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EXHIBIT 10.5
[Execution Version]
CREDIT AGREEMENT
Among
INTEGRATED ELECTRICAL SERVICES, INC.
as Borrower,
THE FINANCIAL INSTITUTIONS
NAMED IN THIS CREDIT AGREEMENT
as Banks,
and
NATIONSBANK, N.A.,
as Agent for the Banks
$175,000,000
July 30, 1998
Arranged By:
NATIONSBANC XXXXXXXXXX SECURITIES LLC
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TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.3 Accounting Terms; Preparation of Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.4 Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 2. CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1 Revolving Loan Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2 Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Swing Line Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.6 Breakage Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.7 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.8 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.9 Market Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.10 Payment Procedures and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.1 Conditions Precedent to Initial Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . 34
3.2 Conditions Precedent to Each Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.4 Absence of Conflicts and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.5 Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.6 Public Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.7 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.8 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.10 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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4.11 Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.12 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.15 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.16 Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.2 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.5 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.6 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.8 Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.9 Corporate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.10 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.11 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.13 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.14 Lines of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.15 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.16 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.17 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.18 Payment of Certain Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.19 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 6. DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.2 Termination of Revolving Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.3 Acceleration of Credit Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.4 Cash Collateralization of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.5 Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.6 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.7 Actions Under Credit Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.8 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.9 Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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ARTICLE 7. THE AGENT AND THE ISSUING BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.1 Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.2 Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.3 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.4 Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.7 Successor Agent and Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.3 Modifications, Waivers, and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.4 Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.5 Assignment and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.6 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.7 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.8 Forum Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.9 Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.10 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.11 Amendment and Restatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.13 No Further Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
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EXHIBITS
Exhibit A - Form of Compliance Certificate
Exhibit B - Form of Revolving Loan Borrowing Request
Exhibit C - Form of Continuation/Conversion Request
Exhibit D - Form of Revolving Loan Note
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Closing Documents List
Exhibit G - Form of Joinder Agreement
Exhibit H - Form of Acquisition Certificate
SCHEDULES
Schedule I - Administrative Information (Borrower; Agent; Banks)
Schedule II - Disclosures (Existing Other Debt; Existing
Subsidiaries)
Schedule III - Subordination Terms (Subordinated Debt)
Schedule IV - Restricted Payment Terms (Qualified Preferred Stock)
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CREDIT AGREEMENT
This Credit Agreement dated as of July 30, 1998, is among Integrated
Electrical Services, Inc., a Delaware corporation, as Borrower, the financial
institutions named herein, as Banks, and NationsBank, N.A., successor in
interest by merger to NationsBank of Texas, N.A., as Agent for the Banks.
The parties hereto agree as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.
1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (unless otherwise indicated,
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Acquisition" means the direct or indirect purchase or acquisition,
whether in one or more related transactions, of any Person or group of Persons
or any related group of assets, liabilities, or securities of any Person or
group of Persons.
"Acquisition Certificate" means an acquisition certificate executed by
a Responsible Officer of the Borrower in substantially the form of Exhibit H.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person or any Subsidiary of such Person.
The term "control" (including the terms "controlled by" or "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership, by contract, or otherwise.
"Agent" means NationsBank in its capacity as an agent pursuant to
Article 7 and any successor agent pursuant to Section 7.7.
"Agent Fee Letter" means the confidential letter agreement dated as of
April 30, 1998, between the Borrower, the Agent and the Arranger regarding
certain fees owed by the Borrower to the Agent in connection with this
Agreement.
"Agreement" means this Credit Agreement.
"Applicable Margin" means, with respect to interest rates, unused
commitment fees, and letter of credit fees and as of any date of its
determination, an amount equal to the percentage amount set forth in the table
below opposite the applicable ratio of (a) the consolidated Debt of the
Borrower as of the end of the fiscal quarter then most recently ended to (b)
the consolidated EBITDA of the Borrower for the four fiscal quarters then most
recently ended:
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Applicable Margin
Debt LIBOR Tranches and Applicable Margin Applicable Margin
to EBITDA Letter of Credit Fee Prime Rate Tranche Commitment Fee
--------- -------------------- ------------------ -----------------
#1.00 1.00% 0.00% 0.250%
)1.00 but #1.50 1.25% 0.00% 0.250%
)1.50 but #2.00 1.50% 0.00% 0.300%
)2.00 2.00% 0.50% 0.375%
Until delivery of the first Compliance Certificate, the foregoing ratio shall
be deemed to be 1.01. Thereafter, the ratio and resulting Applicable Margin
shall be based upon Schedule C of the most recent Compliance Certificate
delivered to the Agent pursuant to Section 5.2(a) or Section 5.2(b) (provided
that for the period from the determination of the Applicable Margin based on
the first Compliance Certificate until the date when the Applicable Margin is
reset based upon the Compliance Certificate for the period ending December 31,
1998, the ratio shall be deemed to be the greater of the ratio as so determined
or 1.01 and the Applicable Margin shall be set accordingly).
Any adjustments to the Applicable Margin shall become effective on the 45th
day following the last day of each fiscal quarter or on the 90th day following
the last day of each fiscal year as applicable; provided, however, that if any
such Compliance Certificate is not delivered when required hereunder, the
Applicable Margin shall be deemed to be the maximum percentage amount in each
table from such 45th or 90th day until such Compliance Certificate is received
by the Agent.
Upon any change in the Applicable Margin, the Agent shall promptly notify the
Borrower and the Banks of the new Applicable Margin.
"Applicable Lending Office" means, with respect to each Bank and for
any particular type of transaction, the office of such Bank set forth in
Schedule I to this Agreement (or in the applicable Assignment and Acceptance by
which such Bank joined this Agreement) as its applicable lending office for
such type of transaction or such other office of such Bank as such Bank may
from time to time specify in writing to the Borrower and the Agent for such
particular type of transaction.
"Arranger" means NationsBanc Xxxxxxxxxx Securities LLC, formerly known
as NationsBanc Xxxxxxxxxx Securities, Inc.
"Assignment and Acceptance" means an Assignment and Acceptance in
substantially the form of Exhibit E executed by an assignor Bank, an assignee
Bank, and the Agent, in accordance with Section 8.5.
"Banks" means the lenders listed as Banks on the signature pages of
this Agreement and each Eligible Assignee that shall become a party to this
Agreement pursuant to Section 8.5(b).
"Base Rate" means, for any day, the fluctuating rate per annum of
interest equal to the greater
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of (a) the Prime Rate in effect on such day or (b) the Federal Funds Rate in
effect on such day plus 0.50%.
"Borrower" means Integrated Electrical Services, Inc., a Delaware
corporation.
"Business Day" means any Monday through Friday during which commercial
banks are open for business in Houston, Texas, Dallas, Texas, and, if the
applicable Business Day relates to any LIBOR Tranche, on which dealings are
carried on in the London interbank market.
"Capital Expenditures" means, with respect to any Person and any
period of its determination, the consolidated expenditures of such Person
during such period that are required to be included in or are reflected by the
consolidated property, plant, or equipment accounts of such Person, or any
similar fixed asset or long term capitalized asset accounts of such Person, on
the consolidated balance sheet of such Person in conformity with generally
accepted accounting principles.
"Capital Leases" means, with respect to any Person, any lease of any
property by such Person which would, in accordance with generally accepted
accounting principles, be required to be classified and accounted for as a
capital lease on the balance sheet of such Person.
"Cash Taxes" means, with respect to any Person and for any period of
its determination, the consolidated cash taxes paid by such Person during such
period, or with respect to any Persons which were organized as partnerships or
subchapter S corporations during such period, all amounts owed by the
respective partners or shareholders of such Persons with respect to taxes
payable in connection with such partnership or equity ownership during such
period.
"Change of Control" means, with respect to the Borrower, (a) the
direct or indirect acquisition after the date hereof by any Person or related
Persons constituting a group of (i) beneficial ownership of issued and
outstanding shares of Voting Securities of the Borrower, the result of which
acquisition is that such Person or such group possesses 35% or more of the
combined voting power of all then-issued and outstanding Voting Securities of
the Borrower or (ii) the power to elect, appoint, or cause the election or
appointment of at least a majority of the members of the board of directors of
the Borrower, or (b) the individuals who, at the beginning of any period of 12
consecutive months, constitute the Borrower's board of directors (together with
any new director whose election by the Borrower's board of directors or whose
nomination for election by the Borrower's stockholders entitled to vote thereon
was approved by a vote of at least a majority of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason (other than death or disability) to constitute a majority of the
Borrower's board of directors then in office.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
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"Commonly Controlled Entity" means, with respect to any Person, any
other Person which is under common control with such Person within the meaning
of Section 414 of the Code.
"Compliance Certificate" means a compliance certificate executed by a
Responsible Officer of the Borrower in substantially the form of Exhibit A,
including the following attached Schedules:
Schedule A: The applicable financial reports provided under
Section 5.2(a) or 5.2(b) ending on the date of the computation of the
financial covenants.
Schedule B: A schedule of any adjustments to the financial
reports in Schedule A to the Compliance Certificate, listed on a
company-by-company basis, that are requested by the Borrower to
reflect the financial results of Acquisitions made prior to the end of
the applicable period, together with the supporting financial reports
of the Acquisitions from which the Borrower prepared such adjustments,
prepared in accordance with Section 1.3(c) and otherwise in a form
acceptable to the Agent.
Schedule C: The computation of the financial covenants under this
Agreement based upon the financial reports in Schedule B to the
Compliance Certificate in a form acceptable to the Agent.
"Consent" means the Consent, dated as of July 30, 1998, made by the
Subsidiaries of the Borrower in favor of the Agent, consenting to the security
interests granted to the Agent under the Pledge Agreements, together with any
future agreements made by any Subsidiaries of the Borrower consenting to the
grant to the Agent of any such security interests.
"Continuation/Conversion Request" means a Continuation/Conversion
Request in substantially the form of Exhibit C executed by a Responsible
Officer of the Borrower and delivered to the Agent.
"Contract Status Report" means a report, in form and substance
acceptable to the Agent, detailing the status of each contract of any
Restricted Entity which contract has a value equal to or greater than
$7,500,000.
"Credit Documents" means this Agreement, the Revolving Loan Notes, the
Swing Line Note, the Fee Letter, the Agent Fee Letter, the Letter of Credit
Documents, the Guaranty, the Security Documents, the Interest Hedge Agreements,
and each other agreement, instrument, or document executed at any time in
connection with this Agreement.
"Credit Obligations" means all principal, interest, fees,
reimbursements, indemnifications, and other amounts now or hereafter owed by
the Borrower to the Agent and the Banks (or with respect to the Interest Hedge
Agreements, any Affiliates of the Banks) under this Agreement, the Revolving
Loan Notes, the Swing Line Note, the Letter of Credit Documents, and the other
Credit
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Documents and any increases, extensions, and rearrangements of those
obligations under any amendments, supplements, and other modifications of the
documents and agreements creating those obligations.
"Credit Parties" means the Borrower and the Guarantors.
"Debt" means, with respect to any Person, without duplication, (a)
indebtedness of such Person for borrowed money, (b) obligations of such Person
evidenced by bonds, debentures, notes, or other similar instruments, (c)
obligations of such Person to pay the deferred purchase price of property or
services (other than trade debt and normal operating liabilities incurred in
the ordinary course of business), (d) obligations of such Person as lessee
under Capital Leases, (e) obligations of such Person under or relating to
letters of credit, guaranties, purchase agreements, or other creditor
assurances, in each case, assuring a creditor against loss in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (d) of this definition, (f) nonrecourse indebtedness or obligations of
others of the kinds referred to in clauses (a) through (e) of this definition
secured by any Lien on or in respect of any property of such Person, and (g)
obligations of such Person evidenced by preferred stock or other equity
interests in such Person which provide for mandatory redemption, mandatory
payment of dividends, or similar rights to the payment of money. For the
purposes of determining the amount of any Debt, the amount of any Debt
described in clause (e) of the definition of Debt shall be valued at the
maximum amount of the contingent liability thereunder, the amount of any Debt
described in clause (f) that is not covered by clause (e) shall be valued at
the lesser of the amount of the Debt secured or the book value of the property
securing such Debt, and the amount of any Debt described in clause (g) shall be
valued at the stated redemption value of such Debt as of the date of
determination.
"Default" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Default Rate" means, with respect to any amount due hereunder, a per
annum interest rate equal to (a) if such amount is either outstanding principal
accruing interest based upon a rate established elsewhere in this Agreement or
accrued but unpaid interest thereon, the sum of (i) the interest rate
established elsewhere in this Agreement from time to time for such principal
amount, including any applicable margin, plus (ii) 2.00% per annum or (b) in
all other cases, the Base Rate in effect from time to time plus the Applicable
Margin for the Prime Rate Tranche in effect from time to time plus 2.00% per
annum.
"Derivatives" means any swap, hedge, cap, collar, or similar
arrangement providing for the exchange of risks related to price changes in any
commodity, including money.
"Dollars or $" means lawful money of the United States of America.
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"EBITDA" means, with respect to any Person and for any period of its
determination, the consolidated net income of such Person for such period, plus
the consolidated interest expense and income taxes of such Person for such
period, plus the consolidated depreciation and amortization of such Person for
such period, minus all extraordinary gains and all other non-cash income added
to the consolidated net income of such Person for such period, and further,
excluding the $17,036,000 non-cash, non-recurring compensation charge in
connection with the Acquisition disclosed in the Borrower's March 31, 1998,
Form 10-Q.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Eligible Assignee" means, with respect to any assignment hereunder at
the time of such assignment, any commercial bank organized under the laws of
the United States or any of the countries parties to the Organization for
Economic Cooperation and Development or any political subdivision of any
thereof which has primary capital (or its equivalent) of not less than
$250,000,000, is approved by the Agent, and, so long as no Event of Default
exists, is approved by the Borrower, in either case, such approval not to be
unreasonably withheld.
"Environmental Law" means all federal, state, and local laws, rules,
regulations, ordinances, orders, decisions, agreements, and other requirements
now or hereafter in effect relating to the pollution, destruction, loss, or
injury of the environment, the presence of any contaminant in the environment,
the protection, cleanup, remediation, or restoration of the environment, the
creation, handling, transportation, use, or disposal of any waste product in
the environment, exposure of persons to any contaminant, waste, or hazardous
substance in the environment, and the health and safety of employees in
relation to their environment.
"Event of Default" has the meaning specified in Section 6.1.
"Federal Funds Rate" means, for any period, a fluctuating per annum
interest rate 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 which is a Business Day, the average of the quotations for any such day
on such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any of its successors.
"Fee Letter" means the letter agreement dated as of July 30, 1998,
made by the Borrower in favor of the Banks, regarding the upfront fee payable
to each Bank based upon such Bank's Revolving Loan Commitment.
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"Guaranty" means the Guaranty dated as of July 30, 1998, made by the
Subsidiaries of the Borrower in favor of the Agent guaranteeing the Credit
Obligations.
"Guarantors" means (a) the Subsidiaries of the Borrower that have
executed the Guaranty in connection with the execution of this Agreement and
(b) any future Subsidiaries of the Borrower that join the Guaranty pursuant to
Section 5.19.
"Hazardous Materials" means any substance or material identified as a
hazardous substance pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended and as now or hereafter in
effect; any substance or material regulated as a hazardous waste pursuant to
the Resource Conservation and Recovery Act of 1976, as amended and as now or
hereafter in effect; and any substance or material designated as a hazardous
substance or hazardous waste pursuant to any other Environmental Law.
"Highest Lawful Rate" means the maximum lawful interest rate, if any,
that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to the relevant Bank which are presently in
effect or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow. The maximum lawful rate under this
Agreement shall be the weekly indicated rate ceiling under Chapter 1D of
Article 5069 of the Texas Revised Civil Statutes, as amended, unless any other
lawful rate ceiling exceeds the rate ceiling so determined, and then the higher
rate ceiling shall apply.
"Interest Expense" means, with respect to any Person and for any
period of its determination, the consolidated interest expense of such Person
during such period.
"Interest Hedge Agreements" means any swap, hedge, cap, collar, or
similar arrangement between the Borrower and any Bank (or any Affiliate of any
Bank) providing for the exchange of risks related to price changes in the
interest rate on the Revolving Loan Advances under this Agreement.
"Interest Period" means, with respect to each LIBOR Tranche, the
period commencing on the date of such LIBOR Tranche and ending on the last day
of the period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three, or six months,
in each case as the Borrower may select in the applicable Revolving Loan
Borrowing Request or Continuation/Conversion Request (unless there shall exist
any Default or Event of Default, in which case the Borrower may only select one
month Interest Periods); provided, however, that:
(a) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day; provided that
if such extension would cause the last day of such Interest
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Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day;
(b) any Interest Period which begins on the last Business Day of
the calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month in which it would have ended if there
were a numerically corresponding day in such calendar month; and
(c) the Borrower may not select an Interest Period for any LIBOR
Tranche which ends after the Revolving Loan Maturity Date.
"Interim Financial Statements" means the consolidated financial
statements of the Borrower dated as of March 31, 1998, including the
consolidated balance sheets of the Borrower as of the end of such fiscal
quarter and the consolidated statements of income and cash flows for such
fiscal quarter and for the fiscal year to date period ending on the last day of
such fiscal quarter.
"Issuing Bank" means NationsBank and any successor issuing bank
pursuant to Section 7.7.
"LIBOR" means, for any LIBOR Tranche for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "LIBOR" shall mean, for any LIBOR Tranche for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates.
"LIBOR Tranche" shall mean any Tranche which bears interest based upon
the LIBOR, as determined in accordance with Section 2.5.
"Letter of Credit" means any commercial or standby letter of credit
issued by the Issuing Bank for the account of the Borrower pursuant to the
terms of this Agreement.
"Letter of Credit Application" means the Issuing Bank's standard form
letter of credit application for either a commercial or standby letter of
credit, as the case may be, which has been executed by the Borrower and
accepted by the Issuing Bank in connection with the issuance of a Letter of
Credit.
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"Letter of Credit Application Amendment" means the Issuing Bank's
standard form application to amend a letter of credit for either a commercial
or standby letter of credit, as the case may be, which has been executed by a
Borrower and accepted by the Issuing Bank in connection with the increase or
extension of a Letter of Credit.
"Letter of Credit Collateral Account" means a special cash collateral
account pledged to the Agent containing cash deposited pursuant to Sections
2.2(d) or 6.4 to be maintained with the Agent in accordance with Section
2.2(g).
"Letter of Credit Documents" means all Letters of Credit, Letter of
Credit Applications, Letter of Credit Application Amendments, and agreements,
documents, and instruments entered into in connection with or relating thereto.
"Letter of Credit Exposure" means, as of any date of its
determination, the aggregate outstanding undrawn amount of Letters of Credit
plus the aggregate of the reimbursement obligations of the Borrower under the
Letter of Credit Applications and this Agreement.
"Letter of Credit Sublimit" means $15,000,000.
"Lien" means any mortgage, lien, pledge, charge, deed of trust,
security interest, encumbrance, or other type of preferential arrangement to
secure or provide for the payment of any obligation of any Person, whether
arising by contract, operation of law, or otherwise (including any title
retention for such purposes under any conditional sale agreement, any Capital
Lease, or any other title transfer or retention agreement).
"Majority Banks" means, at any time, Banks holding more than 50% of
the then aggregate unpaid principal amount of the Revolving Loan Notes held by
the Banks and the Letter of Credit Exposure of the Banks at such time; provided
that if no such principal amount or Letter of Credit Exposure is then
outstanding, "Majority Banks" shall mean Banks having more than 50% of the
aggregate amount of the Revolving Loan Commitments at such time.
"Material Adverse Change" means any material adverse change in the
business, operations, or financial condition of the Borrower and its
Subsidiaries on a consolidated basis.
"NationsBank" means NationsBank, N.A., successor in interest by merger
to NationsBank of Texas, N.A., in its individual capacity.
"Net Worth" means, with respect to any Person and as of any date of
its determination, the excess of (a) the assets of such Person over (b) the
liabilities of such Person.
"Partnership Pledge Agreement" means the Pledge Agreement dated as of
July 30, 1998, made by the respective limited and general partners of each
limited partnership Subsidiary of the
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Borrower, in favor of the Agent granting the Agent a security interest in the
partnership interests of such partners in such limited partnerships, to secure
the Credit Obligations.
"PBGC" means Pension Benefit Guaranty Corporation or its successor.
"Permitted Debt" means all of the following Debt:
(a) Debt in the form of the Credit Obligations;
(b) Debt in the form of indebtedness for borrowed money
and letters of credit owed by any Subsidiary of the Borrower prior to
the acquisition of such Subsidiary by the Borrower in an Acquisition
transaction, or owed by any Person that is the subject of any
Acquisition assumed by the Borrower or any Subsidiary of the Borrower
in connection with such Acquisition, provided that with respect to any
such indebtedness, arrangements satisfactory to the Agent for the
repayment of such indebtedness within 30 days following the closing of
the Acquisition are made prior to the closing of the Acquisition and
such arrangements are executed;
(c) Debt in the form of (i) purchase money indebtedness
and Capital Leases, (ii) indebtedness for borrowed money and letters
of credit owed by any Subsidiary of the Borrower prior to the
acquisition of such Subsidiary by the Borrower in an Acquisition
transaction, or owed by any Person that is the subject of any
Acquisition assumed by the Borrower or any Subsidiary of the Borrower
in connection with such Acquisition, and (iii) other indebtedness,
which Debt under clauses (i), (ii), and (iii) together are in an
aggregate outstanding amount not to exceed $7,500,000;
(d) Debt in the form of Subordinated Debt;
(e) Debt in the form of Qualified Preferred Stock; and
(f) Debt in the form of reimbursement obligations for
performance bonds issued in the ordinary course of business.
"Permitted Investments" means all of the following investments:
(a) investments (including investments in the form of
loans) in wholly-owned Subsidiaries of the Borrower;
(b) investments in the form of loans, guaranties, open
accounts, and other extensions of trade credit in the ordinary course
of business;
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(c) investments in commercial paper, bankers'
acceptances, loan participation agreements, and other similar
investments, in each case, maturing in twelve months or less from the
date of issuance and which, at the time of acquisition are rated A-2
or better by Standard & Poor's Corporation and P-2 or better by
Xxxxx'x Investors Services, Inc;
(d) investments in direct obligations of the United
States, or investments in any Person which investments are guaranteed
by the full faith and credit of the United States, in either case
maturing in twelve months or less from the date of acquisition thereof
and repurchase agreements having a term of less than one year and
fully collateralized by such obligations which are entered into with
banks or trust companies described in clause (e) below or brokerage
companies having net worth in excess of $250,000,000;
(e) investments in time deposits or certificates of
deposit maturing within one year from the date such investment is
made, issued by a bank or trust company organized under the laws of
the United States or any state thereof having capital, surplus, and
undivided profits aggregating at least $250,000,000 or a foreign
branch thereof and whose long-term certificates of deposit are, at the
time of acquisition thereof, rated A-2 by Standard & Poor's
Corporation or Prime-2 by Xxxxx'x Investors Services, Inc.;
(f) investments in money market funds which invest solely
in the types of investments described in paragraphs (c) through (e)
above; and
(g) loans and advances to directors, officers, and
employees of the Credit Parties made in the ordinary course of
business in an aggregate outstanding amount not to exceed $250,000.
In valuing any investments for the purpose of applying the limitations set
forth in this Agreement, such investments shall be taken at the original cost
thereof (but without reduction for any subsequent appreciation or depreciation
thereof) less any amount actually repaid or recovered on account of capital or
principal (but without reduction for any offsetting investments made by the
investee in the investor). For purposes of this Agreement, at any time when a
corporation becomes a Subsidiary of the Borrower, all investments of such
corporation at such time shall be deemed to have been made by such corporation
at such time.
"Permitted Liens" means all of the following Liens:
(a) Liens securing the Credit Obligations;
(b) Liens securing purchase money debt, Capital Leases,
and assumed or acquired indebtedness for borrowed money and letters of
credit permitted under clause (b) of the definition of Permitted Debt
provided that no such Lien is spread to cover any property not (i)
purchased in connection with the incurrence of such Debt, in the case
of purchase money
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debt, or (ii) covered by such Lien at the time of the assumption or
acquisition of the indebtedness secured thereby, in the case of
assumed or acquired indebtedness for borrowed money and letters of
credit; and
(c) Liens arising in the ordinary course of business
which are not incurred in connection with the borrowing of money, the
obtaining of advances or credit, or payment of legal judgments and
which do not materially detract from the value of any Restricted
Entity's assets or materially interfere with any Restricted Entity's
business, including such (i) Liens for taxes, assessments, or other
governmental charges or levies; (ii) Liens in connection with worker's
compensation, unemployment insurance, or other social security, old
age pension, or public liability obligations; (iii) Liens in the form
of legal or equitable encumbrances deemed to exist by reason of
negative pledge covenants and other covenants or undertakings of like
nature; (iv) Liens in the form of vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction, or
other like Liens arising by operation of law in the ordinary course of
business or incident to the construction or improvement of any
property, including liens securing reimbursement obligations for
performance bonds issued in the ordinary course of business; and (v)
Liens in the form of zoning restrictions, easements, licenses, and
other restrictions on the use of real property or minor irregularities
in title thereto which do not materially impair the use of such
property in the operation of the business of the applicable Restricted
Entity or the value of such property.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, or other entity, or a government or any political subdivision or
agency thereof, or any trustee, receiver, custodian, or similar official.
"Plan" means any (a) employee medical benefit plan under Section 3(1)
of ERISA, (b) employee pension benefit plan under Section 3(2) of ERISA, (c)
multiemployer plan under Section 4001(a)(3) of ERISA, and (d) employee account
benefit plan under Section 3(2) of ERISA.
"Pledge Agreements" means, collectively (i) the Stock Pledge
Agreement, (ii) the Partnership Pledge Agreement, and (iii) any future
agreements granting the Agent a security interest in capital stock, partnership
interests, or other membership interests of any Subsidiary (direct or indirect)
of the Borrower, in each case, to secure the Credit Obligations.
"Prime Rate" means, for any day, the fluctuating per annum interest
rate in effect on such day equal to the rate of interest publicly announced by
the Agent as its prime rate, whether or not the Borrower has notice thereof.
"Prime Rate Borrowing" shall mean that portion of any Revolving Loan
Borrowing which bears interest based upon the Base Rate as determined in
accordance with Section 2.5.
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"Prime Rate Tranche" shall mean the Tranche which bears interest based
upon the Base Rate, as determined in accordance with Section 2.5.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.
"Qualified Preferred Stock" means, with respect to the Borrower and as
of any date of its issuance, any shares of preferred stock of the Borrower that
(a) is issued after the date of this Agreement, (b) provides for its mandatory
redemption on a date, if at all, that is on or after the first anniversary of
the latest maturity of any of the Credit Obligations at the time issued, and
(c) provides in the applicable certificate of designation for the redemption of
such shares and for the blockage of Restricted Payments in respect of such
shares during the existence of a Default or an Event of Default (i) on the
terms and conditions set forth on Schedule IV, or (ii) on terms approved by the
Agent and the Majority Banks in their sole discretion, all such provisions to
be in form and content satisfactory to the Agent and the Majority Banks in
their sole discretion.
"ratable share" or "pro rata share" means, with respect to any Bank
and as of any date of its determination, either (a) the ratio of such Bank's
Revolving Loan Commitment at such time to the aggregate Revolving Loan
Commitments at such time or (b) if the Revolving Loan Commitments have been
terminated, the ratio of such Bank's aggregate outstanding Revolving Loan
Advances and share of the Letter of Credit Exposure at such time to the
aggregate outstanding Revolving Loan Advances and Letter of Credit Exposure at
such time.
"Registration Statement" means the public offering registration
statement of the Borrower as filed with the Securities and Exchange Commission
on October 24, 1997, and as refiled on November 28, 1997, under Registration
Number 333-38715.
"Related Parties" means, with respect to any Person, such Person's
stockholders, directors, officers, employees, agents, Affiliates, successors,
and assigns, and their respective stockholders, directors, officers, employees,
and agents, and, with respect to any Person that is an individual, such
Person's family relations and heirs.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA.
"Responsible Officer" means, with respect to any Person, such Person's
Chief Executive Officer, President, Chief Financial Officer, Secretary, Chief
Accounting Officer, or any other officer of such Person designated by any of
the foregoing in writing from time to time.
"Restricted Entities" means the Borrower and each Subsidiary of the
Borrower.
"Restricted Payment" means the declaration or making by any Person of
any (a) dividends; (b) purchase, redemption, retirement, or other acquisition
for value any of its capital stock now or
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19
hereafter outstanding, or any distribution of assets to its stockholders as
such, whether in cash, assets, or in obligations of it; (c) allocation or other
setting apart of any sum for the payment of any dividend or distribution on, or
for the purchase, redemption, or retirement of, any shares of its capital
stock; or (d) making of any other distribution by reduction of capital or
otherwise in respect of any shares of its capital stock; in each case, other
than any such dividends, distributions, and payments payable in such Person's
common stock.
"Revolving Loan" means the aggregate outstanding principal amount of
the Revolving Loan Borrowings.
"Revolving Loan Advance" means the outstanding principal from a Bank
which represents such Bank's ratable share of a Revolving Loan Borrowing.
"Revolving Loan Borrowing" means any aggregate amount of principal
advanced on the same day and pursuant to the same Revolving Loan Borrowing
Request under the revolving loan facility created in Section 2.1.
"Revolving Loan Borrowing Request" means a Revolving Loan Borrowing
Request in substantially the form of Exhibit B executed by a Responsible
Officer of the Borrower and delivered to the Agent.
"Revolving Loan Commitment" means, for any Bank, the amount set forth
below such Bank's name on the signature pages of this Agreement as its
Revolving Loan Commitment, or if such Bank has entered into any Assignment and
Acceptance since the date of this Agreement, as set forth for such Bank as its
Revolving Loan Commitment in the Register maintained by the Agent pursuant to
Section 8.5(c), in each case as such amount may be terminated pursuant to
Section 6.2.
"Revolving Loan Maturity Date" means July 30, 2001.
"Revolving Loan Note" means a promissory note of the Borrower payable
to the order of a Bank, in substantially the form of Exhibit D, evidencing the
indebtedness of the Borrower to such Bank resulting from Revolving Loan
Advances made by such Bank to the Borrower.
"Security Agreement" means the Security Agreement dated as of July 30,
1998, made by the Borrower and the Subsidiaries of the Borrower in favor of the
Agent granting the Agent a security interest in the accounts receivable of each
such Credit Party to secure the Credit Obligations.
"Security Documents" means the Security Agreement, the Pledge
Agreements, the Consent, and any other document creating or consenting to Liens
in favor of the Agent securing Credit Obligations.
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"Stock Pledge Agreement" means, the Pledge Agreement, dated as of July
30, 1998, made by Borrower and certain Subsidiaries of Borrower in favor of the
Agent granting the Agent a security interest in the capital stock or membership
interests, as applicable, of each Subsidiary (whether direct or indirect) of
Borrower, to secure the Credit Obligations.
"Subordinated Debt" means, with respect to the Borrower and as of any
date of its issuance, any unsecured indebtedness for borrowed money for which
the Borrower is directly and primarily obligated that (a) arises after the date
of this Agreement, (b) does not have any stated maturity before the latest
maturity of any of the Credit Obligations at the time incurred, (c) has terms
that are no more restrictive than the terms of the Credit Documents, and (d) is
expressly subordinated to the Credit Obligations (i) on the terms and
conditions set forth on Schedule III, or (ii) on terms approved by the Agent
and the Majority Banks in their sole discretion, including payment
subordination, remedy subordination, and related terms satisfactory to the
Agent and the Majority Banks in their sole discretion.
"Subsidiary" means, with respect to any Person, any other Person, a
majority of whose outstanding Voting Securities (other than directors'
qualifying shares) shall at any time be owned by such Person or one or more
Subsidiaries of such person.
"Swing Line Lender" means NationsBank.
"Swing Line Loan" means the aggregate outstanding principal amount of
the advances made under the Swing Line Note.
"Swing Line Note" means the promissory note of the Borrower in the
principal amount of $5,000,000 payable to the order of the Swing Line Lender
evidencing the indebtedness of the Borrower to the Swing Line Lender resulting
from advances to the Borrower under the line of credit created thereunder.
"Tranche" means any tranche of principal outstanding under the
Revolving Loan accruing interest on the same basis whether created in
connection with new advances of principal under the Revolving Loan pursuant to
Section 2.5(a)(i) or by the continuation or conversion of existing tranches of
principal under such Loan pursuant to Section 2.5(a)(ii) and shall include the
Prime Rate Tranche or any LIBOR Tranche.
"Type" has the meaning set forth in Section 1.4.
"Voting Securities" means (a) with respect to any corporation, any
capital stock of the corporation having general voting power under ordinary
circumstances to elect directors of such corporation, (b) with respect to any
partnership, any partnership interest having general voting power under
ordinary circumstances to elect the general partner or other management of the
partnership, and (c) with respect to any other Person, such ownership interests
in such Person having general
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voting power under ordinary circumstances to elect the management of such
Person, in each case irrespective of whether at the time any other class of
stock, partnership interests, or other ownership interest might have special
voting power or rights by reason of the happening of any contingency.
1.2 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding."
1.3 Accounting Terms; Preparation of Financials.
(a) All accounting terms, definitions, ratios, and other
tests described herein shall be construed in accordance with United States
generally accepted accounting principles applied on a consistent basis with
those applied in the preparation of the Registration Statement, except as
expressly set forth in this Agreement.
(b) The Restricted Entities shall prepare their financial
statements in accordance with United States generally accepted accounting
principles applied on a consistent basis with those applied in the preparation
of the Registration Statement, unless otherwise approved in writing by the
Agent. In accordance with the foregoing, (i) any Acquisition which is
permitted to be treated as a pooling transaction shall be treated as a pooling
transaction, and following such an Acquisition the consolidated financial
statements of the Borrower shall be adjusted to reflect the results of such
Acquisition during the periods prior to such Acquisition in accordance with
generally accepted accounting principles and (ii) any Acquisition which is not
permitted to be treated as a pooling transaction shall be treated as an asset
purchase, without adjustment for prior periods.
(c) Where expressly permitted in this Agreement, the
Borrower may elect to use the compliance calculations set forth in Schedule C
of a Compliance Certificate to calculate the Applicable Margin or compliance
with a financial covenant under this Agreement. In such case the accounting
terms, definitions, ratios, and other tests used in making such calculation
shall be construed as required by paragraph (a) above except that the
consolidated financial results of the Borrower shall be deemed to be the
adjusted consolidated financial results of the Borrower set forth in Schedule B
of the Compliance Certificate. The Borrower shall prepare Schedule B and C of
the Compliance Certificate in accordance with the following provisions:
(i) The Borrower may select one or more
Acquisitions for inclusion in the adjustments permitted in Schedule B
or C of the Compliance Certificate; provided that if the inclusion of
any Acquisition results in an increase in the consolidated EBITDA of
the Borrower over the consolidated EBITDA of the Borrower required to
be reported in Schedule A of the Compliance Certificate, then the
Borrower must include all Acquisitions which would cause a decrease in
the consolidated EBITDA of the Borrower in Schedule B and C of the
Compliance Certificate.
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(ii) If the Acquisition is treated as a pooling
transaction, the Borrower shall adjust the pooling accounting
treatment of the Acquisition to reflect nonrecurring items (both
positive and negative) that are permitted to be adjusted in accordance
with the pro forma financial statement guidelines established by the
Securities and Exchange Commission for acquisition accounting for
reported acquisitions by public companies or as approved by the Agent.
(iii) If the Acquisition is not treated as a
pooling transaction, the financial results of the acquired Person or
assets shall be added to the applicable financial results of the
Borrower in the same manner as if such transaction were a pooling
transaction with such adjustments thereto as are required to reflect
nonrecurring items (both positive and negative) that are permitted to
be adjusted in accordance with the pro forma financial statement
guidelines established by the Securities and Exchange Commission for
acquisition accounting for reported acquisitions by public companies
or as approved by the Agent.
(iv) No Acquisition may be included in Schedule B
or C of the Compliance Certificate at the request of the Borrower
unless the financial reports of the acquired Person or assets from
which Schedule B and C are prepared are (A) audited financial reports
prepared by an independent certified public accounting firm, or (B)
with respect to unaudited financial reports, are otherwise approved by
the Agent.
1.4 Types. The "Type" of a Tranche refers to the determination
whether such tranche is a LIBOR Tranche or the Prime Rate Tranche.
1.5 Interpretation. Article, Section, Schedule, and Exhibit
references are to this Agreement, unless otherwise specified. All references
to instruments, documents, contracts, and agreements are references to such
instruments, documents, contracts, and agreements as the same may be amended,
supplemented, and otherwise modified from time to time, unless otherwise
specified. The word "including" shall mean "including but not limited to."
The word "or" shall mean "and/or" wherever necessary to prevent interpretation
of any provision against the Agent or the Banks. Whenever the Borrower has an
obligation under this Agreement and the Credit Documents the expense of
complying with that obligation shall be an expense of the Borrower unless
otherwise specified. Whenever any determination is to be made by the Agent or
any Bank, such determination shall be in such Person's sole discretion unless
otherwise specified in this Agreement. If any provision in this Agreement and
the Credit Documents is held to be illegal, invalid, not binding, or
unenforceable, such provision shall be fully severable and this Agreement and
the Credit Documents shall be construed and enforced as if such illegal,
invalid, not binding, or unenforceable provision had never comprised a part of
this Agreement and the Credit Documents, and the remaining provisions shall
remain in full force and effect. This Agreement and the Credit Documents have
been reviewed and negotiated by sophisticated parties with access to legal
counsel and shall not be construed against the drafter. In the event of a
conflict between this Agreement and any other Credit Documents, this Agreement
shall control.
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ARTICLE 2. CREDIT FACILITIES.
2.1 Revolving Loan Facility.
(a) Revolving Loan Commitments. Each Bank severally
agrees, on the terms and conditions set forth in this Agreement and for the
purposes set forth in Section 5.4, to make Revolving Loan Advances to the
Borrower as such Bank's ratable share of Revolving Loan Borrowings requested by
the Borrower from time to time on any Business Day during the period from the
date of this Agreement until the Revolving Loan Maturity Date provided that the
aggregate outstanding principal amount of Revolving Loan Advances made by such
Bank plus such Bank's ratable share of the Swing Line Loan plus such Bank's
ratable share of the Letter of Credit Exposure shall not exceed such Bank's
Revolving Loan Commitment. Revolving Loan Borrowings must be made in an amount
equal to or greater than $1,000,000, in the case of any Revolving Loan
Borrowing comprised of a LIBOR Tranche, or $1,000,000, in the case of any Prime
Rate Borrowing, and be made in multiples of $500,000, in the case of any
Revolving Loan Borrowing comprised of a LIBOR Tranche, or $100,000, in the case
of any Prime Rate Borrowing. Within the limits expressed in this Agreement,
the Borrower may from time to time borrow, prepay, and reborrow Revolving Loan
Borrowings. The indebtedness of the Borrower to the Banks resulting from the
Revolving Loan Advances made by the Banks shall be evidenced by Revolving Loan
Notes made by the Borrower.
(b) Method of Advancing
(i) Each Revolving Loan Borrowing shall be made
pursuant to a Revolving Loan Borrowing Request given by the Borrower to the
Agent in writing or by telecopy not later than the time required pursuant to
Section 2.5(a)(i) to select the interest rate basis for the Revolving Loan
Borrowing. Each Revolving Loan Borrowing Request shall be fully completed and
shall specify the information required therein, and shall be irrevocable and
binding on the Borrower. Upon receipt of the Revolving Loan Borrowing Request
by the Agent, the Agent shall promptly forward notice of the Revolving Loan
Borrowing to the Banks. Each Bank shall, before 1:00 p.m. (local time at the
Applicable Lending Office of the Agent) on the date of the requested Revolving
Loan Borrowing, make available from its Applicable Lending Office to the Agent
at the Agent's Applicable Lending Office, in immediately available funds, such
Bank's ratable share of such Revolving Loan Borrowing. Subject to the
satisfaction of all applicable conditions precedent, after receipt by the Agent
of such funds, the Agent shall, by 4:00 p.m. (local time at the Applicable
Lending Office of the Agent), on the date requested for such Revolving Loan
Borrowing make such Revolving Loan Borrowing available to the Borrower in
immediately available funds at any account of Borrower which is designated in
writing by the Borrower to the Agent.
(ii) Unless the Agent shall have received notice
from a Bank before the date of any Revolving Loan Borrowing that such Bank
shall not make available to the Agent such Bank's ratable share of such
Revolving Loan Borrowing, the Agent may assume that such Bank has
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made its ratable share of such Revolving Loan Borrowing available to the Agent
on the date of such Revolving Loan Borrowing in accordance with paragraph (i)
above and the Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that
such Bank shall not have so made its ratable share of such Revolving Loan
Borrowing available to the Agent, such Bank agrees that it shall pay interest
on such amount for each day from the date such amount is made available to the
Borrower by the Agent until the date such amount is paid to the Agent by such
Bank at the Federal Funds Rate in effect from time to time, provided that with
respect to such Bank if such amount is not paid by such Bank by the end of the
second day after the Agent makes such amount available to the Borrower, the
interest rates specified above shall be increased by a per annum amount equal
to 2.00% on the third day and shall remain at such increased rate thereafter.
Interest on such amount shall be due and payable by such Bank upon demand by
the Agent. If such Bank shall pay to the Agent such amount and interest as
provided above, such amount so paid shall constitute such Bank's Revolving Loan
Advance as part of such Revolving Loan Borrowing for all purposes of this
Agreement even though not made on the same day as the other Revolving Loan
Advances comprising such Revolving Loan Borrowing. In the event that such Bank
has not repaid such amount by the end of the fifth day after such amount was
made available to the Borrower, the Borrower agrees to repay to the Agent on
demand such amount, together with interest on such amount for each day from the
date such amount was made available to the Borrower until the date such amount
is repaid to the Agent at the interest rate charged to the Borrower for such
Revolving Loan Borrowing under the terms of this Agreement.
(iii) The failure of any Bank to make available its
ratable share of any Revolving Loan Borrowing shall not relieve any other Bank
of its obligation, if any, to make available its ratable share of such
Revolving Loan Borrowing. No Bank shall be responsible for the failure of any
other Bank to honor such other Bank's obligations hereunder, including any
failure to make available any funds as part of any Revolving Loan Borrowing.
(c) Prepayment.
(i) The Borrower may prepay the outstanding
principal amount of the Revolving Loan pursuant to written notice given by the
Borrower to the Agent in writing or by telecopy not later than (A) 1:00 p.m.
(local time at the Applicable Lending Office of the Agent) on the third
Business Day before the date of the proposed prepayment, in the case of the
prepayment of any portion of the Revolving Loan which is comprised of LIBOR
Tranches, or (B) 11:00 a.m. (local time at the Applicable Lending Office of the
Agent) on the same Business Day of the proposed prepayment, in the case of the
prepayment of any portion of the Revolving Loan comprised solely of the Prime
Rate Tranche. Each such notice shall specify the principal amount and Tranche
or Tranches of the Revolving Loan which shall be prepaid, the date of the
prepayment, and shall be irrevocable and binding on the Borrower. Prepayments
of the Revolving Loan shall be made in integral multiples of $500,000, in the
case of prepayments of any LIBOR Tranches, or $100,000, in the case of
prepayments of the Prime Rate Tranche. If the prepayment would cause the
aggregate outstanding principal amount of any LIBOR Tranche comprising all or
any part of the Revolving
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Loan or the aggregate outstanding principal amount of the Prime Rate Tranche
comprising all or any part of the Revolving Loan, to be less than $1,000,000,
in the case of any such LIBOR Tranche, or $1,000,000, in the case of the Prime
Rate Tranche, the prepayment must be in an amount equal to the entire
outstanding principal amount of such LIBOR Tranche under the Revolving Loan or
the entire outstanding principal amount of the Prime Rate Tranche under the
Revolving Loan, as the case may be. Upon receipt of any notice of prepayment,
the Agent shall give prompt notice of the intended prepayment to the Banks.
For each such notice given by the Borrower, the Borrower shall prepay the
Revolving Loan in the specified amount on the specified date as set forth in
such notice. The Borrower shall have no right to prepay any principal amount
of the Revolving Loan except as provided in this Section 2.1(c)(i).
(ii) Each prepayment of principal of any LIBOR
Tranche under the Revolving Loan pursuant to this Section 2.1(c) shall be
accompanied by payment of all accrued but unpaid interest on the principal
amount prepaid and any amounts required to be paid pursuant to Section 2.6 as a
result of such prepayment.
(d) Repayment. The Borrower shall pay to the Agent for
the ratable benefit of the Banks the aggregate outstanding principal amount of
the Revolving Loan on the Revolving Loan Maturity Date.
(e) Reduction of Commitments. The Borrower shall have
the right, upon at least three Business Days' irrevocable notice to the Agent,
to terminate in whole or reduce ratably in part the unused portion of the
Commitments; provided that each partial reduction shall be in the aggregate
amount of $5,000,000 or in integral multiples of $5,000,000 in excess thereof.
Any reduction or termination of the Commitments pursuant to this Section 2.1(e)
shall be permanent, with no obligation of the Banks to reinstate such
Commitments and the commitment fees provided for in Section 2.4(a) shall
thereafter be computed on the basis of the Commitments, as so reduced.
2.2 Letter of Credit Facility.
(a) Commitment for Letters of Credit. The Issuing Bank
shall, on the terms and conditions set forth in this Agreement and for the
purposes set forth in Section 5.4, issue, increase, and extend Letters of
Credit at the request of the Borrower from time to time on any Business Day
during the period from the date of this Agreement until the Revolving Loan
Maturity Date provided that (i) the Letter of Credit Exposure shall not exceed
the Letter of Credit Sublimit and (ii) the aggregate outstanding principal
amount of Revolving Loan Borrowings plus the Letter of Credit Exposure plus the
Swing Line Loan shall not exceed the aggregate amount of the Revolving Loan
Commitments. No Letter of Credit may have an expiration date later than 12
months after its issuance date, and each Letter of Credit which is
self-extending beyond its expiration date must be cancelable upon no more than
30 days notice prior to each extension period given by the Issuing Bank to the
beneficiary of such Letter of Credit. No Letter of Credit may have an
expiration date later than 12 months after the Revolving Loan Maturity Date
unless approved by the Issuing Bank,
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the Agent, and the Banks. Each Letter of Credit must be in form and substance
acceptable to the Issuing Bank. The indebtedness of the Borrower to the
Issuing Bank resulting from Letters of Credit requested by the Borrower shall
be evidenced by the Letter of Credit Applications made by the Borrower.
(b) Requesting Letters of Credit. Each Letter of Credit
shall be issued, increased, or extended pursuant to a Letter of Credit
Application or Letter of Credit Application Amendment, as applicable, given by
the Borrower to the Issuing Bank in writing or by telecopy promptly confirmed
in writing, such Letter of Credit Application or Letter of Credit Application
Amendment being given not later than 1:00 p.m. (local time at the Applicable
Lending Office of the Agent) on the third Business Day before the date of the
proposed issuance, increase, or extension of the Letter of Credit. Each Letter
of Credit Application or Letter of Credit Application Amendment shall be fully
completed and shall specify the information required therein (including the
proposed form of the Letter of Credit or change thereto), and shall be
irrevocable and binding on the Borrower. Upon receipt by the Issuing Bank of
the Letter of Credit Application or Letter of Credit Application Amendment, the
Issuing Bank shall give prompt notice thereof to the Agent, and the Agent shall
promptly inform the Banks of the proposed Letter of Credit or change thereto.
Subject to the satisfaction of all applicable conditions precedent, the Issuing
Bank shall, by 4:00 p.m. (local time at the Applicable Lending Office of the
Agent), on the date requested by the Borrower for the issuance, increase, or
extension of such Letter of Credit issue, increase, or extend such Letter of
Credit to the specified beneficiary. Upon the date of the issuance, increase,
or extension of a Letter of Credit, the Issuing Bank shall be deemed to have
sold to each other Bank and each other Bank shall be deemed to have purchased
from the Issuing Bank a ratable participation in the related Letter of Credit
or change thereto. The Issuing Bank shall notify the Agent of each Letter of
Credit issued, increased, or extended and the date and amount of each Bank's
participation in such Letter of Credit, and the Agent shall in turn notify the
Banks.
(c) Reimbursements for Letters of Credit. With respect
to any Letter of Credit and in accordance with the related Letter of Credit
Application, the Borrower agrees to pay to the Issuing Bank on demand fees due
with respect to such Letter of Credit as specified in Section 2.4(b)). If the
Borrower does not pay upon demand of the Issuing Bank any amount due to the
Issuing Bank under any Letter of Credit Application, in addition to any rights
the Issuing Bank may have under such Letter of Credit Application, the Issuing
Bank may upon written notice to the Agent request the satisfaction of such
obligation by the making of a Revolving Loan Borrowing. Concurrently with such
notice to the Agent, the Issuing Bank will use reasonable efforts provide like
notice to the Borrower, provided that failure to provide such notice to the
Borrower at such time shall not invalidate the effectiveness of such request
for a Revolving Loan Borrowing. Upon such request, the Borrower shall be
deemed to have requested the making of a Revolving Loan Borrowing in the amount
of such obligation and the transfer of the proceeds thereof to the Issuing
Bank. Such Revolving Loan Borrowing shall be a Prime Rate Borrowing. The
Agent shall promptly forward notice of such Revolving Loan Borrowing to the
Borrower and the Banks, and each Bank shall, in accordance with the procedures
of Section 2.1(b), other than limitations on the size of Revolving
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Loan Borrowings, and notwithstanding the failure of any conditions precedent,
make available such Bank's ratable share of such Revolving Loan Borrowing to
the Agent, and the Agent shall promptly deliver the proceeds thereof to the
Issuing Bank for application to such Bank's share of the obligations under such
Letter of Credit. The Borrower hereby unconditionally and irrevocably
authorizes, empowers, and directs the Issuing Bank to make such requests for
Revolving Loan Borrowings on behalf of the Borrower, and the Banks to make
Revolving Loan Advances to the Agent for the benefit of the Issuing Bank in
satisfaction of such obligations. The Agent and each Bank may record and
otherwise treat the making of such Revolving Loan Borrowings as the making of
Revolving Loan Borrowings to the Borrower under this Agreement as if requested
by the Borrower. Nothing herein is intended to release the Borrower's
obligations under any Letter of Credit Application, but only to provide an
additional method of payment therefor. The making of any Revolving Loan
Borrowing under this Section 2.2(c) shall not constitute a cure or waiver of
any Default or Event of Default, other than the payment Default or Event of
Default which is satisfied by the application of the amounts deemed advanced
hereunder, caused by the Borrower's failure to comply with the provisions of
this Agreement or any Letter of Credit Application.
(d) Prepayments of Letters of Credit. In the event that
any Letters of Credit shall be outstanding according to their terms after the
Revolving Loan Maturity Date, the Borrower shall pay to the Agent an amount
equal to the Letter of Credit Exposure allocable to such Letters of Credit to
be held in the Letter of Credit Collateral Account and applied in accordance
with paragraph (g) below.
(e) Obligations Unconditional. The obligations of the
Borrower and each Bank under this Agreement and the Letter of Credit
Applications to make payments as required to reimburse the Issuing Bank for
draws under Letters of Credit and to make other payments due in respect of
Letters of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and the Letter of
Credit Applications under all circumstances, including: (i) any lack of
validity or enforceability of any Letter of Credit Document; (ii) any
amendment, waiver, or consent to departure from any Letter of Credit Document;
(iii) the existence of any claim, set-off, defense, or other right which the
Borrower or any Bank may have at any time against any beneficiary or transferee
of any Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank, or any other person or
entity, whether in connection with the transactions contemplated in this
Agreement or any unrelated transaction; (iv) any statement or any other
document presented under such 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; or (v) payment by the Issuing Bank
under any Letter of Credit against presentation of a draft or certificate which
does not comply with the terms of such Letter of Credit; provided, however,
that nothing contained in this paragraph (d) shall be deemed to constitute a
waiver of any remedies of the Borrower or any Bank in connection with the
Letters of Credit or the Borrower's or such Bank's rights under paragraph (e)
below.
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(f) Liability of Issuing Bank. The Issuing Bank shall not be
liable or responsible for: (i) the use which may be made of any Letter of
Credit or any acts or omissions of any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency, or genuineness of documents related
to Letters of Credit, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient, fraudulent, or
forged; (iii) payment by the Issuing Bank against presentation of documents
which do not strictly comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
relevant Letter of Credit; or (iv) any other circumstances whatsoever in making
or failing to make payment under any Letter of Credit (INCLUDING THE ISSUING
BANK'S OWN NEGLIGENCE); except that the Issuing Bank shall be liable to the
Borrower or any Bank to the extent of any direct, as opposed to consequential,
damages suffered by the Borrower or such Bank which the Borrower or such Bank
proves were caused by (A) the Issuing Bank's gross negligence or willful
misconduct in determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit, (B) the Issuing Bank's willful
failure to make or delay in making lawful payment under any Letter of Credit
after the presentation to it of documentation strictly complying with the terms
and conditions of such Letter of Credit or the Issuing Bank's payment of
greater than the maximum amount permitted under any Letter of Credit, or (C)
the Issuing Bank's negligence in the handling of money.
(g) Letter of Credit Collateral Account.
(i) If the Borrower is required to deposit funds in the
Letter of Credit Collateral Account pursuant to Sections 2.2(d) or 6.4, then
the Borrower and the Agent shall establish the Letter of Credit Collateral
Account and the Borrower shall execute any documents and agreements, including
the Agent's standard form assignment of deposit accounts, that the Agent
reasonably requests in connection therewith to establish the Letter of Credit
Collateral Account and grant the Agent a first priority security interest in
such account and the funds therein. The Borrower hereby pledges to the Agent
and grants the Agent a security interest in the Letter of Credit Collateral
Account, whenever established, all funds held in the Letter of Credit
Collateral Account from time to time, and all proceeds thereof as security for
the payment of the Obligations.
(ii) Funds held in the Letter of Credit Collateral Account
shall be held as cash collateral for obligations with respect to Letters of
Credit and promptly applied by the Agent at the request of the Issuing Bank to
any reimbursement or other obligations under Letters of Credit that exist or
occur. To the extent that any surplus funds are held in the Letter of Credit
Collateral Account above the Letter of Credit Exposure, during the existence of
an Event of Default the Agent may (A) hold such surplus funds in the Letter of
Credit Collateral Account as cash collateral for the Credit Obligations or (B)
apply such surplus funds to any Credit Obligations in accordance with Section
6.9. If no Default exists, the Agent shall release to the Borrower at the
Borrower's written request any funds held in the Letter of Credit Collateral
Account above the amounts required by Section 2.2(d).
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(iii) Funds held in the Letter of Credit Collateral Account
shall be invested in money market funds of the Agent or in another investment
if mutually agreed upon by the Borrower and the Agent, but the Agent shall have
no other obligation to make any other investment of the funds therein. The
Agent shall exercise reasonable care in the custody and preservation of any
funds held in the Letter of Credit Collateral Account and shall be deemed to
have exercised such care if such funds are accorded treatment substantially
equivalent to that which the Agent accords its own property, it being
understood that the Agent shall not have any responsibility for taking any
necessary steps to preserve rights against any parties with respect to any such
funds.
2.3 Swing Line Facility.
(a) Commitment. The Swing Line Lender agrees, on the
terms and conditions set forth in the Swing Line Note, to make advances to the
Borrower under the Swing Line Note. No Bank shall have any rights thereunder
(but each Bank shall have the obligation to reimburse the Swing Line Lender in
accordance with paragraph (b) below). The indebtedness of the Borrower to the
Swing Line Lender resulting from the advances under the Swing Line Note made by
the Swing Line Lender shall be evidenced by the Swing Line Note made by the
Borrower.
(b) Reimbursements for Swing Line Loan Obligations. With
respect to the Swing Line Loan and the interest, premium, fees, and other
amounts owed by the Borrower to the Swing Line Lender in connection with the
Swing Line Note, and in accordance with the terms of the Swing Line Note, the
Borrower agrees to pay to the Swing Line Lender such amounts when due and
payable to the Swing Line Lender under the Swing Line Note. If the Borrower
does not pay to the Swing Line Lender any such amounts when due and payable to
the Swing Line Lender under the Swing Line Note, in addition to any rights the
Swing Line Lender may have under such Swing Line Note, the Swing Line Lender
may upon written notice to the Agent request the satisfaction of such
obligation by the making of a Revolving Loan Borrowing in the amount of any
such amounts not paid when due and payable. Concurrently with such notice to
the Agent, the Swing Line Lender will use reasonable efforts provide like
notice to the Borrower, provided that failure to provide such notice to the
Borrower at such time shall not invalidate the effectiveness of such request
for a Revolving Loan Borrowing. Upon such request, the Borrower shall be deemed
to have requested the making of a Revolving Loan Borrowing in the amount of
such obligation and the transfer of the proceeds thereof to the Swing Line
Lender. Such Revolving Loan Borrowing shall be a Prime Rate Borrowing. The
Agent shall promptly forward notice of such Revolving Loan Borrowing to the
Borrower and the Banks, and each Bank shall, in accordance with the procedures
of Section 2.1(b), other than limitations on the size of Revolving Loan
Borrowings, and notwithstanding the failure of any conditions precedent, make
available such Bank's ratable share of such Revolving Loan Borrowing to the
Agent, and the Agent shall promptly deliver the proceeds thereof to the Swing
Line Lender for application to such amounts owed to the Swing Line Lender. The
Borrower hereby unconditionally and irrevocably authorizes, empowers, and
directs the Swing Line Lender to make such requests for Revolving Loan
Borrowings on behalf of the Borrower, and the Banks to make Revolving Loan
Advances to the Agent for the benefit of the Swing Line Lender in satisfaction
of
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such obligations. The Agent and each Bank may record and otherwise treat the
making of such Revolving Loan Borrowings as the making of a Revolving Loan
Borrowing to the Borrower under this Agreement as if requested by the Borrower.
Nothing herein is intended to release the Borrower's obligations under the
Swing Line Note, but only to provide an additional method of payment therefor.
The making of any Borrowing under this Section 2.3(b) shall not constitute a
cure or waiver of any Default or Event of Default, other than the payment
Default or Event of Default which is satisfied by the application of the
amounts deemed advanced hereunder, caused by the Borrower's failure to comply
with the provisions of this Agreement or the Swing Line Note.
2.4 Fees.
(a) Commitment Fees. The Borrower shall pay to the Agent
for the ratable benefit of the Banks an unused commitment fee in an amount
equal to the product of the Applicable Margin for unused commitment fees in
effect from time to time multiplied by the average daily amount by which (i)
the aggregate amount of the Revolving Loan Commitments exceeds (ii) the
aggregate outstanding principal amount of the Revolving Loan plus the Letter of
Credit Exposure. The unused commitment fee shall be due and payable in arrears
on the last day of each calendar quarter and on the Revolving Loan Maturity
Date.
(b) Fees for Letters of Credit. For each Letter of
Credit issued by the Issuing Bank, the Borrower shall pay to the Agent for the
ratable benefit of the Banks a letter of credit fee equal to the Applicable
Margin for letter of credit fees per annum on the face amount of such Letter of
Credit for the stated term of such Letter of Credit, with a minimum fee of
$500. In addition, for each Letter of Credit issued by the Issuing Bank, the
Borrower shall pay to the Agent for the benefit of the Issuing Bank a fronting
fee of 0.125% per annum on the face amount of such Letter of Credit for the
stated term of such Letter of Credit, with a minimum fee of $500. The Borrower
shall pay each such letter of credit fee for each Letter of Credit quarterly in
arrears within ten days after when billed therefor by the Issuing Bank.
(c) Agent Fee Letter. The Borrower shall pay to the
parties specified therein the fees and other amounts payable under the Agent
Fee Letter.
(d) Fee Letter. The Borrower shall pay to the Banks the
upfront fee payable to each Bank under the Fee Letter, based upon such Bank's
commitment amount.
2.5 Interest.
(a) Election of Interest Rate Basis. The Borrower may
select the interest rate basis for the Revolving Loan in accordance with the
terms of this Section 2.5(a):
(i) Under the Revolving Loan Borrowing Request
provided to the Agent in connection with the making of each Revolving Loan
Borrowing, the Borrower shall select the
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amount and the Type of the Tranches, and for each LIBOR Tranche selected, any
permitted Interest Period for each such LIBOR Tranche, which will comprise such
Revolving Loan Borrowing, provided that (A) at no time shall there be more than
ten separate LIBOR Tranches outstanding and (B) each LIBOR Tranche must be in a
principal amount equal to or greater than $1,000,000 and be made in multiples
of $500,000, and the Prime Rate Tranche must be in a principal amount equal to
or greater than$1,000,000 and be made in multiples of $100,000. Such interest
rate elections must be provided to the Agent in writing or by telecopy not
later than 1:00 p.m. (local time at the Applicable Lending Office of the Agent)
on the third Business Day before the date of any proposed Revolving Loan
Borrowing comprised of a LIBOR Tranche or 11:00 a.m. (local time at the
Applicable Lending Office of the Agent) on the same day of any proposed
Revolving Loan Borrowing which is a Prime Rate Borrowing. The Agent shall
promptly forward copies of such interest rate elections to the Banks. In the
case of any Revolving Loan Borrowing comprised of a LIBOR Tranche, upon
determination by the Agent, the Agent shall promptly notify the Borrower and
the Banks of the applicable interest rate for such Tranche.
(ii) With respect to any Tranche, the Borrower may
continue or convert any portion of any LIBOR Tranche or the Prime Rate Tranche
to form new LIBOR Tranches or increase or decrease the amount of the Prime Rate
Tranche in accordance with this paragraph. Each such continuation or
conversion shall be deemed to create a new LIBOR Tranche or increase or
decrease the amount of the Prime Rate Tranche, as applicable, for all purposes
of this Agreement. Each such continuation or conversion shall be made pursuant
to a Continuation/Conversion Request given by the Borrower to the Agent in
writing or by telecopy not later than 1:00 p.m. (local time at the Applicable
Lending Office of the Agent) on the third Business Day before the date of the
proposed continuation or conversion. Each Continuation/Conversion Request
shall be fully completed and shall specify the information required therein,
and shall be irrevocable and binding on the Borrower. The Agent shall promptly
forward notice of the continuation or conversion to the Banks. In the case of
any continuation or conversion into LIBOR Tranches, upon determination by the
Agent, the Agent shall notify the Borrower and the Banks of the applicable
interest rate. Continuations and conversions of LIBOR Tranches shall be made
in integral multiples of $500,000, and continuations and conversions of the
Prime Rate Tranche shall be made in integral multiples of $100,000. No
continuation or conversion shall be permitted if such continuation or
conversion would cause the aggregate outstanding principal amount of any LIBOR
Tranche which would remain outstanding to be less than $1,000,000, or the
aggregate outstanding principal amount of the Prime Rate Tranche which would
remain outstanding to be less than $1,000,000. At no time shall there be more
than ten separate LIBOR Tranches outstanding. Any conversion of an existing
LIBOR Tranche is subject to Section 2.5. Subject to the satisfaction of all
applicable conditions precedent, the Agent and the Banks shall before close of
business on the date requested by the Borrower for the continuation or
conversion, make such continuation or conversion.
(iii) At the end of the Interest Period for any
LIBOR Tranche if the Borrower has not continued or converted such LIBOR Tranche
into new Tranches as provided for in paragraph (ii) above, the Borrower shall
be deemed to have continued such LIBOR Tranche as
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a new LIBOR Tranche with an Interest Period of one month. All of the Prime
Rate Tranche shall continue as the Prime Rate Tranche unless the Borrower
converts such Prime Rate Tranche as provided for in paragraph (ii) above.
(b) LIBOR Tranches. Each LIBOR Tranche shall bear
interest during its Interest Period at a per annum interest rate equal to the
sum of the LIBOR for such Tranche plus the Applicable Margin for LIBOR Tranches
in effect from time to time. The Borrower shall pay to the Agent for the
ratable benefit of the Banks all accrued but unpaid interest on each LIBOR
Tranche on the last day of the applicable Interest Period for such LIBOR
Tranche (and with respect to LIBOR Tranches with Interest Periods of greater
than three months, on the date which is three months after the first date of
the Interest Period for such LIBOR Tranche), when required upon prepayment as
specified elsewhere in this Agreement, on any date when such LIBOR Tranche is
prepaid in full, and on the Revolving Loan Maturity Date.
(c) Prime Rate Tranche. The Prime Rate Tranche shall
bear interest at a per annum interest rate equal to the Base Rate in effect
from time to time plus the Applicable Margin for the Prime Rate Tranche in
effect from time to time. The Borrower shall pay to the Agent for the ratable
benefit of the Banks all accrued but unpaid interest on the aggregate
outstanding principal amount of the Prime Rate Tranche on the last day of each
calendar quarter, when required upon prepayment as specified elsewhere in this
Agreement, on any date the Prime Rate Tranche is prepaid in full, and on the
Revolving Loan Maturity Date.
(d) Usury Protection.
(i) If, with respect to any Bank and the
Borrower, the effective rate of interest contracted for by such Bank with the
Borrower under the Credit Documents, including the stated rates of interest
contracted for hereunder and any other amounts contracted for under the Credit
Documents which are deemed to be interest, at any time exceeds the Highest
Lawful Rate, then the outstanding principal amount of the loans made by such
Bank to the Borrower hereunder shall bear interest at a rate which would make
the effective rate of interest on the loans made by such Bank to the Borrower
under the Credit Documents equal the Highest Lawful Rate until the difference
between the amounts which would have been due by the Borrower to such Bank at
the stated rates and the amounts which were due by the Borrower to such Bank at
the Highest Lawful Rate (the "Lost Interest") has been recaptured by such Bank.
If, when the loans made hereunder are repaid in full, the Lost Interest has not
been fully recaptured by such Bank pursuant to the preceding paragraph, then,
to the extent permitted by law, the interest rates charged by such Bank to the
Borrower hereunder shall be retroactively increased such that the effective
rate of interest on the loans made by such Bank to the Borrower under the
Credit Documents was at the Highest Lawful Rate since the effectiveness of this
Agreement to the extent necessary to recapture the Lost Interest not recaptured
pursuant to the preceding sentence and, to the extent allowed by law, the
Borrower shall pay to such Bank the amount of the Lost Interest remaining to be
recaptured by such Bank.
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(ii) In calculating all sums paid or agreed to be
paid to any Bank by the Borrower for the use, forbearance, or detention of
money under the Credit Documents, such amounts shall, to the extent permitted
by applicable law, be amortized, prorated, allocated, and spread in equal parts
throughout the term of the Credit Documents.
(iii) NOTWITHSTANDING THE FOREGOING OR ANY OTHER
TERM IN THIS AGREEMENT AND THE CREDIT DOCUMENTS TO THE CONTRARY, it is the
intention of each Bank and the Borrower to conform strictly to any applicable
usury laws. Accordingly, if any Bank contracts for, charges, or receives any
consideration from the Borrower which constitutes interest in excess of the
Highest Lawful Rate, then any such excess shall be canceled automatically and,
if previously paid, shall at such Bank's option be applied to the outstanding
amount of the loans made hereunder by such Bank to the Borrower or be refunded
to the Borrower.
2.6 Breakage Costs. If (i) any payment of principal on or any
conversion of any LIBOR Tranche is made on any date other than the last day of
the Interest Period for such LIBOR Tranche, whether as a result of any
voluntary or mandatory prepayment (other than a prepayment upon the occurrence
of any event subject to Section 2.8 or 2.9), any acceleration of maturity, or
any other cause, (ii) any payment of principal on any LIBOR Tranche is not made
when due, or (iii) any LIBOR Tranche is not borrowed, converted, or prepaid in
accordance with the respective notice thereof provided by the Borrower to the
Agent, whether as a result of any failure to meet any applicable conditions
precedent for borrowing, conversion, or prepayment, the permitted cancellation
of any request for borrowing, conversion, or prepayment, the failure of the
Borrower to provide the respective notice of borrowing, conversion, or
prepayment, or any other cause not specified above which is created by the
Borrower, then the Borrower shall pay to each Bank upon demand any amounts
required to compensate such Bank for any losses, costs, or expenses, including
lost profits and administrative expenses, which are reasonably allocable to
such action, including losses, costs, and expenses related to the liquidation
or redeployment of funds acquired or designated by such Bank to fund or
maintain such Bank's ratable share of such LIBOR Tranche or related to the
reacquisition or redesignation of funds by such Bank to fund or maintain such
Bank's ratable share of such LIBOR Tranche following any liquidation or
redeployment of such funds caused by such action. Such Bank need not prove
matched funding of any particular funds, and a certificate as to the amount of
such loss, cost, or expense detailing the calculation thereof and certifying
that such Bank customarily charges such amounts to its other customers in
similar circumstances submitted by such Bank to the Borrower shall be
conclusive and binding for all purposes, absent manifest error.
2.7 Increased Costs.
(a) Cost of Funds. If due to either (i) any introduction
of, change in, or change in the interpretation of any law or regulation, in
each case, after the date of this Agreement or (ii) compliance with any
guideline or request from any central bank or other governmental authority
having appropriate jurisdiction (whether or not having the force of law) given
after the date of this
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Agreement, there shall be any increase in the costs of any Bank attributable to
(x) committing to make any Revolving Loan Advance or obtaining funds for the
making, funding, or maintaining of such Bank's ratable share of any LIBOR
Tranche in the relevant interbank market or (y) committing to make Letters of
Credit or issuing, funding, or maintaining Letters of Credit (including any
increase in any applicable reserve requirement specified by the Federal Reserve
Board, including those for emergency, marginal, supplemental, or other
reserves), then the Borrower shall pay to such Bank upon demand any amounts
required to compensate such Bank for such increased costs, such amounts being
due and payable upon demand by such Bank. A certificate as to the cause and
amount of such increased cost detailing the calculation of such cost and
certifying that such Bank customarily charges such amounts to its other
customers in similar circumstances submitted by such Bank to the Borrower shall
be conclusive and binding for all purposes, absent manifest error. No Bank may
make any claim for compensation under this Section 2.7(a) for increased costs
incurred before 90 days prior to the delivery of any such certificate.
(b) Capital Adequacy. If, due to either (i) any
introduction of, change in, or change in the interpretation of any law or
regulation, in each case, after the date of this Agreement or (ii) compliance
with any guideline or request from any central bank or other governmental
authority having appropriate jurisdiction (whether or not having the force of
law) given after the date of this Agreement, there shall be any increase in the
capital requirements of any Bank or its parent or holding company attributable
to (x) committing to make Revolving Loan Advances or making, funding, or
maintaining Revolving Loan Advances or (y) committing to make Letters of Credit
or issuing, funding, or maintaining Letters of Credit, as such capital
requirements are allocated by such Bank, then the Borrower shall pay to such
Bank upon demand any amounts required to compensate such Bank or its parent or
holding company for such increase in costs (including an amount equal to any
reduction in the rate of return on assets or equity of such Bank or its parent
or holding company), such amounts being due and payable upon demand by such
Bank. A certificate as to the cause and amounts detailing the calculation of
such amounts and certifying that such Bank customarily charges such amounts to
its other customers in similar circumstances submitted by such Bank to the
Borrower shall be conclusive and binding for all purposes, absent manifest
error. No Bank may make any claim for compensation under this Section 2.7(b)
for increased costs incurred before 90 days prior to the delivery of any such
certificate.
2.8 Illegality. Notwithstanding any other provision in this
Agreement, if it becomes unlawful for any Bank to obtain deposits or other
funds for making or funding such Bank's ratable share of any LIBOR Tranche in
the relevant interbank market, such Bank shall so notify the Borrower and the
Agent and such Bank's commitment to create LIBOR Tranches shall be suspended
until such condition has passed, all LIBOR Tranches applicable to such Bank
shall be converted to the Prime Rate Tranche as of the end of each applicable
Interest Period or earlier if necessary, and all subsequent requests for LIBOR
Tranches shall be deemed to be requests for Prime Rate Borrowings or
continuations and conversions of the Prime Rate Tranche, as applicable, with
respect to such Bank.
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2.9 Market Failure. Notwithstanding any other provision in this
Agreement, if the Agent determines that: (a) quotations of interest rates for
the relevant deposits referred to in the definition of "LIBOR" are not being
provided in the relevant amounts, or maturities for purposes of determining the
rate of interest referred to in the definition of "LIBOR" or (b) the relevant
rates of interest referred to in the definition of "LIBOR" which are used as
the basis to determine the rate of interest for LIBOR Tranches will not
adequately cover the cost to any Bank of making or maintaining such Bank's
ratable share of any LIBOR Tranche, then if the Agent so notifies the Borrower,
the Agent and the Banks' commitment to create LIBOR Tranches shall be suspended
until such condition has passed, all LIBOR Tranches shall be converted to the
Prime Rate Tranche as of the end of each applicable Interest Period or earlier
if necessary, and all subsequent requests for LIBOR Tranches shall be deemed to
be requests for Prime Rate Borrowings or continuations and conversions of the
Prime Rate Tranche, as applicable, with respect to such Bank.
2.10 Payment Procedures and Computations.
(a) Payment Procedures. Time is of the essence in this
Agreement and the Credit Documents. All payment hereunder shall be made in
Dollars. The Borrower shall make each payment under this Agreement and under
the Revolving Loan Notes not later than 12:00 noon (local time at the
Applicable Lending Office of the Agent) on the day when due to the Agent at the
Agent's Applicable Lending Office in immediately available funds. All payments
by the Borrower hereunder shall be made without any offset, abatement,
withholding, deduction, counterclaim, or reduction. Upon receipt of payment
from the Borrower of any principal, interest, or fees due to the Banks, the
Agent shall promptly after receipt thereof distribute to the Banks their
ratable share of such payments for the account of their respective Applicable
Lending Offices. If and to the extent that the Agent shall not have so
distributed to any Bank its ratable share of such payments, the Agent agrees
that it shall pay interest on such amount for each day after the day when such
amount is made available to the Agent by the Borrower until the date such
amount is paid to such Bank by the Agent at the Federal Funds Rate in effect
from time to time, provided that if such amount is not paid by the Agent by the
end of the third day after the Borrower makes such amount available to the
Agent, the interest rates specified above shall be increased by a per annum
amount equal to 2.00% on the fourth day and shall remain at such increased rate
thereafter. Interest on such amount shall be due and payable by the Agent upon
demand by such Bank. Upon receipt of other amounts due solely to the Agent,
the Issuing Bank, the Swing Line Lender, or a specific Bank, the Agent shall
distribute such amounts to the appropriate party to be applied in accordance
with the terms of this Agreement.
(b) Agent Reliance. Unless the Agent shall have received
written notice from the Borrower prior to any date on which any payment is due
to the Banks that the Borrower shall not make such payment in full, the Agent
may assume that the Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such date an amount equal to the amount then due
such Bank. If and to the extent the Borrower shall not have so made such
payment in full to the Agent, each Bank shall repay to the Agent forthwith on
demand such amount distributed to such Bank, together with interest
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thereon from the date such amount is distributed to such Bank until the date
such Bank repays such amount to the Agent, at an interest rate equal to, the
Federal Funds Rate in effect from time to time, provided that with respect to
such Bank, if such amount is not repaid by such Bank by the end of the second
day after the date of the Agent's demand, the interest rates specified above
shall be increased by a per annum amount equal to 2.00% on the third day after
the date of the Agent's demand and shall remain at such increased rate
thereafter.
(c) Sharing of Payments. Each Bank agrees that if it
should receive any payment (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the Credit
Documents, or otherwise) in respect of any obligation of the Borrower to pay
principal, interest, fees, or any other obligation incurred under the Credit
Documents in a proportion greater than the total amount of such principal,
interest, fees, or other obligation then owed and due by the Borrower to such
Bank bears to the total amount of principal, interest, fees, or other
obligation then owed and due by the Borrower to all of the Banks immediately
prior to such receipt, then such Bank receiving such excess payment shall
purchase for cash without recourse from the other Banks an interest in the
obligations of the Borrower to such Banks in such amount as shall result in a
participation by all of the Banks, in proportion with the Banks' respective pro
rata shares, in the aggregate unpaid amount of principal, interest, fees, or
any such other obligation, as the case may be, owed by the Borrower to all of
the Banks; provided that if all or any portion of such excess payment is
thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, in proportion with the
Banks' respective pro rata shares, but without interest.
(d) Authority to Charge Accounts. The Agent, if and to
the extent payment owed to the Agent or any Bank is not made when due, may
charge from time to time against any account of the Borrower with the Agent any
amount so due. The Agent agrees promptly to notify the Borrower after any such
charge and application made by the Agent provided that the failure to give such
notice shall not affect the validity of such charge and application.
(e) Interest and Fees. Unless expressly provided for in
this Agreement, (i) all computations of interest based on the Prime Rate
(including the Base Rate, when applicable) shall be made on the basis of a
365/366 day year, as the case may be, (ii) all computations of interest based
on the Federal Funds Rate (including the Base Rate, when applicable) shall be
made on the basis of a 360 day year, (iii) all computations of interest based
upon the LIBOR shall be made on the basis of a 360 day year, and (iv) all
computations of fees shall be made on the basis of a 360 day year, in each case
for the actual number of days (including the first day, but excluding the last
day) occurring in the period for which such interest or fees are payable. Each
determination by the Agent of an interest rate or fee shall be conclusive and
binding for all purposes, absent manifest error.
(f) Payment Dates. Whenever any payment shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or
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fees, as the case may be. If the time for payment for an amount payable is not
specified in this Agreement or in any other Credit Document, the payment shall
be due and payable on demand by the Agent or the applicable Bank.
2.11 Taxes.
(a) No Deduction for Certain Taxes. Any and all payments
by the Borrower shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, other than taxes
imposed on the income and franchise taxes imposed on the Agent, any Bank, or
the Applicable Lending Office thereof by any jurisdiction in which any such
entity is a citizen or resident or any political subdivision of such
jurisdiction (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as "Taxes"). If
the Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable to the Agent, any Bank, or the Applicable Lending Office
thereof, (i) the sum payable shall be increased as may be necessary so that,
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.11), such Person receives an
amount equal to the sum it would have received had no such deductions been
made; (ii) the Borrower shall make such deductions; and (iii) the Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) Other Taxes. The Borrower agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges, or similar levies which arise from any payment made or from the
execution, delivery, or registration of, or otherwise with respect to, this
Agreement or the other Credit Documents (other than those which become due as a
result of any Bank joining this Agreement as a result of any Assignment and
Acceptance, which shall be paid by the Bank which becomes a Bank hereunder as a
result of such Assignment and Acceptance).
(c) Foreign Bank Withholding Exemption. Each Bank and
Issuing Bank that is not incorporated under the laws of the United States of
America or a state thereof agrees that it shall deliver to the Borrower and the
Agent (i) two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may be, certifying
in each case that such Bank is entitled to receive payments under this
Agreement and the Revolving Loan Notes payable to it, without deduction or
withholding of any United States federal income taxes, (ii) if applicable, an
Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the
case may be, to establish an exemption from United States backup withholding
tax, and (iii) any other governmental forms which are necessary or required
under an applicable tax treaty or otherwise by law to reduce or eliminate any
withholding tax, which have been reasonably requested by the Borrower. Each
Bank which delivers to the Borrower and the Agent a Form 1001 or 4224 and Form
W-8 or W-9 pursuant to the next preceding sentence further undertakes to
deliver to the Borrower and the Agent two further copies of the said letter and
Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or other
manner of certification, as the case may be, on or
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before the date that any such letter or form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent letter
and form previously delivered by it to the Borrower and the Agent, and such
extensions or renewals thereof as may reasonably be requested by the Borrower
and the Agent certifying in the case of a Form 1001 or 4224 that such Bank is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes. If an event (including
without limitation any change in treaty, law or regulation) has occurred prior
to the date on which any delivery required by the preceding sentence would
otherwise be required which renders all such forms inapplicable or which would
prevent any Bank from duly completing and delivering any such letter or form
with respect to it and such Bank advises the Borrower and the Agent that it is
not capable of receiving payments without any deduction or withholding of
United States federal income tax, and in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax, such Bank
shall not be required to deliver such letter or forms. The Borrower shall
withhold tax at the rate and in the manner required by the laws of the United
States with respect to payments made to a Bank failing to provide the requisite
Internal Revenue Service forms in a timely manner. Each Bank which fails to
provide to the Borrower in a timely manner such forms shall reimburse the
Borrower upon demand for any penalties paid by the Borrower as a result of any
failure of the Borrower to withhold the required amounts that are caused by
such Bank's failure to provide the required forms in a timely manner.
2.12 Change of Lending Office.
(a) Each Bank agrees that if it makes any demand for payment under
Section 2.7 or 2.11(a), or if any adoption or change of the type described in
Section 2.8 shall occur with respect to it, it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in
its sole discretion) to designate a different lending office if the making of
such a designation would reduce or obviate the need for the Borrower to make
payments under Section 2.7 or 2.11(a), or would eliminate or reduce the effect
of any adoption or change described in Section 2.8.
(b) If any Bank (including any participant Bank under Section 8.5)
shall assert that any adoption or change of the type described in Section 2.8
hereof has occurred with respect to it, or if any Bank (including any
participant Bank under Section 8.5) requests compensation under Section 2.7, or
if the Borrower is required to pay any additional amount to any Bank or any
authority for the account of any Bank pursuant to Section 2.11, then the
Borrower may, at its expense and effort, upon notice to such Bank and the
Agent, require such Bank to, and such Bank promptly shall, assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 8.5), all its interests, rights, and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Bank, if a Bank accepts such assignment); provided that (i) if such
assignee is not a Bank or an Affiliate thereof, the Borrower shall have
received the prior written consent of the Agent and the Issuing Bank which
consents shall not unreasonably be withheld or delayed, (ii) such Bank shall
have received payment of an amount equal to the aggregate
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outstanding principal of such Bank's Revolving Loan Advances and its
participations in Letters of Credit, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (at least to the
extent of such outstanding principal) and the Borrower (in the case of all
other amounts), and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.7 or payment required to be made
pursuant to Section 2.11, such assignment will result in a reduction in such
compensation or payments compared to the compensation or payments payable to
the assigning Bank. A Bank shall not be required to make any such assignment
and delegation if, prior thereto, as a result of a waiver by such Bank or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation no longer exist or cease to apply.
ARTICLE 3. CONDITIONS PRECEDENT.
3.1 Conditions Precedent to Initial Extension of Credit. The
obligation of each Bank to make the initial extension of credit under this
Agreement, including the making of any Revolving Loan Advances and the issuance
of any Letters of Credit, and the obligation of the Swing Line Lender to make
any advances under the Swing Line Loan shall be subject to the following
conditions precedent:
(a) Documents. The Borrower shall have delivered or
shall have caused to be delivered the documents and other items listed on
Exhibit F, together with any other documents requested by the Agent to document
the agreements and intent of the Credit Documents, each in form and with
substance satisfactory to the Agent;
(b) Material Adverse Change. No Material Adverse Change
shall have occurred since March 31, 1998.
3.2 Conditions Precedent to Each Extension of Credit. The
obligation of each Bank to make any extension of credit under this Agreement,
including the making of any Revolving Loan Advances and the issuance, increase,
or extension of any Letters of Credit, and the obligation of the Swing Line
Lender to make any advances under the Swing Line Loan shall be subject to the
further conditions precedent that on the date of such extension of credit:
(a) Representations and Warranties. As of the date of
the making of any extension of credit hereunder, the representations and
warranties contained in each Credit Document shall be true and correct in all
material respects as of such date (and the Borrower's request for the making of
any extension of credit hereunder shall be deemed to be a restatement,
representation, and additional warranty of the representations and warranties
contained in each Credit Document as of such date); and
(b) Default. As of the date of the making of any
extension of credit hereunder, there shall exist no Default or Event of
Default, and the making of the extension of credit would not cause a Default or
Event of Default.
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Agent and each Bank, and with each request for any extension of
credit hereunder, including the making of any Revolving Loan Advances, and the
issuance, increase, or extension of any Letters of Credit, again represents and
warrants to the Agent and each Bank, as follows:
4.1 Organization. As of the date of this Agreement, each
Restricted Entity (a) is duly organized, validly existing, and in good standing
under the laws of such Person's respective jurisdiction of organization and (b)
is duly licensed, qualified to do business, and in good standing in each
jurisdiction in which such Person is organized, owns property, or conducts
operations to the extent that any failure to be so licensed, qualified, or in
good standing in accordance with this clause (b) could reasonably be expected
to cause a Material Adverse Change.
4.2 Authorization. The execution, delivery, and performance by
each Credit Party of the Credit Documents to which such Credit Party is a party
and the consummation of the transactions contemplated thereby (a) do not
contravene the organizational documents of such Credit Party, (b) have been
duly authorized by all necessary corporate action of each Credit Party, and (c)
are within each Credit Party's corporate powers.
4.3 Enforceability. Each Credit Document to which any Credit
Party is a party has been duly executed and delivered by each Credit Party
which is a party to such Credit Document and constitutes the legal, valid, and
binding obligation of each such Credit Party, enforceable against each such
Credit Party in accordance with such Credit Document's terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws at the time in effect affecting the rights of creditors generally and
subject to the availability of equitable remedies.
4.4 Absence of Conflicts and Approvals. The execution, delivery,
and performance by each Credit Party of the Credit Documents to which such
Credit Party is a party and the consummation of the transactions contemplated
thereby, (a) do not result in any violation or breach of any provisions of, or
constitute a default under, any note, indenture, credit agreement, security
agreement, credit support agreement, or other similar agreement to which such
Credit Party is a party or any other material contract or agreement to which
such Credit Party is a party, (b) do not violate any law or regulation binding
on or affecting such Credit Party, (c) do not require any authorization,
approval, or other action by, or any notice to or filing with, any governmental
authority, and (d) do not result in or require the creation or imposition of
any Lien prohibited by this Agreement.
4.5 Investment Companies. No Restricted Entity or Affiliate
thereof is an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
4.6 Public Utilities. No Restricted Entity or Affiliate thereof
is a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding
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Company Act of 1935, as amended. No Restricted Entity or Affiliate thereof is
a regulated public utility.
4.7 Financial Condition.
(a) The Borrower has delivered to the Agent the
Registration Statement, including therein the proforma combined balance sheet
of the Borrower following the public offering of securities contemplated
therein and proforma combined statement of income for the periods shown
therein, which accurately and completely, in all material respects, present
fairly the financial condition of Borrower as of such date. The Borrower has
delivered to the Agent the Interim Financial Statements, and the Interim
Financial Statements are accurate and complete in all material respects and
present fairly the financial condition of Borrower as of their date and for
their period in accordance with generally accepted accounting principles, as
applicable to interim financial reports.
(b) As of the date of the Registration Statement and the
Interim Financial Statements, there were no material contingent obligations,
liabilities for taxes, unusual forward or long-term commitments, or unrealized
or anticipated losses of the Borrower or any of the Borrower's Subsidiaries,
except as disclosed in the Registration Statement and the Interim Financial
Statements, and adequate reserves for such items have been made in accordance
with generally accepted accounting principles. No Material Adverse Change has
occurred since the date of the Registration Statement or the Interim Financial
Statements. No Default exists.
4.8 Condition of Assets. Each Restricted Entity has good and
indefeasible title to substantially all of its owned property and valid
leasehold rights in all of its leased property, as reflected in the financial
statements most recently provided to the Agent free and clear of all Liens
except Permitted Liens. Each Restricted Entity possesses and has properly
approved, recorded, and filed, where applicable, all permits, licenses,
patents, patent rights or licenses, trademarks, trademark rights, trade names
rights, and copyrights which are useful in the conduct of its business and
which the failure to possess could reasonably be expected to cause a Material
Adverse Change. The material properties used in the operations of each
Restricted Entity are in good repair, working order, and condition, normal wear
and tear excepted. The properties of each Restricted Entity have not been
adversely affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of property or cancellation of contracts, permits, or
concessions by a governmental authority, riot, activities of armed forces, or
acts of God or of any public enemy in any manner which (after giving effect to
any insurance proceeds) could reasonably be expected to cause a Material
Adverse Change.
4.9 Litigation. There are no actions, suits, or proceedings
pending or, to the knowledge of the Borrower, threatened against any Restricted
Entity at law, in equity, or in admiralty, or by or before any governmental
department, commission, board, bureau, agency, instrumentality, domestic or
foreign, or any arbitrator which could reasonably be expected to cause a
Material Adverse Change.
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4.10 Subsidiaries. As of the date of this Agreement, the Borrower
has no Subsidiaries except as disclosed in Schedule II. The Borrower has no
Subsidiaries which have not been disclosed in writing to the Agent.
4.11 Laws and Regulations. Each Restricted Entity is in compliance
with all federal, state, and local laws and regulations which are applicable to
the operations and property of such Person where the failure to comply with the
same could reasonably be expected to cause a Material Adverse Change.
4.12 Environmental Compliance. Each Restricted Entity has been and
is in compliance with all Environmental Laws and has obtained and is in
compliance with all related permits necessary for the ownership and operation
of any such Person's properties, in each case, where the failure to be in
compliance with the same could reasonably be expected to cause a Material
Adverse Change. Each Restricted Entity has not received notice of and has not
been investigated for any violation or alleged violation of any Environmental
Law in connection with any such Person's presently or previously owned
properties which currently threaten action or suggest liabilities which could
reasonably be expected to cause a Material Adverse Change. Each Restricted
Entity does not and has not created, handled, transported, used, or disposed of
any Hazardous Materials on or about any such Person's properties (nor has any
such Person's properties been used for those purposes); has never been
responsible for the release of any Hazardous Materials into the environment in
connection with any such Person's operations and has not contaminated any
properties with Hazardous Materials; and does not and has not owned any
properties contaminated by any Hazardous Materials, in each case in any manner
which could reasonably be expected to cause a Material Adverse Change.
4.13 ERISA. Each Restricted Entity and each of their respective
Commonly Controlled Entities are in compliance with all provisions of ERISA to
the extent that the failure to be in compliance could reasonably be expected to
cause a Material Adverse Change. No Restricted Entity nor any of their
respective Commonly Controlled Entities participates in or during the past five
years has participated in any employee pension benefit plan covered by Title IV
of ERISA or any multiemployer plan under Section 4001(a)(3) of ERISA. With
respect to the Plans of the Restricted Entities, no Material Reportable Event
or Prohibited Transaction has occurred and exists that could reasonably be
expected to cause a Material Adverse Change.
4.14 Taxes. Each Restricted Entity has filed all United States
federal, state, and local income tax returns and all other domestic and foreign
tax returns which are required to be filed by such Person and has paid, or
provided for the payment before the same became delinquent of, all taxes due
pursuant to such returns or pursuant to any assessment received by such Person
except for tax payments being contested in good faith, for which adequate
reserves have been established and reported in accordance with general accepted
accounting principals, and which could not reasonably be expected to cause a
Material Adverse Change. The charges, accruals, and reserves on the books
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of the Restricted Entities in respect of taxes are adequate in accordance with
generally accepted accounting principles.
4.15 True and Complete Disclosure. All factual information
furnished by or on behalf of any Credit Party in writing to the Agent or any
Bank in connection with the Credit Documents and the transactions contemplated
thereby is true and accurate in all material respects on the date as of which
such information was dated or certified and does not contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements contained therein not misleading. All projections, estimates,
and pro forma financial information furnished by any Credit Party were prepared
on the basis of assumptions, data, information, tests, or conditions believed
to be reasonable at the time such projections, estimates, and pro forma
financial information were furnished.
4.16 Year 2000.
(a) Except to the extent that a failure to do so could
not reasonably be expected to cause a Material Adverse Change, the Borrower (i)
has begun analyzing the operations of the Restricted Entities that could be
adversely affected by failure to become Year 2000 compliant (that is, that
computer applications, imbedded microchips and other systems will be able to
perform date-sensitive functions prior to and after December 31, 1999); and
(ii) is developing a plan for becoming Year 2000 compliant in a timely manner.
The Borrower reasonably believes that it will become Year 2000 compliant for
its operations and those of its Subsidiaries and Affiliates on a timely basis
except to the extent that a failure to do so could not reasonably be expected
to cause a Material Adverse Change.
(b) The Borrower will promptly notify the Bank in the
event the Borrower determines that any computer application which is material
to the operations of the Borrower, its Subsidiaries, or its Affiliates or any
of its material vendors or suppliers will not be fully Year 2000 compliant on a
timely basis, except to the extent that such failure could not reasonably be
expected to cause a Material Adverse Change.
ARTICLE 5. COVENANTS. Until the Agent and the Banks receive irrevocable
payment of the Credit Obligations and have terminated this Agreement and each
other Credit Document, the Borrower shall comply with and cause compliance with
the following covenants:
5.1 Organization. The Borrower shall cause each Restricted Entity
to (a) maintain itself as an entity duly organized, validly existing, and in
good standing under the laws of such Person's respective jurisdiction of
organization and (b) be duly licensed, qualified to do business, and in good
standing in each jurisdiction in which such Person is organized, owns property,
or conducts operations and which requires such licensing or qualification where
failure to be so licensed, qualified, or in good standing as required by this
clause (b) could reasonably be expected to cause
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a Material Adverse Change; provided, however, that nothing in this Section 5.1
shall be interpreted to be violated as a result of a transaction permitted by
Section 5.9.
5.2 Reporting. The Borrower shall furnish to the Agent all of the
following:
(a) Annual Reports. As soon as available and in any
event not later than 90 days after the end of each fiscal year of the Borrower,
(i) a copy of the annual audit report for such fiscal year for the Borrower,
including therein the consolidated balance sheets of the Borrower as of the end
of such fiscal year and the consolidated statements of income, stockholders'
equity, and cash flows for the Borrower for such fiscal year, setting forth the
consolidated financial position and results of the Borrower for such fiscal
year and certified, without any qualification or limit of the scope of the
examination of matters relevant to the financial statements, by a nationally
recognized certified public accounting firm, (ii) a completed Compliance
Certificate duly certified by a Responsible Officer of the Borrower, and (iii)
a completed Contract Status Report duly certified by a Responsible Officer of
the Borrower;
(b) Quarterly Reports. As soon as available and in any
event not later than 45 days after the end of each of the first three fiscal
quarters of the Borrower of each year, and in each case in form and substance
acceptable to the Agent, (i) a copy of the internally prepared consolidated
financial statements of the Borrower for such fiscal quarter and for the fiscal
year to date period ending on the last day of such fiscal quarter, including
therein the consolidated balance sheets of the Borrower as of the end of such
fiscal quarter and the consolidated statements of income, and cash flows for
such fiscal quarter and for such fiscal year to date period, setting forth the
consolidated financial position and results of the Borrower for such fiscal
quarter and fiscal year to date period, all in reasonable detail and duly
certified by a Responsible Officer of the Borrower as having been prepared in
accordance with generally accepted accounting principles, including those
applicable to interim financial reports which permit normal year end
adjustments and do not require complete financial notes, (ii) a completed
Compliance Certificate duly certified by a Responsible Officer of the Borrower,
and (iii) a completed Contract Status Report duly certified by a Responsible
Officer of the Borrower;
(c) Semi-annual Subsidiary Update. As soon as available
and in any event not later than 45 days after the end of the second fiscal
quarter of the Borrower of each year and 90 days after the end of the fourth
fiscal quarter of the Borrower of each year, an update of the information
included in Schedule II, including all Subsidiaries acquired by the Borrower
since the previous update of such scheduled information.
(d) Acquisition Information. As soon as available prior
to the closing of any Acquisition requiring approval of the Majority Banks, and
on or prior to the closing of any Acquisition not requiring such approval, a
completed Acquisition Certificate duly certified by a Responsible Officer of
the Borrower, which the Agent shall forward to the Banks for any Acquisition
requiring approval of the Majority Banks (and prior to the consummation of the
Acquisition, the
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Borrower shall, upon request by the Agent, make available to the Agent at the
Borrower's offices in Houston, Texas, the acquisition documents regarding the
acquired assets, including schedules reflecting litigation liabilities,
environmental liabilities, and other assumed liabilities, and any other
information regarding the acquired assets as the Agent may reasonably request);
(e) SEC Filings. As soon as available and in any event
not later than thirty days after the filing or delivery thereof, copies of all
financial statements, reports, and proxy statements which the Borrower shall
have sent to its stockholders generally and copies of all regular and periodic
reports, if any, which any Restricted Entity shall have filed with the
Securities and Exchange Commission;
(f) Defaults. Promptly, but in any event within five
Business Days after the discovery thereof, a notice of any facts known to a
Responsible Officer of any Restricted Entity which constitute a Default,
together with a statement of a Responsible Officer of the Borrower setting
forth the details of such facts and the actions which the Borrower has taken
and proposes to take with respect thereto (and the Agent shall, promptly upon
receipt from the Borrower of a notice pursuant to this Section 5.2(e), forward
a copy of such notice to each Bank);
(g) Litigation. Promptly, but in any event within 10
Business Days after the commencement thereof, notice of all actions, suits, and
proceedings before any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting any
Restricted Entity which, if determined adversely, could reasonably be expected
to cause a Material Adverse Change;
(h) Material Agreement Default. Promptly, but in any
event within 10 Business Days after a Responsible Officer obtains knowledge
thereof, notice of any breach by any Restricted Entity of any contract or
agreement which breach could reasonably be expected to cause a Material Adverse
Change;
(i) Material Changes. Prompt written notice of any other
condition or event of which a Responsible Officer of any Restricted Entity has
knowledge, which condition or event has resulted or could reasonably be
expected to cause a Material Adverse Change; and
(j) Other Information. Such other information respecting
the business operations or property of any Restricted Entity, financial or
otherwise, as the Agent or the Majority Banks may from time to time reasonably
request.
5.3 Inspection. The Borrower shall cause each Restricted Entity
to permit the Agent and the Banks to visit and inspect any of the properties of
such Restricted Entity, to examine all of such Person's books of account,
records, reports, and other papers, to make copies and extracts therefrom, and
to discuss their respective affairs, finances, and accounts with their
respective officers, employees, and independent public accountants all at such
reasonable times and as often as may be
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reasonably requested, provided that the Borrower is given at least 3 Business
Days' advance notice thereof and reasonable opportunity to be present when
independent public accountants or other third parties are contacted, and
provided further that so long as no Default or Event of Default exists, the
Agent and the Banks shall not exercise the foregoing inspection right more
often than once in any calendar year.
5.4 Use of Proceeds. The proceeds of the Revolving Loan
Borrowings shall be used by the Borrower for Acquisitions, working capital
needs, Capital Expenditures, and for other lawful corporate purposes. The
Borrower shall not, directly or indirectly, use any part of such proceeds for
any purpose which violates, or is inconsistent with, Regulations T, U, or X of
the Board of Governors of the Federal Reserve System.
5.5 Financial Covenants. The Agent shall determine compliance
with the following financial covenants based upon the applicable Schedule of
the most recent Compliance Certificate delivered to the Agent pursuant to
Section 5.2(a) or 5.2(b).
(a) Net Worth. The Borrower shall not permit the
consolidated Net Worth of the Borrower as of the last day of each fiscal
quarter to be less than the sum of (i) $187,500,000, plus (ii) 90% of the
cumulative quarterly consolidated net income of the Borrower after March 31,
1998, for each fiscal quarter of the Borrower during which the Borrower has
positive consolidated net earnings; plus (iii) 100% of the net proceeds
received by Borrower after March 31, 1998, from any sale or issuance of any
equity securities of, or any other additions to capital by, the Borrower or its
Subsidiaries; plus (iv) to the extent that the required consolidated Net Worth
under this Section 5.5(a) was not increased in clauses (i) through (iii) above
as a result of any Acquisition, 100% of any increase in the consolidated Net
Worth of the Borrower resulting from any Acquisition. Compliance with this
paragraph (a) shall be determined based upon Schedule C of the applicable
Compliance Certificate.
(b) Maximum Debt to EBITDA Ratio. As of the last day of
each fiscal quarter of the Borrower, the Borrower shall not permit the ratio of
(i) the consolidated Debt of the Borrower as of end of such fiscal quarter to
(ii) the consolidated EBITDA of the Borrower for the preceding four fiscal
quarters then ended, to be greater than 2.50 to 1.00. Compliance with this
paragraph (b) shall be determined based upon Schedule C of the applicable
Compliance Certificate.
(c) Minimum Fixed Charge Coverage Ratio. As of the last
day of each fiscal quarter, the Borrower shall not permit the ratio of (i) the
consolidated EBITDA of the Borrower for the preceding four fiscal quarters then
ended less consolidated Cash Taxes paid by the Borrower during such period to
(ii) (A) the consolidated Interest Expense of the Borrower for the preceding
four fiscal quarters then ended plus (B) the aggregate amount of Restricted
Payments declared or paid by the Borrower during such period plus (C) the
consolidated Capital Expenditures (other than Capital Expenditures that are
deemed to occur solely because of the making of an Acquisition) of the Borrower
during such period plus (D) the consolidated current maturities of the Borrower
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(including Capital Leases) plus (E) the greater of (1) 20% of the outstanding
amount of the Revolving Loan as of the last day of such fiscal quarter or (2)
$4,000,000, to be less than 1.75 to 1.00; provided, that with respect to a
determination for which any component of such determination involves Persons
which were not Restricted Entities for the entire applicable period of
determination, the Cash Taxes paid by each such Person during such period may,
at the election of the Borrower, be deemed to be equal to the product of (a)
the EBITDA of such Person for the applicable period multiplied by (b) 39%.
Compliance with this paragraph (c) shall be determined based upon Schedule C of
the applicable Compliance Certificate.
(d) Capital Expenditures. The Borrower shall not permit
the consolidated Capital Expenditures (other than Capital Expenditures that are
deemed to occur because of the making of an Acquisition) of the Borrower during
any four quarter period to exceed an amount equal to 6% of the consolidated Net
Worth of the Borrower as of the end of the applicable four quarter period;
provided, that with respect to a determination including any fiscal quarter
which involves Persons which were not Restricted Entities for the entire
applicable period of determination, the Capital Expenditures of each such
Person for each such quarterly period shall be deemed to be equal to the
quotient of (i) the consolidated Capital Expenditures of such Person for the
fiscal year then most recently ended, divided by (ii) 4. Compliance with this
paragraph (d) shall be determined based upon Schedule C of the applicable
Compliance Certificate.
5.6 Debt.
(a) The Borrower shall not permit any Restricted Entity
to create, assume, incur, suffer to exist, or in any manner become liable,
directly, indirectly, or contingently in respect of, any Debt other than
Permitted Debt.
(b) The Borrower shall, as soon as available but in any
event not less than 10 Business Days prior to the issuance of any preferred
stock or subordinated indebtedness, deliver to the Agent a copy of the
certificate of designation or subordinated debt documents, as applicable,
together with a certificate, signed by a Responsible Officer of the Borrower,
certifying that such preferred stock or subordinated indebtedness constitutes
Qualified Preferred Stock or Subordinated Debt pursuant to the terms of this
Agreement.
5.7 Liens. The Borrower shall not permit any Restricted Entity to
create, assume, incur, or suffer to exist any Lien on any of its real or
personal property whether now owned or hereafter acquired, or assign any right
to receive its income, except for Permitted Liens.
5.8 Other Obligations.
(a) The Borrower shall not permit any Restricted Entity
to create, incur, assume, or suffer to exist any obligations in respect of
unfunded vested benefits under any pension Plan or deferred compensation
agreement in an aggregate outstanding amount in excess of $1,000,000.
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(b) The Borrower shall not permit any Restricted Entity
to create, incur, assume, or suffer to exist any obligations in respect of
Derivatives, other than Derivatives used by any Restricted Entity in such
Restricted Entity's respective business operations in aggregate notional
quantities not to exceed the reasonably anticipated consumption of such
Restricted Entity of the underlying commodity for the relevant period, but no
Derivatives which are speculative in nature.
5.9 Corporate Transactions. The Borrower shall not, without the
Agent's consent, permit any Restricted Entity to (a) merge, consolidate, or
amalgamate with another Person, or liquidate, wind up, or dissolve itself (or
take any action towards any of the foregoing), (b) convey, sell, lease, assign,
transfer, or otherwise dispose of any of its property, businesses, or other
assets outside of the ordinary course of business, or (c) make any Acquisition
except that:
(i) Any Subsidiary of the Borrower may merge,
consolidate, or amalgamate into the Borrower or any wholly owned
Subsidiary of the Borrower, or convey, sell, lease, assign, transfer,
or otherwise dispose of any of its assets to the Borrower or any
wholly-owned Subsidiary of the Borrower (and if such disposition
transfers all or substantially all of the assets of transferring
Subsidiary, such subsidiary may then liquidate, wind up, or dissolve
itself); provided that the Borrower or the wholly-owned Subsidiary, as
applicable, is the surviving or acquiring entity; and
(ii) The Borrower or any Subsidiary of the Borrower may
make any Acquisition (by purchase or merger) provided that (A) the
Borrower or such Subsidiary of the Borrower is the acquiring or
surviving entity, (B) the aggregate of all consideration (other than
common stock of the Borrower) paid by the Restricted Entities in
connection with any Acquisition made on or after the date of this
Agreement does not exceed $10,000,000 without the prior consent of the
Majority Banks, (C) the aggregate of all consideration (other than
common stock of the Borrower) paid by the Restricted Entities in
connection with all Acquisitions during any calendar year (exclusive
of any such consideration paid prior to the date of this Agreement)
does not exceed $30,000,000 without the prior consent of the Majority
Banks, (D) no Default or Event of Default exists and the Acquisition
would not reasonably be expected to cause a Default or Event of
Default (including any default under Section 5.5 with respect to
historical and future proforma financial status and results), and (E)
the acquired assets are in substantially the same business as the
Borrower; provided that to the extent that the Borrower obtains the
consent of the Majority Banks to an Acquisition pursuant to
subsections (B) or (C) above, the consideration paid by the Restricted
Entities in connection with such Acquisition shall not be included in
the calculations of the limitations contained in such subsections.
5.10 Distributions. The Borrower shall not (a) declare or pay any
dividends; (b) purchase, redeem, retire, or otherwise acquire for value any of
its capital stock now or hereafter outstanding; or make any distribution of
assets to its stockholders as such, whether in cash, assets, or in obligations
of it; (c) allocate or otherwise set apart any sum for the payment of any
dividend or
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distribution on, or for the purchase, redemption, or retirement of, any shares
of its capital stock; or (d) make any other distribution by reduction of
capital or otherwise in respect of any shares of its capital stock, except that
the Borrower may make payments of dividends on Qualified Preferred Stock.
5.11 Transactions with Affiliates. The Borrower shall not permit
any Restricted Entity to enter into any transaction directly or indirectly with
or for the benefit of an Affiliate except transactions with an Affiliate for
the leasing of property, the rendering or receipt of services, or the purchase
or sale of inventory or other assets in the ordinary course of business if the
monetary or business consideration arising from such a transaction would be
substantially as advantageous to such Restricted Entity as the monetary or
business consideration which such Restricted Entity would obtain in a
comparable arm's length transaction.
5.12 Insurance.
(a) The Borrower shall cause each Restricted Entity to
maintain insurance with responsible and reputable insurance companies or
associations reasonably acceptable to the Agent in such amounts and covering
such risks as are usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which such Persons
operate. Without limiting the foregoing, the Borrower shall maintain insurance
coverage for the Restricted Entities equal to or better than, on an item by
item basis for each item, the coverage for the Restricted Entities existing on
the date of this Agreement. The Borrower shall deliver to the Agent
certificates evidencing such policies or copies of such policies at the Agent's
request following a reasonable period to obtain such certificates taking into
account the jurisdiction where the insurance is maintained.
(b) All policies representing liability insurance of the
Restricted Entities shall name the Agent and the Banks as additional named
insureds in a form satisfactory to the Agent. All proceeds of such liability
insurance coverage for the Agent and the Banks shall be paid as directed by the
Agent to indemnify the Agent or the applicable Bank for the liability covered.
In the event that proceeds of property or liability insurance are paid to any
Restricted Entity in violation of the foregoing, the Restricted Entity shall
hold the proceeds in trust for the Agent, segregate the proceeds from the other
funds of such Restricted Entity, and promptly pay the proceeds to the Agent
with any necessary endorsement. The Agent shall have the right, but not the
obligation, during the existence of an Event of Default, to make proof of loss
under, settle and adjust any claim under, and receive the proceeds under the
insurance, and the reasonable expenses incurred by the Agent in the adjustment
and collection of such proceeds shall be paid by the Borrower. The Borrower
irrevocably appoints the Agent as its attorney in fact to take such actions in
its name. If the Agent does not take such actions, the Borrower may take such
actions subject to the approval of any final action by the Agent. The Agent
shall not be liable or responsible for failure to collect or exercise diligence
in the collection of any proceeds.
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5.13 Investments. The Borrower shall not permit any Restricted
Entity to make or hold any direct or indirect investment in any Person,
including capital contributions to the Person, investments in the debt or
equity securities of the Person, and loans, guaranties, trade credit, or other
extensions of credit to the Person, except for Permitted Investments.
5.14 Lines of Business. The Borrower shall not permit the
Restricted Entities to change the character of their business as conducted on
the date of this Agreement, or engage in any type of business not reasonably
related to such business as presently and normally conducted.
5.15 Compliance with Laws. The Borrower shall cause each
Restricted Entity to comply with all federal, state, and local laws and
regulations which are applicable to the operations and property of such
Persons, in each case, where the failure to comply could reasonably be expected
to cause a Material Adverse Change.
5.16 Environmental Compliance. The Borrower shall cause each
Restricted Entity to comply with all Environmental Laws and obtain and comply
with all related permits necessary for the ownership and operation of any such
Person's properties, in each case, where the failure to comply could reasonably
be expected to cause a Material Adverse Change. The Borrower shall cause each
Restricted Entity to promptly disclose to the Agent any notice to or
investigation of such Persons for any violation or alleged violation of any
Environmental Law in connection with any such Person's presently or previously
owned properties which represent liabilities which could reasonably be expected
to cause a Material Adverse Change. The Borrower shall not permit any
Restricted Entity to create, handle, transport, use, or dispose of any
Hazardous Materials on or about any such Person's properties; release any
Hazardous Materials into the environment in connection with any such Person's
operations or contaminate any properties with Hazardous Materials; or own
properties contaminated by any Hazardous Materials, in each case in any manner
that could reasonably be expected to cause a Material Adverse Change.
5.17 ERISA Compliance. The Borrower shall cause each Restricted
Entity to (i) comply in all material respects with all applicable provisions of
ERISA and prevent the occurrence of any Reportable Event or Prohibited
Transaction with respect to, or the termination of, any of their respective
Plans, in each case, where the failure to do so could reasonably be expected to
cause a Material Adverse Change and (ii) not create or participate in any
employee pension benefit plan covered by Title IV of ERISA or any multiemployer
plan under Section 4001(a)(3) of ERISA.
5.18 Payment of Certain Claims. The Borrower shall cause each
Restricted Entity to pay and discharge, before the same shall become
delinquent, (a) all taxes, assessments, levies, and like charges imposed upon
any such Person or upon any such Person's income, profits, or property by
authorities having competent jurisdiction prior to the date on which penalties
attach thereto except for tax payments being contested in good faith for which
adequate reserves have been established and reported in accordance with
generally accepted accounting principals which could not reasonably be expected
to cause a Material Adverse Change and (b) all trade payables and current
operating
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liabilities, unless the same are less than 90 days past due or are being
contested in good faith, have adequate reserves established and reported in
accordance with general accepted accounting principals, and could not
reasonably be expected to cause a Material Adverse Change.
5.19 Subsidiaries. Upon the formation or acquisition of any new
Subsidiary, the Borrower shall and shall cause such Subsidiary to promptly, but
in any event within 30 days after the formation or acquisition of such new
Subsidiary, execute and deliver to the Agent such guaranties, security
agreements, pledge agreements, amendment agreements, consents, and other
documents and agreements as the Agent requests so that such Subsidiary
guarantees and secures the Credit Obligations on the same terms as the existing
Subsidiaries of the Borrower (including the execution and delivery of a Joinder
Agreement in substantially the form of Exhibit G for the purpose of joining
such Subsidiary as a party to the Guaranty, the Security Agreement, and, if
applicable, the Stock Pledge Agreement or the Partnership Pledge Agreement, or
the execution of such new guaranties, pledge agreements, security agreements,
and consents as the Agent determines are necessary to have the same effect in
different jurisdictions). In connection therewith and within 30 days after the
formation or acquisition of such new Subsidiary, the Borrower shall provide
corporate documentation and opinion letters reasonably satisfactory to the
Agent reflecting the corporate status of such new Subsidiary of the Borrower
and the enforceability of such agreements.
ARTICLE 6. DEFAULT AND REMEDIES.
6.1 Events of Default. Each of the following shall be an "Event
of Default" for the purposes of this Agreement and for each of the Credit
Documents:
(a) Payment Failure. The Borrower (i) fails to pay when
due any principal amounts due under this Agreement or any other Credit Document
or (ii) fails to pay when due any interest, fees, reimbursements,
indemnifications, or other amounts due under this Agreement or any other Credit
Document and such failure has not been cured within five Business Days;
(b) False Representation. Any written representation or
warranty made by any Credit Party or any Responsible Officer thereof in this
Agreement or in any other Credit Document proves to have been false or
erroneous in any material respect at the time it was made or deemed made;
(c) Breach of Covenant. (i) Any breach by the Borrower
of any of the covenants contained in Sections 5.1(a) (with respect to the
Borrower), 5.2, 5.3, 5.4, 5.6, 5.7, 5.8, 5.9, 5.10, 5.13 or 5.19 or (ii) any
breach by any Credit Party of any other covenants contained in this Agreement,
or any other Credit Document and such breach is not cured within 30 days
following the earlier of knowledge of such breach by a Responsible Officer of
such Credit Party or the receipt of written notice thereof from the Agent;
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(d) Security and Support Documents. Any Security
Document shall at any time and for any reason (other than one within the
reasonable control of any Bank) cease to create the Lien on the property
purported to be subject to such agreement in accordance with the terms of such
agreement, or cease to be in full force and effect, or shall be contested by
any party thereto;
(e) Guaranty. (i) the Guaranty shall at any time and for
any reason cease to be in full force and effect with respect to any Guarantor
(except as permitted under Section 5.9 hereof) or shall be contested by any
Guarantor, or any Guarantor shall deny it has any further liability or
obligation thereunder, or (ii) any breach by any Guarantor of any of the
covenants contained in Section 1 of the Guaranty;
(f) Material Debt Default. (i) Any principal, interest,
fees, or other amounts due on any Debt of any Restricted Entity (other than the
Credit Obligations) is not paid when due, whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise, and such failure is
not cured within the applicable grace period, if any, and the aggregate amount
of all Debt of such Persons so in default exceeds $250,000; (ii) any other
event shall occur or condition shall exist under any agreement or instrument
relating to any Debt of any such Person (other than the Credit Obligations) the
effect of which is to accelerate or to permit the acceleration of the maturity
of any such Debt, whether or not any such Debt is actually accelerated, and
such event or condition shall not be cured within the applicable grace period,
if any, and the aggregate amount of all Debt of such Persons so in default
exceeds $1,000,000; (iii) any Debt of any such Person shall be declared to be
due and payable, or required to be prepaid (other than by a regularly scheduled
prepayment) prior to the stated maturity thereof, and the aggregate amount of
all Debt of such Persons so accelerated exceeds $1,000,000; or (iv) any default
or event of default, however denominated, occurs under the Swing Line Note;
(g) Material Agreement Default. There shall occur any
breach by any Restricted Entity of any contract or agreement which breach could
reasonably be expected to cause a Material Adverse Change and such breach is
not cured within the applicable grace period, if any;
(h) Bankruptcy and Insolvency. (i) there shall have been
filed against any Restricted Entity or any such Person's properties, without
such Person's consent, any petition or other request for relief seeking an
arrangement, receivership, reorganization, liquidation, or similar relief under
bankruptcy or other laws for the relief of debtors and such request for relief
(A) remains in effect for 60 or more days, whether or not consecutive, or (B)
is approved by a final nonappealable order, or (ii) any such Person consents
to or files any petition or other request for relief of the type described in
clause (i) above seeking relief from creditors, makes any assignment for the
benefit of creditors or other arrangement with creditors, or admits in writing
such Person's inability to pay such Person's debts as they become due (the
occurrence of any Event of Default under clause (i) or (ii) of this paragraph
being a "Bankruptcy Event of Default");
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(h) Adverse Judgment. The aggregate outstanding amount
of judgments against the Restricted Parties not discharged or stayed pending
appeal or other court action within 30 days following entry is greater than
$250,000; or
(i) Change of Control. There shall occur any Change of
Control.
6.2 Termination of Revolving Loan Commitments. Upon the
occurrence of any Bankruptcy Event of Default, all of the commitments of the
Agent and the Banks hereunder shall terminate. During the existence of any
Event of Default other than a Bankruptcy Event of Default, the Agent shall at
the request of the Majority Banks declare by written notice to the Borrower all
of the commitments of the Agent and the Banks hereunder terminated, whereupon
the same shall immediately terminate.
6.3 Acceleration of Credit Obligations. Upon the occurrence of
any Bankruptcy Event of Default, the aggregate outstanding principal amount of
all loans made hereunder, all accrued interest thereon, and all other Credit
Obligations shall immediately and automatically become due and payable. During
the existence of any Event of Default other than a Bankruptcy Event of Default,
the Agent shall at the request of the Majority Banks declare by written notice
to the Borrower the aggregate outstanding principal amount of all loans made
hereunder, all accrued interest thereon, and all other Credit Obligations to be
immediately due and payable, whereupon the same shall immediately become due
and payable. In connection with the foregoing, except for the notice provided
for above in this Article VI, the Borrower waives notice of any Default or
Event of Default, grace, notice of intent to accelerate, notice of
acceleration, presentment, demand, notice of nonpayment, protest, and all other
notices.
6.4 Cash Collateralization of Letters of Credit. Upon the
occurrence of any Bankruptcy Event of Default, the Borrower shall pay to the
Agent an amount equal to the Letter of Credit Exposure to be held in the Letter
of Credit Collateral Account for disposition in accordance with Section 2.2(g).
During the existence of any Event of Default other than a Bankruptcy Event of
Default, the Agent shall at the request of the Majority Banks require by
written notice to the Borrower that the Borrower pay to the Agent an amount
equal to the Letter of Credit Exposure to be held in the Letter of Credit
Collateral Account for disposition in accordance with Section 2.2(g), whereupon
the Borrower shall pay to the Agent such amount for such purpose.
6.5 Default Interest. If any Event of Default exists based upon a
default in the payment of any amounts owing hereunder, the Agent shall at the
request of the Majority Banks declare by written notice to the Borrower that
the Credit Obligations specified in such notice shall bear interest beginning
on the date specified in such notice until paid in full at the applicable
Default Rate for such Credit Obligations, whereupon the Borrower shall pay such
interest to the Agent for the benefit of the Agent and the Banks, as
applicable, upon demand by the Agent. If any other Event of Default exists,
the Agent shall at the request of the Majority Banks declare by written notice
to the Borrower that, unless such Event of Default is cured to the satisfaction
of the Agent and the Majority Banks
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on or before the 30th day following the occurrence of such Event of Default,
the Credit Obligations specified in such notice shall bear interest beginning
on such 30th day until paid in full at the applicable Default Rate for such
Credit Obligations, whereupon the Borrower shall, if such Event of Default is
not cured by such date, pay such interest to the Agent for the benefit of the
Agent and the Banks, as applicable, upon demand by the Agent after such date.
6.6 Right of Setoff. During the existence of an Event of Default,
the Agent and each Bank is hereby authorized at any time, to the fullest extent
permitted by law, to set off and apply any indebtedness owed by the Agent or
such Bank to the Borrower against any and all of the obligations of the
Borrower under this Agreement and the Credit Documents, irrespective of whether
or not the Agent or such Bank shall have made any demand under this Agreement
or the Credit Documents and although such obligations may be contingent and
unmatured. The Agent and each Bank, as the case may be, agrees promptly to
notify the Borrower after any such setoff and application made by such party
provided that the failure to give such notice shall not affect the validity of
such setoff and application.
6.7 Actions Under Credit Documents. Following an Event of
Default, the Agent shall at the request of the Majority Banks take any and all
actions permitted under the other Credit Documents, including the Guaranty and
the Security Documents.
6.8 Remedies Cumulative. No right, power, or remedy conferred to
the Agent or the Banks in this Agreement and the Credit Documents, or now or
hereafter existing at law, in equity, by statute, or otherwise, shall be
exclusive, and each such right, power, or remedy shall to the full extent
permitted by law be cumulative and in addition to every other such right,
power, or remedy. No course of dealing and no delay in exercising any right,
power, or remedy conferred to the Agent or the Banks in this Agreement and the
Credit Documents, or now or hereafter existing at law, in equity, by statute,
or otherwise, shall operate as a waiver of or otherwise prejudice any such
right, power, or remedy.
6.9 Application of Payments. Prior to the Revolving Loan Maturity
Date or any acceleration of the Credit Obligations, all payments made hereunder
shall be applied to the Credit Obligations as directed by the Borrower, subject
to the rules regarding the application of payments to certain Credit
Obligations provided for hereunder and in the Credit Documents. Following the
Revolving Loan Maturity Date or any acceleration of the Credit Obligations, all
payments and collections shall be applied to the Credit Obligations in the
following order:
First, to the payment of the costs, expenses, reimbursements
(other than reimbursement obligations with respect to draws
under Letters of Credit), and indemnifications of the Agent
that are due and payable under the Credit Documents;
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Then, ratably to the payment of the costs, expenses,
reimbursements (other than reimbursement obligations with
respect to draws under Letters of Credit), and
indemnifications of the Banks that are due and payable under
the Credit Documents;
Then, ratably to the payment of all accrued but unpaid
interest and fees and obligations under Interest Hedge
Agreements due and payable under the Credit Documents;
Then, ratably to the payment of all outstanding principal and
reimbursement obligations for draws under Letters of Credit
due and payable under the Credit Documents;
Then, ratably to the payment of any other amounts due and
owing with respect to the Credit Obligations; and
Finally, any surplus held by the Agent and remaining after
payment in full of all the Credit Obligations and reserve for
Credit Obligations not yet due and payable shall be promptly
paid over to the Borrower or to whomever may be lawfully
entitled to receive such surplus. All applications shall be
distributed in accordance with Section 2.10(a).
ARTICLE 7. THE AGENT AND THE ISSUING BANK
7.1 Authorization and Action. Each Bank hereby 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 and of the other Credit Documents, together with such powers as are
reasonably incidental thereto. Statements under the Credit Documents that the
Agent may take certain actions, without further qualification, means that the
Agent may take such actions with or without the consent of the Banks or the
Majority Banks, but where the Credit Documents expressly require the
determination of the Banks or the Majority Banks, the Agent shall not take any
such action without the prior written consent thereof. As to any matters not
expressly provided for by this Agreement or any other Credit Document
(including, without limitation, enforcement or collection of the Revolving Loan
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the written
instructions of the Majority Banks, and such instructions shall be binding upon
all Banks and all holders of Revolving Loan Notes; provided, however, that the
Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement, any other Credit
Document, or applicable law.
7.2 Reliance, Etc. Neither the Agent, the Issuing Bank, nor any
of their respective Related Parties (for the purposes of this Section 7.2,
collectively, the "Indemnified Parties") shall be liable for any action taken
or omitted to be taken by any Indemnified Party under or in connection
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with this Agreement or the other Credit Documents, INCLUDING ANY INDEMNIFIED
PARTY'S OWN NEGLIGENCE, except for any Indemnified Party's gross negligence or
willful misconduct. Without limitation of the generality of the foregoing, the
Agent and the Issuing Bank: (a) may treat the payee of any Revolving Loan Note
as the holder thereof until the Agent receives written notice of the assignment
or transfer thereof signed by such payee and in form satisfactory to the Agent;
(b) may consult with legal counsel (including counsel for the Borrower),
independent public accountants, and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants, or experts; (c) makes
no warranty or representation to any Bank and shall not be responsible to any
Bank for any statements, warranties, or representations made in or in
connection with this Agreement or the other Credit Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants, or conditions of this Agreement or any other
Credit Document on the part of the Credit Parties or to inspect the property
(including the books and records) of the Credit Parties; (e) shall not be
responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement or any
other Credit Document; and (f) shall incur no liability under or in respect of
this Agreement or any other Credit Document by acting upon any notice, consent,
certificate, or other instrument or writing (which may be by telecopier or
telex) reasonably believed by it to be genuine and signed or sent by the proper
party or parties.
7.3 Affiliates. With respect to its Revolving Loan Commitments,
the Revolving Loan Advances made by it, its interests in the Letters of Credit,
and the Revolving Loan Notes issued to it, the Agent and the Issuing Bank shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent. The term "Bank" or "Banks"
shall, unless otherwise expressly indicated, include the Agent and the Issuing
Bank in their individual capacity. The Agent, the Issuing Bank, and their
respective Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with, any
Credit Party, and any Person who may do business with or own securities of any
Credit Party, all as if the Agent were not an agent hereunder and the Issuing
Bank were not the issuer of Letters of Credit hereunder and without any duty to
account therefor to the Banks.
7.4 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based
on the Registration Statement, the Interim Financial Statements, and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it shall, independently and without reliance upon the Agent
or any other Bank 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.
7.5 Expenses. To the extent not paid by the Borrower, each Bank
severally agrees to pay to the Agent and the Issuing Bank on demand such Bank's
ratable share of the following: (a) all reasonable out-of-pocket costs and
expenses of the Agent and the Issuing Bank in connection with
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the preparation, execution, delivery, administration, modification, and
amendment of this Agreement and the other Credit Documents, including the
reasonable fees and expenses of outside counsel for the Agent and the Issuing
Bank with respect to advising the Agent and the Issuing Bank as to their
respective rights and responsibilities under this Agreement and the Credit
Documents, and (b) all out-of-pocket costs and expenses of the Agent and the
Issuing Bank in connection with the preservation or enforcement of the rights
of the Agent, the Issuing Bank, and the Banks under this Agreement and the
other Credit Documents, whether through negotiations, legal proceedings, or
otherwise, including fees and expenses of counsel for the Agent and the Issuing
Bank. The provisions of this paragraph shall survive the repayment and
termination of the credit provided for under this Agreement and any purported
termination of this Agreement which does not expressly refer to this paragraph.
7.6 Indemnification. To the extent not reimbursed by the
Borrower, each Bank severally agrees to protect, defend, indemnify, and hold
harmless the Agent, the Issuing Bank, and each of their respective Related
Parties (for the purposes of this Section 7.6, collectively, the "Indemnified
Parties"), from and against all demands, claims, actions, suits, damages,
judgments, fines, penalties, liabilities, and out-of-pocket costs and expenses,
including reasonable costs of attorneys and related costs of experts such as
accountants (collectively, the "Indemnified Liabilities"), actually incurred by
any Indemnified Party which are related to any litigation or proceeding
relating to this Agreement, the Credit Documents, or the transactions
contemplated thereunder, INCLUDING ANY INDEMNIFIED LIABILITIES CAUSED BY ANY
INDEMNIFIED PARTY'S OWN NEGLIGENCE, but not Indemnified Liabilities which are a
result of any Indemnified Party's gross negligence or willful misconduct. The
provisions of this paragraph shall survive the repayment and termination of the
credit provided for under this Agreement and any purported termination of this
Agreement which does not expressly refer to this paragraph.
7.7 Successor Agent and Issuing Bank. The Agent or the Issuing
Bank may resign at any time by giving written notice thereof to the Banks and
the Borrower and may be removed at any time with or without cause by the
Majority Banks upon receipt of written notice from the Majority Banks to such
effect. Upon receipt of notice of any such resignation or removal, the
Majority Banks shall have the right to appoint a successor Agent or Issuing
Bank with the consent of the Borrower, which consent shall not be unreasonably
withheld. If no successor Agent or Issuing Bank shall have been so appointed
by the Majority Banks with the consent of the Borrower, and shall have accepted
such appointment, within 30 days after the retiring Agent's or Issuing Bank's
giving of notice of resignation or the Majority Banks' removal of the retiring
Agent or Issuing Bank, then the retiring Agent or Issuing Bank may, on behalf
of the Banks and the Borrower, appoint a successor Agent or Issuing Bank, which
shall be, in the case of a successor agent, a commercial bank organized under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000 and, in the case of the
Issuing Bank, a Bank. Upon the acceptance of any appointment as Agent or
Issuing Bank by a successor Agent or Issuing Bank, such successor Agent or
Issuing Bank shall thereupon succeed to and become vested with all the rights,
powers, privileges, and duties of the retiring Agent or Issuing Bank, and the
retiring Agent or Issuing Bank
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shall be discharged from any duties and obligations under this Agreement and
the other Credit Documents after such acceptance, except that the retiring
Issuing Bank shall remain the Issuing Bank with respect to any Letters of
Credit outstanding on the effective date of its resignation or removal and the
provisions affecting the Issuing Bank with respect to such Letters of Credit
shall inure to the benefit of the retiring Issuing Bank until the termination
of all such Letters of Credit. After any Agent's or Issuing Bank's resignation
or removal hereunder as Agent or Issuing Bank, the provisions of this Article 7
shall inure to such Person's benefit as to any actions taken or omitted to be
taken by such Person while such Person was Agent or Issuing Bank under this
Agreement and the other Credit Documents.
ARTICLE 8. MISCELLANEOUS.
8.1 Expenses. The Borrower shall pay on demand of the applicable
party specified herein (a) all reasonable out-of-pocket costs and expenses of
the Agent and the Issuing Bank in connection with the preparation, execution,
delivery, administration, modification, and amendment of this Agreement and the
other Credit Documents, including the reasonable fees and expenses of outside
counsel for the Agent and the Issuing Bank, and (b) all out-of-pocket costs and
expenses of the Agent, the Issuing Bank, and each Bank in connection with the
preservation or enforcement of their respective rights under this Agreement and
the other Credit Documents, whether through negotiations, legal proceedings, or
otherwise, including fees and expenses of counsel for the Agent, the Issuing
Bank, and each Bank. The provisions of this paragraph shall survive the
repayment and termination of the credit provided for under this Agreement and
any purported termination of this Agreement which does not expressly refer to
this paragraph.
8.2 Indemnification. The Borrower agrees to protect, defend,
indemnify, and hold harmless the Agent, the Issuing Bank, each Bank, and each
of their respective Related Parties (for the purposes of this Section 8.2,
collectively, the "Indemnified Parties"), from and against all demands, claims,
actions, suits, damages, judgments, fines, penalties, liabilities, and
out-of-pocket costs and expenses, including reasonable costs of attorneys and
related costs of experts such as accountants (collectively, the "Indemnified
Liabilities"), actually incurred by any Indemnified Party which are related to
any litigation or proceeding relating to this Agreement, the Credit Documents,
or the transactions contemplated thereunder, INCLUDING ANY INDEMNIFIED
LIABILITIES CAUSED BY ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE, but not
Indemnified Liabilities which are a result of any Indemnified Party's gross
negligence or willful misconduct. The provisions of this paragraph shall
survive the repayment and termination of the credit provided for under this
Agreement and any purported termination of this Agreement which does not
expressly refer to this paragraph.
8.3 Modifications, Waivers, and Consents. No modification or
waiver of any provision of this Agreement or the Revolving Loan Notes, nor any
consent required under this Agreement or the Revolving Loan Notes, shall be
effective unless the same shall be in writing and signed by the Majority Banks
and the Borrower, and then such modification, waiver, or consent shall be
effective
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only in the specific instance and for the specific purpose for which given;
provided, however, that no modification, waiver, or consent shall, unless in
writing and signed by all the Banks and the Borrower do any of the following:
(a) waive any of the conditions specified in Section 3.1 or 3.2, (b) increase
the Revolving Loan Commitments of the Banks, (c) forgive or reduce the amount
or rate of any principal, interest, or fees payable under the Credit Documents,
or postpone or extend the time for payment thereof, (d) release any Guaranty or
any material collateral securing the Credit Obligations (except as otherwise
permitted or required herein), or (e) change the percentage of Banks required
to take any action under this Agreement, the Revolving Loan Notes, or the
Security Documents, including any amendment of the definition of "Majority
Banks" or this Section 8.3. No modification, waiver, or consent shall, unless
in writing and signed by the Agent or the Issuing Bank affect the rights or
obligations of the Agent or the Issuing Bank, as the case may be, under the
Credit Documents. The Agent shall not modify or waive or grant any consent
under any other Credit Document of such action would be prohibited under this
Section 8.3 with respect to the Credit Agreement or the Revolving Loan Notes.
8.4 Survival of Agreements. All representations, warranties, and
covenants of the Borrower in this Agreement and the Credit Documents shall
survive the execution of this Agreement and the Credit Documents and any other
document or agreement.
8.5 Assignment and Participation. This Agreement and the Credit
Documents shall bind and inure to the benefit of the Borrower and their
respective successors and assigns and the Agent and the Banks and their
respective successors and assigns. The Borrower may not assign its rights or
delegate its duties under this Agreement or any Credit Document.
(a) Assignments. Any Bank may assign to one or more
banks or other entities all or any portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Revolving Loan Commitments, the Revolving Loan Advances owing to it, the
Revolving Loan Notes held by it, and the participation interest in the Letters
of Credit owned by it); provided, however, that (i) each such assignment shall
be of a constant, and not a varying, percentage of all of such Bank's rights
and obligations under this Agreement, (ii) assignments of Revolving Loan
Commitments shall be made in minimum amounts of $5,000,000 and be made in
integral multiples of $1,000,000 and the assigning Bank, if it retains any
Revolving Loan Commitments, shall maintain at least $5,000,000 in Revolving
Loan Commitments, (iii) each such assignment shall be to an Eligible Assignee,
(iv) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with the Revolving Loan Notes subject to such assignment,
and (v) each Eligible Assignee (other than the Eligible Assignee of the Agent)
shall pay to the Agent a $3,500 administrative fee. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least three
Business Days after the execution thereof, (A) the assignee thereunder shall be
a party hereto for all purposes and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder and (B) such Bank
thereunder
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shall, to the extent that rights and obligations hereunder have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of such Bank's
rights and obligations under this Agreement, such Bank shall cease to be a
party hereto).
(b) Term of Assignments. By executing and delivering an
Assignment and Acceptance, the Bank thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such Bank 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 of value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Credit Party or the performance or observance by any Credit Party of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the Registration Statement and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee shall, independently and without reliance upon the Agent, such
Bank or any other Bank 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 shall 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 Bank.
(c) The Register. The Agent shall maintain at its
address referred to in Section 8.6 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Banks and the Revolving Loan Commitments of each Bank from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Agent, the Issuing Bank, and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or
any Bank at any reasonable time and from time to time upon reasonable prior
notice.
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(d) Procedures. Upon its receipt of an Assignment and
Acceptance executed by a Bank and an Eligible Assignee, together with the
Revolving Loan Notes subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed in the appropriate form, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) 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 in exchange for the surrendered Revolving Loan
Notes a new Revolving Loan Note to the order of such Eligible Assignee in an
amount equal to the Revolving Loan Commitment assumed by it pursuant to such
Assignment and Acceptance and, if such Bank has retained any Revolving Loan
Commitment hereunder, a new Revolving Loan Note to the order of such Bank in an
amount equal to the Revolving Loan Commitment retained by it hereunder. Such
new Revolving Loan Notes shall be dated the effective date of such Assignment
and Acceptance and shall be in the appropriate form.
(e) Participation. Each Bank may sell participation to
one or more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Revolving Loan Commitments, the Revolving Loan Advances owing to
it, its participation interest in the Letters of Credit, and the Revolving Loan
Notes held by it); provided, however, that (i) such Bank's obligations under
this Agreement (including, without limitation, its Revolving Loan Commitments
to the Borrower hereunder) shall remain unchanged, (ii) such Bank shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Bank shall remain the holder of any such Revolving Loan
Notes for all purposes of this Agreement, (iv) the Borrower, the Agent, and the
Issuing Bank and the other Banks shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under this
Agreement, and (v) such Bank shall not require the participant's consent to any
matter under this Agreement, except that upon 10 days' written notice of such
participation to the Agent and the Borrower, such Bank may permit the
participant to possess consent rights with respect to changes in the principal
amount of the Revolving Loan Notes, reductions in fees or interest, extensions
of the applicable maturity date, or releases of any collateral or guarantor
(except to the extent otherwise permitted herein or in any of the other Credit
Documents). The Borrower hereby agrees that participants shall have the same
rights under Sections 2.6, 2.7, 2.8, 2.9, 2.10, and 8.2 as a Bank to the extent
of their respective participation.
(f) Assignments or Pledges to Federal Reserve Banks. In
addition to the foregoing rights of assignment and participation, any Bank may
assign or pledge any portion of its rights under this Agreement (including the
Revolving Loan Advances owed to such Bank) to any Federal Reserve Bank in
accordance with applicable law without notice to or the consent of the Borrower
or the Agent, provided that (i) such Bank shall not be relieved of its
obligations under this Agreement as
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a result thereof and (ii) in no event shall the Federal Reserve Bank be
entitled to direct the actions of the pledging or assigning Bank under this
Agreement.
8.6 Notice. All notices and other communications under this
Agreement and the Revolving Loan Notes shall be in writing and mailed by
certified mail (return receipt requested), telecopied, telexed, hand delivered,
or delivered by a nationally recognized overnight courier, to the address for
the appropriate party specified in Schedule I or at such other address as shall
be designated by such party in a written notice to the other parties. Mailed
notices shall be effective when received. Telecopied or telexed notices shall
be effective when transmission is completed or confirmed by telex answerback.
Delivered notices shall be effective when delivered by messenger or courier.
Notwithstanding the foregoing, notices and communications to the Agent pursuant
to Article 2 or 7 shall not be effective until received by the Agent.
8.7 Choice of Law. This Agreement and the Revolving Loan Notes
have been prepared, are being executed and delivered, and are intended to be
performed in the State of Texas, and the substantive laws of the State of Texas
and the applicable federal laws of the United States shall govern the validity,
construction, enforcement, and interpretation of this Agreement and the
Revolving Loan Notes; provided however, Chapter 15 of the Texas Credit Code
does not apply to this Agreement or the Revolving Loan Notes. Each Letter of
Credit shall be governed by the Uniform Customs and Practice for Documentary
Credits, International Chamber of Commerce Publication No. 500 (1993 version).
8.8 Forum Selection. THE BORROWER IRREVOCABLY CONSENTS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATED THERETO.
THE BORROWER AGREES AND SHALL NOT CONTEST THAT PROPER FORUM AND VENUE FOR ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY
TRANSACTIONS RELATING THERETO ARE IN THE COURTS OF THE STATE OF TEXAS IN XXXXXX
COUNTY, TEXAS, AND THE FEDERAL COURTS LOCATED IN XXXXXX COUNTY, TEXAS. THE
BORROWER IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE FOREGOING BASED UPON CLAIMS THAT THE FOREGOING COURTS ARE AN INCONVENIENT
FORUM.
8.9 Service of Process. IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO,
THE BORROWER WAIVES PERSONAL SERVICE OF ANY SUMMONS,
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COMPLAINT, OR OTHER PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS
MAIL, RETURN RECEIPT REQUESTED, TO THE BORROWER AT ITS ADDRESS FOR NOTICES
HEREUNDER, OR ANY OTHER FORM OF SERVICE PROVIDED FOR IN THE TEXAS CIVIL
PRACTICE LAW AND RULES THEN IN EFFECT SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE UPON THE BORROWER.
8.10 Waiver of Jury Trial. THE BORROWER IRREVOCABLY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO.
8.11 Amendment and Restatement. This Agreement represents a full
and complete amendment and restatement of the Credit Agreement dated as of
January 30, 1998, among the Borrower, NationsBank of Texas, N.A., as
predecessor in interest to NationsBank, N.A., as the Agent, and the Banks named
therein, and that prior version is deemed replaced hereby as of the
effectiveness of this Agreement. The indebtedness under such prior version of
this Agreement continues under this Agreement (as reallocated among the Banks
in connection with the effectiveness of this Agreement) and the execution of
this Agreement does not indicate a payment, satisfaction, novation, or
discharge thereof. All security and support for the indebtedness under the
prior version of this Agreement continues to secure and support the
indebtedness hereunder. Upon the effectiveness of this Agreement, all
outstanding Revolving Loan Advances shall be reallocated among the Banks
ratably in accordance with their Commitments. Amounts payable under the prior
version of this Agreement shall accrue thereunder until the effectiveness of
this Agreement and the Agent shall arrange with the Borrower and the Banks to
prorate and ratably distribute to the Agent and the Banks all amounts payable
under the prior version of this Agreement for the periods prior to the
effectiveness of this Agreement.
8.12 Counterparts. This Agreement may be executed in multiple
counterparts which together shall constitute one and the same instrument.
8.13 No Further Agreements. THIS WRITTEN AGREEMENT AND THE CREDIT
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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64
EXECUTED as of the date first above written.
BORROWER:
INTEGRATED ELECTRICAL SERVICES, INC.
By: /s/ XXX X. XXXX
---------------------------------
Xxx X. Xxxx
Senior Vice President and
Chief Financial Officer
AGENT:
NATIONSBANK, N.A., as Agent
By: /s/ XXXXXX X. XXXXX
---------------------------------
Xxxxxx X. Xxxxx
Vice President
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65
BANKS:
NATIONSBANK, N.A.
Revolving Loan Commitment: By: /s/ XXXXXX X. XXXXX
$30,000,000 ---------------------------------
Xxxxxx X. Xxxxx
Vice President
BANK OF SCOTLAND
Revolving Loan Commitment: By: /s/ XXXXX XXXX TAT
$25,000,000 ---------------------------------
Xxxxx Xxxx Tat
Senior Vice President
COMERICA BANK - TEXAS
Revolving Loan Commitment: By: /s/ XXXX XXXXXXX
$25,000,000 ---------------------------------
Xxxx Xxxxxxx
Vice President
NATIONAL CITY BANK OF KENTUCKY
Revolving Loan Commitment: By: /s/ XXX XXXXXXX
$15,000,000 ---------------------------------
Xxx Xxxxxxx
Vice President
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66
PARIBAS
Revolving Loan Commitment: By: /s/ XXXXXX X. XXXXXXX
$15,000,000 -----------------------------
Name: Xxxxxx X. Xxxxxxx
---------------------------
Title: Vice President
--------------------------
By: /s/ XXXXX XXXXXXXX
-----------------------------
Name: Xxxxx Xxxxxxxx
---------------------------
Title: Vice President
--------------------------
THE BANK OF NOVA SCOTIA
Revolving Loan Commitment: By: /s/ F.C.H. XXXXX
$15,000,000 -----------------------------
Name: F.C.H. Xxxxx
---------------------------
Title: Senior Manager Loan
Operations
--------------------------
CENTURA BANK
Revolving Loan Commitment: By: /s/ XXXXX X. XXXXX
$15,000,000 -----------------------------
Name: Xxxxx X. Xxxxx
---------------------------
Title: Bank Officer
--------------------------
CREDIT LYONNAIS NEW YORK BRANCH
Revolving Loan Commitment: By: /s/ PASCAL POUPELLE
$15,000,000 -----------------------------
Name: Pascal Poupelle
---------------------------
Title: Executive Vice President
--------------------------
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FIRST AMERICAN NATIONAL BANK
Revolving Loan Commitment: By: /s/ XXXXXXX XXXXXX
$10,000,000 --------------------------
Name: Xxxxxxx Xxxxxx
------------------------
Title: A.V.P.
-----------------------
SUNTRUST BANK
Revolving Loan Commitment: By: /s/ XXXX X. XXXXXX, XX.
$10,000,000 -------------------------------
Name: Xxxx X. Xxxxxx, Xx.
-----------------------------
Title: Vice President
----------------------------
By: /s/ XXXXXX XXXXX
-------------------------------
Name: Xxxxxx Xxxxx
-----------------------------
Title: Corporate Banking Officer
----------------------------
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[Execution Version]
GUARANTY
(Subsidiaries of Integrated Electrical Services, Inc.)
This Guaranty dated as of July 30, 1998 ("Agreement"), is made by the
undersigned subsidiaries of Integrated Electrical Services, Inc., a Delaware
corporation (each a "Guarantor"), in favor of NationsBank, N.A., successor in
interest by merger to NationsBank of Texas, N.A., in its capacity as agent
("Agent") for certain financial institutions which are or may become parties to
the Credit Agreement described below.
INTRODUCTION
This Agreement is given in connection with the Credit Agreement dated
as of July 30, 1998 (as modified from time to time, the "Credit Agreement"),
among Integrated Electrical Services, Inc., a Delaware corporation
("Borrower"), certain financial institutions which are or may become parties
thereto, and the Agent, the defined terms of which are used herein unless
otherwise defined herein. It is a condition precedent to the obligation of the
Banks to make any extension of credit under the Credit Agreement that the
Guarantors execute and deliver this Agreement to the Agent. Each Guarantor is
a Subsidiary of the Borrower. Because each Guarantor receives and, as a result
of its ownership by the Borrower, expects to continue to receive financial and
management support from the Borrower, each Guarantor will obtain substantial
benefit from the extensions of credit expected to be made to the Borrower under
the Credit Agreement.
Therefore, to induce the Agent and such financial institutions to
enter into the Credit Agreement, the Guarantors jointly and severally agree
with the Agent as follows:
Section 1. Guaranty. The Guarantors irrevocably and jointly and
severally guarantee to the Agent the full payment when due of (a) all
principal, interest, fees, reimbursements, indemnifications, and other amounts
now or hereafter owed by the Borrower to the Agent and the Banks (and with
respect to the Interest Hedge Agreements, the Affiliates of the Banks) under
the terms of the Credit Agreement and the other Credit Documents, including
amounts owed under the terms of the Credit Agreement and the other Credit
Documents for which the Borrower has obtained relief under bankruptcy or other
laws providing for relief from creditors, and (b) any increases, extensions,
and rearrangements of the foregoing obligations under any amendments,
supplements, and other modifications of the documents and agreements creating
the foregoing obligations (collectively, the "Guaranteed
69
Obligations"). This is a guaranty of payment and not merely a guaranty of
collection, and each Guarantor is liable as a primary obligor. If any of the
Guaranteed Obligations are not punctually paid when due, whether by maturity,
acceleration, or otherwise, and the Agent shall notify any Guarantor of such
default and make demand for payment hereunder, such Guarantor shall immediately
pay to the Agent the full amount of the Guaranteed Obligations which are due
and payable. Each Guarantor shall make each payment to the Agent in U.S.
Dollars in immediately available funds as directed by the Agent. The Agent is
hereby authorized at any time following any demand for payment hereunder to set
off and apply any indebtedness owed by the Agent to any Guarantor against any
and all of the obligations of such Guarantor under this Agreement. The Agent
agrees to promptly notify such Guarantor after any such setoff and application,
but the failure to give such notice shall not affect the validity of such
setoff and application.
Section 2. Guaranty Absolute.
2.1 This Agreement shall be deemed accepted by the Agent upon
receipt, and the obligations of the Guarantors under this Agreement are
effective immediately and are continuing and cover all Guaranteed Obligations
arising prior to and after the date hereof. This Agreement may not be revoked
by any Guarantor and shall continue to be effective with respect to Guaranteed
Obligations arising or created after any attempted revocation by any Guarantor.
2.2 Each Guarantor guarantees that the Guaranteed Obligations will
be paid strictly in accordance with the terms of the Credit Agreement and the
other Credit Documents, regardless of any law, regulation, or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. Each Guarantor agrees
that such Guarantor's obligations under this Agreement shall not be released,
diminished, or impaired by, and waives any rights which such Guarantor might
otherwise have which relate to:
(a) Any lack of validity or enforceability of the
Guaranteed Obligations, any Credit Document, or any other agreement or
instrument relating thereto; any increase, reduction, extension, or
rearrangement of the Guaranteed Obligations; any amendment, supplement, or
other modification of the Credit Documents; any waiver or consent granted under
the Credit Documents, including waivers of the payment and performance of the
Guaranteed Obligations; or any sale, assignment, delegation, or other transfer
of the Guaranteed Obligations or the Credit Documents;
(b) Any grant of any security or support for the
Guaranteed Obligations or any impairment of any security or support for the
Guaranteed Obligations, including any
70
full or partial release, exchange, subordination, or waste of any collateral
for the Guaranteed Obligations or any full or partial release of the Borrower,
any Guarantor, or any other Person liable for the payment or performance of the
Guaranteed Obligations; any change in the organization or structure of the
Borrower, any Guarantor, or any other Person liable for the payment or
performance of the Guaranteed Obligations; or the insolvency, bankruptcy,
liquidation, or dissolution of the Borrower, any Guarantor, or any other Person
liable for the payment or performance of the Guaranteed Obligations;
(c) The manner of applying payments on the Guaranteed
Obligations or the proceeds of any security or support for the Guaranteed
Obligations against the Guaranteed Obligations;
(d) The failure to give notice of the occurrence of any
of the events or actions referred to in this Section 2.2, notice of any default
or event of default, however denominated, under the Credit Documents, notice of
intent to demand, notice of demand, notice of presentment for payment, notice
of nonpayment, notice of intent to protest, notice of protest, notice of grace,
notice of dishonor, notice of intent to accelerate, notice of acceleration,
notice of bringing of action to enforce the payment or performance of the
Guaranteed Obligations, notice of any sale or foreclosure of any collateral for
the Guaranteed Obligations, notice of any transfer of the Guaranteed
Obligations, notice of the financial condition of or other circumstances
regarding the Borrower, any Guarantor, or any other Person liable for the
Guaranteed Obligations, or any other notice of any kind relating to the
Guaranteed Obligations (and the parties intend that no Guarantor shall be
considered a "Debtor" as defined in Section 9.105 of the Texas Business and
Commerce Code for the purpose of notices required to be given to a Debtor
thereunder); or
(e) Any other action taken or omitted which affects the
Guaranteed Obligations, whether or not such action or omission prejudices any
Guarantor or increases the likelihood that any Guarantor will be required to
pay the Guaranteed Obligations pursuant to the terms hereof--it is the
unambiguous and unequivocal intention of each Guarantor that such Guarantor
shall be obligated to pay the Guaranteed Obligations when due, notwithstanding
any occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not particularly described
herein.
2.3 This Agreement shall continue to be effective or be
reinstated, as the case may be, if any payment on the Guaranteed Obligations
must be refunded for any reason including any bankruptcy proceeding. In the
event that the Agent or any Bank must refund any payment received against the
Guaranteed Obligations, any prior release from the terms of this Agreement
given to any Guarantor by the Agent shall be without effect, and this Agreement
shall be reinstated in full force and effect. It is the intention of each
Guarantor that such
-3-
71
Guarantor's obligations hereunder shall not be discharged except by final
payment of the Guaranteed Obligations.
2.4 (a) Each Guarantor is a Subsidiary of the Borrower and
receives and, because of its ownership by the Borrower, expects to continue to
receive business opportunities, financial support, and management support from
the Borrower. Each Guarantor has agreed to enter into this Agreement so that
the Borrower can receive the benefits of the Guaranteed Obligations and
continue to provide these services to such Guarantor.
(b) In consummating the transactions contemplated by the
Credit Documents, no Guarantor intends to disturb, delay, hinder, or defraud
either present or future creditors of such Guarantor. Each Guarantor is
familiar with, and has independently reviewed books and records regarding, the
financial condition of the Borrower and is familiar with the value of the
security and support for the payment and performance of the Guaranteed
Obligations. Based upon such examination, and taking into account the fairly
discounted value of such Guarantor's contingent obligations under this
Agreement and the value of the subrogation and contribution claims such
Guarantor could make in connection with this Agreement, and assuming each of
the transactions contemplated by the Credit Documents is consummated and the
Borrower makes full use of the credit facilities thereunder, the present
realizable fair market value of the assets of such Guarantor exceeds the total
obligations of such Guarantor, and such Guarantor is able to realize upon its
assets and pay its obligations as such obligations mature in the normal course
of business.
(c) If notwithstanding the foregoing it is judicially
determined with respect to any Guarantor that entering into this Agreement
would violate Section 548 of the United States Bankruptcy Code or any
comparable provisions of any state law, then such Guarantor shall be liable
under this Guaranty only for amounts aggregating up to the largest amount that
would not render such Guarantor's obligations hereunder subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any state law.
(d) Each Guarantor agrees that each Guarantor shall have
rights of contribution and subrogation against each other Guarantor with
respect to any payments made in connection with the Guaranteed Obligations.
Section 3. Unimpaired Collection.
3.1 There are no conditions precedent to the enforcement of this
Agreement, except as expressly contained herein. It shall not be necessary for
the Agent, in order to
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72
enforce payment by any Guarantor under this Agreement, to show any proof of the
Borrower's default, to exhaust the Agent's remedies against the Borrower, any
Guarantor, or any other Person liable for the payment or performance of the
Guaranteed Obligations, to enforce any security or support for the payment or
performance of the Guaranteed Obligations, or to enforce any other means of
obtaining payment or performance of the Guaranteed Obligations. Each Guarantor
waives any rights under Chapter 34 of the Texas Business and Commerce Code,
Section 17.001 of the Texas Civil Practice and Remedies Code, and Rule 31 of
the Texas Rules of Civil Procedure related to the foregoing. Neither the Agent
nor the Banks shall be required to mitigate damages or take any other action to
reduce, collect, or enforce the Guaranteed Obligations.
3.2 With respect to each Guarantor, all Subordinated Obligations
of such Guarantor (as defined below) shall be subordinate and junior in right
of payment and collection to the payment and collection in full of all
Guaranteed Obligations as described below:
(a) As used herein, the term "Subordinated Obligations" for
such Guarantor means: (i) all present and future indebtedness, liabilities, and
obligations of any kind owed by the Borrower, any Guarantor, or any other
Person liable for the payment or performance of the Guaranteed Obligations to
such Guarantor, including debt obligations, equity obligations, and other
contractual obligations requiring payments of any kind to be made to such
Guarantor and including any right of subrogation (including any statutory
rights of subrogation under Section 509 of the Bankruptcy Code, 11 U.S.C.
Section 509, or under Chapter 34 of the Texas Business and Commerce Code),
contribution, indemnification, reimbursement, exoneration, or any right to
participate in any claim or remedy of the Agent against the Borrower, any
Guarantor, or any Person liable for the payment or performance of the
Guaranteed Obligations, or any collateral which the Agent now has or may
acquire, and (ii) any increases, extensions, and rearrangements of the
foregoing obligations under any amendments, supplements, and other
modifications of the documents and agreements creating the foregoing
obligations.
(b) Until all Guaranteed Obligations have been
irrevocably paid in full (and therefore the payment thereof is no longer
subject to being set aside or returned under the law), such Guarantor agrees
not to take any action to enforce payment of such the Subordinated Obligations
of such Guarantor, but this standstill is not intended as a permanent waiver of
the subrogation, contribution, indemnification, reimbursement, exoneration,
participation, or other rights of such Guarantor.
(c) Upon any receivership, insolvency proceeding,
bankruptcy proceeding, assignment for the benefit of creditors, reorganization,
arrangement with creditors, sale of
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73
assets for creditors, dissolution, liquidation, or marshaling of the assets of
the Borrower, any Guarantor, or any other Person liable for the payment or
performance of the Guaranteed Obligations, all amounts due with respect to the
Guaranteed Obligations shall be paid in full before such Guarantor shall be
entitled to collect or receive any payment with respect to the Subordinated
Obligations of such Guarantor, and all payments to which such Guarantor would
be entitled to collect or receive on the Subordinated Obligations of such
Guarantor shall be paid over to the Agent for application to the Guaranteed
Obligations.
(d) Following notice from the Agent to the Borrower that
an Event of Default exists and that no further payments shall be made on the
Subordinated Obligations of such Guarantor until (i) all amounts due with
respect to the Guaranteed Obligations shall be paid in full or (ii) the Agent
revokes such notice, such Guarantor shall not be entitled to collect or receive
any payment with respect to the Subordinated Obligations of such Guarantor.
(e) Any lien, security interest, or assignment securing
the repayment of the Subordinated Obligations of such Guarantor shall be fully
subordinate to any lien, security interest, or assignment in favor of the Agent
which secures the Guaranteed Obligations. At the request of the Agent, such
Guarantor will take any and all steps necessary to fully evidence the
subordination granted hereunder, including amending or terminating financing
statements and executing and recording subordinations of liens.
(f) This is an absolute and irrevocable agreement of
subordination and the Agent may, without notice to such Guarantor, take any
action described in Section 2.2 without impairing or releasing the obligations
of such Guarantor hereunder.
(g) Such Guarantor shall not assign or otherwise transfer
to any other Person any interest in the Subordinated Obligations of such
Guarantor unless such Guarantor causes the assignee or other transferee to
execute and deliver to the Agent a subordination agreement in substantially the
form of the subordination provisions in this Agreement.
(h) If any amount shall be paid to such Guarantor in
violation of this Section 3.2, such amount shall be held in trust for the
benefit of the Agent and immediately turned over to the Agent, with any
necessary endorsement, to be applied to the Guaranteed Obligations.
Section 4. Miscellaneous.
4.1 Each Guarantor hereby affirms and shall comply with the
representations, warranties, and covenants made by the Borrower in the Credit
Agreement to the extent that
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such representations, warranties, and covenants are applicable to such
Guarantor, including all of the representations and warranties in Section 4 of
the Credit Agreement and all of the covenants in Section 5 of the Credit
Agreement.
4.2 Each Guarantor shall pay to the Agent on demand (a) all
reasonable out-of-pocket costs and expenses of the Agent in connection with the
preparation, execution, delivery, administration, modification, and amendment
of this Agreement and the other Credit Documents to which such Guarantor is a
party, including the reasonable fees and out-of-pocket expenses of outside
counsel for the Agent with respect to advising the Agent as to its rights and
responsibilities under this Agreement and the Credit Documents to which such
Guarantor is a party, and (b) all costs and expenses of the Agent in connection
with the enforcement of the Agent's rights under this Agreement and the other
Credit Documents to which such Guarantor is a party, whether through
negotiations, legal proceedings, or otherwise, including fees and expenses of
counsel for the Agent. The provisions of this paragraph shall survive any
purported termination of this Agreement and the Credit Documents that does not
expressly reference this paragraph.
4.3 Each Guarantor agrees to protect, defend, indemnify, and hold
harmless the Agent, each Bank, and each of their respective Related Parties
(collectively, the "Indemnified Parties"), from and against all demands,
claims, actions, suits, damages, judgments, fines, penalties, liabilities, and
costs and expenses, including reasonable costs of attorneys and related costs
of experts such as accountants (collectively, the "Indemnified Liabilities"),
actually incurred by the Indemnified Parties which are related to any
litigation or proceeding relating to this Agreement, the Credit Documents, or
the transactions contemplated thereunder, INCLUDING INDEMNIFIED LIABILITIES
CAUSED BY ANY INDEMNIFIED PARTIES' OWN NEGLIGENCE, but not Indemnified
Liabilities which are a result of any Indemnified Parties' gross negligence or
willful misconduct or negligence in the handling of money. The provisions of
this paragraph shall survive any purported termination of this Agreement and
the Credit Documents that does not expressly reference this paragraph.
4.4 Each Guarantor agrees that this Agreement shall be governed by
the laws of the State of Texas. If any provision in this Agreement is held to
be unenforceable, such provision shall be severed and the remaining provisions
shall remain in full force and effect. All representations, warranties, and
covenants of any Guarantor in this Agreement shall survive the execution of
this Agreement and any other contract or agreement. The Agent's remedies under
this Agreement and the Credit Documents to which any Guarantor is a party shall
be cumulative, and no delay in enforcing this Agreement and the Credit
Documents to which such Guarantor is a party shall act as a waiver of the
Agent's rights thereunder. The provisions of this Agreement may be waived or
amended only in a writing signed by the
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75
party against whom enforcement is sought. This Agreement shall bind and inure
to the benefit of each Guarantor and the Agent and their respective successors
and assigns. Each Guarantor may not assign its rights or delegate its duties
under this Agreement. The Agent may assign its rights and delegate its duties
under this Agreement in accordance with the terms of the Credit Agreement.
This Agreement may be executed in multiple counterparts each of which shall
constitute one and the same agreement. Unless otherwise specified, all notices
and other communications between such Guarantor and the Agent provided for in
this Agreement and the Credit Documents to which such Guarantor is a party
shall be in writing, including telecopy, and delivered or transmitted to the
addresses set forth below, or to such other address as shall be designated by
such Guarantor or the Agent in written notice to the other party. Notice sent
by telecopy shall be deemed to be given and received when receipt of such
transmission is acknowledged, and delivered notice shall be deemed to be given
and received when receipted for by, or actually received by, an authorized
officer of such Guarantor or the Agent, as the case may be.
If to any Guarantor:
[Guarantor]
c/o Integrated Electrical Services, Inc.
0000 Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxx
telephone: 000-000-0000
telecopier: 000-000-0000
If to the Agent:
NationsBank, N.A.,
as Agent under the Credit Agreement
dated as of July 30, 1998, among
Integrated Electrical Services, Inc., the financial
institutions parties thereto, and the Agent
000 Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx, Vice President
telephone: 000-000-0000
telecopier: 000-000-0000
4.5 Any present or future Subsidiary of the Borrower may become a
Guarantor under and a party to this Agreement by executing and delivering to
the Agent a Joinder
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76
Agreement in accordance with Section 5.19 of the Credit Agreement or by
otherwise assuming in writing in favor of the Agent the liabilities of a
Guarantor under this Agreement. Upon execution and delivery of a Joinder
Agreement or otherwise assuming the liabilities of a Guarantor under this
Agreement such Subsidiary shall be deemed to be a Guarantor under this
Agreement and a party to this Agreement for all purposes hereunder.
4.6 WAIVER OF JURY TRIAL. EACH GUARANTOR IRREVOCABLY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO.
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
-9-
77
EXECUTED as of the date first above written.
ACE ELECTRIC, INC.
X.X. XXXXX, INC.
AMBER ELECTRIC, INC.
BW CONSOLIDATED, INC.
BW/CEC, INC.
BW/BEC, INC.
BW/CEC, L.L.C.
BW/BEC, L.L.C.
XXXXXXX X. XXXXX COMPANY, INC.
XXXXXX ELECTRICAL CONTRACTORS, INC.
XXXXXX ELECTRICAL OF TREASURE COAST INC.
FLORIDA INDUSTRIAL ELECTRIC, INC.
GENERAL PARTNER, INC.
X.X. XXXX ELECTRIC CO., INC.
X.X. XXXX MANAGEMENT LLC
XXXXXXXX ELECTRIC, INC.
XXXXXX ELECTRICAL SUPPLY, INC.
XXXX XXXXXXXXX, INCORPORATED
HOLLAND ELECTRICAL SYSTEMS, INC.
SPECTROL, INC.
XXXXXXX-XXXXXXXX ELECTRIC, INC.
XXXXXXX-XXXXXXXX MANAGEMENT LLC
MENNIGA ELECTRIC, INC.
MID-STATES ELECTRIC COMPANY, INC.
XXXXX ELECTRICAL CONTRACTORS, INC.
XXXXX MANAGEMENT LLC
XXXX ELECTRIC, INC.
XXXXXX ELECTRIC COMPANY, INC.
XXXXXX XXXX & COMPANY
XXXXXXXX ELECTRIC CORP.
XXXXXXX ELECTRIC COMPANY, INC.
XXXXX INVESTMENTS, INC.
XXXXXXX & X'XXXXXXX CORPORATION
XXXXXX ELECTRICAL CONTRACTORS, INC.
By: /s/ XXXX X. XXXXXXXX
-------------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
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78
ALADDIN-XXXX ELECTRIC & AIR, INC.
CYPRESS ELECTRICAL CONTRACTORS, INC.
XXXXX ELECTRIC ACQUISITION
CORPORATION
XXXXXX XXXXXXXX ELECTRIC CO., INC.
INTEGRATED ELECTRICAL FINANCE, INC.
INTEGRATION COMMUNICATION SERVICES,
INC.
XXXXXXX ELECTRIC INC.
SUMMIT ELECTRIC OF TEXAS, INCORPORATED
By: /s/ XXXX X. XXXXXXXX
-------------------------------------
Xxxx X. Xxxxxxxx
Secretary
X.X. XXXX HOLDINGS LLC
XXXXXXX-XXXXXXXX HOLDINGS LLC
IES HOLDINGS LLC
XXXXX ELECTRICAL HOLDINGS LLC
XXXXXXX SUMMIT HOLDINGS, INC.
By: /s/ XXXXX XXXXXXXX
-------------------------------------
Xxxxx Xxxxxxxx
Manager
BEXAR ELECTRIC COMPANY, LTD.
By: BW/BEC, INC., its General Partner
BW/BEC, LLC, its Limited Partner
By: /s/ XXXX X. XXXXXXXX
------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
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79
XXXXXXX ELECTRIC COMPANY, LTD.
By: BW/CEC, INC., its General Partner
BW/CEC, LLC, its Limited Partner
By: /s/ XXXX X. XXXXXXXX
-------------------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
X.X. XXXX ELECTRICAL CONTRACTORS LP
By: X.X. XXXX MANAGEMENT LLC, its General Partner
By: /s/ XXXX X. XXXXXXXX
-------------------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
By: X.X. XXXX HOLDINGS LLC, its Limited Partner
By: /s/ XXXXX XXXXXXXX
-------------------------------------------
Xxxxx Xxxxxxxx
Manager
XXXXXXXX XXXXXXXX ELECTRIC CO.
By: XXXXXXXX ELECTRIC, INC., its General Partner
XXXXXXXX ELECTRIC, CORP., its General Partner
By: /s/ XXXX X. XXXXXXXX
-------------------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
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80
XXXXXXXX ELECTRIC, LTD
By: GENERAL PARTNER, INC., its General Partner
XXXXXXX X. XXXXX COMPANY, INC., its
Limited Partner
By: /s/ XXXX X. XXXXXXXX
---------------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
XXXXXXX-XXXXXXXX ELECTRICAL CONTRACTORS LP
By: XXXXXXX-XXXXXXXX MANAGEMENT LLC, its
General Partner
By: /s/ XXXX X. XXXXXXXX
---------------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
By: XXXXXXX-XXXXXXXX HOLDINGS LLC, its
Limited Partner
By: /s/ XXXXX XXXXXXXX
---------------------------------------
Xxxxx Xxxxxxxx
Manager
IES MANAGEMENT LP
By: INTEGRATED ELECTRICAL FINANCE, INC., its
General Partner
By: /s/ XXXX X. XXXXXXXX
---------------------------------------
Xxxx X. Xxxxxxxx
Secretary
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81
By: IES HOLDINGS, LLC , its Limited Partner
By: /s/ XXXXX XXXXXXXX
--------------------------------------------
Xxxxx Xxxxxxxx
Manager
XXXXX ELECTRIC LP
By: XXXXX MANAGEMENT LLC, its General Partner
By: /s/ XXXX X. XXXXXXXX
--------------------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
By: XXXXX ELECTRICAL HOLDINGS LLC, its Limited
Partner
By: /s/ XXXXX XXXXXXXX
--------------------------------------------
Xxxxx Xxxxxxxx
Manager
XXXXXXX SUMMIT ELECTRIC LP
By: XXXXXXX ELECTRIC INC., its General Partner and
its Limited Partner
SUMMIT ELECTRIC OF TEXAS,
INCORPORATED, its General Partner
By: /s/ XXXX X. XXXXXXXX
--------------------------------------------
Xxxx X. Xxxxxxxx
Secretary
NATIONSBANK, N.A., as Agent
By: /s/ XXXXXX X. XXXXX
--------------------------------------------
Xxxxxx X. Xxxxx
Vice President
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[Execution Version]
Exhibit D
FORM OF
PROMISSORY NOTE
([Bank Name])
$[Amount] Houston, Texas [date]
For value received, the undersigned INTEGRATED ELECTRICAL SERVICES,
INC., a Delaware corporation ("Borrower"), hereby promises to pay to the order
of [Bank Name] ("Bank"), the principal amount of [Amount] ($[ ]) or, if less,
the aggregate outstanding principal amount of the Revolving Loan Advances (as
defined in the Credit Agreement referred to below) made by the Bank to the
Borrower, together with accrued but unpaid interest on the principal amount of
each such Revolving Loan Advance from the date of such Revolving Loan Advance
until such principal amount is paid in full, at such interest rates, and at such
times, as are specified in the Credit Agreement.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, and is subject to the terms of, the Credit Agreement dated as of
July 30, 1998 (as the same may be modified from time to time, the "Credit
Agreement"), among the Borrower, the financial institutions parties thereto
("Banks"), and NationsBank, N.A., successor in interest by merger to NationsBank
of Texas, N.A., as agent for the Banks ("Agent"). Capitalized terms used herein
but not defined herein shall have the meanings specified by the Credit
Agreement. The Credit Agreement, among other things, (a) provides for the making
of Revolving Loan Advances by the Bank to the Borrower from time to time, the
indebtedness of the Borrower resulting from each such Revolving Loan Advance
being evidenced by this Note, and (b) contains provisions for acceleration of
the maturity of this Note upon the happening of certain events stated in the
Credit Agreement and for prepayments of principal prior to the maturity of this
Note upon the terms and conditions specified in the Credit Agreement.
Both principal and interest are payable to the Agent in the currency,
at the times, in the locations, and in the manner specified in the Credit
Agreement. The Bank shall record all Revolving Loan Advances and payments of
principal made under this Note, but no failure of the Bank to make such
recordings shall affect the Borrower's repayment obligations under this Note.
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It is contemplated that because of prepayments there may be times when
no indebtedness is owed under this Note. Notwithstanding such prepayments, this
Note shall remain valid and shall be in force as to Revolving Loan Advances made
pursuant to the Credit Agreement after such prepayments.
It is the intention of the Bank and the Borrower to conform strictly to
any applicable usury laws. Accordingly, the terms of the Credit Agreement
relating to the prevention of usury will be strictly followed.
No Further Agreements. THIS WRITTEN AGREEMENT AND THE CREDIT
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date first above written.
INTEGRATED ELECTRICAL SERVICES,
INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
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[Execution Version]
PROMISSORY NOTE
(Swing Line)
$5,000,000.00 July 30, 1998
INTEGRATED ELECTRICAL SERVICES, INC., a Delaware corporation
("Borrower"), for value received, hereby promises to pay to the order of
NATIONSBANK, N.A., successor in interest by merger to NationsBank of Texas,
N.A. ("Lender"), the principal sum of FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00) or, if less, the outstanding principal amount advanced under
this Promissory Note ("Note") and interest thereon, all as required by this
Note.
This Note is the Swing Line Note referred to in, and is entitled to
the benefits of, and is subject to the terms of, the Credit Agreement dated as
of July 30, 1998 (as modified from time to time, the "Credit Agreement"), among
the Borrower, the financial institutions parties thereto ("Banks"), and
NationsBank, N.A., successor in interest by merger to NationsBank of Texas,
N.A., as agent for the Banks ("Agent"). Capitalized terms used herein but not
defined herein shall have the meanings specified by the Credit Agreement.
Subject to the terms of this Note, the Lender shall from time to time
prior to the Maturity Date (hereinafter defined) make advances ("Advances") to
the Borrower under this Note. The aggregate outstanding principal amount of
such advances shall not exceed the face amount of this Note. The Borrower
shall request Advances by providing the Lender with notice not later than 11:00
a.m., Houston, Texas, time on the date of the requested Advance. The request
must specify the amount of the requested Advance and the date of funding for
such Advance. The Lender shall, before 4:00 p.m., Houston, Texas, time on the
date of such Advance, make such Advance available to the Borrower in
immediately available funds at the Borrower's account with the Lender.
Subject to the terms hereof, the Borrower may prepay the Advances on
this Note by providing the Lender with notice of the intended prepayment not
later than 11:00 a.m., Houston, Texas, time on the date of prepayment,
specifying the amount and the date of such prepayment. Each partial prepayment
of the Advances shall be in a minimum amount of $100,000 or an integral
multiple thereof or, if the aggregate outstanding principal amount of the
Advances would be less than $100,000 following the prepayment, in the remaining
aggregate outstanding principal amount of the Advances, together with accrued
interest to the date of such prepayment on the principal amount prepaid.
Amounts prepaid shall be applied in the inverse order of maturity.
Notwithstanding anything herein to the contrary, the Borrower shall
pay to the Lender the outstanding principal balance of this Note on July 30,
2001 ("Maturity Date").
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It is contemplated that because of prepayments there may be times when
no indebtedness is owed under this Note. Notwithstanding such prepayments,
this Note shall remain valid and shall be in force as to Advances made pursuant
to the Credit Agreement after such prepayments.
The Advances shall bear interest at a per annum rate equal to the
difference of (a) (i) the Adjusted Base Rate in effect from time to time plus
(ii) the Applicable Margin for the Prime Rate Tranche in effect from time to
time, calculated on the basis of a 365/366-day year for the actual number of
days elapsed, minus (b) the Applicable Margin for Commitment Fees in effect
from time to time, calculated on the basis of a 360-day year for the actual
number of days elapsed.
The Borrower shall pay to the Lender all accrued but unpaid interest
on the aggregate outstanding principal amount of the Advances on the last day
of each calendar quarter, when the Advances are prepaid in full, and on the
Maturity Date.
The Lender shall record in its records all Advances made under this
Note and all payments of principal and interest on the Advances. Any failure
of the Lender to make such recordings, however, shall not affect the Borrower's
repayment obligations. The Lender's records shall be presumptive evidence of
the principal and interest owed by the Borrower.
The Borrower shall make each payment required under this Note not
later than 12:00 noon, Houston, Texas, time on the date when due in Dollars to
the Lender at such location as is specified by the Lender in writing in
immediately available funds. During the existence of an Event of Default, the
Borrower hereby authorizes the Lender, if and to the extent payment is not made
when due under this Note, to charge from time to time against any account of
the Borrower with the Lender any amount so due. Whenever any payment to be
made under this Note shall be stated to be due on a day other than a day on
which the Lender is open for business in Houston, Texas ("Business Day"), such
payment shall be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of the payment of
interest. All payments shall be applied as directed by the Borrower or, if not
directed by the Borrower, as determined by the Lender.
Each of the following shall be an "Event of Default" for the purposes
of this Note: (a) the Borrower (i) fails to pay when due any principal amounts
due under this Note or (ii) fails to pay when due any interest or other amounts
due under this Note and such failure has not been cured within five Business
Days, (b) there shall occur any Event of Default under the Credit Agreement, or
(c) the Lender shall resign or be removed as Agent under the Credit Agreement.
During the continuation of any Event of Default, the Lender may
declare by written notice to the Borrower all of the commitments of the Lender
hereunder terminated (whereupon the same shall terminate) and the Lender may
declare by written notice to the Borrower the aggregate outstanding principal
amount of the Advances, all accrued interest thereon, and all other amounts
payable by the Borrower under this Note to be immediately due and payable
(whereupon the same shall immediately and automatically become due and
payable). Upon the occurrence of any Event
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of Default relating to bankruptcy or insolvency, all of the commitments of the
Lender hereunder shall terminate, and the aggregate outstanding principal
amount of all Advances made under this Note, all accrued interest thereon, and
all other amounts payable by the Borrower under this Note shall immediately and
automatically become due and payable.
Except for the notices provided for above and in the Credit Agreement,
the Borrower waives notice of intent to demand, demand, presentment for
payment, notice of nonpayment, protest, notice of setoff, notice of protest,
notice of dishonor, notice of intent to accelerate, notice of acceleration, and
all other notices in connection with the foregoing.
During the existence of an Event of Default, the Lender is authorized
at any time, to the fullest extent permitted by law, to setoff and apply any
indebtedness owed by the Lender to the Borrower against any and all of the
obligations of the Borrower under this Note, irrespective of whether or not the
Lender shall have made any demand under this Note and although such obligations
may be contingent and unmatured. Following an Event of Default, the Lender may
exercise (a) all of its rights under this Note and the Credit Agreement
(including Section 2.3(b) thereof) (such agreements being the "Loan Documents")
and (b) all other rights at law or in equity. During the existence of an Event
of Default, all payments and collections shall be applied in the order
determined by the Lender.
No right, power, or remedy conferred to the Lender in the Credit
Agreement or any Loan Document, or now or hereafter existing at law, in equity,
by statute, or otherwise shall be exclusive, and each such right, power, or
remedy shall to the full extent permitted by law be cumulative and in addition
to every other such right, power or remedy. No course of dealing and no delay
in exercising any right, power, or remedy conferred to the Lender in this Note,
or now or hereafter existing at law, in equity, by statute, or otherwise shall
operate as a waiver of or otherwise prejudice any such right, power, or remedy.
No notice to or demand upon the Borrower shall entitle the Borrower to similar
notices or demands in the future.
If the Borrower fails to pay when due any amount payable under this
Note, at the request of the Lender the amount not paid when due shall bear
interest beginning on the date due until paid in full at the rate otherwise set
for outstanding principal hereunder plus 2.00%.
It is the intention of the Lender and the Borrower to conform strictly
to any applicable usury laws. Accordingly, the terms of the Credit Agreement
relating to the prevention of usury will be strictly followed.
This Note shall be governed by the laws of the State of Texas without
regard to any principles of conflicts of laws. If any provision in this Note
is held to be unenforceable, such provision shall be severed and the remaining
provisions shall remain in full force and effect. All representations,
warranties, and covenants of the Borrower in this Note shall survive the
execution of this Note, the other Loan Documents, and any other contract or
agreement. The Lender's remedies under this Note and the Loan Documents shall
be cumulative, and no delay in enforcing this Note or the other Loan Documents
shall act as a waiver of the Lender's rights hereunder. The provisions
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of this Note may be waived or amended only in a writing signed by the party
against whom enforcement of such waiver or amendment is sought. This Note
shall bind the Borrower and the Borrower's successors and assigns and shall
inure to the benefit of the Lender and the Lender's successors and assigns.
The Borrower may not assign the Borrower's rights or delegate the Borrower's
duties under this Note or the other Loan Documents. The Lender may assign and
participate the Lender's rights and delegate the Lender's duties under this
Note. Unless otherwise specified, all notices provided for in this Note shall
be made in accordance with the terms of the Credit Agreement.
This Note evidences a modification and extension of certain
indebtedness previously evidenced by that certain promissory note of the
Borrower in favor of NationsBank of Texas, N.A., predecessor in interest to
NationsBank, N.A., dated as of January 30, 1998, in the maximum principal
amount of $5,000,000 (such promissory note is referred to as the "Original
Note"). The indebtedness represented by the Original Note continues under this
Note and the execution of this Note does not indicate a payment, satisfaction,
novation, or discharge thereof. All security and support for the Original Note
and the indebtedness represented thereby continues to secure and support this
Note and the indebtedness hereunder.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date first above written.
INTEGRATED ELECTRICAL SERVICES, INC.
By:
-----------------------------------------
Xxx X. Xxxx
Senior Vice President and
Chief Financial Officer
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[Execution Version]
SECURITY AGREEMENT
(Integrated Electrical Services, Inc., and Subsidiaries)
This Security Agreement dated as of July 30, 1998 ("Agreement"), is
made by Integrated Electrical Services, Inc., a Delaware corporation
("Borrower"), and the undersigned subsidiaries of the Borrower (the Borrower
and such undersigned subsidiaries being the "Debtors") in favor of NationsBank,
N.A., successor in interest by merger to NationsBank of Texas, N.A., in its
capacity as agent ("Secured Party") for certain financial institutions which
are or may become parties to the Credit Agreement described below.
INTRODUCTION
Reference is made to the Credit Agreement dated as of July 30, 1998
(as modified from time to time, the "Credit Agreement"), among the Borrower,
certain financial institutions which are or may become parties thereto, and the
Secured Party. Each of the undersigned subsidiaries of the Borrower has
entered into the Guaranty dated as of July 30, 1998 (as modified from time to
time, the "Guaranty"), in favor of the Secured Party guaranteeing the payment
of the obligations of the Borrower under the Credit Agreement. It is a
condition precedent to the effectiveness of the Credit Agreement that the
Debtors secure the Credit Agreement and the Guaranty with this Agreement.
Therefore, for the consideration expressed in the Credit Agreement and
the Guaranty, and in order to induce the Secured Party to enter into the Credit
Agreement, the Debtors jointly and severally agree with the Secured Party as
follows:
Section 1. Interpretation; Definitions.
1.1 Terms defined above and elsewhere in this Agreement shall have
their specified meanings. Capitalized terms used herein but not defined herein
shall have the meanings specified by the Credit Agreement. Terms defined in
Article 9 of the UCC shall have the meanings specified in Article 9 of the UCC.
1.2 The following terms shall have the following meanings:
"Chief Executive Office Location" means, with respect to each Debtor,
the location of the chief executive office of such Debtor as specified in
Schedule I.
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"Collateral" has the meaning specified in Section 2.1.
"Collateral Account" means any deposit account with the Secured Party
which is designated, maintained, and under the sole control of the Secured
Party and is pledged to the Secured Party which has been established pursuant
to the provisions of this Agreement for the purposes described in this
Agreement including collecting, holding, disbursing, or applying certain funds,
all in accordance with this Agreement. Each Debtor agrees to execute any
documents reasonably requested by the Secured Party to create any Collateral
Account and pledge it to the Secured Party.
"Proceeds" means all of each Debtor's present and future (a) proceeds
of the Collateral, whether arising from the collection, sale, lease, exchange,
assignment, licensing, or other disposition of the Collateral, (b) proceeds of
any casualty or condemnation of the Collateral (including insurance proceeds
and condemnation awards), (c) claims against third parties for impairment,
loss, damage, or impairment of the value of the Collateral, and (d) rights
under any insurance, indemnity, warranty, or guaranty of or for any of the
foregoing, in each case whether represented as money, deposit accounts,
accounts, general intangibles, securities, instruments, documents, chattel
paper, inventory, equipment, fixtures, or goods.
"Receivables" means all of each Debtor's present and future accounts,
accounts from governmental agencies, instruments, chattel paper, income tax
refunds, and any other rights to the payment of money.
"Related Rights" means all of each Debtor's present and future sale
contracts, chattel paper, licenses, permits, contracts, ledgers, files,
records, computer files, computer programs, and general intangibles related to
any other items of Collateral.
"Secured Obligations" means (a) all principal, interest, fees,
reimbursements, indemnifications, and other amounts now or hereafter owed by
the Borrower to the Secured Party and the Banks (and with respect to the
Interest Hedge Agreements, any Affiliates of the Banks) under the Credit
Agreement and the other Credit Documents; (b) all amounts now or hereafter owed
by the Debtors to the Secured Party and the Banks (and with respect to the
Interest Hedge Agreements, any Affiliates of the Banks) under the Guaranty,
this Agreement, and the other Credit Documents; and (c) any increases,
extensions, and rearrangements of the foregoing obligations under any
amendments, supplements, and other modifications of the agreements creating the
foregoing obligations.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of Texas, as amended from time to time, and any successor
statute.
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Section 2. Grant of Security Interest.
2.1 Grant of Security Interest. Each Debtor hereby grants to the
Secured Party, for the benefit of the holders of the Secured Obligations, a
security interest in all of such Debtor's right, title, and interest in and to
the following property (the "Collateral") to secure the payment and performance
of the Secured Obligations:
All Receivables;
All Related Rights; and
All Proceeds.
To the extent that the Collateral is not subject to the UCC, each Debtor
collaterally assigns all of such Debtor's right, title, and interest in and to
such Collateral to the Secured Party to secure the payment and performance of
the Secured Obligations to the full extent that such a collateral assignment is
possible under the relevant law.
2.2 Debtor Remains Liable. Anything herein to the contrary
notwithstanding: (a) each Debtor shall remain liable under any contracts and
agreements included in the Collateral to the extent set forth therein to
perform such Debtor's obligations thereunder to the same extent as if this
Agreement had not been executed; (b) the exercise by Secured Party of any
rights hereunder shall not release any Debtor from any obligations under any
contracts and agreements included in the Collateral; and (c) Secured Party
shall not have any obligation under any contracts and agreements included in
the Collateral by reason of this Agreement, nor shall Secured Party be
obligated to perform or fulfill any of the obligations of any Debtor
thereunder, including any obligation to make any inquiry as to the nature or
sufficiency of any payment any Debtor may be entitled to receive thereunder, to
present or file any claim, or to take any action to collect or enforce any
claim for payment thereunder.
Section 3. General Provisions. Each Debtor represents and warrants to
and agrees with the Secured Party as follows:
3.1 Ownership. Such Debtor has good and indefeasible title to the
assets which comprise the Collateral of such Debtor as reflected in such
Debtor's financial statements free from any liens, security interests,
assignments, adverse claims, restrictions, or other encumbrances whatsoever
except the Permitted Liens. No effective recorded interest, financing
statement, or similar recording or filing covering any part of the Collateral
of such Debtor is on file in any recording office, except those filed in
connection with Permitted Liens. Such Debtor shall not, without the prior
written consent of the Secured Party, grant
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any lien, security interest, assignment, restriction, claim, or other
encumbrance on or against the Collateral, or lease, sell, or otherwise transfer
any of such Debtor's rights in the Collateral except as otherwise permitted
under this Agreement.
3.2 Perfection.
(a) General.
(i) As of the date of this Agreement, the true
and correct name of such Debtor as listed on such Debtor's certificate of
incorporation is the name specified for such Debtor on the signature pages of
this Agreement. Such Debtor has had no prior names other than those listed for
such Debtor in Schedule I. Such Debtor has not used and does not use any trade
names other than those listed in Schedule I. Without ten days' advance written
notice to the Secured Party, such Debtor shall not change such Debtor's name.
(ii) As of the date of this Agreement, such
Debtor's chief executive office is located at the Chief Executive Office
Location for such Debtor. Without ten days' advance written notice to the
Secured Party, such Debtor shall not change the location of such Debtor's chief
executive office from the Chief Executive Office Location for such Debtor.
(iii) A carbon, photographic, or other reproduction
of this Agreement shall be sufficient as a financing statement and may be filed
in any appropriate office in lieu thereof.
(b) Perfection of Receivables.
(i) Such Debtor shall provide the Secured Party
with advance written notice of any material increase in the amount of
Receivables in the form of accounts or general intangibles for the payment of
money from governmental agencies that require consents or other actions to
assign, perfect, or realize upon (including Receivables from the federal
government that are subject to the Federal Assignment of Claims Act),
instruments, and chattel paper and the opportunity to perfect a first priority
security interest (subject only to Permitted Liens) in any such Receivables of
such Debtor. Upon written request of the Secured Party, such Debtor shall take
such actions as the Secured Party may reasonably request to permit the Secured
Party to perfect a first priority security interest in any such Receivables of
such Debtor, including obtaining necessary consents from governmental agencies,
delivery of instruments to the Secured Party with all necessary endorsements,
and delivery of assignment agreements requested by the Secured Party.
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(ii) With respect to Receivables of such Debtor in
the form of chattel paper, such Debtor shall, upon written request from the
Agent, xxxx conspicuously all such Collateral with a legend, in form and
substance reasonably satisfactory to the Secured Party, indicating that such
Collateral is subject to the security interests granted hereunder. Such Debtor
shall, during the existence of an Event of Default and upon request by the
Secured Party, promptly deliver to the Secured Party possession of the
Receivables of such Debtor in the form of chattel paper.
(iii) No authorization, consent, or other action is
necessary to allow such Debtor to perform such Debtor's obligations hereunder
with respect to the Receivables of such Debtor in the form of accounts and
general intangibles for the payment of money.
3.3 Priority.
(a) The security interests created by this Agreement are
or, with respect to any security interest in Collateral of any Subsidiary
acquired by the Borrower in an Acquisition transaction, will be within 30 days
following the closing of such Acquisition, first priority except as set forth
below, subject only to the Permitted Liens, and such Debtor shall preserve and
maintain the status of such security interests to the end that such security
interests remain first priority security interests, except as set forth below,
in the Collateral subject only to the Permitted Liens. Permitted Liens for
taxes, assessments, or other governmental charges or levies may be first
priority to the extent required by applicable law.
(b) If the proceeds of the Secured Obligations are used
to pay any indebtedness secured by prior liens, the Secured Party is subrogated
to all of the rights and liens of the holders of such indebtedness.
3.4 Further Assurances.
(a) There are no actions, suits, proceedings, or
investigations pending or, to the knowledge of such Debtor, threatened against
or affecting any material portion of the Collateral, or involving the validity
or enforceability of this Agreement or the priority of the liens, security
interests, or assignments created hereunder with respect to any material
portion of the Collateral. If the validity or priority of this Agreement or of
any liens, security interests, or assignments created or purported to be
created hereunder or the title of such Debtor to any Collateral of such Debtor
shall be endangered, questioned, or attacked in any material respect or if any
material legal proceedings are instituted against such Debtor with respect
thereto, such Debtor shall give prompt written notice thereof to the Secured
Party, and the action proposed to be taken by such Debtor in connection
therewith. During the existence of an Event of Default, such Debtor shall not
initiate any action with respect to
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such material matters without granting the Secured Party advance written notice
of such Debtor's intent to initiate such actions and the opportunity to consult
with such Debtor regarding such Debtor's proposed actions (unless immediate
action is necessary to prevent loss to such Debtor). At the Secured Party's
request, during the existence of an Event of Default, such Debtor shall take
any actions reasonably requested by the Secured Party with respect to such
matters, including diligently endeavoring to cure any material defect existing
or claimed, and taking all reasonably necessary and desirable steps for the
defense of any legal proceedings, including the employment of counsel, the
prosecution or defense of litigation, and the release or discharge of all
adverse claims. During the existence of an Event of Default, the Secured
Party, whether or not named as a party to any legal proceedings, is authorized
to take any additional steps as the Secured Party deems necessary or desirable
for the defense of any such legal proceedings or the protection of the validity
or priority of this Agreement and the liens, security interests, and
assignments created hereunder, including the employment of independent counsel,
the prosecution or defense of litigation, the compromise or discharge of any
adverse claims made with respect to any Collateral of such Debtor and the
payment or removal of prior liens or security interests, and the reasonable
expenses of the Secured Party in taking such action shall be paid by such
Debtor. Provided, that the Secured Party shall first request in writing that
such Debtor take such additional steps and such Debtor shall, after reasonable
opportunity, have failed to do so.
(b) Such Debtor agrees that at any time such Debtor shall
promptly execute and deliver all further agreements, and take all further
action, that the Secured Party may reasonably request, in order to further
evidence the liens, security interests, and assignments granted or purported to
be granted hereunder and perfect and protect the same or to enable the Secured
Party to exercise and enforce the Secured Party's rights and remedies
hereunder. Without limiting the foregoing, such Debtor shall at the Secured
Party's reasonable request execute financing statements, assignments, notices,
certificates of title and applications therefor, and such other documents and
agreements as the Secured Party may reasonably request in order to perfect and
preserve the security interests granted or purported to be granted hereunder.
Such Debtor shall furnish to the Secured Party from time to time any statements
and schedules further identifying and describing any Collateral of such Debtor
and such other reports in connection with the Collateral of such Debtor as the
Secured Party may reasonably request.
(c) During the existence of an Event of Default, such
Debtor agrees that, if such Debtor fails to perform under this Agreement, the
Secured Party may, but shall not be obligated to, after written request to such
Debtor to perform, perform such Debtor's obligations under this Agreement, and
any reasonable expenses incurred by the Secured Party in performing such
Debtor's obligations shall be paid by such Debtor. Any such performance
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by the Secured Party may be made by the Secured Party in reasonable reliance on
any statement, invoice, or claim, without inquiry into the validity or accuracy
thereof. The amount and nature of any expense of the Secured Party hereunder
shall be conclusively established by a certificate of any officer of the
Secured Party absent manifest error.
(d) Such Debtor irrevocably appoints the Secured Party as
such Debtor's attorney in fact, with full authority to act during the existence
of an Event of Default for such Debtor and in the name of such Debtor, to take
any action and execute any agreement which the Secured Party deems necessary or
advisable to accomplish the purposes of this Agreement, including the matters
that the Secured Party is expressly authorized to take pursuant to this
Agreement (including the matters described in paragraph (c) above), and
instituting proceedings the Secured Party deems necessary or desirable to
enforce the rights of the Secured Party with respect to this Agreement.
Provided, that the Secured Party shall first request in writing that such
Debtor take such actions and such Debtor shall, after reasonable opportunity,
have failed to do so.
(e) The powers conferred on the Secured Party under this
Agreement are solely to protect the Secured Party's rights under this Agreement
and shall not impose any duty upon it to exercise any such powers. Except as
elsewhere provided hereunder, the Secured Party shall have no duty as to any of
the Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to the Collateral.
3.5 Insurance. With respect to any casualty or condemnation to
the Collateral, all proceeds of such casualty or condemnation which are due to
such Debtor, including any property insurance proceeds, condemnation awards,
proceeds from actions, and any other proceeds, are assigned to the Secured
Party and shall be paid directly to the Secured Party for disposition in
accordance with Section 5.12 of the Credit Agreement.
3.6 Value of Receivables. Such Debtor shall use such Debtor's
commercially reasonable efforts to collect payments on the Receivables of such
Debtor when due. Unless otherwise specified herein, such Debtor shall use
commercially reasonable efforts to perform such Debtor's obligations under each
contract giving rise to any Receivables of such Debtor.
Section 4. General Remedies. During the existence of an Event of
Default, the Secured Party may, at the Secured Party's option, exercise one or
more of the remedies specified elsewhere in this Agreement or the following
remedies:
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4.1 Interim Remedies.
(a) To the extent permitted by law, the Secured Party may
exercise all the rights and remedies of a secured party under the UCC.
(b) The Secured Party may prosecute actions in equity or
at law for the specific performance of any covenant or agreement herein
contained or in aid of the execution of any power herein granted or for the
enforcement of any other appropriate legal or equitable remedy.
(c) The Secured Party may occupy any premises owned or
leased by any Debtor where any Collateral is assembled for a reasonable period
in order to effectuate the Secured Party's rights and remedies hereunder or
under law, without obligation to any Debtor with respect to such occupation.
4.2 Remedies - Receivables.
(a) During the existence of an Event of Default, the
Secured Party may establish Collateral Accounts for the purpose of collecting
the Receivables of such Debtor and holding the proceeds thereof, and may direct
such Debtor to instruct all account debtors and obligors on the Receivables of
such Debtor to make all payments on the Receivables of such Debtor directly to
the Secured Party for deposit into such Collateral Account. After such
direction to such Debtor and until such direction has been rescinded (i) all
collections and proceeds of the Receivables of such Debtor shall be directed to
such Collateral Accounts, (ii) all proceeds of the Receivables of such Debtor
which may from time to time come into the possession of such Debtor shall be
held in trust for the Secured Party, segregated from the other funds of such
Debtor, and delivered immediately to the Secured Party in the form received
with any necessary endorsement for deposit into such Collateral Account, such
delivery in no event to be later than one Business Day after receipt thereof by
such Debtor, and (iii) such Debtor shall not adjust, settle, or compromise the
amount or payment of any Receivable of such Debtor, release wholly or partly
any account debtor or obligor for any Receivable of such Debtor, or allow any
credit or discount on any Receivable of such Debtor, without the advanced
written consent of the Secured Party.
(b) In connection with the foregoing, the Secured Party
shall have the right at any time during the existence of an Event of Default to
take any of the following actions, in the Secured Party's own name or in the
name of such Debtor: change the accounts which shall be the Collateral
Accounts for the Receivables of such Debtor; compromise or extend the time for
payment of the Receivables of such Debtor upon such terms as the Secured Party
may determine; endorse the name of such Debtor on checks, instruments, or other
evidences of payment on the Receivables of such Debtor; make written or verbal
requests for verification of amount owing on the Receivables of such Debtor
from
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any Persons which the Secured Party believes are account debtors or obligors on
the Receivables of such Debtor; open mail addressed to such Debtor and, to the
extent of checks or other proceeds of the Receivables of such Debtor, dispose
of same in accordance with this Agreement; take action in the Secured Party's
name or such Debtor's name to enforce collection; and take all other action
necessary to carry out this Agreement and give effect to the Secured Party's
rights hereunder. Costs and expenses incurred by the Secured Party in
collection and enforcement of the Receivables of such Debtor, including
attorneys' fees and out-of-pocket expenses, shall be reimbursed by such Debtor
to the Secured Party on demand.
4.3 Foreclosure.
(a) The Secured Party may foreclose on any Collateral in
any manner permitted by the courts of or in the State of Texas or the State in
which any Collateral is located. If the Secured Party should institute a suit
for the collection of the Secured Obligations and for foreclosure under this
Agreement, the Secured Party may at any time before the entry of a final
judgment dismiss the same, and take any other action permitted by this
Agreement.
(b) To the extent permitted by law, the Secured Party may
exercise all the foreclosure rights and remedies of a secured party under the
UCC. In connection therewith, the Secured Party may sell any Collateral at
public or private sale, at the office of the Secured Party or elsewhere, for
cash or credit and upon written notice to such Debtor, such other terms as the
Secured Party deems commercially reasonable. The Secured Party may sell any
Collateral at one or more sales, and the security interest granted hereunder
shall remain in effect as to the unsold portion of the Collateral. Each Debtor
hereby deems ten days advance notice of the time and place of any public or
private sale reasonable notification, recognizing that if the Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, shorter notice may be reasonable. The
Secured Party shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. The Secured Party may adjourn any sale by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was adjourned. In
the event that any sale hereunder is not completed or is defective in the
opinion of the Secured Party, the Secured Party shall have the right to cause
subsequent sales to be made hereunder. Any statements of fact or other
recitals made in any xxxx of sale, assignment, or other document representing
any sale hereunder, including statements relating to the occurrence of an Event
of Default, acceleration of the Secured Obligations, notice of the sale, the
time, place, and terms of the sale, and other actions taken by the Secured
Party in relation to the sale may be conclusively relied upon by the purchaser
at any sale hereunder. The Secured Party may delegate to any agent the
performance of any
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acts in connection with any sale hereunder, including the sending of notices
and the conduct of the sale.
4.4 Application of Proceeds. Unless otherwise specified herein,
any cash proceeds received by the Secured Party from the sale of, collection
of, or other realization upon any part of the Collateral or any other amounts
received by the Secured Party hereunder may be, at the discretion of the
Secured Party (a) held by the Secured Party in one or more Collateral Accounts
as cash collateral for the Secured Obligations or (b) applied to the Secured
Obligations. Amounts applied to the Secured Obligations shall be applied in
the following order:
First, to the payment of the costs and expenses of exercising
the Secured Party's rights hereunder, whether expressly provided for
herein or otherwise; and
Second, to the payment of the Secured Obligations in the order
set forth in Section 6.9 of the Credit Agreement.
Any surplus cash collateral or cash proceeds held by the Secured Party after
payment in full of the Secured Obligations and the termination of all
commitments of the Secured Party to all Debtors shall be paid over by the
Secured Party to the Borrower for distribution to the Debtors entitled to
receive such surplus or to any other Persons that may be lawfully entitled to
receive such surplus.
4.5 Waiver of Certain Rights. To the full extent each Debtor may
do so, such Debtor shall not insist upon, plead, claim, or take advantage of
any law providing for any appraisement, valuation, stay, extension, or
redemption, and such Debtor hereby waives and releases the same, and all rights
to a marshaling of the assets of such Debtor, including the Collateral, or to a
sale in inverse order of alienation in the event of foreclosure of the liens
and security interests hereby created. Such Debtor shall not assert any right
under any law pertaining to the marshaling of assets, sale in inverse order of
alienation, the administration of estates of decedents or other matters
whatever to defeat, reduce, or affect the right of the Secured Party under the
terms of this Agreement.
Section 5. Miscellaneous.
5.1 Choice of Law. Except to the extent that the validity,
perfection, or effect of perfection or nonperfection of the security interests
created hereunder, or the remedies hereunder, in respect of any particular
Collateral are required to be governed by the laws of a jurisdiction other than
the State of Texas, this Agreement shall be subject to and construed and
enforced in accordance with the substantive laws of the State of Texas.
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5.2 Notice. Unless otherwise specified, all notices and other
communications between each Debtor and the Secured Party provided for in this
Agreement and the Credit Documents to which such Debtor is a party shall be in
writing, including telecopy, and delivered or transmitted to the addresses set
forth below, or to such other address as shall be designated by such Debtor or
the Secured Party in written notice to the other party. Notice sent by
telecopy shall be deemed to be given and received when receipt of such
transmission is acknowledged, and delivered notice shall be deemed to be given
and received when receipted for by, or actually received by, an authorized
officer of such Debtor or the Secured Party, as the case may be.
If to any Debtor:
[Debtor]
c/o Integrated Electrical Services, Inc.
0000 Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxx
telephone: 000-000-0000
telecopier: 000-000-0000
If to the Secured Party:
NationsBank, N.A.,
as Agent under the Credit Agreement
dated as of July 30, 1998, among
Integrated Electrical Services, Inc., the financial
institutions parties thereto, and the Agent
000 Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx, Vice President
telephone: 000-000-0000
telecopier: 000-000-0000
5.3 General. If any provision in this Agreement is held to be
unenforceable, such provision shall be severed and the remaining provisions
shall remain in full force and effect. All representations, warranties, and
covenants of any Debtor in this Agreement shall survive the execution of this
Agreement and any other contract or agreement. If a due date for an amount
payable is not specified in this Agreement, the due date shall be the date on
which the Secured Party demands payment therefor. The Secured Party's remedies
under this Agreement and the Credit Documents shall be cumulative, and no delay
in enforcing this
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Agreement and the Credit Documents shall act as a waiver of the Secured Party's
rights thereunder. The provisions of this Agreement may be waived or amended
only in a writing signed by the party against whom enforcement is sought. This
Agreement shall bind and inure to the benefit of each Debtor and the Secured
Party and their respective successors and assigns. Each Debtor may not assign
its rights or delegate its duties under this Agreement. The Secured Party may
assign its rights and delegate its duties under this Agreement in accordance
with the terms of the Credit Agreement. This Agreement may be executed in
multiple counterparts each of which shall constitute one and the same
agreement.
5.4 Joinder. Any present or future Subsidiary of the Borrower may
become a Debtor under and a party to this Agreement by executing and delivering
to the Secured Party a Joinder Agreement in accordance with Section 5.19 of the
Credit Agreement or by otherwise assuming in writing in favor of the Secured
Party the liabilities of a Debtor under this Agreement. Upon execution and
delivery of a Joinder Agreement or otherwise assuming the liabilities of a
Debtor under this Agreement such Subsidiary shall be deemed to be a Debtor
under this Agreement and a party to this Agreement for all purposes hereunder.
5.5 Amendment and Restatement. This Agreement represents an
amendment and restatement of the Security Agreement dated as of January 30,
1998, made by certain of the Debtors in favor of NationsBank of Texas, N.A.,
predecessor in interest to NationsBank, N.A., as Secured Party, and all
previous versions are deemed replaced hereby. The indebtedness secured under
the prior versions of this Agreement continues to be secured under this version
of this Agreement and the execution of this Agreement does not indicate a
payment, satisfaction, novation, or discharge thereof. All security interests
under the prior versions of this Agreement continue to secure such indebtedness
under this version of this Agreement without impairment or interruption.
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date first above written.
INTEGRATED ELECTRICAL SERVICES, INC.
By: /s/ XXX X. XXXX
-----------------------------------------
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Xxx X. Xxxx
Senior Vice President and
Chief Financial Officer
[signatures continued on next page]
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ACE ELECTRIC, INC.
X.X. XXXXX, INC.
AMBER ELECTRIC, INC.
BW CONSOLIDATED, INC.
BW/CEC, INC.
BW/BEC, INC.
BW/CEC, L.L.C.
BW/BEC, L.L.C.
XXXXXXX X. XXXXX COMPANY, INC.
XXXXXX ELECTRICAL CONTRACTORS, INC.
XXXXXX ELECTRICAL OF TREASURE COAST INC.
FLORIDA INDUSTRIAL ELECTRIC, INC.
GENERAL PARTNER, INC.
X.X. XXXX ELECTRIC CO., IN.C
X.X. XXXX MANAGEMENT LLC
XXXXXXXX ELECTRIC, INC.
XXXXXX ELECTRICAL SUPPLY, INC.
XXXX XXXXXXXXX, INCORPORATED
HOLLAND ELECTRICAL SYSTEMS, INC.
SPECTROL, INC.
XXXXXXX-XXXXXXXX ELECTRIC, INC.
XXXXXXX-XXXXXXXX MANAGEMENT LLC
MENNIGA ELECTRIC, INC.
MID-STATES ELECTRIC COMPANY, INC.
XXXXX ELECTRICAL CONTRACTORS, INC.
XXXXX MANAGEMENT LLC
XXXX ELECTRIC, INC.
XXXXXX ELECTRIC COMPANY, INC.
XXXXXX XXXX & COMPANY
XXXXXXXX ELECTRIC CORP.
XXXXXXX ELECTRIC COMPANY, INC.
XXXXX INVESTMENTS, INC.
XXXXXXX & X'XXXXXXX CORPORATION
XXXXXX ELECTRICAL CONTRACTORS, INC.
By: /s/ XXXX X. XXXXXXXX
-------------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
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ALADDIN-XXXX ELECTRIC & AIR, INC.
CYPRESS ELECTRICAL CONTRACTORS, INC.
XXXXX ELECTRIC ACQUISITION CORPORATION
XXXXXX XXXXXXXX ELECTRIC CO., INC.
INTEGRATED ELECTRICAL FINANCE, INC.
INTEGRATION COMMUNICATION SERVICES, INC.
XXXXXXX ELECTRIC INC.
SUMMIT ELECTRIC OF TEXAS, INCORPORATED
By: /s/ XXXX X. XXXXXXXX
---------------------------------------
Xxxx X. Xxxxxxxx
Secretary
X.X. XXXX HOLDINGS LLC
XXXXXXX-XXXXXXXX HOLDINGS LLC
IES HOLDINGS LLC
XXXXX ELECTRICAL HOLDINGS LLC
XXXXXXX SUMMIT HOLDINGS, INC.
By: /s/ XXXXX XXXXXXXX
---------------------------------------
Xxxxx Xxxxxxxx
Manager
BEXAR ELECTRIC COMPANY, LTD.
By: BW/BEC, INC., its General Partner
BW/BEC, LLC, its Limited Partner
By /s/ XXXX X. XXXXXXXX
-------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
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XXXXXXX ELECTRIC COMPANY, LTD.
By: BW/CEC, INC., its General Partner
BW/CEC, LLC, its Limited Partner
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
X.X. XXXX ELECTRICAL CONTRACTORS LP
By: X.X. XXXX MANAGEMENT LLC, its
General Partner
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
By: X.X. XXXX HOLDINGS LLC, its Limited
Partner
By: /s/ XXXXX XXXXXXXX
----------------------------------
Xxxxx Xxxxxxxx
Manager
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XXXXXXXX XXXXXXXX ELECTRIC CO.
By: XXXXXXXX ELECTRIC, INC., its General
Partner
XXXXXXXX ELECTRIC, CORP., its General
Partner
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
XXXXXXXX ELECTRIC, LTD
By: GENERAL PARTNER, INC., its General
Partner
XXXXXXX X. XXXXX COMPANY, INC., its
Limited Partner
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
XXXXXXX-XXXXXXXX ELECTRICAL CONTRACTORS LP
By: XXXXXXX-XXXXXXXX MANAGEMENT LLC, its
General Partner
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
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By: XXXXXXX-XXXXXXXX HOLDINGS LLC,
its Limited Partner
By: /s/ XXXXX XXXXXXXX
----------------------------------
Xxxxx Xxxxxxxx
Manager
IES MANAGEMENT LP
By: INTEGRATED ELECTRICAL FINANCE, INC.,
its General Partner
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxx
Secretary
By: IES HOLDINGS, LLC , its Limited
Partner
By: /s/ XXXXX XXXXXXXX
----------------------------------
Xxxxx Xxxxxxxx
Manager
XXXXX ELECTRIC LP
By: XXXXX MANAGEMENT LLC, its General
Partner
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
By: XXXXX ELECTRICAL HOLDINGS LLC, its
Limited Partner
By: /s/ XXXXX XXXXXXXX
----------------------------------
Xxxxx Xxxxxxxx
Manager
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XXXXXXX SUMMIT ELECTRIC LP
By: XXXXXXX ELECTRIC INC., its General
Partner and its Limited Partner
SUMMIT ELECTRIC OF TEXAS,
INCORPORATED, its General Partner
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxx
Secretary
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NATIONSBANK, N.A., as Agent
By: /s/ XXXXXX X. XXXXX
------------------------------------------
Xxxxxx X. Xxxxx
Vice President
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Schedule I
to Security Agreement
Collateral Information
(For Each Debtor)
[Note: To be supplied by Borrower.]
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PLEDGE AGREEMENT
This Pledge Agreement dated as of July 30, 1998 ("Agreement"), is made
by the undersigned partners of the Partnerships described below (each of the
undersigned, individually, a "Pledgor," and collectively, the "Pledgors"), in
favor of NationsBank, N.A., successor in interest by merger to NationsBank of
Texas, N.A., as agent under the Credit Agreement described below ("Secured
Party").
INTRODUCTION
Reference is made to the Credit Agreement dated as of July 30, 1998
(as modified from time to time, the "Credit Agreement"), among Integrated
Electrical Services, Inc., a Delaware corporation ("Borrower"), certain
financial institutions which are or may become parties thereto (the "Banks"),
and the Secured Party. It is a condition precedent to the obligation of the
Banks to make any extension of credit under the Credit Agreement that the
Pledgors shall have entered into this Agreement. Therefore, in consideration of
the credit expected to be received in connection with the Credit Agreement, the
Pledgors jointly and severally agree with the Secured Party as follows:
Section 1. Definitions. The terms "deposit account," "account," "general
intangible," "security," "instrument," "document," "chattel paper,"
"equipment," "fixture," "inventory," "goods," and "proceeds" shall have the
meanings specified by Article 9 of the Uniform Commercial Code ("UCC").
Capitalized terms used but not defined herein shall have the meanings set forth
in the Credit Agreement. As used herein, the following terms shall have the
following meanings:
"Collateral" means the Partnership Agreements, Pledged Interests,
Records, and Proceeds.
"Partnerships" means Xxxxxxxx Electric, Ltd., an Alabama limited
partnership, Xxxxxxx Electric Company, Ltd., a Texas limited partnership, Bexar
Electric Company, Ltd., a Texas limited partnership, X.X. Xxxx Electrical
Contractors, LP, a Texas limited partnership, Xxxxxxxx Xxxxxxxx Electric
Company, a Delaware partnership, Xxxxxxx-Xxxxxxxx Electrical Contractors LP, a
Texas limited partnership, IES Management LP, a Texas limited partnership,
Xxxxx Electric LP, a Texas limited partnership, Xxxxxxx-Summit Electric LP, a
110
Texas limited partnership, and any partnership the interests in which are
hereafter pledged by any Pledgor to the Secured Party to secure the payment and
performance of the Secured Obligations.
"Partnership Agreements" means (a) the Agreement of Limited
Partnership of Xxxxxxxx Electric, Ltd., dated as of December 30, 1992, (b) the
Second Amended and Restated Limited Partnership Agreement of Xxxxxxx Electric
Company, Ltd., dated as of October 1, 1997, (c) the Amended and Restated
Limited Partnership Agreement of the Partnership, dated as of January 2, 1996,
as amended by the First Amendment to Amended and Restated Limited Partnership
Agreement, dated as of May 1, 1997, (d) the Agreement of Limited Partnership of
X.X. Xxxx Electrical Contractors LP, dated as of June 1, 1998, (e) the
Agreement of General Partnership of Xxxxxxxx Xxxxxxxx Electric Company, dated
as of February 2, 1998, (f) the Agreement of Limited Partnership of
Xxxxxxx-Xxxxxxxx Electrical Contractors LP, dated as of June 5, 1998, (g) the
agreement of limited partnership of IES Management LP, (h) the Agreement of
Limited Partnership of Xxxxx Electric LP, dated as of June 3, 1998, (i) the
Agreement of Limited Partnership of Xxxxxxx Summit Electric LP, dated as of May
4, 1998, and (j) any partnership agreement of any future Partnership, in each
case, as the same may be amended, restated, supplemented, or otherwise modified
from time to time.
"Pledged Interests" means all of the outstanding limited and general
partnership interests in the Partnerships, together with all distributions,
cash, instruments, and other proceeds from time to time received or otherwise
distributed in respect of the foregoing, including partnership interest rights,
options, liquidating distributions, new partnership interests, or other
properties or benefits to which any Pledgor may become entitled to receive on
account of such property.
"Proceeds" means all present and future proceeds of the Pledged
Interests, whether arising from the collection, sale, exchange, assignment, or
other disposition of any Pledged Interests, the realization upon any Pledged
Interests, or any other transaction or occurrence, including all claims of such
Pledgor against third parties for impairment, loss, or damage to any Pledged
Interests, all proceeds payable under any put, call, hedge, or other protection
for the value of any Pledged Interests, and all rights under any indemnity,
warranty, or guaranty of or for any of the foregoing, whether such proceeds are
represented as money, deposit accounts, accounts, general intangibles,
securities, instruments, documents, chattel paper, inventory, equipment,
fixtures, or goods.
"Records" means all present and future contracts, accounting records,
files, computer files, computer programs, and other records relating to the
Partnership Agreements, Pledged Interests, and Proceeds.
111
"Secured Obligations" means (a) all principal, interest, premium,
fees, reimbursements, indemnifications, and other amounts now or hereafter owed
by the Borrower to the Secured Party and the Banks (and with respect to the
Interest Hedge Agreements, any Affiliates of the Banks) under the Credit
Agreement and the other Credit Documents, (b) all amounts now or hereafter owed
by the Pledgors to the Secured Party and the Banks (and with respect to the
Interest Hedge Agreements, any Affiliates of the Banks) under the Guaranty,
this Agreement, and the other Credit Documents, and (c) any increases,
extensions, renewals, replacements, and rearrangements of the foregoing
obligations under any amendments, supplements, and other modifications of the
agreements creating the foregoing obligations.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of Texas, as amended from time to time, and any successor
statute.
Section 2. Grant of Security Interest. Each Pledgor hereby grants to the
Secured Party a security interest in all of such Pledgor's right, title, and
interest in and to the Collateral to secure the payment and performance of the
Secured Obligations.
Section 3. General Provisions. Each Pledgor represents and warrants to
and agrees with the Secured Party as follows:
3.1 Ownership. Such Pledgor owns all of its rights in the Pledged
Interests as set forth next to its name on Schedule I attached hereto, free and
clear of any liens, security interests, assignments, options, adverse claims,
restrictions, and other encumbrances whatsoever, and has the capacity to enter
into modifications of the Partnership Agreement applicable to the Pledged
Interests of such Pledgor without the consent of any other party other than the
Secured Party. The Pledged Interests are duly authorized and validly issued and
are fully paid and nonassessable. The Pledged Interests constitute 100% of the
limited and general partnership interests in the Partnerships. No effective
pledge or other transfer regarding the Pledged Interests of such Pledgor is in
effect. No recorded financing statement or similar recording or filing covering
any part of the Collateral is in effect or on file in any recording office,
except those filed in connection with this Agreement. No Pledgor shall, without
the prior written consent of the Secured Party, grant any lien, security
interest, assignment, option, restriction, claim, or other encumbrance on or
against the Collateral, or lease, sell, or otherwise transfer any of its rights
in the Collateral, except (a) as permitted under the Credit Agreement, or (b)
to the Secured Party pursuant to the terms of this Agreement.
3.2 Perfection.
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(a) Such Pledgor waives any provision of the Partnership
Agreement applicable to the Pledged Interests of such Pledgor prohibiting or
otherwise restricting the grant of the security interest hereunder. No consent
of any Person is required for the grant by such Pledgor of the security
interest in the Collateral granted hereunder or for the exercise by the Secured
Party of its rights hereunder.
(b) As of the date of this Agreement, the true and
correct name of such Pledgor as listed on such Pledgor's certificate of
incorporation or formation is the name specified for such Pledgor on the
signature pages of this Agreement. Such Pledgor has had no prior names other
than those listed for such Pledgor in Schedule I to the Credit Agreement. Such
Pledgor has not used and does not use any trade names other than those listed
in Schedule I to the Credit Agreement. Without advance written notice to the
Secured Party and reasonable opportunity for the Secured Party to take action
to protect the Secured Party's interests hereunder, such Pledgor shall not
change such Pledgor's name.
(c) As of the date of this Agreement, such Pledgor's
chief executive office is located at the address listed for such Pledgor in
Schedule I to the Credit Agreement. Without advance written notice to the
Secured Party and reasonable opportunity for the Secured Party to take action
to protect the Secured Party's interests hereunder, such Pledgor shall not
change the location of such Pledgor's chief executive office.
(d) A carbon, photographic, or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof.
3.3 Priority. The security interest created by this Agreement is
first priority (except to the extent otherwise permitted in the Credit
Agreement), and each Pledgor shall preserve and maintain the status of such
security interest to the end that this Agreement shall remain a first priority
security interest in the Collateral.
3.4 Value.
(a) The Partnership Agreement applicable to the Pledged
Interests of such Pledgor has been duly authorized, executed, and delivered by
all parties thereto, and is in full force and effect, enforceable against all
parties thereto in accordance with its terms, subject to bankruptcy and general
principles of equity. An accurate and complete copy of such Partnership
Agreement has been made available for review by the Secured Party in connection
with the execution of this Agreement, and such Partnership Agreement has not
been amended, supplemented, or otherwise modified, or performance thereunder
waived.
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(b) Such Pledgor shall furnish to the Secured Party
promptly upon the giving or receipt thereof, copies of all material notices,
requests, and other documents given to any party to the Partnership Agreement
applicable to the Pledged Interests of such Pledgor or received by such Pledgor
under such Partnership Agreement, and from time to time furnish to the Secured
Party such information and reports regarding the Collateral as the Secured
Party may reasonably request.
(c) Such Pledgor has performed all of its obligations
under the Partnership Agreement applicable to the Pledged Interests of such
Pledgor, and has no liability with respect to any additional capital
contributions or other payment obligations thereunder. Such Pledgor shall use
its commercially reasonable efforts to maintain the Partnership Agreement
applicable to the Pledged Interests of such Pledgor in full force and effect.
(d) Such Pledgor shall not without the advance written
consent of the Secured Party amend, supplement, or otherwise modify the
Partnership Agreement applicable to the Pledged Interests of such Pledgor as in
effect on the date hereof, waive performance under or terminate any provisions
thereof, or consent to any of those actions. Such Pledgor shall not take any
action in connection with such Partnership Agreement which materially impairs
the value of the rights of the Secured Party therein, or consent to any such
actions. If the Secured Party so requests, such Pledgor shall withhold from
taking any action under such Partnership Agreement, or shall take such actions
under such Partnership Agreement as the Secured Party may request.
(e) Such Pledgor shall not initiate any remedies or take
any action to enforce such Pledgor's rights under the Partnership Agreement
applicable to the Pledged Interests of such Pledgor without giving the Secured
Party advance written notice of such Pledgor's intent to initiate such remedies
or take such actions thereunder and the opportunity to consult with such
Pledgor regarding such Pledgor's proposed actions.
3.5 Use and Condition.
(a) So long as no Default or Event of Default shall exist
and be continuing and until the Borrower has received notice from the Secured
Party pursuant to Section 4.1(c) of this Agreement (which notice the Borrower
shall promptly forward to the Pledgors), each Pledgor shall be entitled to
receive and retain any cash dividends or distributions distributed in respect
of the Pledged Interests of such Pledgor, provided that any: (i) non-cash
dividends, distributions, instruments, and other property received or otherwise
distributed in respect of or in substitution for any such Pledged Interests;
(ii) cash dividends and other distributions in connection with a partial or
total liquidation or dissolution of any Partnership or in
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connection with a reduction of capital, capital surplus, or paid-in-surplus of
any Partnership; and (iii) cash distributed in respect of a redemption of
principal of, or in exchange for, any such Pledged Interests, shall be promptly
delivered to the Secured Party for disposition in accordance with Section 4.3
and shall, if received by any Pledgor, be received in trust for the benefit of
the Secured Party, be segregated from the other property or funds of such
Pledgor, and be promptly delivered to the Secured Party as Collateral in the
same form as so received, with any necessary endorsement.
(b) With regard to the Pledged Interests of each Pledgor,
so long as no Default or Event of Default shall exist and be continuing and
until the Borrower has received notice from the Secured Party pursuant to
Section 4.1(d) of this Agreement (which notice the Borrower shall promptly
forward to the Pledgors), each Pledgor shall be entitled to exercise any voting
and other consensual rights pertaining to the Pledged Interests of such Pledgor
for any purpose not inconsistent with the terms of this Agreement. The Secured
Party shall execute and deliver (or cause to be executed and delivered) to such
Pledgor any instruments that such Pledgor may reasonably request to enable such
Pledgor to exercise the voting and other rights which it is entitled to
exercise hereunder and to receive the dividends, distributions, or interest
payments which it is authorized to receive and retain hereunder.
3.6 Further Assurances.
(a) Each Pledgor agrees that at any time such Pledgor
shall promptly execute and deliver all further agreements, and take all further
action, that may be necessary or that the Secured Party may reasonably request,
in order to further evidence the security interests granted or purported to be
granted hereunder and perfect and protect the same or to enable the Secured
Party to exercise and enforce its rights and remedies hereunder. Without
limiting the foregoing, each Pledgor shall at the Secured Party's reasonable
request: (i) xxxx conspicuously any tangible Collateral with a legend, in form
and substance satisfactory to the Secured Party, indicating that such
Collateral is subject to the security interest granted or purported to be
granted hereunder; and (ii) execute financing statements, amendments and
continuations of financing statements, and such other documents and agreements
as the Secured Party may reasonably request in order to perfect and preserve
the security interests granted or purported to be granted hereunder. Each
Pledgor shall furnish to the Secured Party from time to time any statements and
schedules further identifying and describing any of the Collateral and such
other reports in connection with the Collateral as the Secured Party may
reasonably request.
(b) During the existence of an Event of Default, each
Pledgor agrees that, if such Pledgor fails to perform under this Agreement, the
Secured Party may, but shall not be obligated to, after written request to such
Pledgor to perform, perform such Pledgor's
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obligations under this Agreement and any expenses reasonably incurred by the
Secured Party in performing such Pledgor's obligations shall be paid by such
Pledgor. Any such performance by the Secured Party may be made by the Secured
Party in reasonable reliance on any statement, invoice, or claim, without
inquiry into the validity or accuracy thereof. The amount and nature of any
expense of the Secured Party hereunder shall be conclusively established,
absent manifest error, by a certificate of any officer of the Secured Party.
(c) Each Pledgor irrevocably appoints the Secured Party
as such Pledgor's attorney in fact, with full authority to act during the
existence of an Event of Default for such Pledgor and in the name of such
Pledgor, to take any action and execute any agreement which the Secured Party
deems necessary or advisable to accomplish the purposes of this Agreement,
including taking actions the Secured Party is expressly authorized to take
pursuant to this Agreement (such as the matters described in paragraph (b)
above), instituting proceedings the Secured Party deems necessary or desirable
to enforce the rights of the Secured Party with respect to this Agreement, and
taking actions with respect to receiving, endorsing, and collecting instruments
made payable to such Pledgor representing any dividend, interest payment, or
other distribution in respect of the Pledged Interests of such Pledgor and
giving full discharge for the same. Provided, that the Secured Party shall
first request in writing that such Pledgor take actions and such Pledgor shall,
after reasonable opportunity, have failed to do so.
(d) The powers conferred on the Secured Party under this
Agreement are solely to protect its rights under this Agreement and shall not
impose any duty upon it to exercise any such powers. Except as elsewhere
provided hereunder, the Secured Party shall have no duty as to any of the
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to the Collateral. The
Secured Party shall have no responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, rights of first refusal,
or other matters relative to any Pledged Interests, whether or not the Secured
Party has or is deemed to have knowledge of such matters, or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Pledged Interests.
3.7 Pledgor Remains Liable. Anything herein to the contrary
notwithstanding: (a) such Pledgor shall remain liable under the Partnership
Agreement applicable to the Pledged Interests of such Pledgor to the extent set
forth therein to perform such Pledgor's obligations thereunder to the same
extent as if this Agreement had not been executed; (b) the exercise by Secured
Party of any rights hereunder shall not release such Pledgor from any
obligations under such Partnership Agreement; and (c) Secured Party shall not
have any obligation under such Partnership Agreement by reason of this
Agreement, nor shall Secured Party be obligated to perform or fulfill any of
the obligations of such Pledgor thereunder,
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including any obligation to make any inquiry as to the nature or sufficiency of
any payment such Pledgor may be entitled to receive thereunder, to present or
file any claim, or to take any action to collect or enforce any claim for
payment thereunder.
Section 4. Remedies. During the continuation of any Event of Default:
4.1 Interim Remedies.
(a) The Secured Party may exercise all the rights and
remedies of a secured party under the UCC.
(b) The Secured Party may prosecute actions in equity or
at law for the specific performance of any covenant or agreement herein
contained or in aid of the execution of any power herein granted or for the
enforcement of any other appropriate legal or equitable remedy.
(c) During the continuance of an Event of Default,
following written notice to the Borrower (which notice the Borrower shall
promptly forward to the Pledgors) and to the extent specified in such written
notice, all rights of the Pledgors to receive cash dividends or distributions
shall cease, and all such rights shall thereupon become vested in the Secured
Party who shall thereupon have the sole right to receive such cash dividends.
All cash dividends or distributions received by any Pledgor in violation of the
foregoing shall be received in trust for the benefit of the Secured Party,
shall be segregated from other funds of such Pledgor, and shall be promptly
paid over to the Secured Party to be held as Pledged Interests in the same form
as so received (with any necessary endorsement).
(d) During the continuance of an Event of Default,
following written notice to the Borrower (which notice the Borrower shall
promptly forward to the Pledgors) and to the extent specified in such written
notice, all rights of the Pledgors to exercise the voting and other consensual
rights which they would otherwise be entitled to exercise under the Partnership
Agreements and pursuant to this Agreement shall cease, and all such rights
shall thereupon become vested in the Secured Party who shall thereupon have the
sole right to exercise such voting and other consensual rights, and the Secured
Party may instruct each Pledgor to take or not take action under the applicable
Partnership Agreements. Following such notice from the Secured Party, each
Pledgor authorizes all other parties to the Partnership Agreement applicable to
the Pledged Interests of such Pledgor to follow the instructions of the Secured
Party and ignore the instructions of such Pledgor with respect to such
Pledgor's rights under such Partnership Agreement.
(e) During the continuance of an Event of Default,
following written
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notice to the Borrower (which notice the Borrower shall promptly forward to the
Pledgors) and to the extent specified in such written notice, the Secured Party
shall have the right, without further notice to any Pledgor, to transfer or to
register, in the name of the Secured Party or any of its nominees, any of the
Pledged Interests.
(f) The Secured Party may require any Pledgor to promptly
assemble any tangible Collateral of such Pledgor and make it available to the
Secured Party at a place to be designated by the Secured Party. The Secured
Party may occupy any premises owned or leased by any Pledgor where the
Collateral is assembled for a reasonable period in order to effectuate its
rights and remedies hereunder or under law, without obligation to such Pledgor
with respect to such occupation. The Secured Party shall have no obligation to
take any action to assemble or otherwise take control of the Collateral,
whether for the purposes of sale or otherwise.
(g) The Secured Party may take any action permitted under
the Credit Agreement or other Credit Documents, including declaring the unpaid
portion of the Secured Obligations to be immediately due and payable under the
terms of the Credit Agreement.
4.2 Foreclosure.
(a) The Secured Party may foreclose on the Collateral in
any manner permitted by the courts of or in the State of Texas. If the Secured
Party should institute a suit for the collection of the Secured Obligations and
for the foreclosure of this Agreement, the Secured Party may at any time before
the entry of a final judgment dismiss the same, and take any other action
permitted by this Agreement.
(b) The Secured Party may exercise all the rights and
remedies of a secured party under the UCC, including foreclosure.
(i) If, in the opinion of the Secured Party,
there is any question that a public or semipublic sale or distribution of any
Collateral will violate any state or federal securities law, the Secured Party
in its discretion (A) may offer and sell the Pledged Interests privately to
purchasers who will agree to take them for investment purposes and not with a
view to distribution, or (B) may, if lawful, sell such securities in an
intrastate offering under Section 3(a)(11) of the Securities Act of 1933, as
amended, and no sale so made in good faith by the Secured Party shall be deemed
to be not "commercially reasonable" because so made. Each Pledgor shall
cooperate fully with Secured Party in all respects in selling or realizing upon
all or any part of the Collateral. In addition, each Pledgor shall fully comply
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with the securities laws of the United States, the State of Texas, and other
states and take such actions as may be necessary to permit the Secured Party to
sell or otherwise dispose of any partnership interests pledged hereunder in
compliance with such laws; provided that this Section 4.2(b)(i) shall not
require any Pledgor to file a registration statement with respect to such
partnership interests.
(ii) The Secured Party may sell, after notice to
the Pledgor, any Collateral at public or private sale, at the office of the
Secured Party or elsewhere, for cash or credit and upon such other terms as the
Secured Party deems commercially reasonable. The Secured Party may sell any
Collateral at one or more sales, and the security interest granted hereunder
shall remain in effect as to the unsold portion of the Collateral. Each Pledgor
hereby deems ten days advance notice of the time and place of any public or
private sale reasonable notification, recognizing that if the Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, shorter notice may be reasonable. The
Secured Party shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. The Secured Party may adjourn any sale by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was adjourned. In the
event that any sale hereunder is not completed or is defective in the opinion
of the Secured Party, the Secured Party shall have the right to cause
subsequent sales to be made hereunder. Any statements of fact or other recitals
made in any xxxx of sale, assignment, or other document representing any sale
hereunder, including statements relating to the occurrence of an Event of
Default, acceleration of the Secured Obligations, notice of the sale, the time,
place, and terms of the sale, and other actions taken by the Secured Party in
relation to the sale shall be conclusive evidence of the truth of the matters
so stated. The Secured Party may delegate to any agent the performance of any
acts in connection with any sale hereunder, including the sending of notices
and the conduct of the sale.
4.3 Application of Proceeds. Unless otherwise specified herein,
any cash proceeds received by the Secured Party from the sale of, collection
of, or other realization upon any part of the Collateral shall be applied by
the Secured Party in accordance with and in the manner specified by Section 6.9
of the Credit Agreement.
4.4 Waiver of Certain Rights. To the full extent each Pledgor may
do so, no Pledgor shall insist upon, plead, claim, or take advantage of any law
providing for any appraisement, valuation, stay, extension, or redemption, and
each Pledgor hereby waives and releases the same, and all rights to a
marshaling of the assets of such Pledgor, including the Collateral, or to a
sale in inverse order of alienation in the event of foreclosure of the liens
and security interests hereby created. No Pledgor shall assert any right under
any law pertaining to the marshaling of assets, sale in inverse order of
alienation, the administration
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of estates of decedents or other matters whatever to defeat, reduce, or affect
the right of the Secured Party under the terms of this Agreement.
Section 5. Miscellaneous.
5.1 Notices. All notices and other communications from the Secured
Party to any Pledgor provided for in this Agreement shall be delivered or
transmitted to the Borrower, and shall be deemed delivered to any such Pledgor
upon delivery to the Borrower. All notices and other communications between the
parties provided for in this Agreement shall be delivered or transmitted as
provided in the Credit Agreement to the applicable address set forth therein.
5.2 General. This miscellaneous provisions contained in Article 8
of the Credit Agreement are incorporated herein as if fully set forth herein.
This Agreement may be executed in multiple counterparts each of which shall
constitute one and the same agreement.
5.3 Amendment and Restatement. This Agreement represents an
amendment, restatement, and consolidation of the Pledge Agreements, each dated
as of January 30, 1998, made by certain of the Pledgors in favor of NationsBank
of Texas, N.A., predecessor in interest to NationsBank, N.A., as Secured Party,
and all previous versions are deemed replaced hereby. The indebtedness secured
under the prior versions of this Agreement continues to be secured under this
version of this Agreement and the execution of this Agreement does not indicate
a payment, satisfaction, novation, or discharge thereof. All security interests
under the prior versions of this Agreement continue to secure such indebtedness
under this version of this Agreement without impairment or interruption.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
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THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
Executed as of the date first above written.
Pledgors:
BW/BEC, INC.
BW/BEC, LLC
BW/CEC, INC.
BW/CEC, LLC
X.X. XXXX MANAGEMENT LLC
XXXXXXXX ELECTRIC, INC.
XXXXXXXX ELECTRIC, CORP.
GENERAL PARTNER, INC.
XXXXXXX X. XXXXX COMPANY, INC.
XXXXXXX-XXXXXXXX MANAGEMENT LLC
XXXXX MANAGEMENT LLC
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxx
Assistant Secretary
X.X. XXXX HOLDINGS LLC
XXXXXXX-XXXXXXXX HOLDINGS LLC
IES HOLDINGS, LLC
XXXXX ELECTRICAL HOLDINGS LLC
By: /s/ XXXXX XXXXXXXX
----------------------------------
Xxxxx Xxxxxxxx
Manager
INTEGRATED ELECTRICAL FINANCE, INC.
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XXXXXXX ELECTRIC INC.
SUMMIT ELECTRIC OF TEXAS,
INCORPORATED
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxx
Secretary
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Secured Party:
NATIONSBANK, N.A., as Agent
By: /s/ XXXXXX X. XXXXX
----------------------------------
Xxxxxx X. Xxxxx
Vice President
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Schedule I
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Pledged Interests of each Pledgor
[NOTE: to be provided by Borrower]
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