(x) Limitation on Actions Affecting Public Utility Regulation.
(i) The Borrower will not, and will not permit any of its
Subsidiaries to, take or fail to take any action if, as a direct
consequence thereof, the Borrower or any of its Subsidiaries (other
than CHI Power Marketing, Inc.) would be, or be deemed to be, subject
to any financial, organizational or rate regulation as an Electric
Utility or to be regulated as a "public utility company" or a company
which is a "holding company" or a "public utility company" subject to
registration with the Securities and Exchange Commission or to
regulation under PUHCA.
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(ii) The Borrower will not, and will not permit any of its
Subsidiaries to, take or fail to take any action if, (A) as a sole
result of such action or inaction or (B) as a result of such action
or inaction in combination with other events, including, without
limitation, events that do not involve the Borrower or any of its
Subsidiaries (provided that the Agent or any of the Lenders has given
prior written notice to the Borrower of such other events), the Agent
or any of the Lenders would be "a public utility company" or a
company which is a "holding company" of a "public utility company" or
otherwise be subject to registration with the Securities and Exchange
Commission or to regulation under PUHCA or any other Requirement of
Law regulating utilities or independent power producers, provided
that it shall not be a violation of this Section if as a result of
the exercise of its remedies hereunder or under applicable law the
Agent or any of the Lenders obtains control of any Facility and thus
becomes subject to regulation as the owner of a "qualifying facility"
as defined under the PURPA regulations, or as an "exempt wholesale
generator" as defined under the National Energy Policy Act of 1992.
(y) Limitation on Dividend and Other Payment Restrictions. Except to
the extent required under the terms of the instruments of Permitted Indebtedness
or Requirements of Law applicable to the Borrower or any of its Subsidiaries,
the Borrower will not create or otherwise cause or suffer to exist or become
effective any restriction of any kind on the ability of any of its Subsidiaries
to (i) pay dividends or make any other distributions permitted by applicable law
on any capital stock of such Subsidiary or any other Subsidiary of the Borrower,
(ii) pay any Indebtedness owed to the Borrower or any other Subsidiary of the
Borrower, (iii) make loans or advances to the Borrower or any other Subsidiary
of the Borrower or (iv) transfer any of its property or assets to the Borrower
or any other Subsidiary of the Borrower.
(z) Bank Accounts, etc. Neither the Borrower nor any of its
Subsidiaries will maintain any checking, savings or other account at any bank or
other financial institution, or any other account where money or securities may
be deposited or maintained with any other Person other than the Blocked Account,
the Depository Accounts, the L/C Cash Collateral Account, any account maintained
by an Excluded Future Subsidiary, payroll accounts, the accounts specified in
Schedule 7.2(z) and any other accounts which are disclosed by the Borrower to
the Agent in the weekly reports delivered to the Agent under Section 7.1(k)(iv).
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ARTICLE VIII
FINANCIAL COVENANTS
-------------------
Until the satisfaction of all Obligations in full, the termination of
the Revolving Credit Commitments and the Agent's obligation to cause to be
issued Letters of Credit, and the expiration or cash collateralization in full
of all Letters of Credit:
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SECTION VIII.1. Tangible Net Worth. The Tangible Net Worth of the
Borrower shall not be less than $45,000,000 at any time.
SECTION VIII.2. Capital Expenditures. The amount of the Borrower's
and its Subsidiaries' aggregate Capital Expenditures made or committed to be
made (to the extent such commitments are required to be recorded as capital
expenditures in accordance with GAAP) in any fiscal year with respect to
Facilities owned by the Borrower or any of its Affiliates on the Closing Date,
other than Capital Expenditures (i) required to be made by the FERC or ordered
to be made by any other Regulatory Authority, (ii) made for the purpose of
repairing or rebuilding, substantially to their pre-existing condition,
Facilities which are damaged or destroyed by an act of nature or as the result
of any unforeseeable event, whether or not covered by insurance, (iii) made or
committed to be made (to the extent such commitments are required to be recorded
as capital expenditures in accordance with GAAP) from the proceeds of Permitted
Indebtedness or the sale of capital stock or other equity interests of the
Borrower or any of its Affiliates (to the extent permitted under the Loan
Documents) and (iv) made or committed to be made (to the extent such commitments
are required to be recorded as capital expenditures in accordance with GAAP)
from proceeds maintained in reserve or restricted accounts in accordance with
prior practices, which, in the case of Capital Expenditures of the type
specified in clause (ii), (iii) or (iv) above, to the extent such Capital
Expenditures exceed the amounts of Capital Expenditures projected in the
Business Plan to be made with proceeds from such sources, shall be made only
upon prior written notice to the Agent and shall not exceed the amount set forth
below opposite such fiscal year:
Fiscal Year Amount
----------- ------
2000 $2,781,000
2001 $2,119,000
2002 $2,169,000
2003 $2,126,000
2004 $2,196,000
2005 $2,268,000
2006 $2,341,000
provided that, so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, any such amount, if not expended during a
fiscal year for which it is permitted above, may be carried over for expenditure
in subsequent fiscal years.
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SECTION VIII.3. Post-Availability Expiration Date Expenditures.
Commencing on the Availability Expiration Date, (a) the Borrower will not, and
will not permit any of its Subsidiaries, other than Excluded Future
Subsidiaries, to, make any expenditures, from proceeds of Collections or
otherwise, for business development or general and administrative expenses
except as specified in the Business Plan for the period covered thereby and (b)
the release of funds to the Depository Accounts (with the allocation of such
funds between the two Depository Accounts to be made in the reasonable
discretion of the Borrower) from the Blocked Account under Section 2.10(c)(i)
shall be limited to the amounts authorized in the preceding clause (a).
SECTION VIII.4. Projected Minimum Coverage Ratio. The Projected
Minimum Coverage Ratio shall not be less than 1.15 to 1.00 as of December 31 of
any year.
ARTICLE IX
EVENTS OF DEFAULT
-----------------
SECTION IX.1. Events of Default. The occurrence of any of the
following events shall constitute an "Event of Default":
(a) the Borrower shall fail to pay any principal, interest, fees,
expenses or other Obligations within five days of the date when due, except with
respect to the last payments of principal, interest or fees due hereunder
(including, without limitation, upon acceleration), which shall be payable on
the date when due (or on the date of acceleration); or
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(b) the Borrower or any of its Subsidiaries shall fail to perform or
observe
(i) any term, condition, covenant or agreement contained
in Section 7.1(a), (b), (d), (e), (j), (k), (m) or (n) more than
thirty days after the earlier of (A) the date on which any officer of
the Borrower or such Subsidiary knew or reasonably should have known
of such failure in the ordinary course of his or her responsibilities
and (B) the date on which the Agent notified the Borrower and such
Subsidiary in writing of such failure, provided that, if (I) such
failure is capable of being cured within such thirty-day period and
(II) the Borrower or such Subsidiary initiates a cure thereof within
such period, it shall not become an Event of Default unless it
continues to exist on the earlier of (x) the Borrower or such
Subsidiary has ceased to attempt diligently (in the reasonable
judgment of the Agent) to cure such failure, and (y) ninety days
after the initial occurrence of such failure; or
(ii) the covenant contained in Section 8.4 by March 31 of
any year with respect to the preceding December 31; or
(iii) any other term, condition, covenant or agreement
contained in this Agreement or any other Loan Document to which it is
a party (except as provided in Section 9.1(a), (b)(i) or(b)(ii)),
provided that, if such failure (A) was unintentional, (B) could not
reasonably be expected to have a Material Adverse Effect and (C) is
capable of being cured within thirty days, it shall not become an
Event of Default unless it continues to exist at the end of such
thirty-day period; or
(c) the Borrower or any Designated Subsidiary (other than any
Subsidiary whose continued existence is not required under Section 7.1(a)) shall
dissolve, wind up or otherwise cease to conduct its business except as permitted
under Section 7.2(d); or
(d) the Borrower or any Designated Subsidiary shall become the
subject of (i) an Insolvency Event as set forth in clause (e) of the definition
of Insolvency Event that is not resolved or dismissed within sixty days or (ii)
any Insolvency Event except as set forth in clause (e) of the definition of
Insolvency Event; or
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(e) the Borrower or any of its Subsidiaries, other than Excluded
Future Subsidiaries, (i) shall fail to pay any Indebtedness (other than
Non-Recourse Debt)in an aggregate amount in excess of $250,000 (other than the
Indebtedness hereunder) including, without limitation, any interest or premium
thereon, when due (whether at scheduled maturity (taking into account all cure
periods) or by required prepayment, acceleration, demand or otherwise), or (ii)
shall otherwise be in breach or default in any of its obligations under any
agreement with respect to any such Indebtedness, if the effect of such breach,
default or failure to pay is to cause such Indebtedness to become due or
redeemed or permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to declare such Indebtedness due or
require such Indebtedness to be redeemed prior to its stated maturity; or
(f) any representation or warranty made by the Borrower or any of its
Subsidiaries under or in connection with any Loan Document, Financial Statement
or certificate delivered in connection therewith (i) shall prove to have been
incorrect in any respect when made or deemed made in the case of the
representations and warranties contained in Section 6.1(m), (s), (x), (ab), (ac)
or (af), or (ii) shall prove to have been materially incorrect when made or
deemed made in the case of any of the other representations or warranties of the
Borrower under the Loan Documents; or
(g) one or more federal tax liens (other than Permitted Liens) for
more than $100,000 shall be filed of record against the Borrower or any of its
Subsidiaries and shall not be stayed, bonded or discharged within thirty days;
or
(h) a Change of Control shall have occurred; or
(i) one or more judgments or orders for the payment of money in
excess of $500,000 in the aggregate (other than judgments and orders that are
fully covered by insurance and with respect to which the insurance company has
accepted liability) shall be rendered against the Borrower or any of its
Subsidiaries, other than Excluded Future Subsidiaries, and shall not be stayed,
vacated, bonded or discharged within thirty days; or
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(j) any covenant, agreement or obligation of the Borrower or any of
its Subsidiaries contained in or evidenced by any of the Loan Documents shall
cease to be enforceable, or shall be determined to be unenforceable, in
accordance with its terms and the Borrower or such Subsidiary shall not have
provided a substitute therefor which is reasonably acceptable to the Agent
within ten days of written notice thereof to the Borrower; the Borrower or any
of its Subsidiaries shall deny or disaffirm its obligations under any of the
Loan Documents or any Lien granted in connection therewith; or any Lien granted
on any of the Collateral shall be determined to be void, voidable or invalid, is
subordinated or is not given the priority contemplated by this Agreement or the
Pledge Agreement and the Borrower or such Subsidiary shall have not provided
substitute collateral therefor of a type, with a value, and under documentation
in form and substance reasonably acceptable to the Agent within ten days of
written notice thereof to the Borrower; or
(k) the Auditors shall deliver a Qualified opinion on the Borrower's
Financial Statements; or
(l) the occurrence of any event that could reasonably be expected to
have a Material Adverse Effect if such event continues to exist more than ten
days after the date on which the Agent notified the Borrower in writing of such
event.
SECTION IX.2. Acceleration and Cash Collateralization. Upon the
occurrence and during the continuance of an Event of Default, the Agent may or,
upon the request of the Required Lenders, the Agent shall:
(a) Acceleration. Declare all Obligations immediately due and payable
by written notice to the Borrower (except with respect to any Event of Default
with respect to the Borrower specified in Section 9.1(d), in which case the
Obligations shall automatically become immediately due and payable without
presentment, demand, protest or any other action or obligation of the Agent or
any of the Lenders except as stated in this subsection.
(b) Termination of Commitment. Declare the Revolving Credit
Commitments, or the Agent's obligations to use its best efforts to cause to be
issued Letters of Credit, immediately terminated (except with respect to any
Event of Default with respect to the Borrower specified in Section 9.1(d), in
which case such Commitments and obligation shall automatically terminate) and,
at all times thereafter, any Revolving Credit Loans made by a Lender or Letters
of Credit caused to be issued by the Agent pursuant to this Agreement shall be
in such Lender's or the Agent's sole and absolute discretion.
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(c) Blocked and Depository Accounts. Notify the Blocked Account Bank
and the Depository Account Bank to deliver to the Agent for application to the
outstanding Obligations all amounts on deposit in the Blocked Account or the
Depository Accounts.
(d) Cash Collateralization. With respect to all Letters of Credit
outstanding at the time of an acceleration pursuant to Section 9.2(a), or within
thirty days thereof in the case of an acceleration based solely upon an Event of
Default specified in Section 9.1(b) as it relates to a failure to perform any
term, covenant or agreement in Section 7.1(a), (b), (d), (e), (j), (m), (n) or
(o), require the Borrower to deposit in the L/C Cash Collateral Account an
amount equal to the aggregate then undrawn amount of the outstanding Letters of
Credit. Amounts held in the L/C Cash Collateral Account shall be under the sole
dominion and control of the Agent and shall be applied by the Agent to the
payment of drafts drawn under such Letters of Credit, and the balance, if any,
in the L/C Cash Collateral Account, after all such Letters of Credit shall have
expired or been fully drawn upon, shall be applied to repay the other
Obligations. After all such Letters of Credit shall have expired or been fully
drawn upon, all Obligations in respect of Letters of Credit shall have been
satisfied and all other Obligations shall have been paid in full, the balance,
if any, in the L/C Cash Collateral Account shall be returned to the Borrower.
SECTION IX.3. Other Remedies. In addition to those remedies set forth
in Section 9.2, upon the occurrence and during the continuance of an Event of
Default, the Agent shall have all rights and remedies with respect to the
Obligations and the Collateral under the Code, other applicable laws and the
Loan Documents, and the Agent may do any or all of the following:
(a) have full access to all documents, instruments, files and records
(including the copying of any computer records) relating to the Receivables of
the Borrower or use (at the expense of the Borrower) such supplies or space of
the Borrower at the Borrower's places of business necessary to administer and
collect its Receivables, other than Restricted Receivables;
(b) accelerate or extend the time of payment, compromise, issue
credits, or bring suit on the Receivables, other than Restricted Receivables, of
the Borrower (in the name of the Borrower or the Agent) and otherwise administer
and collect such Receivables;
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(c) sell, assign and deliver the Receivables of the Borrower, other
than Restricted Receivables, and any returned, reclaimed or repossessed
merchandise, with or without advertisement, at public or private sale, for cash,
on credit or otherwise, subject to applicable law;
(d) foreclose the security interests created pursuant to the Loan
Documents by any available procedure, or take possession of any or all of the
Collateral, without judicial process and enter any premises where any Collateral
may be located for the purpose of taking possession of or removing the same; and
(e) make any payment or take any other action necessary or desirable
to protect or preserve any Collateral, any of the Facilities or any other aspect
of the business of the Borrower or any of its Subsidiaries including, without
limitation, the maintenance of permits, rights of way, easements and licenses
relating to the Facilities or otherwise to the business activities of the
Borrower and paying on behalf of the Borrower or such Subsidiary insurance
premiums, tax obligations or any other liabilities which, if unpaid, could
result in the creation of a Lien on any of the Collateral or reasonably be
expected to have a Material Adverse Effect, all of which payments shall be
Obligations and secured by the Collateral, provided that nothing herein shall be
deemed to create any obligation on the part of the Agent to make any of the
foregoing payments or to take any other action.
To the extent permitted by applicable law, the Agent may bid or become a
purchaser at any sale, free from any right of redemption, which right is
expressly waived by the Borrower. If notice of intended disposition of any
Collateral is required by law, it is agreed that five Business Days' notice
shall constitute reasonable notification. The Borrower will assemble the
Collateral and make it available to the Agent at such locations as the Agent may
specify, whether at the premises of the Borrower or elsewhere, and will make
available to the Agent the premises and facilities of the Borrower for the
purpose of the Agent's taking possession of or removing the Collateral or
putting the Collateral in saleable form.
SECTION IX.4. License for Use of Software and Other Intellectual
Property. Unless expressly prohibited by any licensor thereof, the Agent is
hereby granted a license to use all computer software programs, data bases,
processes and materials used by the Borrower in connection with its businesses
or the Collateral. The Agent agrees not to use any such license prior to the
occurrence of an Event of Default without giving the Borrower prior notice
thereof.
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SECTION IX.5. No Marshalling; Deficiencies; Remedies Cumulative. The
Borrower waives any right to require the Agent to marshal any Collateral or
otherwise to compel the Agent to seek recourse against or satisfaction of the
Obligations from one source before seeking recourse or satisfaction from another
source. The net cash proceeds resulting from the Agent's exercise of any of the
foregoing rights to liquidate all or substantially all of the Collateral (after
deducting all of the Agent's expenses related thereto) shall be applied by the
Agent to the payment of the Obligations, whether due or to become due, in such
order as the Agent may elect. The Borrower shall remain liable to the Agent and
the Lenders for any deficiencies and the Agent and the Lenders in turn agree to
remit to the Borrower or its successors or assigns any surplus resulting
therefrom. The foregoing remedies are not intended to be exhaustive and the full
or partial exercise of any of them shall not preclude the full or partial
exercise of any other available remedy under this Agreement, under any other
Loan Document, at equity or at law.
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SECTION IX.6. Defense of Collateral; Continuation of Liens; Further
Assurances. The Borrower shall defend the Collateral against all claims and
demands of all Persons at any time claiming any interest therein, other than
Permitted Liens. The Borrower agrees to comply with the requirements of all
state and federal laws to grant to and continue in favor of the Agent for the
ratable benefit of the Lenders valid and perfected first security interests in
the Collateral. The Borrower agrees, from time to time, at the Agent's request,
to file notices of Liens, financing statements, and amendments, renewals and
continuations thereof, and cooperate with the Agent's representatives, in
connection with the continued perfection and protection of the Collateral. The
Borrower shall do all things and shall deliver all instruments reasonably
requested by the Agent to protect or perfect any security interest, pledge,
mortgage or lien given hereunder including, without limitation, financing
statements under the Code. The Borrower authorizes the Agent (i) to execute
alone any financing statement or other documents or instruments that the Agent
may reasonably require to perfect, protect or establish any Lien or security
interest hereunder, (ii) to sign the Borrower's name on the same and (iii) to
file this Agreement or any copy thereof as a financing statement, where
permitted by law. The Borrower appoints such Person or Persons as the Agent may
designate as its attorney-in-fact and upon the occurrence and continuance of an
Event of Default, such attorney-in-fact may endorse the name of the Borrower on
any checks, notes, drafts or other forms of payment or security that may come
into the possession of either the Agent or any Affiliate of the Agent to sign
the Borrower's name on invoices or bills of lading, drafts against customers,
notices of assignment, verifications and schedules and, generally, to do all
things necessary to carry out this Agreement. Upon the occurrence and
continuance of an Event of Default, such attorney-in-fact may notify the post
office authorities to change the address of delivery of mail to the then
existing address of the Borrower to an address designated by the Agent, and open
and dispose of mail addressed to the Borrower. The powers granted herein, being
coupled with an interest, are irrevocable, and the Borrower approves and
ratifies all acts of the attorney-in-fact. Neither the Agent nor the
attorney-in-fact shall be liable for any act or omission, error in judgment or
mistake of law so long as such act, omission, error or mistake does not
constitute intentional misconduct or gross negligence.
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ARTICLE X
THE AGENT
---------
SECTION X.1. Appointment of Agent.
(a) Each Lender hereby designates HUB as its Agent and irrevocably
authorizes the Agent to take action on such Lender's behalf under the Loan
Documents as is provided herein and to exercise the powers and to perform the
duties described therein and to exercise such other powers as are reasonably
incidental thereto. The Agent may perform any of its duties by or through its
agents or employees.
(b) Other than the Borrower's rights under Section 10.9, the
provisions of this Article X are solely for the benefit of the Agent and the
Lenders, and the Borrower shall not have any rights as a third party beneficiary
of any of the provisions hereof. The Agent shall act solely as agent of the
Lenders and assumes no obligation toward or relationship of agency or trust with
or for the Borrower.
SECTION X.2. Nature of Duties of Agent. The Agent shall have no
duties or responsibilities except those expressly set forth in the Loan
Documents. Neither the Agent nor any of its officers, directors, employees or
agents shall be liable for any action taken or omitted by it as such hereunder
or in connection herewith, unless caused by its or their gross negligence or
willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature. The Agent does not have a fiduciary relationship in
respect of any Lender or any participant of any Lender.
SECTION X.3. Lack of Reliance on Agent.
(a) Independently and without reliance upon the Agent, each Lender,
to the extent it deems appropriate, has made and shall continue to make (i) its
own independent investigation of the financial or other condition and affairs of
the Borrower in connection with the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of the
Borrower, and, except as expressly provided in this Agreement, the Agent shall
have no duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the making of the initial Revolving
Credit Loans or the issuance of the Initial Letter of Credit or at any time or
times thereafter.
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(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
collectability, priority or sufficiency of this Agreement or the Notes or the
financial or other condition of the Borrower. The Agent shall not be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or the Notes, or the financial
condition of the Borrower, or the existence or possible existence of any Default
or Event of Default, unless specifically requested to do so in writing by any
Lender.
SECTION X.4. Certain Rights of the Agent. The Agent may request
instructions from the Required Lenders at any time. If the Agent requests
instructions from the Required Lenders with respect to any action or inaction,
the Agent shall be entitled to await instructions from the Required Lenders
before such action or inaction. No Lender shall have any right of action based
upon the Agent's action or inaction in response to instructions from the
Required Lenders.
SECTION X.5. Reliance by Agent. The Agent may rely upon written or
telephonic communication it believes to be genuine and to have been signed, sent
or made by the proper person. The Agent may obtain the advice of legal counsel
(including counsel for the Borrower with respect to matters concerning the
Borrower), independent public accountants and other experts selected by it and
shall have no liability for any action or inaction taken or omitted to be taken
by it in good faith based upon such advice.
SECTION X.6. Indemnification of Agent. To the extent the Agent is not
reimbursed and indemnified by the Borrower, each Lender will reimburse and
indemnify the Agent to the extent of its Proportionate Share for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees and disbursements)
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in performing its duties hereunder or
otherwise relating to the Loan Documents unless resulting from the Agent's gross
negligence or willful misconduct. The agreements contained in this Section shall
survive any termination of this Agreement and the other Loan Documents and the
payment in full of the Obligations.
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SECTION X.7. The Agent in Its Individual Capacity. In its individual
capacity, the Agent shall have the same rights and powers hereunder as any other
Lender or holder of a Note or participation interests and may exercise the same
as though it was not performing the duties specified herein. The terms
"Lenders," "Required Lenders," "holders of Notes," or any similar terms shall,
unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory or other business with the Borrower or any
Affiliate of the Borrower as if it were not performing the duties specified
herein, and may accept fees and other consideration from the Borrower for
services in connection with this Agreement and otherwise without having to
account for the same to the Lenders. The Lenders hereby acknowledge that (i) HUB
has certain lending relationships with Subsidiaries of the Borrower and (ii) the
Borrower has agreed to pay to HUB, for its own account, certain fees in
connection with the issuance of Letters of Credit from time to time by HUB for
the account of the Borrower or its Subsidiaries.
SECTION X.8. Holders of Notes. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have been filed with
the Agent. Any request, authority or consent of any Person who, at the time of
making such request or giving such authority or consent, is the holder of any
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
SECTION X.9. Successor Agent.
(a) The Agent may, upon ten Business Days' notice to the Lenders and
the Borrower, resign by giving written notice thereof to the Lenders and the
Borrower. The Agent's resignation shall be effective upon the appointment of a
successor Agent.
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(b) Upon receipt of the Agent's resignation, the Required Lenders may
appoint a successor Agent which shall also be a Lender. Unless an Event of
Default shall have occurred and be continuing at the time of such appointment,
any successor Agent shall be subject to approval by the Borrower, which approval
shall not be unreasonably withheld and shall be delivered to the Required
Lenders within ten Business Days after the Borrower's receipt of notice of a
proposed successor Agent. If a successor Agent has not accepted its appointment
within fifteen Business Days, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent in compliance with the preceding sentence.
(c) Upon its acceptance of the agency hereunder, such successor Agent
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this Agreement. The retiring Agent shall
continue to have the benefit of this Article X for any action or inaction while
it was Agent.
SECTION X.10. Collateral Matters.
(a) The Agent is authorized to release any Lien granted to or held by
the Agent upon any Collateral (i) upon termination of the Revolving Credit
Commitments, expiration of all outstanding Letters of Credit and payment and
satisfaction of all of the Obligations, (ii) required to be delivered from
permitted sales of Collateral hereunder, if any, upon receipt of the proceeds or
(iii) if the release can be and is approved by the Required Lenders. The Agent
may request and the Lenders will provide confirmation of the Agent's authority
to release particular types or items of Collateral.
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(b) Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Agreement, or consented to in writing by
the Required Lenders or all of the Lenders, as applicable, and upon at least
five Business Days' prior written request by the Borrower, the Agent shall (and
is hereby irrevocably authorized by the Lenders to) execute such documents as
may be necessary to evidence the release of the Liens granted to the Agent for
the benefit of the Lenders herein or pursuant hereto upon the Collateral that
was sold or transferred; provided that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens upon (or obligations of the Borrower or any other Pledgor in respect
of) all interests retained by the Borrower or any Pledgor, including (without
limitation) the proceeds of the sale, all of which shall continue to constitute
part of the Collateral. In the event of any sale or transfer of Collateral, or
any foreclosure with respect to any of the Collateral, the Agent shall be
authorized to deduct all of the expenses reasonably incurred by the Agent from
the proceeds of any such sale, transfer or foreclosure.
(c) The Agent shall have no obligation to assure that the Collateral
exists or is owned by the Borrower or any other Pledgor, that such Collateral is
cared for, protected or insured, or that the Liens on the Collateral have been
created, perfected or have any particular priority. With respect to the
Collateral, the Agent may act in any manner it may deem appropriate, in its sole
discretion, given the Agent's own interest in the Collateral as one of the
Lenders and it shall have no duty or liability whatsoever to the Lenders, except
for its gross negligence or willful misconduct.
SECTION X.11. Actions with Respect to Defaults. In addition to the
Agent's right to take actions on its own accord as permitted under this
Agreement, the Agent shall take such action with respect to an Event of Default
as shall be directed by the Required Lenders. Until the Agent shall have
received such directions, the Agent may act or not act as it deems advisable and
in the best interests of the Lenders.
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SECTION X.12. Delivery of Information. The Agent shall not be
required to deliver to any Lender originals or copies of any documents,
instruments, notices, communications or other information received by the Agent
from the Borrower, any Subsidiary, the Required Lenders, any Lender or any other
Person under or in connection with this Agreement or any other Loan Document
except (i) as specifically provided in this Agreement or any other Loan Document
and (ii) as specifically requested from time to time in writing by any Lender
with respect to a specific document, instrument, notice or other written
communication received by and in the possession of the Agent at the time of
receipt of such request and then only in accordance with such specific request.
ARTICLE XI
GENERAL PROVISIONS
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SECTION XI.1. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY DISPUTE
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS
OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS
OF THE STATE OF NEW YORK.
SECTION XI.2. SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG THE
BORROWER AND THE LENDERS (OR THE AGENT ACTING ON THEIR BEHALF), WHETHER SOUNDING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND
FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, AND THE COURTS TO WHICH AN APPEAL
THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT ON BEHALF OF THE
LENDERS SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN ANY LOCATION REASONABLY SELECTED
BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT TO REALIZE ON SUCH PROPERTY, OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT. THE BORROWER
AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR
CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE LENDERS (OR THE AGENT ACTING ON
THEIR BEHALF). THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE LENDERS (OR THE AGENT ACTING ON THEIR BEHALF)
HAVE COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
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SECTION XI.3. SERVICE OF PROCESS. THE BORROWER HEREBY IRREVOCABLY
DESIGNATES XXXXXX XXXXXXX XXXXXXX BRODER & MICOLEAU LLC, XXX XXXXX XXXXX, 00XX
XXXXX, XXXXXXXX, XXXXX 00000, ATTENTION: XXXXXXX XXXXXXX, ESQ., AS THE DESIGNEE
AND AGENT OF THE BORROWER TO RECEIVE, FOR AND ON BEHALF OF THE BORROWER, SERVICE
OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON
SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL TO THE BORROWER,
BUT THE FAILURE OF THE BORROWER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY
THE SERVICE OF SUCH PROCESS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT
OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION XI.4. JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS
EACH HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO A TRIAL
BY JURY.
SECTION XI.5. LIMITATION OF LIABILITY. NEITHER THE AGENT NOR ANY
LENDER SHALL HAVE ANY LIABILITY TO THE BORROWER (WHETHER SOUNDING IN TORT,
CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY THE BORROWER IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS
CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE
JUDGMENT OR COURT ORDER BINDING ON THE AGENT OR ANY SUCH LENDER THAT THE LOSSES
WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE AGENT OR ANY SUCH LENDER. THE BORROWER HEREBY WAIVES ALL
FUTURE CLAIMS AGAINST THE AGENT AND THE LENDERS FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES UNLESS RESULTING FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE AGENT OR ANY SUCH LENDER.
SECTION XI.6. Delays; Partial Exercise of Remedies. No delay or
omission of the Agent or the Lenders to exercise any right or remedy hereunder
shall impair any such right or operate as a waiver thereof. No single or partial
exercise by the Agent or the Lenders of any right or remedy shall preclude any
other or further exercise thereof, or preclude any other right or remedy.
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SECTION XI.7. Notices. Except as otherwise provided herein, all
notices and correspondence hereunder shall be in writing and sent by certified
or registered mail, return receipt requested, by overnight delivery service,
with all charges prepaid, or by telecopier followed by a hard copy sent by
regular mail, if to the Agent, then to Xxxxxx United Bank, Soundview Plaza, 0000
Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, Telecopy: (000) 000-0000,
Attention: Xx. Xxxxxx X. Xxxxxx, Xx., Senior Vice President, with a copy to
Luskin, Xxxxx & Xxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Telecopy: (000) 000-0000, Attention: Xxxxxx X. Xxxxxx, Esq., if to any Lender,
then to its address specified opposite its name on Schedule 1, and if to the
Borrower, then to CHI Energy, Inc., Stamford Towers, 000 Xxxxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxxxxxx 00000, Telecopy: (000) 000-0000, Attention: Xx.
Xxxxxx X. Xxxxx, President, with a copy to Xxxxxx Xxxxxxx Xxxxxxx Broder &
Micoleau LLC, Xxx Xxxxx Xxxxx, 00xx Xxxxx, Xxxxxxxx, Xxxxx 00000, Telecopy:
(000) 000-0000, Attention: Xxxxxxx Xxxxxxx, Esq., or, in each case, to such
other address specified by any party in writing to the other parties in the
manner required under this Section. All such notices and correspondence shall be
deemed given (i) if sent by certified or registered mail, three Business Days
after being postmarked, (ii) if sent by overnight delivery service, when
received at the above stated addresses or when delivery is refused and (iii) if
sent by telecopier transmission, when such transmission is confirmed.
SECTION XI.8. Assignments and Participations.
(a) Borrower Assignment. The Borrower shall not assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
Agent and the Required Lenders.
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(b) Lender Assignments. Each Lender may, with the prior consent of
the Agent and the Borrower which, except as provided in the penultimate sentence
of this subsection (b), shall not be unreasonably withheld or delayed, assign to
one or more banks or other financial institutions all or a portion of its rights
and obligations under this Agreement, the Notes and the other Loan Documents,
and upon execution and delivery to the Agent, for its acceptance and recording
in the Register, of an agreement in substantially the form of Exhibit C (an
"Assignment and Assumption Agreement"), together with surrender of any Note or
Notes subject to such assignment and a processing and recordation fee of $2,500.
No such assignment shall be for less than $3,000,000 of the Revolving Credit
Commitments or Loans unless it is to another Lender. Any assignment by a Lender
hereunder shall include such Lender's Revolving Credit Loans, Revolving Credit
Commitment and Term Loan. Upon such execution and delivery to the Agent of an
Assignment and Assumption Agreement, from and after the date specified as the
effective date in the Assignment and Assumption Agreement (the "Acceptance
Date"), (x) the assignee thereunder shall be a party hereto, and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Assumption Agreement, such assignee shall have the rights and
obligations of a Lender hereunder and (y) the assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Assumption Agreement, relinquish its rights (other than
any rights it may have pursuant to Section 11.9 which will survive) and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption Agreement covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto). No consent of the Borrower shall be required
under the first sentence of this Section, (i) if an Event of Default has
occurred and is continuing, (ii) with respect to an assignment to a Lender, a
branch office of a Lender or an Affiliate of a Lender or (iii) with respect to a
pledge by a Lender of all or a portion of its rights and interests under this
Agreement, the Notes or the other Loan Documents to any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System or U.S. Treasury Regulation 31 CFR " 203.14, and such Federal Reserve
Bank shall be permitted to enforce such pledge in any manner permitted by
applicable law. If the Borrower's consent is required hereunder with respect to
an assignment by HUB other than in connection with a sale of a division, or
portfolio of assets, of the Lender, the Borrower may withhold such consent in
its sole and absolute discretion if, after giving effect to such assignment,
HUB's Proportionate Share would be less than 50.1%. In all cases where the
Borrower's consent to an assignment by a Lender is not required hereunder, the
Agent agrees to use reasonable efforts to give written notice of such assignment
to the Borrower promptly after its effectiveness, provided that the Agent's
failure to give such notice shall not invalidate or limit such assignment.
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(c) Agreements of Assignee. By executing and delivering an Assignment
and Assumption Agreement, the assignee thereunder confirms and agrees as
follows: (i) other than as provided in such Assignment and Assumption Agreement,
the assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
the Notes or any other instrument or document furnished pursuant hereto, (ii)
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Pledgor or the performance or observance by the Borrower or any other
Pledgor of any of their obligations under this Agreement, the Pledge Agreement
or any other instrument or document furnished pursuant hereto or thereto, (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the Financial Statements referred to in Section 6.1(i), the
Financial Statements delivered pursuant to Section 7.1(k), if any, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Assumption
Agreement, (iv) such assignee will, independently and without reliance upon the
Agent, such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (v) such
assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
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(d) Agent's Register. The Agent shall maintain a register of the
names and addresses of the Lenders, their Commitments and the principal amount
of their Loans (the "Register"). The Agent shall also maintain a copy of each
Assignment and Assumption Agreement delivered to and accepted by it and modify
the Register to give effect to each Assignment and Assumption Agreement. The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register and copies of each Assignment and
Assumption Agreement shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice. Upon its receipt of each Assignment and Assumption Agreement and
surrender of the affected Note or Notes subject to such assignment, the Agent
will give prompt notice thereof to the Borrower. Within five Business Days after
its receipt of such notice, the Borrower shall execute and deliver to the Agent
(i) before the Availability Expiration Date, a new Revolving Credit Note to the
order of the assignee in the amount of the Revolving Credit Commitment assumed
by it and to the assignor in the amount of the Revolving Credit Commitment
retained by it, if any, and (ii) after the Availability Expiration Date, a new
Term Note to the order of the assignee in the amount of the Term Loan assumed by
it and to the assignor in the amount of the Term Loan retained by it, if any.
Such new Note or Notes shall re-evidence the indebtedness outstanding under the
surrendered Note or Notes and shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Note or Notes and shall be
dated as of the Closing Date. The Agent shall be entitled to rely upon the
Register exclusively for purposes of identifying the Lenders hereunder.
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(e) Lender Participations. Each Lender may sell participations
(without the consent of the Agent, the Borrower or any other Lender) to one or
more parties in or to all or a portion of its rights and obligations under this
Agreement, the Notes and the other Loan Documents. Notwithstanding a Lender's
sale of a participation interest, such Lender's obligations hereunder shall
remain unchanged. The Borrower, the Agent, and the other Lenders shall continue
to deal solely and directly with such Lender. No participant shall have rights
to approve any amendment or waiver of this Agreement except to the extent such
amendment or waiver would (i) increase the Commitment of the Lender from whom
the participant purchased its participation interest; (ii) reduce the principal
of, or rate or amount of interest on the Loans subject to such participation
interest; (iii) postpone any date fixed for any payment of principal of, or
interest on, the Loans subject to such participation interest; or (iv) release
all or a substantial portion of the Collateral, other than in each case when
otherwise permitted hereunder.
(f) Securities Laws. Each Lender agrees that, without the prior
written consent of the Borrower and the Agent, it will not make any assignment
hereunder in any manner or under any circumstances that would require
registration or qualification of, or filings in respect of, any Loan, Note or
other Obligation under the securities laws of the United States or of any other
jurisdiction.
(g) Information. In connection with their efforts to assign their
rights or obligations or sell participations pursuant to Sections 11.8(b) and
(e) hereof, respectively, the Agent and the Lenders may disclose any information
they have, now or in the future, with respect to the business of the Borrower to
prospective assignees or purchasers, provided that, prior to any such
disclosure, the assignee or participant or proposed assignee or proposed
participant shall agree in writing to preserve the confidentiality of any
Confidential Information received by it from the Agent or any Lender.
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SECTION XI.9. Indemnification; Reimbursement of Expenses of
Collection.
(a) The Borrower hereby indemnifies and agrees to defend and hold
harmless the Agent and the Lenders, and its and their directors, officers,
agents, employees and counsel (each, an "Indemnified Party") from and against
any and all losses, claims, damages, liabilities, deficiencies, judgments or
expenses incurred by any of them (except to the extent that it is finally
judicially determined to have resulted from their own gross negligence or
willful misconduct) arising out of or by reason of (i) any litigations,
investigations, claims or proceedings which arise out of or are in any way
related to (A) this Agreement, any other Loan Document or the transactions
contemplated hereby or thereby, (B) any actual or proposed use by the Borrower
or any of its Subsidiaries of the Letters of Credit or the proceeds of the
Revolving Credit Loans or (C) the Agent's or any Lender's entering into this
Agreement, the other Loan Documents or any other agreement or document relating
hereto, including, without limitation, amounts paid in settlement, court costs
and the reasonable fees and disbursements of counsel incurred in connection with
any such litigation, investigation, claim or proceeding or any advice rendered
in connection with any of the foregoing and (ii) any remedial or other action
taken by the Borrower or the Agent or any Lender in connection with compliance
by the Borrower, or any of its properties, with any federal, state or local
Environmental Laws. In addition, the Borrower shall, upon demand, pay to the
Agent all costs and expenses incurred by the Agent (including, without
limitation, recording costs and the reasonable fees and disbursements of counsel
and other professionals) in connection with the preparation, execution,
delivery, administration, modification and amendment of the Loan Documents, and,
upon the occurrence and during the continuance of an Event of Default, pay to
the Agent and the Lenders all costs and expenses (including, without limitation,
the reasonable fees and disbursements of counsel and other professionals) paid
or incurred by the Agent or the Lenders in (A) enforcing or defending its rights
under or in respect of this Agreement, the other Loan Documents or any other
document or instrument now or hereafter executed and delivered in connection
herewith, (B) collecting the Obligations, (C) foreclosing or otherwise
collecting upon the Collateral or any part thereof and (D) obtaining any legal,
accounting or other advice reasonably required in connection with any of the
foregoing. If and to the extent that the Obligations of the Borrower hereunder
are unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such Obligations which is
permissible under applicable law.
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(b) The Borrower's obligations under Section 4.9 and this Section
11.9 shall survive any termination of this Agreement and the other Loan
Documents and the payment in full of the Obligations, and are in addition to,
and not in substitution of, any of its other obligations set forth in this
Agreement.
SECTION XI.10. Right of Setoff. In addition to and not in limitation
of all rights of offset that the Agent, any Lender or any of their respective
Affiliates may have under applicable law, and whether or not the Agent has made
any demand or the Obligations of the Borrower have matured, the Agent, the
Lenders and their respective Affiliates shall have the right to appropriate and
apply to the payment of the Obligations of the Borrower all (i) deposits of the
Borrower or any of its Affiliates held by the Agent, any Lender or any of their
respective Affiliates and (ii) other obligations then or thereafter owing by the
Agent, any Lender or any of their respective Affiliates to the Borrower or any
of its Affiliates.
SECTION XI.11. Amendments and Waivers.
(a) No amendment or waiver of any provision of this Agreement or any
other Loan Document shall be effective unless in writing and signed by the
Required Lenders (or signed by the Agent on their behalf after specific
authorization therefrom), determined without taking into account the Revolving
Credit Commitments or the Loans held by any Defaulting Lender, and any other
party to be charged thereby, except that:
(i) the consent of all the Lenders (other than any
Defaulting Lender) is required to (A) reduce the principal of, or
interest on, the Notes, any Letter of Credit reimbursement
obligations or any fees hereunder (other than fees that are
exclusively for the account of the Agent), (B) postpone the final
scheduled date of maturity of the Notes or any date fixed for any
payment in respect of interest on the Notes, any Letter of Credit
reimbursement obligations or any fees hereunder, (C) amend or waive
this Section 11.11(a), or change the definition of Required Lenders,
or (D) release any Liens in favor of the Lenders on all or
substantially all of the Collateral, except as otherwise expressly
provided in this Agreement, and other than in connection with the
financing, refinancing, sale or other disposition of any asset of the
Borrower permitted under this Agreement;
(ii) no such amendment or waiver shall increase the
Revolving Credit Commitment of any Lender over the amount thereof
then in effect without the
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consent of such Lender (it being understood that amendments or
waivers by the Required Lenders of conditions precedent, covenants,
Defaults or Events of Default shall not constitute an increase in the
Revolving Credit Commitment of any Lender, and that an increase in
the available portion of any Revolving Credit Commitment of any
Lender shall not constitute an increase in the Commitment of such
Lender);
(iii) the consent of the Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of the
Agent under any Loan Document, in addition to the consent of the
Lenders otherwise required by this Section 11.11; and
(iv) the consent of the Borrower shall not be required for
any amendment, modification or waiver of the provisions of Article X
(other than Section 10.9).
(b) The Borrower and the Lenders hereby authorize the Agent to modify
this Agreement by unilaterally amending or supplementing Schedule 1 to reflect
assignments of the Commitments.
(c) If, in connection with any proposed amendment or waiver of any of
the provisions of this Agreement as contemplated by Section 11.11(a), the
consent of the Required Lenders is obtained but the consent of one or more of
such other Lenders whose consent is required is not obtained, then the Borrower
shall have the right to replace each such non-consenting Lender or Lenders (so
long as all non-consenting Lenders are so replaced) with one or more replacement
Lenders pursuant to Section 11.8 so long as at the time of such replacement,
each such replacement Lender consents to the proposed amendment or waiver. No
early termination fee shall be payable under Section 4.7 to any Lender that is
replaced under this subsection.
SECTION XI.12. Nonliability of Agent and Lenders. The relationship
between the Borrower and the Lenders and the Agent shall be solely that of
borrower and lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent nor any Lender undertakes
any responsibility to the Borrower to review or inform the Borrower of any
matter in connection with any phase of the Borrower's business or operations.
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SECTION XI.13. Independent Nature of Lenders' Rights. The amount
payable at any time hereunder to each Lender under such Lender's Note shall be a
separate and independent debt.
SECTION XI.14. Counterparts; Telecopied Signatures. This Agreement
and any waiver or amendment hereto may be executed in counterparts and by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument. This Agreement may be executed and delivered by
telecopier or other facsimile transmission all with the same force and effect as
if the same was a fully executed and delivered original counterpart.
SECTION XI.15. Severability. In case any provision in or obligation
under this Agreement, the Notes or any other Loan Document shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
-115-
SECTION XI.16. Maximum Rate. Notwithstanding anything to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Borrower, the Agent and the Lenders hereby agree that all agreements among them
under this Agreement and the other Loan Documents, whether now existing or
hereafter arising and whether written or oral, are expressly limited so that in
no contingency or event whatsoever shall the amount paid, or agreed to be paid,
to the Agent or any Lender for the use, forbearance, or detention of the money
loaned to the Borrower and evidenced hereby or thereby or for the performance or
payment of any covenant or obligation contained herein or therein, exceed the
maximum non-usurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
Obligations, under the laws of the State of New York (or the law of any other
jurisdiction whose laws may be mandatorily applicable notwithstanding other
provisions of this Agreement and the other Loan Documents), or under applicable
federal laws which may presently or hereafter be in effect and which allow a
higher maximum non-usurious interest rate than under New York (or such other
jurisdiction's) law, in any case after taking into account, to the extent
permitted by applicable law, any and all relevant payments or charges under this
Agreement and the other Loan Documents, and any available exemptions, exceptions
and exclusions (the "Highest Lawful Rate"). If due to any circumstance
whatsoever, fulfillment of any provisions of this Agreement or any of the other
Loan Documents at the time performance of such provision shall be due shall
exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance the Agent
or any Lender should ever receive anything of value deemed interest by
applicable law which would exceed the Highest Lawful Rate, such excessive
interest shall be applied to the reduction of the principal amount then
outstanding hereunder or on account of any other then outstanding Obligations
and not to the payment of interest, or if such excessive interest exceeds the
principal unpaid balance then outstanding hereunder and such other then
outstanding Obligations, such excess shall be refunded to the Borrower. All sums
paid or agreed to be paid to the Agent or any Lender for the use, forbearance,
or detention of the Obligations and other Indebtedness of the Borrower to the
Lenders shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such Indebtedness,
until payment in full thereof, so that the actual rate of interest on account of
all such Indebtedness does not exceed the Highest Lawful Rate throughout the
entire term of such Indebtedness. The terms and provisions of this Section shall
control every other provision of this Agreement and all agreements between the
Borrower, the Agent and the Lenders.
-116-
SECTION XI.17. Amendment and Restatement. This Agreement amends and
restates, and supersedes in its entirety, the Original Loan Agreement.
SECTION XI.18. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE AGREEMENT AMONG THE
BORROWER, THE AGENT AND THE LENDERS, SUPERSEDE ANY PRIOR WRITTEN AND VERBAL
AGREEMENTS BETWEEN OR AMONG THEM, AND SHALL BIND AND BENEFIT THE BORROWER, THE
AGENT AND THE LENDERS AND THEIR RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS.
-117-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their proper and duly authorized officers as of the date first
set forth above.
BORROWER:
---------
CHI ENERGY, INC.
By: /s/ Xxxx X. Xxxxx
--------------------------
Xxxx X. Xxxxx
Vice President
AGENT:
------
XXXXXX UNITED BANK
By: /s/ Xxxxxx X. Xxxxxx, Xx.
--------------------------
Xxxxxx X. Xxxxxx, Xx.
Senior Vice President
LENDERS:
--------
XXXXXX UNITED BANK
By: /s/ Xxxxxx X. Xxxxxx, Xx.
--------------------------
Xxxxxx X. Xxxxxx, Xx.
Senior Vice President
BANC OF AMERICA COMMERCIAL FINANCE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President
-118-
SCHEDULE 1
LENDERS, LENDING OFFICES AND COMMITMENTS
Lender Lending Office Total
------ -------------- Commitments
Xxxxxx United Bank 0000 Xxxx Xxxx Xxxxxx $20,000,000
Xxxxxxxx, Xxxxxxxxxxx 00000
Banc of America $15,000,000
Commercial Finance 000 Xxxxxxx Xxxx
Corporation Wilton, Connecticut 06897-4079
-----------
$35,000,000
================================================================================
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
among
CHI ENERGY, INC.,
AS BORROWER,
EACH OF THE FINANCIAL INSTITUTIONS
PARTIES HERETO,
AS LENDERS,
and
XXXXXX UNITED BANK,
AS AGENT
Dated as of November 3, 1999
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
SECTION I.1. General Definitions...............................................................................2
-------------------
SECTION I.2. Accounting Terms and Determinations..............................................................22
-----------------------------------
SECTION I.3. Other Terms; Headings............................................................................23
---------------------
ARTICLE II
SECTION II.1. The Revolving Credit Loans......................................................................23
--------------------------
SECTION II.2. Procedures for Borrowing of Revolving Credit Loans; Disputes....................................24
------------------------------------------------------------
SECTION II.3. Disbursement of Revolving Credit Loans..........................................................26
--------------------------------------
SECTION II.4. Term............................................................................................26
----
SECTION II.5. Notices of Borrowing............................................................................27
--------------------
SECTION II.6. Disbursement of Funds; Evidence of Debt to Lenders; Account Statements; Adjustments.............28
-----------------------------------------------------------------------------------
SECTION II.7. Payments........................................................................................29
--------
SECTION II.8. Sharing of Payments.............................................................................30
-------------------
SECTION II.9. Defaulting Lenders..............................................................................31
------------------
SECTION II.10. Conversion to Term Loan........................................................................34
-----------------------
SECTION II.11. Letters of Credit..............................................................................36
-----------------
SECTION II.12. Amortization of Term Loan; Cash Collateralization of Letters of Credit.........................42
----------------------------------------------------------------------
SECTION II.13. Maximum Amount of the Facility; Mandatory Prepayments; Optional Prepayments....................43
---------------------------------------------------------------------------
SECTION II.14. Payment Procedures.............................................................................45
------------------
SECTION II.15. Collection of Receivables; Application of Collections; Deposit to Blocked Account..............45
---------------------------------------------------------------------------------
ARTICLE III
SECTION III.1. General........................................................................................48
-------
SECTION III.2. Further Security...............................................................................49
----------------
SECTION III.3. Termination....................................................................................49
-----------
SECTION III.4. Recourse to Security...........................................................................50
--------------------
SECTION III.5. Special Provisions Relating to Receivables and Related Matters.................................50
--------------------------------------------------------------
SECTION III.6. Special Provisions Relating to Equipment.......................................................51
----------------------------------------
ARTICLE IV
SECTION IV.1. Interest........................................................................................52
--------
SECTION IV.2. Interest After Event of Default.................................................................52
-------------------------------
SECTION IV.3. Facility Fee....................................................................................52
------------
SECTION IV.4. Unused Line Fee.................................................................................52
---------------
SECTION IV.5. Letter of Credit Fees...........................................................................53
---------------------
SECTION IV.6. Agency Fees.....................................................................................53
-----------
SECTION IV.7. Early Termination Fee...........................................................................53
---------------------
SECTION IV.8. Calculations....................................................................................53
------------
SECTION IV.9. Indemnification in Certain Events...............................................................54
---------------------------------
Page
----
ARTICLE V
SECTION V.1. Conditions to Initial Revolving Credit Loans and Initial Letter of Credit........................55
-------------------------------------------------------------------------
SECTION V.2. Conditions Precedent to Each Revolving Credit Loan and Each Letter of Credit.....................60
----------------------------------------------------------------------------
SECTION V.3. Determinations Under Section 5.1.................................................................61
--------------------------------
ARTICLE VI
SECTION VI.1. Representations and Warranties of the Borrower..................................................61
----------------------------------------------
ARTICLE VII
SECTION VII.1. Affirmative Covenants..........................................................................71
---------------------
SECTION VII.2. Negative Covenants.............................................................................83
------------------
ARTICLE VIII
SECTION VIII.1. Tangible Net Worth............................................................................94
------------------
SECTION VIII.2. Capital Expenditures..........................................................................94
--------------------
SECTION VIII.3. Post-Availability Expiration Date Expenditures................................................95
----------------------------------------------
SECTION VIII.4. Projected Minimum Coverage Ratio..............................................................95
--------------------------------
ARTICLE IX
SECTION IX.1. Events of Default...............................................................................95
-----------------
SECTION IX.2. Acceleration and Cash Collateralization.........................................................98
---------------------------------------
SECTION IX.3. Other Remedies..................................................................................99
--------------
SECTION IX.4. License for Use of Software and Other Intellectual Property....................................100
-----------------------------------------------------------
SECTION IX.5. No Marshalling; Deficiencies; Remedies Cumulative..............................................101
-------------------------------------------------
SECTION IX.6. Defense of Collateral; Continuation of Liens; Further Assurances...............................102
----------------------------------------------------------------
ARTICLE X
SECTION X.1. Appointment of Agent............................................................................103
--------------------
SECTION X.2. Nature of Duties of Agent.......................................................................103
-------------------------
SECTION X.3. Lack of Reliance on Agent.......................................................................103
-------------------------
SECTION X.4. Certain Rights of the Agent.....................................................................104
---------------------------
SECTION X.5. Reliance by Agent...............................................................................104
-----------------
SECTION X.6. Indemnification of Agent........................................................................104
------------------------
SECTION X.7. The Agent in Its Individual Capacity............................................................105
------------------------------------
SECTION X.8. Holders of Notes................................................................................105
----------------
SECTION X.9. Successor Agent.................................................................................105
---------------
SECTION X.10. Collateral Matters.............................................................................106
------------------
SECTION X.11. Actions with Respect to Defaults...............................................................107
--------------------------------
SECTION X.12. Delivery of Information........................................................................108
-----------------------
-ii-
Page
----
ARTICLE XI
SECTION XI.1. GOVERNING LAW..................................................................................108
-------------
SECTION XI.2. SUBMISSION TO JURISDICTION.....................................................................108
--------------------------
SECTION XI.3. SERVICE OF PROCESS.............................................................................109
------------------
SECTION XI.4. JURY TRIAL.....................................................................................109
----------
SECTION XI.5. LIMITATION OF LIABILITY........................................................................109
-----------------------
SECTION XI.6. Delays; Partial Exercise of Remedies...........................................................109
------------------------------------
SECTION XI.7. Notices........................................................................................110
-------
SECTION XI.8. Assignments and Participations.................................................................110
------------------------------
SECTION XI.9. Indemnification; Reimbursement of Expenses of Collection.......................................116
--------------------------------------------------------
SECTION XI.10. Right of Setoff...............................................................................117
---------------
SECTION XI.11. Amendments and Waivers........................................................................117
----------------------
SECTION XI.12. Nonliability of Agent and Lenders.............................................................118
---------------------------------
SECTION XI.13. Independent Nature of Lenders' Rights.........................................................119
-------------------------------------
SECTION XI.14. Counterparts; Telecopied Signatures...........................................................119
-----------------------------------
SECTION XI.15. Severability..................................................................................119
------------
SECTION XI.16. Maximum Rate..................................................................................120
------------
SECTION XI.17. Amendment and Restatement.....................................................................121
-------------------------
SECTION XI.18. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS......................................................121
----------------------------------------
-iii-
Schedules
---------
Schedule 1 - Lenders, Lending Offices and Commitments
Schedule 2.15 - Restricted Receivables
Schedule 3.6(a) - Equipment Locations
Schedule 5.1(a)(ii) - Pledged Subsidiaries
Schedule 6.1(a) - Jurisdictions Where Borrower and Subsidiaries are Qualified to do Business
Schedule 6.1(b) - Jurisdictions Where Records of Receivables are Kept; List of Jurisdictions Where
Equipment Collateral is Located
Schedule 6.1(f) - Consents and Filings
Schedule 6.1(g) - Stock and other Equity Interests in Subsidiaries and Affiliates; Designated
Subsidiaries; Inactive Subsidiaries
Schedule 6.1(h) - Affiliate Transactions
Schedule 6.1(i) - Capital Stock of the Borrower Which Has Been Redeemed, Retired, Purchased or
Otherwise Acquired for Value by the Borrower Since September 30, 1998; Other
Matters Referenced in Section 6.1(i)
Schedule 6.1(k) - Joint Ventures and Partnerships between CHI Energy, Inc. and any other Person
Schedule 6.1(r) - Tax Disclosures
Schedule 6.1(s) - Litigation
Schedule 6.1(t) - Real Property
Schedule 6.1(z) - ERISA Plans
Schedule 6.1(ac) - Environmental Actions
Schedule 6.1(ae) - Material Contracts
Schedule 7.2(a) - Existing Indebtedness
Schedule 7.2(b) - Existing Contingent Obligations
Schedule 7.2(c) - Existing Liens
Schedule 7.2(g) - Pending Asset Sales and other Dispositions
Schedule 7.2(k) - Permitted Investment
Schedule 7.2(q) - Permitted Amendments of Material Contracts
Schedule 7.2(r) - Leases
Schedule 7.2(s) - Leasebacks
Schedule 7.2(z) - Bank Accounts
Exhibits
--------
Exhibit A - Revolving Credit Note
Exhibit B - Term Note
Exhibit C - Assignment and Assumption Agreement
Exhibit D - Guaranty
Exhibit E - Pledge Agreement
Exhibit F - Blocked Account Agreement
Exhibit G - Depository Account Agreement
Exhibit H - Contribution Agreement
Exhibit I - Solvency Certificate
Exhibit J - Support Letter
Exhibit K - Letter of Credit Request
Exhibit L - Perfection Certificate
Exhibit M - Opinion of Counsel
Exhibit N - Compliance Certificate
Exhibit O - Notice of Borrowing
Exhibit P - Projected Cash Flow Statement
Exhibit Q - Subordination Agreement
-iv-
