Exhibit 10.1.1
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CREDIT AGREEMENT
Dated as of May 7, 1999
among
AEC FUNDING CORP.
ACTION CONTRACT SERVICES, INC.
BROOKFIELD CORP.
C.A. XXXXXX CONSTRUCTION COMPANY
C.A. XXXXXX MAINTENANCE, INC.
CHEMPOWER, INC.
CONTROLLED POWER LIMITED PARTNERSHIP
ECO SYSTEMS, INC.
GLOBAL POWER COMPANY
INDUSTRA, INC.
INDUSTRA SERVICE CORP.
SEPARATION AND RECOVERY SYSTEMS, INC.
SOUTHWICK CORP.
SPECIALTY MANAGEMENT GROUP, INC.
THE XXXXXX GROUP, INC.
UNITED ECO SYSTEMS, INC.
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
TABLE OF CONTENTS
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PAGE
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1. AMOUNT AND TERMS OF CREDIT........................................... 1
1.1 Credit Facilities........................................... 1
1.2 Letters of Credit........................................... 3
1.3 Prepayments................................................. 3
1.4 Use of Proceeds............................................. 4
1.5 Interest and Applicable Margins............................. 4
1.6 Eligible Accounts........................................... 6
1.7 Cash Management Systems..................................... 8
1.8 Fees........................................................ 8
1.9 Receipt of Payments......................................... 10
1.10 Application and Allocation of Payments...................... 10
1.11 Loan Account and Accounting................................. 11
1.12 Indemnity................................................... 11
1.13 Access...................................................... 12
1.14 Taxes....................................................... 12
1.15 Capital Adequacy; Increased Costs; Illegality............... 13
1.16 Single Loan................................................. 14
1.17 Currency Matters............................................ 14
2. CONDITIONS PRECEDENT................................................. 14
2.1 Conditions to the Initial Loans............................. 14
2.2 Further Conditions to Each Loan............................. 15
3. REPRESENTATIONS AND WARRANTIES....................................... 16
3.1 Corporate Existence; Compliance with Law.................... 16
3.2 Executive Offices; FEIN..................................... 17
3.3 Corporate Power, Authorization, Enforceable Obligations..... 17
3.4 Financial Statements and Projections........................ 17
3.5 Material Adverse Effect..................................... 18
3.6 Ownership of Property; Liens................................ 18
3.7 Labor Matters............................................... 19
3.8 Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness...................................... 19
3.9 Government Regulation....................................... 19
3.10 Margin Regulations.......................................... 20
3.11 Taxes....................................................... 20
3.12 ERISA....................................................... 20
3.13 No Litigation............................................... 21
3.14 Brokers..................................................... 22
3.15 Intellectual Property....................................... 22
3.16 Full Disclosure............................................. 22
3.17 Environmental Matters....................................... 22
3.18 Insurance................................................... 23
3.19 Deposit and Disbursement Accounts........................... 23
3.20 Government Contracts........................................ 23
3.21 Customer and Trade Relations................................ 23
3.22 Agreements and Other Documents.............................. 23
3.23 Solvency.................................................... 24
3.24 Year 2000 Representations................................... 24
3.25 Indenture Debt.............................................. 24
3.26 Inactive Canadian Subsidiaries.............................. 24
4. FINANCIAL STATEMENTS AND INFORMATION................................. 25
4.1 Reports and Notices......................................... 25
4.2 Communication with Accountants.............................. 25
5. AFFIRMATIVE COVENANTS................................................ 25
5.1 Maintenance of Existence and Conduct of Business............ 25
5.2 Payment of Obligations...................................... 25
5.3 Books and Records........................................... 26
5.4 Insurance; Damage to or Destruction of Collateral........... 26
5.5 Compliance with Laws........................................ 28
5.6 Supplemental Disclosure..................................... 28
5.7 Intellectual Property....................................... 29
5.8 Environmental Matters....................................... 29
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee
Letters..................................................... 29
5.10 Further Assurances.......................................... 29
5.11 Year 2000 Problems.......................................... 30
6. NEGATIVE COVENANTS................................................... 30
6.1 Mergers, Subsidiaries, Etc.................................. 30
6.2 Investments; Loans and Advances............................. 33
6.3 Indebtedness................................................ 33
6.4 Employee Loans and Affiliate Transactions................... 34
6.5 Capital Structure and Business.............................. 35
6.6 Guaranteed Indebtedness..................................... 35
6.7 Liens....................................................... 35
6.8 Sale of Stock and Assets.................................... 35
6.9 ERISA....................................................... 36
6.10 Financial Covenants......................................... 36
6.11 Hazardous Materials......................................... 36
6.12 Sale-Leasebacks............................................. 36
6.13 Cancellation of Indebtedness................................ 36
6.14 Restricted Payments......................................... 36
6.15 Change of Corporate Name or Location; Change of Fiscal Year. 37
6.16 No Impairment of Intercompany Transfers..................... 37
6.17 No Speculative Transactions................................. 37
6.18 Leases...................................................... 37
6.19 Changes Relating to the Indenture........................... 37
7. TERM................................................................. 38
7.1 Termination................................................. 38
7.2 Survival of Obligations Upon Termination of Financing
Arrangements................................................ 38
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES............................... 38
8.1 Events of Default........................................... 38
8.2 Remedies.................................................... 40
8.3 Waivers by Credit Parties................................... 41
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT.................. 41
9.1 Assignment and Participations............................... 41
9.2 Appointment of Agent........................................ 43
9.3 Agent's Reliance, Etc....................................... 44
9.4 GE Capital and Affiliates................................... 44
9.5 Lender Credit Decision...................................... 44
9.6 Indemnification............................................. 45
9.7 Successor Agent............................................. 45
9.8 Setoff and Sharing of Payments.............................. 46
9.9 Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert........................................ 46
10. SUCCESSORS AND ASSIGNS............................................... 48
10.1 Successors and Assigns...................................... 48
11. MISCELLANEOUS........................................................ 49
11.1 Complete Agreement; Modification of Agreement............... 49
11.2 Amendments and Waivers...................................... 49
11.3 Fees and Expenses........................................... 51
11.4 No Waiver................................................... 52
11.5 Remedies.................................................... 52
11.6 Severability................................................ 52
11.7 Conflict of Terms........................................... 52
11.8 Confidentiality............................................. 52
11.9 GOVERNING LAW............................................... 53
11.10 Notices..................................................... 54
11.11 Section Titles.............................................. 54
11.12 Counterparts................................................ 54
11.13 WAIVER OF JURY TRIAL........................................ 54
11.14 Press Releases, etc......................................... 54
11.15 Reinstatement............................................... 55
11.16 Advice of Counsel........................................... 55
11.17 No Strict Construction...................................... 55
12. CROSS-GUARANTY....................................................... 55
12.1 Cross-Guaranty.............................................. 55
12.2 Waivers by Borrowers........................................ 56
12.3 Benefit of Guaranty......................................... 56
12.4 Subordination of Subrogation, Etc........................... 56
12.5 Election of Remedies........................................ 57
12.6 Limitation.................................................. 57
12.7 Contribution with Respect to Guaranty Obligations........... 57
12.8 Liability Cumulative........................................ 58
INDEX OF APPENDICES
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Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule A - List of Borrowers
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 1.6(r) - List of Account Debtors for Concentration
Exception
Schedule 3.2 - Executive Offices; Principal Place of
Business; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Projections
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Schedule 6.16 - Existing Agreements
Schedule 6.20 - Credit Parties' Indebtedness
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Closing Checklist
Annex E (Section 4.1(a)) - Financial Statements and Projections --
Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (Annex A) - Commitments as of Closing Date
THIS CREDIT AGREEMENT ("Agreement"), dated as of May 7, 1999, among
each of the corporations listed on Schedule A hereto (such corporations are
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sometimes collectively referred to herein as "Borrowers" and individually as a
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"Borrower"); the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL
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CORPORATION, a New York corporation (in its individual capacity, "GE Capital"),
for itself, as Lender, and as Agent for Lenders, and the other Lenders signatory
hereto from time to time.
RECITALS
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WHEREAS, Borrowers have requested that Lenders extend revolving credit
facilities to Borrowers of up to Thirty Million US Dollars ($30,000,000) in the
aggregate to provide (a) working capital financing for Borrowers, (b) funds for
other general corporate purposes of Borrowers; and (c) funds for certain fees
and expenses in connection with the transactions contemplated hereby; and for
these purposes, Lenders are willing to make certain loans and other extensions
of credit to Borrowers of up to such amount upon the terms and conditions set
forth herein; and
WHEREAS, Borrowers have agreed to secure all of their obligations under
the Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon certain existing and after-acquired personal
property; and
WHEREAS, American Eco Corporation, an Ontario, Canada corporation
("Holdings") and the direct or indirect beneficial owner of all of the capital
stock or partnership interests of Borrowers, is willing to guaranty all of the
obligations of Borrowers to Agent and Lenders under the Loan Documents; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities
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(a) Revolving Credit Facility.
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(i) Subject to the terms and conditions hereof,
each Revolving Lender agrees to make available to Borrowers from time to time
until the Commitment Termination Date
its Pro Rata Share of advances (each, a "Revolving Credit Advance"). The Pro
Rata Share of the Revolving Loan of any Revolving Lender shall not at any time
exceed its separate Revolving Loan Commitment. The obligations of each Revolving
Lender hereunder shall be several and not joint. The aggregate amount of
Revolving Credit Advances (calculated at the US Dollar Amount) outstanding shall
not exceed at any time the lesser of (A) the Maximum Amount and (B) the
Aggregate Borrowing Base, in each case, less the aggregate amount of Letter of
Credit Obligations (calculated at the US Dollar Amount) outstanding at such time
("Borrowing Availability"). Borrowing Availability may be further reduced by
Reserves imposed by Agent in its reasonable credit judgment. Moreover, the
Revolving Loan outstanding to any Borrower or Borrower Group shall not exceed at
any time that Borrower's or Borrower Group's respective separate Borrowing Base.
Until the Commitment Termination Date, each respective Borrower or Borrower
Group, as the case may be, may from time to time borrow, repay and reborrow
under this Section 1.1(a). Each Revolving Credit Advance shall be made on notice
by Borrower Representative on behalf of the applicable Borrower or Borrower
Group, as the case may be, to one of the representatives of Agent identified on
Disclosure Schedule 1.1 at the address specified thereon. Those notices must be
given no later than 11:00 a.m.(New York time) on the Business Day of the
proposed Revolving Credit Advance. Each such notice (a "Notice of Revolving
Credit Advance") must be given in writing (by telecopy or overnight courier)
substantially in the form of Exhibit 1.1(a)(i), and shall include the
information required in such Exhibit and such other information as may be
required by Agent. Each Revolving Credit Advance shall be made in US Dollars
except that each Revolving Credit Advance to AEC Funding shall be made in
Canadian Dollars.
(ii) Except as provided in Section 1.11, each
Borrower shall execute and
deliver to each Revolving Lender a note to evidence the Revolving Loan
Commitment of that Revolving Lender. Each note shall be in the principal amount
of the Revolving Loan Commitment of the applicable Revolving Lender, dated the
Closing Date and substantially in the form of Exhibit 1.1(a)(ii) (each a
"Revolving Note" and, collectively, the "Revolving Notes"). Each Revolving Note
shall represent the obligation of the applicable Borrower to pay the amount of
the applicable Revolving Lender's Revolving Loan Commitment or, if less, the
applicable Revolving Lender's Pro Rata Share of the aggregate unpaid principal
amount of all Revolving Credit Advances to such Borrower or Borrower Group
together with interest thereon as prescribed in Section 1.5. The entire unpaid
balance of the aggregate Revolving Loan and all other non-contingent Obligations
shall be immediately due and payable in full in immediately available funds on
the Commitment Termination Date.
(b) Reliance on Notices; Appointment of Borrower
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Representative. Agent shall be entitled to rely upon, and shall be fully
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protected in relying upon, any Notice of Revolving Credit Advance or similar
notice believed by Agent to be genuine. Agent may assume that each Person
executing and delivering any notice in accordance herewith was duly authorized,
unless the responsible individual acting thereon for Agent has actual knowledge
to the contrary. Each Borrower hereby designates Holdings as its representative
and agent on its behalf for the purposes of issuing Notices of Revolving Credit
Advances, giving instructions with respect to the disbursement of the proceeds
of the Loans, requesting Letters of Credit, giving and receiving all other
notices and consents hereunder or under any of the other Loan Documents and
taking all other actions (including in respect of compliance with covenants) on
behalf of any Borrower or
Borrowers under the Loan Documents. Borrower Representative hereby accepts such
appointment. Agent and each Lender may regard any notice or other communication
pursuant to any Loan Document from Borrower Representative as a notice or
communication from all Borrowers, and may give any notice or communication
required or permitted to be given to any Borrower or any Borrower Group
hereunder to Borrower Representative on behalf of such Borrower or Borrower
Group. Each Borrower agrees that each notice, representation and warranty,
covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower.
1.2 Letters of Credit. Subject to and in accordance with the terms and
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conditions contained herein and in Annex B, Borrower Representative, on behalf
of the applicable Borrower, shall have the right to request, and Revolving
Lenders agree to incur, or purchase participations in, Letter of Credit
Obligations in respect of each Borrower. Each Letter of Credit Obligation in
respect of AEC Funding shall be in Canadian Dollars and each Letter of Credit
Obligation in respect of the Domestic Borrowers shall be in US Dollars.
1.3 Prepayments
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(a) Mandatory Prepayments. (i) If at any time the outstanding
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balance of the aggregate Revolving Loan (calculated as a US Dollar Amount)
exceeds the lesser of (A) the Maximum Amount and (B) the Aggregate Borrowing
Base, Borrowers shall immediately repay the aggregate outstanding Revolving
Credit Advances to the extent required to eliminate such excess. If any such
excess remains after repayment in full of the aggregate outstanding Revolving
Credit Advances, Borrowers shall provide cash collateral for the Letter of
Credit Obligations in the manner set forth in Annex B to the extent required to
eliminate such excess. Furthermore, if, at any time, the outstanding balance of
the Revolving Loan of any Borrower or Borrower Group exceeds that Borrower's or
Borrower Group's separate Borrowing Base at any time the applicable Borrower or
Borrower Group shall immediately repay its Revolving Credit Advances in the
amount of such excess (and, if necessary, shall provide cash collateral for its
Letter of Credit Obligations as described above). For the purposes of this
Section 1.3(a), the Revolving Loan to AEC Funding and the Borrowing Base of AEC
Funding shall each be calculated in the US Dollar Amount thereof.
(ii) Immediately upon receipt by any Credit Party
of proceeds of any Collateral, such Credit Party shall cause Borrowers to
prepay the Loans in an amount equal to all such proceeds, net of (A)
commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by such Credit
Party in connection therewith (in each case, paid to non-Affiliates), (B)
transfer taxes, (C) amounts payable to holders of senior Liens (to the
extent such Liens constitute Permitted Encumbrances hereunder), if any, and
(D) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith. Any such prepayment shall be applied in accordance
with clause (b) below.
(b) Application of Certain Mandatory Prepayments. Any
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prepayments made by any Borrower pursuant to clause (a)(ii) above shall be
applied as follows: first, to Fees and reimbursable expenses of Agent then due
and payable pursuant to any of the Loan Documents; second, to interest then due
and payable on Revolving Credit Advances made to such Borrower or such
Borrower's Borrower Group; third, to the principal balance of Revolving Credit
Advances outstanding to such Borrower or such Borrower's Borrower Group until
the same shall have been paid in full; fourth, to any Letter of Credit
Obligations of such Borrower or such Borrower's Borrower Group to provide cash
collateral therefor in the manner set forth in Annex B, until all such Letter of
Credit Obligations have been fully cash collateralized in the manner set forth
in Annex B; fifth, to interest then due and payable on the Revolving Credit
Advances outstanding to each other Borrower or Borrower Group, pro rata; sixth,
to the principal balance of the Revolving Credit Advances made to each other
Borrower or Borrower Group, pro rata, until the same shall have been paid in
full, and last to any Letter of Credit Obligations of each other Borrower or
Borrower Group, pro rata, to provide cash collateral therefor in the manner set
forth in Annex B, until all such Letter of Credit Obligations have been fully
cash collateralized. The Revolving Loan Commitment shall not be permanently
reduced by the amount of any such prepayments.
(c) Application of Prepayments from Insurance Proceeds.
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Prepayments from insurance proceeds in accordance with Section 5.4(c) shall be
applied as follows: insurance proceeds from casualties or losses to cash or the
Collateral shall be applied to the Revolving Credit Advances of the Borrower or
such Borrower's Borrower Group that incurred such casualties or losses. The
Revolving Loan Commitment shall not be permanently reduced by the amount of any
such prepayments. If the insurance proceeds received as to a particular Borrower
exceed the outstanding principal balances of the Loans to that Borrower or such
Borrower's Borrower Group or if the precise amount of insurance proceeds
allocable to the Collateral are not otherwise determined, the allocation and
application of those proceeds shall be determined by Agent, subject to the
approval of Requisite Lenders.
(d) Nothing in this Section 1.3 shall be construed to
constitute Agent's or any Lender's consent to any transaction referred to in
clause (a)(ii) above which is not permitted by other provisions of this
Agreement or the other Loan Documents.
1.4 Use of Proceeds. Each Borrower, individually, or, if applicable, as
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a member of a Borrower Group, shall utilize the proceeds of the Revolving Loan
solely for the financing of its respective ordinary working capital, general
corporate needs (but excluding in any event the making of any Restricted Payment
not specifically permitted by Section 6.14) and for such other purposes as
expressly permitted hereunder. Disclosure Schedule (1.4) contains a description
of each Borrower's or Borrower Group's respective sources and uses of funds as
of the Closing Date, including Loans and Letter of Credit Obligations to be made
or incurred on that date, and a funds flow memorandum detailing how funds from
each source are to be transferred to particular uses.
1.5 Interest and Applicable Margins. (a)(i) Domestic Borrowers shall
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pay interest to Agent, for the ratable benefit of Lenders in accordance with the
various Loans being made by each Lender, in arrears on each applicable Interest
Payment Date, at the Index Rate plus the
Applicable Revolver Index Margin per annum based on the aggregate Revolving
Credit Advances outstanding to Domestic Borrowers from time to time; and (ii)
AEC Funding shall pay interest to Agent, for the ratable benefit of Lenders in
accordance with the various Loans being made by each Lender, in arrears on each
applicable Interest Payment Date, at the applicable BA Rate plus the Applicable
BA Rate Margin per annum based on the aggregate Revolving Credit Advances
outstanding to AEC Funding from time to time.
The Applicable Revolver Index Margin, Applicable BA Rate
Margin, Applicable L/C Margin and Applicable Unused Line Fee Margin will be
2.00%, 2.00%, 1.00%, and .25% per annum, respectively.
(b) If any payment on any Loan becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis
and interest shall be made by Agent on the basis of a three hundred and sixty
(360) day year, in each case for the actual number of days occurring in the
period for which such interest and Fees are payable. The Index Rate shall be
determined each day based upon the Index Rate as in effect each day. The BA Rate
shall be determined as specified in the definition of "BA Rate" as set forth in
Annex A. Each determination by Agent of an interest rate and Fees hereunder
shall be conclusive, absent manifest error.
(d) (i) If an Event of Default shall have occurred and be
continuing under Section 8.1(a), (h) or (i) or (ii) if any other Event of
Default shall have occurred and be continuing and at the election of Agent (or
upon the written request of Requisite Lenders) confirmed by written notice from
Agent to Borrower Representative, then the interest rates applicable to the
Loans and the Letter of Credit Fees shall be increased by two percent (2%) per
annum above the rates of interest or the rate of such Fees otherwise applicable
hereunder ("Default Rate"), and all outstanding Obligations shall bear interest
at the Default Rate applicable to such Obligations. Interest and Letter of
Credit Fees at the Default Rate shall accrue from the initial date of such
Default or Event of Default until that Default or Event of Default is cured or
waived and shall be payable upon demand.
(e) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest which would have been received had
the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of interest and in the
manner provided in Sections 1.5(a) through (d) above, unless and until the rate
of interest again exceeds the Maximum Lawful Rate, and at that time this
paragraph shall again apply. In no event shall the total interest received by
any Lender pursuant to the terms hereof exceed the amount which such Lender
could lawfully have received had the interest due hereunder been calculated for
the full term hereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is
calculated pursuant to this paragraph, such interest shall be calculated at a
daily rate equal to the Maximum Lawful Rate divided by the number of days in the
year in which such calculation is made. If, notwithstanding the provisions of
this Section 1.5(e), a court of competent jurisdiction shall finally determine
that a Lender has received interest hereunder in excess of the Maximum Lawful
Rate, Agent shall, to the extent permitted by applicable law, promptly apply
such excess in the order specified in Section 1.10 and thereafter shall refund
any excess to Borrowers or as a court of competent jurisdiction may otherwise
order.
1.6 Eligible Accounts. Based on the most recent Borrowing Base
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Certificate delivered by each Borrower or Borrower Group, as the case may be, to
Agent and on other information available to Agent, Agent shall in its reasonable
credit judgment determine which Accounts of each Borrower shall be "Eligible
Accounts" for purposes of this Agreement, except any such Account to which any
of the exclusionary criteria set forth below applies shall not constitute an
"Eligible Account." Agent shall have the right to establish, modify or eliminate
Reserves against Eligible Accounts from time to time in its reasonable credit
judgment. In addition, Agent reserves the right, at any time and from time to
time after the Closing Date, to adjust any of the criteria set forth below, to
establish new criteria and to adjust advance rates with respect to Eligible
Accounts, in its reasonable credit judgment, subject to the approval of
Requisite Lenders in the case of adjustments or new criteria or changes in
advance rates which have the effect of making more credit available. Eligible
Accounts shall not include any Account of any Borrower:
(a) which does not arise from the sale of goods or the
performance of services by such Borrower in the ordinary course of its business;
(b) (i) upon which such Borrower's right to receive payment is
not absolute or is contingent upon the fulfillment of any condition whatsoever
or (ii) as to which such Borrower is not able to bring suit or otherwise enforce
its remedies against the Account Debtor through judicial process or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to such Borrower's completion
of further performance under such contract or is subject to the equitable lien
of a surety bond issuer;
(c) in the event that any defense, counterclaim, setoff or
dispute is asserted as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, acceptable to Agent in
form and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by such Borrower or (ii) is subject
to any right, claim, security interest or other interest of any other Person,
other than Liens in favor of Agent, on behalf of itself and Lenders and, with
respect to Canadian Accounts only, Prior Claims that are unregistered and
otherwise unperfected and that secure amounts that are not yet due and payable;
(g) that arises from a sale to any director, officer, other
employee or Affiliate of any Credit Party, or to any entity which has any common
officer or director with any Credit Party;
(h) (i) with respect to US Accounts, that is the obligation of
an Account Debtor that is the United States government or a political
subdivision thereof, or any state or municipality or department, agency or
instrumentality thereof unless Agent, in its sole discretion, has agreed to the
contrary in writing and such Borrower, if necessary or desirable, has complied
with the Federal Assignment of Claims Act of 1940, or any applicable state
statute or municipal ordinance of similar purpose and effect, with respect to
such obligation; and (ii) with respect to Canadian Accounts, that is the
obligation of an Account Debtor that is the Canadian Government (Her Majesty the
Queen in Right of Canada) or a political subdivision thereof, or any province or
territory, or any municipality or department, agency or instrumentality thereof,
unless Agent, in its sole discretion, has agreed to the contrary in writing, the
Account is assignable by way of security and such Borrower, if necessary or
desirable, has complied with the Financial Administration Act (Canada) and any
amendments thereto, or any applicable provincial statute or municipal ordinance
of similar purpose and effect, with respect to such obligation;
(i) that is the obligation of an Account Debtor located in a
foreign country other than Canada (excluding the provinces of Quebec,
Newfoundland, the Northwest Territories and Nunavut) unless payment thereof is
assured by a letter of credit assigned and delivered to Agent, satisfactory to
Agent as to form, amount and issuer;
(j) to the extent such Borrower or any Subsidiary thereof is
liable for goods sold or services rendered by the applicable Account Debtor to
such Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
(k) that arises with respect to goods which are delivered on a
xxxx-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within the earlier
of: sixty (60) days following its due date or ninety (90) days following its
original invoice date;
(ii) if any Account Debtor obligated upon such
Account suspends business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come due; or
(iii) if any petition or assignment is filed by or
against any Account Debtor obligated upon such Account under any
bankruptcy law or any other federal, state or foreign (including any
Canadian) receivership, insolvency relief or other law or laws for the relief
of debtors;
(m) which is the obligation of an Account Debtor if fifty
percent (50%) or more of the dollar amount of all Accounts owing by that Account
Debtor are ineligible under the other criteria set forth in this Section 1.6;
(n) as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties
in the Loan Documents is untrue;
(p) to the extent such Account is evidenced by a
judgment, Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment;
(r) to the extent that such Account, together with all other
Accounts owing by such Account Debtor and its Affiliates (other than those
Accounts specified on Disclosure Schedule 1.6(r)) as of any date of
determination exceed ten percent (10%) of all Eligible Accounts and with respect
to those Accounts specified on Disclosure Schedule 1.6(r), as of any date of
determination exceed twenty percent (20%) of all Eligible Accounts;
(s) which is payable in any currency other than US Dollars or
with respect to Canadian Accounts, Canadian Dollars; or
(t) which is otherwise unacceptable to Agent in its reasonable
credit judgment.
For the purpose of valuing AEC Funding's Borrowing Base in US Dollars, such
Borrower's Eligible Accounts denominated in Canadian Dollars shall be converted
by Borrower Representative into the US Dollar Amount thereof as determined on
the date of delivery of the relevant Borrowing Base Certificate unless Agent has
notified AEC Funding or Borrowing Representative that, in light of recent or
expected currency fluctuations, the conversion shall be made on a more current
basis.
1.7 Cash Management Systems. On or prior to the Closing Date, Borrowers
-----------------------
will establish and will maintain until the Termination Date, the cash management
systems described on Annex C (the "Cash Management Systems").
1.8 Fees. (a) Borrowers shall pay to GE Capital, individually, the Fees
----
specified in that certain fee letter of even date herewith among Borrowers and
GE Capital (the "GE Capital Fee Letter"), at the times specified for payment
therein.
(b) As additional compensation for the Revolving Lenders,
Borrowers shall pay to Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date the following:
(i) a fee for Borrowers' non-use of available
funds in an amount equal to the Applicable Unused Line Fee Margin per annum
(calculated on the basis of a 360 day year for actual days elapsed) multiplied
by the difference between (x) the Maximum Amount and (y) the average for
the period of the daily closing balances of the aggregate Revolving Loan
outstanding during the period for which such Fee is due. For the purposes of
this Section 1.8(b)(i)(y), the daily closing balances of the aggregate
Revolving Loan outstanding to AEC Funding shall be calculated by Agent in
the US Dollar Amount thereof; and
(ii) with respect to any calendar month in which
the average aggregate daily principal balance of the Revolving Loan
consisting of Revolving Credit Advances is less than $5,000,000, Borrowers
shall pay to Lender a minimum borrowing fee equal to the amount, if any, by
which (A) the amount of interest charges which would have been payable for
such month had the actual aggregate daily principal balance of the Revolving
Loan consisting of Revolving Credit Advances for each day during such month
been $5,000,000, exceeds (B) the actual interest charges payable upon the
Revolving Loan consisting of Revolving Credit Advances for such month. The
minimum borrowing fee shall be due and payable on the close of business on the
last day of each month in which a minimum borrowing fee is due and payable.
For the purposes of this Section 1.8(b)(ii), the US Dollar Amount of the
average daily principal balance of the Revolving Loan consisting of
Revolving Credit Advances to AEC Funding shall be added to the average daily
principal balance of the Revolving Loan consisting of Revolving Credit
Advances to the Domestic Borrowers and the interest charges shall be
determined as if such aggregate Revolving Loan consisting of Revolving Credit
Advances is an Index Rate Loan.
(c) If Borrowers prepay the Revolving Loan and terminate the
Revolving Loan Commitment, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations, Borrowers shall pay to Agent,
for the benefit of Lenders as liquidated damages and compensation for the costs
of being prepared to make funds available hereunder an amount equal to the
Applicable Percentage (as defined below) multiplied by the sum of the amount of
the Revolving Loan Commitment. As used herein, the term "Applicable Percentage"
shall mean (x) two percent (2%), in the case of a prepayment on or prior to the
first anniversary of the Closing Date, (y) one percent (1%), in the case of a
prepayment after the first anniversary of the Closing Date but on or prior to
the second anniversary, and (z) one percent (1%), in the case of a prepayment
after the second anniversary. Notwithstanding anything to the contrary contained
in this Section 1.8(c), in the event of the termination of this Agreement by
Borrowers prior to the Commitment Termination Date and the full and final
repayment of all of the Obligations and the receipt by Agent and Lenders of cash
collateral all as provided herein, Borrowers shall not be required to pay the
prepayment fee provided for above if each of the following conditions is
satisfied: (i) no Default or Event of Default shall exist or have occurred and
be continuing, (ii) Agent shall have received not less than thirty (30) days
prior written notice of the intention of Borrowers to so terminate this
Agreement, and (iii) the final payment in full of all of the Obligations is
received simultaneously with the sale of all or substantially all of the Capital
Stock
or assets of Holdings to ITEQ Corporation or the merger of Holdings with and
into ITEQ Corporation and, in connection therewith, GE Capital, in its sole and
absolute discretion, elects to provide financing to ITEQ Corporation (either as
a lender or co-lender) with the proceeds of such financing used to repay the
Borrowers' Obligations hereunder.
(d) Borrowers shall pay to Agent, for the ratable benefit of the
Revolving Lenders, the Letter of Credit Fee as provided in Annex B.
1.9 Receipt of Payments. Domestic Borrowers shall make each payment
--------------------
under this Agreement not later than 2:00 p.m. (New York time) on the day when
due in immediately available funds in US Dollars to the US Collection Account
and AEC Funding shall make each payment under this Agreement not later than 2:00
p.m. (New York time) on the day when due in immediately available funds in
Canadian Dollars to the Canadian Collection Account. For purposes of computing
interest and Fees and determining Borrowing Availability or Net Borrowing
Availability as of any date, all payments shall be deemed received on the day of
receipt of immediately available funds therefor in the respective Collection
Account prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New
York time on any Business Day shall be deemed to have been received on the
following Business Day. Notwithstanding anything to the contrary contained
herein, if Agent receives any payment from or on behalf of any Credit Party in a
currency other than the currency in which an Obligation due and payable is
denominated, Agent may convert the payment (including the monetary proceeds of
realization upon any Collateral and any funds then held in a cash collateral
account) into the currency of the relevant Obligation at the exchange rate that
Agent would be prepared to sell the currency in which the relevant Obligation is
denominated against the currency received in New York on the Business Day
immediately preceding the date of actual payment. The Obligations shall be
satisfied only to the extent of the amount actually received by Agent upon such
conversion.
1.10 Application and Allocation of Payments. (a) So long as no Default
--------------------------------------
or Event of Default has occurred and is continuing, (i) payments consisting of
proceeds of Accounts received in the ordinary course of business shall be
applied to the Revolving Loan; (ii) payments matching specific scheduled
payments then due shall be applied to those scheduled payments; and (iii)
mandatory prepayments shall be applied as set forth in Section 1.3. All payments
and prepayments applied to a particular Loan shall be applied ratably to the
portion thereof held by each Lender as determined by its Pro Rata Share. As to
each other payment, and as to all payments made when a Default or Event of
Default has occurred and is continuing or following the Commitment Termination
Date, each Borrower hereby irrevocably waives the right to direct the
application of any and all payments received from or on behalf of such Borrower,
and each Borrower hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply any and all such payments against the Obligations of
Borrowers as Agent may deem advisable notwithstanding any previous entry by
Agent in the Loan Account or any other books and records. In the absence of a
specific determination by Agent with respect thereto, payments shall be applied
to amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the other Loans, ratably in
proportion to the interest accrued as to each Loan; (3) to principal payments on
the other Loans and to provide cash collateral for Letter of Credit Obligations
in the manner described in Annex B, ratably to the aggregate, combined principal
balance of the other Loans and outstanding Letter of Credit
Obligations; and (4) to all other Obligations including expenses of Lenders to
the extent reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may,
charge to the Revolving Loan balance on behalf of each Borrower and cause to be
paid all Fees, expenses, Charges, costs (including insurance premiums in
accordance with Section 5.4(a)) and interest and principal owing by Borrowers
under this Agreement or any of the other Loan Documents if and to the extent
Borrowers fail to promptly pay any such amounts as and when due, even if such
charges would cause the balance of the aggregate Revolving Loan to exceed
Borrowing Availability or would cause the balance of the Revolving Loan of any
Borrower to exceed such Borrower's separate Borrowing Base. At Agent's option
and to the extent permitted by law, any charges so made shall constitute part of
the Revolving Loan hereunder.
1.11 Loan Account and Accounting. Agent shall maintain a loan account
----------------------------
(the "Loan Account") on its books to record: all Advances, all payments made by
Borrowers, and all other debits and credits as provided in this Agreement with
respect to the Loans or any other Obligations. All entries in the Loan Account
shall be made in accordance with Agent's customary accounting practices as in
effect from time to time. The balance in the Loan Account, as recorded on
Agent's most recent printout or other written statement, shall, absent manifest
error, be presumptive evidence of the amounts due and owing to Agent and Lenders
by each Borrower; provided that any failure to so record or any error in so
recording shall not limit or otherwise affect any Borrower's duty to pay the
Obligations. Agent shall render to Borrower Representative a monthly accounting
of transactions with respect to the Loans setting forth the balance of the Loan
Account as to each Borrower. Unless Borrower Representative notifies Agent in
writing of any objection to any such accounting (specifically describing the
basis for such objection), within thirty (30) days after the date thereof, each
and every such accounting shall (absent manifest error) be deemed final, binding
and conclusive upon Borrowers in all respects as to all matters reflected
therein. Only those items expressly objected to in such notice shall be deemed
to be disputed by Borrowers. Notwithstanding any provision herein contained to
the contrary, any Lender may elect (which election may be revoked) to dispense
with the issuance of Notes to that Lender and may rely on the Loan Account as
evidence of the amount of Obligations from time to time owing to it.
1.12 Indemnity. Each Credit Party that is a signatory hereto shall
---------
jointly and severally indemnify and hold harmless each of Agent, Lenders and
their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, "Indemnified Liabilities"); provided, that no such
Credit Party
shall be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL
DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED,
SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
1.13 Access. Each Credit Party which is a party hereto shall, during
------
normal business hours, from time to time upon two (2) Business Days' prior
notice as frequently as Agent determines to be appropriate: (a) provide Agent
and any of its officers, employees and agents access to its properties,
facilities, advisors and employees (including officers) of each Credit Party and
to the Collateral, (b) permit Agent, and any of its officers, employees and
agents, to inspect, audit and make extracts from any Credit Party's books and
records, and (c) permit Agent, and its officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the
Accounts, Inventory and other Collateral of any Credit Party. If a Default or
Event of Default has occurred and is continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent, each such Credit
Party shall provide such access to Agent and to each Lender at all times and
without advance notice. Furthermore, so long as any Event of Default has
occurred and is continuing, Borrowers shall provide Agent and each Lender with
access to their suppliers and customers. Each Credit Party shall make available
to Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records which Agent may request. Each
Credit Party shall deliver any document or instrument necessary for Agent, as it
may from time to time request, to obtain records from any service bureau or
other Person which maintains records for such Credit Party, and shall maintain
duplicate records or supporting documentation on media, including computer tapes
and discs owned by such Credit Party. Agent will give Lenders at least ten (10)
days' prior written notice of regularly scheduled audits. Representatives of
other Lenders may accompany Agent's representatives on regularly scheduled
audits at no charge to Borrowers.
1.14 Taxes. (a) Any and all payments by each Borrower hereunder
-----
(including any payments made pursuant to Section 12) or under the Notes shall be
made, in accordance with this Section 1.14, free and clear of and without
deduction for any and all present or future Taxes. If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder (including any sum payable pursuant to Section 12) or under the Notes,
(i) the sum payable shall be increased as much as shall be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 1.14) Agent or Lenders, as
applicable, receive an amount equal to the sum they would have received had no
such deductions been made, (ii) such Borrower shall make such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. Within thirty (30) days after
the date of any payment of Taxes, Borrower Representative shall furnish to Agent
the original or a certified copy of a receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and, within ten (10) days of demand therefor, pay Agent
and each Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.14) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower Representative and Agent a properly completed and executed IRS Form
4224 or Form 1001 or other applicable form, certificate or document prescribed
by the IRS or the United States certifying as to such Foreign Lender's
entitlement to such exemption (a "Certificate of Exemption"). Any foreign Person
that seeks to become a Lender under this Agreement shall provide a Certificate
of Exemption to Borrower Representative and Agent prior to becoming a Lender
hereunder. No foreign Person may become a Lender hereunder if such Person is
unable to deliver a Certificate of Exemption.
1.15 Capital Adequacy; Increased Costs; Illegality. (a) If any Lender
----------------------------------------------
shall have determined that any law, treaty, governmental (or quasi-governmental)
rule, regulation, guideline or order regarding capital adequacy, reserve
requirements or similar requirements or compliance by any Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted
after the Closing Date, from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by such Lender and thereby reducing the
rate of return on such Lender's capital as a consequence of its obligations
hereunder, then Borrowers shall from time to time upon demand by such Lender
(with a copy of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrower
Representative and to Agent shall, absent manifest error, be final, conclusive
and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower
Representative and to Agent by such Lender, shall be conclusive and binding on
Borrowers for all purposes, absent manifest error. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances referred to
above which would result in any such increased cost, the affected Lender shall,
to the extent not inconsistent with such
Lender's internal policies of general application, use reasonable commercial
efforts to minimize costs and expenses incurred by it and payable to it by
Borrowers pursuant to this Section 1.15(b).
(c) Replacement of Lender in Respect of Increased Costs.
--------------------------------------------------------
Within fifteen (15) days after receipt by Borrower Representative of written
notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Section 1.14(a), 1.15(a) or
1.15(b), Borrower Representative may, at its option, notify Agent and such
Affected Lender of its intention to replace the Affected Lender. So long as no
Default or Event of Default has occurred and is continuing, Borrower
Representative, with the consent of Agent, may obtain, at Borrowers' expense, a
replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be satisfactory to Agent. If Borrowers obtain a
Replacement Lender within ninety (90) days following notice of their intention
to do so, the Affected Lender must sell and assign its Loans and Commitments to
such Replacement Lender for an amount equal to the principal balance of all
Loans held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale, provided that Borrowers shall have
reimbursed such Affected Lender for the additional amounts or increased costs
that it is entitled to receive under this Agreement through the date of such
sale and assignment.
Notwithstanding the foregoing, Borrowers shall not have the right to obtain a
Replacement Lender if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrowers' notice of intention to replace such Affected Lender. Furthermore, if
Borrowers give a notice of intention to replace and do not so replace such
Affected Lender within ninety (90) days thereafter, Borrowers' rights under this
Section 1.15(c) shall terminate unless increased costs or additional amounts are
subsequently claimed by such Affected Lender and Borrowers shall promptly pay
all increased costs or additional amounts demanded by such Affected Lender
pursuant to Sections 1.14(a), 1.15(a) and 1.15(b).
1.16 Single Loan. All Loans to each Borrower and all of the other
------------
Obligations of each Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of that Borrower secured,
until the Termination Date, by all of the Collateral.
1.17 Currency Matters. Principal, interest, reimbursement obligations,
----------------
fees, and all other amounts payable under this Agreement and the other Loan
Documents to Agent and Lenders shall be payable in the currency in which such
Obligations are denominated. Unless stated otherwise, all calculations,
comparisons, measurements or determinations under this Agreement shall be made
in US Dollars. For the purpose of such calculations, comparisons, measurements
or determinations, amounts denominated in other currencies shall be converted by
Agent in the Equivalent Amount of US Dollars on the date of calculation,
comparison, measurement or determination.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated to
--------------------------------
make any Loan or incur any Letter of Credit Obligations on the Closing Date, or
to take, fulfill, or perform any
other action hereunder, until the following conditions have been satisfied or
provided for in a manner satisfactory to Agent, or waived in writing by Agent
and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or
-----------------------------------
counterparts hereof shall have been duly executed by, and delivered to,
Borrowers, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance satisfactory to Agent.
(b) Approvals. Agent shall have received (i) satisfactory
---------
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents or (ii) an officer's certificate in form and substance satisfactory to
Agent affirming that no such consents or approvals are required.
(c) Opening Availability. The Eligible Accounts of each
---------------------
Borrower supporting the initial Revolving Credit Advance and the initial Letter
of Credit Obligations incurred and the amount of the Reserves to be established
on the Closing Date shall be sufficient in value, as determined by Agent, to
provide Borrowers, collectively, with Net Borrowing Availability, after giving
effect to the initial Revolving Credit Advance made hereunder and the incurrence
of any initial Letter of Credit Obligations (on a pro forma basis, with trade
payables being paid currently, and expenses and liabilities being paid in the
ordinary course of business and without acceleration of sales) of at least
$7,500,000. For the purposes of this Section 2.1(c), any Loan to be made to AEC
Funding and the determination of the Net Borrowing Availability for AEC Funding
shall be calculated in the US Dollar Amount thereof.
(d) Payment of Fees. Borrowers shall have paid the Fees
-----------------
required to be paid on the Closing Date in the respective amounts specified in
Section 1.8 (including the Fees specified in the GE Capital Fee Letter), and
shall have reimbursed Agent for all fees, costs and expenses of closing
presented as of the Closing Date.
(e) Capital Structure; Other Indebtedness. The capital
-----------------------------------------
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party shall be acceptable to Agent in its sole discretion.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
---------------------------------
provided herein, no Lender shall be obligated to fund any Loan or incur any
Letter of Credit Obligation, if, as of the date thereof:
***
(a) Any representation or warranty by any Credit Party
contained herein or in any of the other Loan Documents shall be untrue or
incorrect as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement; or
(b) Any event or circumstance having a Material Adverse Effect
shall have occurred since the date hereof as determined by the Requisite
Lenders; or
(c) Any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligation), and Agent or Requisite Lenders shall have
determined not to make any Advance or incur any Letter of Credit Obligation as a
result of that Default or Event of Default, or
(d) After giving effect to any Advance (or the incurrence of
any Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan would exceed the lesser of the Aggregate Borrowing Base
and the Maximum Amount, or (ii) the outstanding principal amount of the
Revolving Loan of the applicable Borrower or Borrower Group would exceed such
Borrower's or Borrower Group's respective separate Borrowing Base. For the
purposes of this Section 2.2(d), any Revolving Loan outstanding or to be made to
AEC Funding shall be calculated in the US Dollar Amount thereof.
The request and acceptance by any Borrower or Borrower Group of the proceeds of
any Loan, or the incurrence of any Letter of Credit Obligation, shall be deemed
to constitute, as of the date of such request, acceptance or incurrence, (i) a
representation and warranty by Borrowers that the conditions in this Section 2.2
have been satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty
provisions set forth in Section 12 and of the granting and continuance of
Agent's Liens, on behalf of itself and Lenders, pursuant to the Collateral
Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender, with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is
-----------------------------------------
a corporation or limited partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation; (b) is duly
qualified to conduct business and is in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would not result
in exposure to losses, damages or liabilities in excess of $50,000; (c) has the
requisite corporate or limited partnership power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (d) subject to specific
representations regarding Environmental Laws, has all licenses, permits,
consents or approvals from or by, and has made all filings with, and has given
all notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (e) is in compliance with
its charter and by-laws or other constituent documents; and (f) subject to
specific representations set forth herein regarding ERISA, Environmental Laws,
tax and other laws, is in compliance with all applicable provisions of law,
except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
3.2 Executive Offices; FEIN. As of the Closing Date, the current
-------------------------
location of each Credit Party's chief executive office and principal place of
business is set forth in Disclosure Schedule (3.2), and none of such locations
has changed within the twelve (12) months preceding the Closing Date. In
addition, Disclosure Schedule (3.2) lists the federal employer identification
number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
------------------------------------------------------------
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's corporate or limited partnership power; (b) have been
duly authorized by all necessary or proper corporate, partnership or shareholder
action; (c) do not contravene any provision of such Person's charter or bylaws
or other constituent documents; (d) do not violate any law or regulation, or any
order or decree of any court or Governmental Authority; (e) do not conflict with
or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(b), all of which will have been duly obtained,
made or complied with prior to the Closing Date. On or prior to the Closing
Date, each of the Loan Documents shall have been duly executed and delivered by
each Credit Party that is a party thereto and each such Loan Document shall then
constitute a legal, valid and binding obligation of such Credit Party
enforceable against it in accordance with its terms.
3.4 Financial Statements and Projections. Except for the Projections,
-------------------------------------
all Financial Statements concerning Holdings and its Subsidiaries which are
referenced below have been prepared in accordance with GAAP consistently applied
throughout the periods covered (except as disclosed therein and except, with
respect to unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all material respects
the financial position of the Persons covered thereby as at the dates thereof
and the results of their operations and cash flows for the periods then ended.
(a) The following Financial Statements attached hereto as
Disclosure Schedule (3.4(A)) have been delivered on the date hereof:
(i) (A) The audited consolidated balance sheets at
November 30, 1997 and 1998 and the related statements of income and cash flows
of Holdings and its Subsidiaries for the Fiscal Years then ended, certified by
PricewaterhouseCoopers, LLP.
(B) The unaudited consolidating balance sheets as
of November 30, 1998 and related statements of income for Holdings and its
Subsidiaries.
(ii) (A) The unaudited consolidated balance sheet(s)
at February 28, 1999 and the related statement(s) of income and cash flows for
Holdings and its Subsidiaries for the Fiscal Quarter then ended.
(B) The unaudited consolidating balance sheet(s)
at February 28, 1999 and the related statement(s) of income for Holdings and its
Subsidiaries for the Fiscal Quarter then ended.
(b) Projections. The Projections delivered on the date hereof
and attached hereto as Disclosure Schedule (3.4(B)) have been prepared by
Borrowers in light of the past operations of their businesses and reflect
projections for the one (1) year period beginning on March 1, 1999 on a month by
month basis for the first year. The Projections are based upon estimates and
assumptions stated therein, all of which Borrowers believe to be reasonable and
fair in light of current conditions and current facts known to Borrowers and, as
of the Closing Date, reflect Borrowers' good faith and reasonable estimates of
the future financial performance of Borrowers and of the other information
projected therein for the period set forth therein.
3.5 Material Adverse Effect. Between November 30, 1998 and the Closing
-----------------------
Date, (a) no Credit Party has incurred any obligations, contingent or
non-contingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments which, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, (b) no contract, lease
or other agreement or instrument has been entered into by any Credit Party or
has become binding upon any Credit Party's assets and no law or regulation
applicable to any Credit Party has been adopted which has had or could
reasonably be expected to have a Material Adverse Effect, and (c) no Credit
Party is in default and to the best of Borrowers' knowledge no third party is in
default under any material contract, lease or other agreement or instrument,
which alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect. Between November 30, 1998 and the Closing Date no event has
occurred, which alone or together with other events, could reasonably be
expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the real
-----------------------------
estate ("Real Estate") listed on Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned real
estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6). Disclosure Schedule (3.6)
further describes any Real Estate with respect to which any Credit Party is a
lessor, sublessor or assignor as of the Closing Date. Each Credit Party also has
good and marketable title to, or valid leasehold interests in, all of its
personal properties and assets. As of the Closing Date, none of the properties
and assets of any Credit Party are subject to any Liens other than Permitted
Encumbrances, and there are no facts, circumstances or conditions known to any
Credit Party that may result in any Liens (including Liens arising under
Environmental Laws) other than Permitted Encumbrances. Each Credit Party has
received all deeds, assignments, waivers, consents, non-disturbance and
attornment or similar agreements, bills of sale and other documents, and has
duly effected all recordings, filings and other actions necessary to establish,
protect and perfect such Credit Party's right, title and interest in and to all
such Real Estate and other properties and assets. Disclosure Schedule (3.6) also
describes any purchase options, rights of first refusal or
other similar contractual rights pertaining to any Real Estate. As of the
Closing Date, no portion of any Credit Party's Real Estate has suffered any
material damage by fire or other casualty loss which has not heretofore been
repaired and restored in all material respects to its original condition or
otherwise remedied. As of the Closing Date, all material permits required to
have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which they are currently occupied
and used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other
--------------
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matter; (c) all payments
due from any Credit Party for employee health and welfare insurance have been
paid or accrued as a liability on the books of such Credit Party; (d) except as
set forth in Disclosure Schedule (3.7), no Credit Party is a party to or bound
by any collective bargaining agreement, management agreement, consulting
agreement or any employment agreement, bonus, stock option or stock appreciation
plan (and true and complete copies of any agreements described on Disclosure
Schedule (3.7) have been delivered to Agent); (e) there is no organizing
activity involving any Credit Party pending or, to any Credit Party's knowledge,
threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board or any labor relations board,
and no labor organization or group of employees of any Credit Party has made a
pending demand for recognition; and (g) except as set forth in Disclosure
Schedule (3.7), there are no complaints or charges against any Credit Party
pending or, to the knowledge of any Credit Party, threatened to be filed with
any Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment by
any Credit Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
------------------------------------------------------------------
Indebtedness. Except as set forth in Disclosure Schedule (3.8), no Credit Party
------------
has any Subsidiaries, is engaged in any joint venture or partnership with any
other Person, or is an Affiliate of any other Person. All of the issued and
outstanding Stock of each Credit Party is owned by each of the Stockholders and
in the amounts set forth on Disclosure Schedule (3.8). There are no outstanding
rights to purchase, options, warrants or similar rights or agreements pursuant
to which any Credit Party may be required to issue, sell, repurchase or redeem
any of its Stock or other equity securities or any Stock or other equity
securities of its Subsidiaries. All outstanding Indebtedness of each Credit
Party as of the Closing Date is described in Section 6.3 (including Disclosure
Schedule (6.3)).
3.9 Government Regulation. No Credit Party is an "investment company"
----------------------
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any Canadian or other United
States federal law or state, provincial, local or foreign law or statute that
restricts or limits its ability to incur Indebtedness or to perform its
obligations hereunder. The making of the Loans by Lenders to Borrowers, the
incurrence of the Letter of Credit Obligations
on behalf of Borrowers and, the application of the proceeds thereof and
repayment thereof will not violate any provision of any such statute or any
rule, regulation or order issued by the Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
-------------------
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action which might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including
-----
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and all
Charges have been paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof (or any such fine,
penalty, interest, late charge or loss has been paid), excluding Charges or
other amounts being contested in accordance with Section 5.2(b). Proper and
accurate amounts have been withheld by each Credit Party from its respective
employees for all periods in full and complete compliance in all material
respects with all applicable federal, state, local, provincial and foreign law
and such withholdings have been timely paid to the respective Governmental
Authorities. Disclosure Schedule (3.11) sets forth as of the Closing Date those
taxable years for which any Credit Party's tax returns are currently being
audited by Revenue Canada, the IRS or any other applicable provincial or state
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except as
described on Disclosure Schedule (3.11), no Credit Party has executed or filed
with Revenue Canada, the IRS or any other provincial or state Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. None of the
Credit Parties and their respective predecessors are liable for any Charges: (a)
under any agreement (including any tax sharing agreements) or (b) to each Credit
Party's knowledge, as a transferee. As of the Closing Date, no Credit Party has
agreed or been requested to make any adjustment under IRC Section 481(a), by
reason of a change in accounting method or otherwise, which would have a
Material Adverse Effect.
3.12 ERISA. (a) Disclosure Schedule (3.12) lists all Plans and
-----
separately identifies all Pension Plans, including Title IV Plans, Multiemployer
Plans, ESOPs and Welfare Plans, including all Retiree Welfare Plans. Copies of
all such listed Plans, together with a copy of the latest form 5500 for each
such Plan, have been delivered to Agent. Except with respect to Multiemployer
Plans, each Qualified Plan has been determined by the IRS to qualify under
Section 401 of the IRC, and the trusts created thereunder have been determined
to be exempt
from tax under the provisions of Section 501 of the IRC, and nothing has
occurred which would cause the loss of such qualification or tax-exempt status.
Each Plan is in compliance, in all material respects, with the applicable
provisions of ERISA and the IRC, including the timely filing of IRS/DOL
5500-series form reports required under the IRC or ERISA. No Credit Party or
ERISA Affiliate has failed to make any contribution or pay any material amount
due as required by either Section 412 of the IRC or Section 302 of ERISA or the
terms of any such Plan. No Credit Party or ERISA Affiliate has engaged in a
"prohibited transaction," as defined in Section 4975 of the IRC, in connection
with any Plan, which would subject any Credit Party to a material tax on
prohibited transactions imposed by Section 4975 of the IRC.
(b) Disclosure Schedule (3.12) sets forth all Canadian Benefit
--------------------------
Plans (other than, for greater certainty, universal plans created by and to
which any Credit Party is obligated to contribute by statute) and Canadian
Pension Plans adopted by each Credit Party. The Canadian Pension Plans are duly
registered under the ITA and all other applicable laws which require
registration and no event has occurred which is reasonably likely to cause the
loss of such registered status. All material obligations of each Credit Party
(including fiduciary, funding, investment and administration obligations)
required to be performed in connection with the Canadian Pension Plans and the
funding agreements therefor have been performed in a timely fashion. There have
been no improper withdrawals or applications of the assets of the Canadian
Pension Plans or the Canadian Benefit Plans. There are no outstanding material
disputes concerning the assets of the Canadian Pension Plans or the Canadian
Benefit Plans. Each of the Canadian Pension Plans is fully funded on a solvency
basis (using actuarial methods and assumptions which are consistent with the
valuations last filed with the applicable Governmental Authorities and which are
consistent with generally accepted actuarial principles).
(c) Except as set forth in Disclosure Schedule (3.12): (i) no
---------------------------
Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any
Credit Party or ERISA Affiliate has been terminated nor has any such Plan with
Unfunded Pension Liabilities been transferred outside of the "controlled group"
(within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or
ERISA Affiliate; (vi) except in the case of any ESOP, stock of all Credit
Parties and their ERISA Affiliates makes up, in the aggregate, no more than ten
(10%) percent of the fair market value of the assets of any Plan, and (vii) no
liability under any Title IV Plan has been satisfied with the purchase of a
contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation or the equivalent by another nationally recognized rating
agency.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
-------------
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, "Litigation"), (a) which
challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) which has a reasonable risk of being determined adversely to any Credit
Party and which, if so determined, could have a Material Adverse Effect. Except
as set forth on Disclosure Schedule (3.13), as of the Closing Date there is no
Litigation pending or threatened which seeks damages in excess of $100,000 or
injunctive relief against or alleges criminal misconduct of any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Credit Party
-------
or Affiliate thereof brought about the obtaining, making or closing of the Loans
and no Credit Party or Affiliate thereof has any obligation to any Person in
respect of any finder's or brokerage fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party
----------------------
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15) hereto. Each Credit Party conducts its business and affairs
without infringement of or interference with any Intellectual Property of any
other Person. Except as set forth in Disclosure Schedule (3.15), no Credit Party
is aware of any infringement claim by any other Person with respect to any
Intellectual Property.
3.16 Full Disclosure. No information contained in this Agreement, any
---------------
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other reports from time to time delivered hereunder or any written
statement furnished by or on behalf of any Credit Party to Agent or any Lender
pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted
Encumbrances with respect to the Collateral other than Accounts.
3.17 Environmental Matters. (a) Except as set forth in Disclosure
----------------------
Schedule (3.17), as of the Closing Date: (i) the Credit Parties are and have
been in compliance with all Environmental Laws, except for such noncompliance
which would not result in Environmental Liabilities which could reasonably be
expected to exceed $100,000; (ii) the Credit Parties have obtained, and are in
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits would not result in Environmental Liabilities which
could reasonably be expected to exceed $100,000, and all such Environmental
Permits are valid, uncontested and in good standing; (iii) no Credit Party is
involved in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of such Credit Party which could reasonably be
expected to exceed $100,000, and no Credit Party has permitted any current or
former tenant or occupant of the Real Estate to engage in any such operations;
(iv) there is no Litigation arising under or related to any Environmental
Laws, Environmental Permits or Hazardous Material which seeks damages,
penalties, fines, costs or expenses in excess of $100,000 or injunctive relief,
or which alleges criminal misconduct by any Credit Party; and (v) no notice has
been received by any Credit Party identifying it as a "potentially responsible
party" or requesting information under CERCLA or analogous state statutes or
applicable foreign laws, and to the knowledge of the Credit Parties, there are
no facts, circumstances or conditions that may result in any Credit Party being
identified as a "potentially responsible party" under CERCLA or analogous state
statutes.
(b) Each Credit Party hereby acknowledges and agrees that
Agent (i) is not now, and has not ever been, in control of any of the Real
Estate or any Credit Party's affairs, and (ii) does not have the capacity
through the provisions of the Loan Documents or otherwise to influence any
Credit Party's conduct with respect to the ownership, operation or management of
any of its Real Estate or compliance with Environmental Laws or Environmental
Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies
---------
of any nature maintained, as of the Closing Date, for current occurrences by
each Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
-----------------------------------
lists all banks and other financial institutions at which any Credit Party
maintains deposits or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
---------------------
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Financial Administration Act (Canada), as amended, the Federal
Assignment of Claims Act (31 U.S.C. Section 3727) or any similar provincial,
state, local or foreign law.
3.21 Customer and Trade Relations. As of the Closing Date, there exists
----------------------------
no actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in: the business
relationship of any Credit Party with any customer or group of customers whose
purchases during the preceding twelve (12) months caused them to be ranked among
the ten largest customers of such Credit Party; or the business relationship of
any Credit Party with any supplier material to its operations.
3.22 Agreements and Other Documents. As of the Closing Date, each
--------------------------------
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which it is subject and each of which are listed on Disclosure
Schedule (3.22): service agreements and maintenance contracts of each Credit
Party which if terminated or cancelled could be reasonably likely to have a
Material Adverse Effect; licenses and permits held by the Credit Parties, the
absence of which could be reasonably likely to have a Material Adverse Effect;
instruments and documents evidencing Indebtedness of such Credit Party and any
Lien granted by such Credit Party with
respect thereto; and instruments and agreements evidencing the issuance of any
equity securities, warrants, rights or options to purchase equity securities of
such Credit Party.
3.23 Solvency. Both before and after giving effect to (a) the Loans and
--------
Letter of Credit Obligations to be made or incurred on the Closing Date or such
other date as Loans and Letter of Credit Obligations requested hereunder are
made or incurred, (b) the disbursement of the proceeds of such Loans pursuant to
the instructions of Borrower Representative, and (c) the payment and accrual of
all transaction costs in connection with the foregoing, each Credit Party is and
will be Solvent.
3.24 Year 2000 Representations. Each Credit Party has completed a Year
-------------------------
2000 Assessment, a copy of which has been delivered to Agent.
3.25 Indenture Debt. As of the Closing Date, Borrowers have delivered
---------------
to Agent a complete and correct copy of the Indenture (including all schedules,
exhibits, amendments, supplements, modifications, assignments, notes and all
other documents delivered pursuant thereto or in connection therewith). All
Obligations, including the Obligations to pay principal of and interest on the
Loans and the Letter of Credit Obligations, constitute Indebtedness permitted
under the Indenture and the execution and delivery of this Agreement will not
constitute a default or event of default under the Indenture. Holdings,
Borrowers and each other Credit Party acknowledge that Agent and each Lender are
entering into this Agreement and are extending the Commitments in reliance upon
this Section 3.25.
3.26 Inactive Canadian Subsidiaries. (a) Holdings and Industra Service
------------------------------
Corporation hereby represent, warrant and covenant as follows:
(i) As of the Closing Date, Nucon, Consultants and
Energy are each inactive Subsidiaries, do not conduct or transact any business
and own assets of less than $100,000 in the aggregate;
(ii) Each of Nucon, Consultants and Energy will be
dissolved within ninety (90) days from the Closing Date; and
(iii) Each of Nucon, Consultants and Energy will not
acquire any property or assets whatsoever, either directly or indirectly, from
any Credit Party or any other Person.
(b) Each of Holdings and the other Credit Parties to this
Agreement hereby covenant that in addition to, and not in limitation of, the
provisions of Section 6 below, no loans, advances, investments, financial
accommodations, transfers of assets or property or the like shall be made to or
for the benefit of Nucon, Consultants or Energy.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. (a) Each Credit Party executing this Agreement
-------------------
hereby agrees that from and after the Closing Date and until the Termination
Date, it shall deliver to Agent or to Agent and Lenders, as required, the
Financial Statements, notices, Projections and other information at the times,
to the Persons and in the manner set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby agrees
that from and after the Closing Date and until the Termination Date, it shall
deliver to Agent or to Agent and Lenders, as required, the various Collateral
Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(b)) at
the times, to the Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party executing this
--------------------------------
Agreement authorizes Agent and, so long as a Default or Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified or chartered, as the case may be, public accountants
including PricewaterhouseCoopers, LLP, and authorizes and at Agent's request
shall instruct those accountants and advisors to disclose and make available to
Agent and each Lender any and all Financial Statements and other supporting
financial documents, schedules and information relating to any Credit Party
(including copies of any issued management letters) with respect to the
business, financial condition and other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof and until
the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
------------------------------------------------
shall: do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and its rights and franchises; continue
to conduct its business substantially as now conducted or as otherwise permitted
hereunder; at all times maintain, preserve and protect all of its assets and
properties used or useful in the conduct of its business, and keep the same in
good repair, working order and condition in all material respects (taking into
consideration ordinary wear and tear) and from time to time make, or cause to be
made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and transact business only in such
corporate and trade names as are set forth in Disclosure Schedule (5.1).
5.2 Payment of Obligations. (a) Subject to Section 5.2(b), each Credit
----------------------
Party shall pay and discharge or cause to be paid and discharged promptly all
Charges payable by it, including (i) Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security (including pensions) and unemployment
withholding with respect to its employees, (ii) lawful claims for labor,
materials, supplies and services or otherwise, and (iii) all storage or rental
charges payable to warehousemen and bailees, in each case, before any thereof
shall become past due.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges described in
Section 5.2(a); provided, that (i) adequate
reserves with respect to such contest are maintained on the books of such Credit
Party, in accordance with GAAP, (ii) any Lien securing payment of such Charges
arises solely by operation of law and is unregistered and no Lien shall be
imposed to secure payment of such Charges (other than payments to bailees) that
is superior to any of the Liens securing the Obligations and such contest is
maintained and prosecuted continuously and with diligence and operates to
suspend collection or enforcement of such Charges, (iii) none of the Collateral
becomes subject to forfeiture or loss as a result of such contest, (iv) such
Credit Party shall promptly pay or discharge such contested Charges or claims
and all additional charges, interest, penalties and expenses, if any, and shall
deliver to Agent evidence acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no longer
met, (v) Agent has not advised Borrowers in writing that Agent reasonably
believes that nonpayment or nondischarge thereof could have or result in a
Material Adverse Effect, and (vi) if non-payment of the Charge could result in
any Lien against any Borrower's personal or real property, such Borrower has
notified Agent of the maximum amount of such Charges and, without duplication,
such amount has been deducted from such Borrower's or such Borrower's Borrower
Group's Borrowing Base as a Reserve.
5.3 Books and Records. Each Credit Party shall keep adequate books and
-----------------
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
(3.4(A)).
5.4 Insurance; Damage to or Destruction of Collateral. (a) The Credit
--------------------------------------------------
Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule (3.18) as in effect on the date
hereof or otherwise in form and amounts customary for their businesses and
industry and acceptable to Agent and with insurers acceptable to Agent. If any
Credit Party at any time or times hereafter shall fail to obtain or maintain any
of the policies of insurance required above or to pay all premiums relating
thereto, Agent may at any time or times thereafter obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which Agent deems advisable. Agent shall have no obligation to
obtain insurance for any Credit Party or pay any premiums therefor. By doing so,
Agent shall not be deemed to have waived any Event of Default arising from any
Credit Party's failure to maintain such insurance or pay any premiums therefor.
All sums so disbursed, including attorneys' fees, court costs and other charges
related thereto, shall be payable on demand by Borrowers to Agent and shall be
additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in
any Credit Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential liability of
such Credit Party) to require additional forms and limits of insurance to, in
Agent's opinion, adequately protect both Agent's and Lenders' interests in all
or any portion of the Collateral and to ensure that each Credit Party is
protected by insurance in amounts and with coverage customary for its industry.
If requested by Agent, each Credit Party shall deliver to Agent from time to
time a report of a reputable insurance broker, satisfactory to Agent, with
respect to its insurance policies.
(c) Each Credit Party shall deliver to Agent, in form and
substance satisfactory to Agent, endorsements to (i) all "All Risk" and business
interruption insurance naming Agent, on behalf of itself and Lenders, and (if
applicable, with respect to any insurance policy covering assets located in the
Province of Quebec) Agent and Lenders, as loss payee, and, to the extent
applicable, containing the standard mortgage clause approved by the Insurance
Bureau of Canada, (ii) all general liability and other liability policies naming
Agent, on behalf of itself and Lenders, and (with respect to any insurance
policy covering assets located in the Province of Quebec) Agent and Lenders, as
additional insured. Each Credit Party irrevocably makes, constitutes and
appoints Agent (and all officers, employees or agents designated by Agent), so
long as any Default or Event of Default has occurred and is continuing or the
anticipated insurance proceeds exceed $250,000, as such Credit Party's true and
lawful agent and attorney-in-fact for the purpose of making, settling and
adjusting claims under such "All Risk" policies of insurance, endorsing the name
of such Credit Party on any check or other item of payment for the proceeds of
such "All Risk" policies of insurance and for making all determinations and
decisions with respect to such "All Risk" policies of insurance. Agent shall
have no duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney. Borrower Representative shall promptly notify Agent
of any loss, damage, or destruction to the Collateral in the amount of $250,000
or more, whether or not covered by insurance. After deducting from such proceeds
the expenses, if any, incurred by Agent in the collection or handling thereof,
Agent may, at its option, apply such proceeds to the reduction of the
Obligations in accordance with Section 1.3(c); provided that in the case of
insurance proceeds pertaining to any Credit Party that is not a Borrower, such
insurance proceeds shall be applied ratably to all of the Loans owing by each
Borrower, or permit or require the applicable Credit Party to use such money, or
any part thereof, to replace, repair, restore or rebuild the Collateral in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, if the casualty giving rise to such insurance
proceeds would not reasonably be expected to have a Material Adverse Effect and
such insurance proceeds do not exceed $250,000 in the aggregate, Agent shall
permit the applicable Credit Party to replace, restore, repair or rebuild the
property; provided that if such Credit Party shall not have completed or entered
into binding agreements to complete such replacement, restoration, repair or
rebuilding within 180 days of such casualty, Agent may apply such insurance
proceeds to the Obligations in accordance with Section 1.3(c); provided further
that in the case of insurance proceeds pertaining to any Credit Party that is
not a Borrower, such insurance proceeds shall be applied ratably to all of the
Loans owing by each Borrower or Borrower Group, as the case may be. All
insurance proceeds which are to be made available to any Borrower to replace,
repair, restore or rebuild the Collateral shall be applied by Agent to reduce
the outstanding principal balance of the Revolving Loan of such Borrower (which
application shall not result in a permanent reduction of the Revolving Loan
Commitment) and upon such application, Agent shall establish a Reserve against
the separate Borrowing Base of the affected Borrower in an amount equal to the
amount of such proceeds so applied. All insurance proceeds made available to any
Credit Party that is not a Borrower to replace, repair, restore or rebuild
Collateral shall be deposited in a cash collateral account. Thereafter, such
funds shall be made available to that Borrower or Credit Party to provide funds
to replace, repair, restore or rebuild the Collateral as follows: (i) Borrower
Representative shall request a Revolving Credit Advance or a release from the
cash collateral account be made to such Borrower or Credit Party in the amount
requested to be released; (ii) so long as the conditions set forth in Section
2.2 have been met, Revolving
Lenders shall make such Revolving Credit Advance or Agent shall release funds
from the cash collateral account; and (iii) in the case of insurance proceeds
applied against the Revolving Loan, the Reserve established with respect to such
insurance proceeds shall be reduced by the amount of such Revolving Credit
Advance. To the extent not used to replace, repair, restore or rebuild the
Collateral, such insurance proceeds shall be applied in accordance with Section
1.3(c); provided that in the case of insurance proceeds pertaining to any Credit
Party that is not a Borrower, such insurance proceeds shall be applied ratably
to all of the Loans owing by each Borrower.
5.5 Compliance with Laws. (a) Each Credit Party shall comply with all
---------------------
federal, state, local, provincial and foreign laws and regulations of the United
States and Canada applicable to it, ERISA and labor matters and Environmental
Laws and Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(b) For each existing Canadian Pension Plan, each Credit Party
shall ensure that such plan retains its registered status under and is
administered in a timely manner in all material respects in accordance with the
applicable pension plan text, funding agreement, the ITA and all other
applicable laws.
(c) For each Canadian Pension Plan hereafter adopted by any
Credit Party which is required to be registered under the ITA or any other
applicable laws, that Credit Party shall use its best efforts to seek and
receive confirmation in writing from the applicable Governmental Authorities to
the effect that such plan is unconditionally registered under the ITA and such
other applicable laws.
(d) For each existing Canadian Pension Plan and Canadian
Benefit Plan hereafter adopted, each Credit Party shall in a timely fashion
perform in all material respects all obligations (including fiduciary, funding,
investment and administration obligations) required to be performed in
connection with such plan and the funding media therefor.
(e) Each Credit Party shall deliver to Agent if requested by
Agent, promptly after the filing thereof by any Credit Party with any applicable
Governmental Authority, copies of each annual and other return, report or
valuation with respect to each Canadian Pension Plan; promptly after receipt
thereof, a copy of any direction, order, notice, ruling or opinion that any
Credit Party may receive from any applicable Governmental Authority with respect
to any Canadian Pension Plan; and notification within 30 days of any increases
having a cost to such Credit Party in excess of C$250,000 per annum, in the
benefits of any existing Canadian Pension Plan or Canadian Benefit Plan, or the
establishment of any new Canadian Pension Plan or Canadian Benefit Plan, or the
commencement of contributions to any such plan to which any Credit Party was not
previously contributing.
5.6 Supplemental Disclosure. From time to time as may be requested by
------------------------
Agent (which request will not be made more frequently than once each year absent
the occurrence and continuance of a Default or an Event of Default), the Credit
Parties shall supplement each Disclosure Schedule hereto, or any representation
herein or in any other Loan Document, with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
such Disclosure Schedule or as an exception to such representation or which is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall be or be
deemed a waiver of any Default or Event of Default resulting from the matters
disclosed therein, except as consented to by Agent and Requisite Lenders in
writing; and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date.
5.7 Intellectual Property. Each Credit Party will conduct its business
---------------------
and affairs without infringement of or interference with any Intellectual
Property of any other Person in any material respect.
5.8 Environmental Matters. Each Credit Party shall and shall cause each
---------------------
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance which could not reasonably be expected to have
a Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions which are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any Real Estate which is reasonably likely
to result in Environmental Liabilities in excess of $100,000; and (d) promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental Laws
or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $100,000, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter.
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
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Each Credit Party shall obtain a landlord's agreement, mortgagee agreement or
bailee letter, as applicable, from the lessor of each leased property or
mortgagee of owned property or with respect to any warehouse, processor or
converter facility or other location where Collateral is located, which
agreement or letter shall contain a waiver or subordination of all Liens or
claims that the landlord, mortgagee or bailee may assert against the Collateral
at that location, and shall otherwise be satisfactory in form and substance to
Agent. Each Credit Party shall timely and fully pay and perform its obligations
under all leases and other agreements with respect to each leased location or
public warehouse where any Collateral is or may be located.
5.10 Further Assurances. Each Credit Party executing this Agreement
-------------------
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request
of Agent, duly execute and deliver, or cause to be duly executed and delivered,
to Agent such further instruments and do and cause to be done such further acts
as may be necessary or proper in the reasonable opinion of Agent to carry out
more effectively the provisions and purposes of this Agreement or any other Loan
Document.
5.11 Year 2000 Problems. On or before July 1, 1999, each Credit Party
------------------
shall complete and deliver to Agent a Year 2000 Corrective Plan. On or prior to
September 1, 1999, each Credit Party shall complete Year 2000 Corrective
Actions. On or before November 1, 1999, each Credit Party shall complete Year
2000 Implementation Testing. On or before December 1, 1999, each Credit Party
shall eliminate all Year 2000 Problems, except where the failure to correct the
same could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that, without the prior written consent of Agent and
the Requisite Lenders, from and after the date hereof until the Termination
Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
----------------------------
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) amalgamate or merge with, consolidate with, acquire all or
substantially all of the assets or Stock of, or otherwise combine with or
acquire, any Person, except that any Borrower may merge with another Borrower or
any Subsidiary Guarantor may merge with a Borrower, so long as, in each
instance, a Borrower shall be the survivor of any such merger to which it is a
party.
Notwithstanding the foregoing, any Borrower (or Holdings, so
long as contemporaneously therewith, all assets so acquired are transferred to
one or more Borrowers), may acquire all or substantially all of the assets or
capital Stock of any Person (the "Target") (in each case, a "Permitted
Acquisition") subject to the satisfaction of each of the following conditions:
(i) Except for the Protective Acquisition, Agent
shall receive at least thirty (30) Business Days' prior written notice of such
proposed Permitted Acquisition, which notice shall include a reasonably detailed
description of such proposed Permitted Acquisition;
(ii) such Permitted Acquisition shall involve assets
which are substantially located in the United States and/or Canada and
comprising a business, or those assets of a business, of the type engaged in by
Borrowers as of the Closing Date, and which business would not subject Agent or
any Lender to regulatory or third party approvals in connection with the
exercise of its rights and remedies under this Agreement or any other Loan
Documents other than approvals applicable to the exercise of such rights and
remedies with respect to Borrowers prior to such Permitted Acquisition;
(iii) such Permitted Acquisition shall be consensual
and shall have been approved by the Target's board of directors;
(iv) no additional Indebtedness, Guaranteed
Indebtedness, contingent obligations or other liabilities shall be incurred,
assumed or otherwise be reflected on a consolidated balance sheet of Borrowers
and Target after giving effect to such Permitted Acquisition, except (A) Loans
made hereunder and (B) ordinary course trade payables, accrued expenses and
unsecured Indebtedness of the Target to the extent no Default or Event of
Default has occurred and is continuing or would result after giving effect to
such Permitted Acquisition;
(v) the sum of all amounts payable in connection with
all Permitted Acquisitions (including all transaction costs and all
Indebtedness, liabilities and contingent obligations incurred or assumed in
connection therewith or otherwise reflected in a consolidated balance sheet of
Borrowers and Target but excluding all amounts payable in connection with the
Protective Acquisition) shall not exceed in the aggregate $15,000,000;
(vi) the Target shall not have incurred an operating
loss for the trailing twelve-month period preceding the date of the Permitted
Acquisition, as determined based upon the Target's financial statements for its
most recently completed fiscal year and its most recent interim financial period
completed within sixty (60) days prior to the date of consummation of such
Permitted Acquisition;
(vii) the business and assets acquired in such
Permitted Acquisition shall be free and clear of all Liens (other than Permitted
Encumbrances);
(viii) at or prior to the closing of any Permitted
Acquisition, Agent will be granted a first priority perfected Lien (subject to
Permitted Encumbrances) in all Collateral acquired pursuant thereto and each
Credit Party hereto and the Target shall have executed such documents and taken
such actions as may be required by Agent in connection therewith;
(ix) concurrently with delivery of the notice
referred to in clause (i) above, Borrowers shall have delivered to Agent, in
form and substance satisfactory to Agent:
(A) a pro forma consolidated balance sheet,
income statement and cash flow statement of Holdings and its
Subsidiaries (the "Acquisition Pro Forma"), based on recent
financial statements, which shall be complete and shall fairly
present in all material respects the assets, liabilities,
financial condition and results of operations of Holdings and
its Subsidiaries in accordance with GAAP consistently applied,
but taking into account such Permitted Acquisition and the
funding of all Loans in connection therewith, and such
Acquisition Pro Forma shall reflect that (x) average daily Net
Borrowing Availability of all Borrowers for the 90-day period
preceding the consummation of such Permitted Acquisition would
have exceeded $6,000,000 on a pro forma basis (giving effect
to such Permitted Acquisition and all Loans funded in
connection therewith as if made on the first day of such
period) and the Acquisition Projections (as hereinafter
defined) shall reflect that such Net Borrowing Availability of
$6,000,000 shall continue for at least 90 days after the
consummation of such Permitted Acquisition, and (y) on a pro
forma basis, no Event of Default has occurred and is
continuing or would result after giving effect to such
Permitted Acquisition and
Borrowers would have been in compliance with the financial
covenants set forth in Annex G for the four quarter period
reflected in the Compliance Certificate most recently
delivered to Agent pursuant to Annex E prior to the
consummation of such Permitted Acquisition (giving effect to
such Permitted Acquisition and all Loans funded in connection
therewith as if made on the first day of such period);
(B) updated versions of the most recently
delivered Projections covering the one (1) year period
commencing on the date of such Permitted Acquisition and
otherwise prepared in accordance with the Projections (the
"Acquisition Projections") and based upon historical financial
data of a recent date satisfactory to Agent, taking into
account such Permitted Acquisition; and
(C) a certificate of the chief financial
officer of Holdings or such other officer acceptable to Agent
to the effect that: (w) each Borrower (after taking into
consideration all rights of contribution and indemnity such
Borrower has against Holdings and each other Subsidiary of
Holdings) will be Solvent upon the consummation of the
Permitted Acquisition; (x) the Acquisition Pro Forma fairly
presents the financial condition of Holdings and Borrowers (on
a consolidated basis) as of the date thereof after giving
effect to the Permitted Acquisition; (y) the Acquisition
Projections are reasonable estimates of the future financial
performance of Holdings and Borrowers subsequent to the date
thereof based upon the historical performance of Holdings,
Borrowers and the Target and show that Holdings and Borrowers
shall continue to be in compliance with the financial
covenants set forth in Annex G for the one (1) year period
thereafter; and (z) Holdings and Borrowers have completed
their due diligence investigation with respect to the Target
and such Permitted Acquisition, which investigation was
conducted in a manner similar to that which would have been
conducted by a prudent purchaser of a comparable business and
the results of which investigation were delivered to Agent and
Lenders;
(x) on or prior to the date of such Permitted
Acquisition, Agent shall have received, in form and substance satisfactory to
Agent, copies of the acquisition agreement and related agreements and
instruments, and all opinions, certificates, lien search results and other
documents reasonably requested by Agent; and
(xi) at the time of such Permitted Acquisition and
after giving effect thereto, no Default or Event of Default has occurred and is
continuing.
Notwithstanding the foregoing, (A) the Accounts of the Target
shall not be included in Eligible Accounts without the prior written consent of
Agent and Requisite Lenders; (B) in the case of a Permitted Acquisition where
the amount payable by Borrower is $2,000,000 or less, such Borrower shall only
be required to satisfy conditions 6.1(i), (ii), (v) and (xi) above and, in
addition, after giving effect to such Permitted Acquisition, the Borrowers have
an aggregate Net Borrowing Availability of not less than $8,000,000; and (C) in
the case of the Protective Acquisition, Specialty Management Group, Inc shall
only be required to satisfy conditions 6.1(ii), (viii) and (xi) above.
6.2 Investments; Loans and Advances. Except as otherwise expressly
---------------------------------
permitted by this Section 6, no Credit Party shall make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that (a) Borrowers may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to any Borrower pursuant to negotiated agreements with respect to
settlement of such Account Debtor's Accounts in the ordinary course of business,
so long as the aggregate amount of such Accounts so settled by Borrowers does
not exceed $300,000; (b) each Credit Party may maintain its existing investments
in its Subsidiaries as of the Closing Date; (c) so long as no Default or Event
of Default has occurred and is continuing and the outstanding aggregate amount
of Revolving Credit Advances is not greater than $5,000,000, Borrowers may make
investments up to $5,000,000 in the aggregate, in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or any agency thereof maturing within one year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Ratings Group or Xxxxx'x Investors Service, Inc., (iii)
certificates of deposit, maturing no more than one year from the date of
creation thereof, issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $300,000,000 and having a senior unsecured rating of
"A" or better by a nationally recognized rating agency (an "A Rated Bank"), (iv)
time deposits, maturing no more than 30 days from the date of creation thereof
with A Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above, (d) Credit Parties may
make other investments not exceeding $500,000 in the aggregate at any time
outstanding, (e) AEC Funding may make loans or advances of money to the Canadian
Subsidiaries for general operating and working capital purposes, provided that,
the aggregate outstanding amount of any such loans or advances shall not exceed
at any given time the Borrowing Availability for AEC Funding, (f) from and after
the Closing Date, in addition to those joint ventures and partnerships set forth
on Disclosure Schedule (3.8), Borrowers may make additional investments in joint
ventures or partnerships, provided that, no Default or Event of Default then
exists, such joint ventures or partnerships relate to the Borrowers' business as
presently conducted and the amount of such investments shall not exceed
$2,000,000 in the aggregate, or $1,000,000 with respect to any single such
investment; and (g) subject to the financial assistance restrictions under
applicable Canadian federal or provincial corporate laws, any Credit Party that
is not a Borrower may make loans or advances to any other Credit Party in such
amounts as such Credit Party may elect from time to time.
6.3 Indebtedness. (a) No Credit Party shall create, incur, assume or
------------
permit to exist any Indebtedness, except (without duplication) (i) Indebtedness
secured by purchase money security interests and Capital Leases permitted in
clause (c) of Section 6.7, (ii) the Loans and the other Obligations, (iii)
unfunded pension fund and other employee benefit plan obligations and
liabilities to the extent they are permitted to remain unfunded under applicable
law, (iv) existing Indebtedness described in Disclosure Schedule (6.3) and
refinancings thereof or amendments or modifications thereto which do not have
the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) and which are otherwise on
terms and conditions no less favorable to any Credit Party, Agent or any Lender,
as determined by Agent, than the terms of the Indebtedness being refinanced,
amended or modified, (v)
Indebtedness specifically permitted under Section 6.1, and (vi) subject to the
financial assistance restrictions under applicable Canadian federal or
provincial corporate laws, and exclusive of any intercompany indebtedness
outstanding as of the Closing Date, Indebtedness consisting of intercompany
loans and advances made by any Credit Party to any other Credit Party, provided
that (A) each Credit Party shall record all intercompany transactions on its
books and records in a manner satisfactory to Agent; (B) at the time any such
intercompany loan or advance is made by any Credit Party to any other Credit
Party and after giving effect thereto, each such Credit Party shall be Solvent;
(C) no Event of Default would occur and be continuing after giving effect to any
such proposed intercompany loan; (D) in the case of any intercompany
Indebtedness owing to any Credit Party, the Borrower advancing such funds to
another Borrower not a member, if applicable, of such Borrower's Borrower Group
or to a Credit Party (not a Borrower) shall have Net Borrowing Availability
under its separate Borrowing Base of not less than fifteen (15%) percent of such
Borrower's or such Borrower Group's Borrowing Base after giving effect to such
intercompany loan; (E) the aggregate amount of such intercompany Indebtedness
owing by any Borrower to any other Borrower (not a member of such Borrower's
Borrower Group) shall not exceed $5,000,000 at any one time outstanding and the
aggregate amount of such Indebtedness owing by any Credit Party not a Borrower
to any Borrower shall not exceed $250,000; (F) the aggregate balance of all such
intercompany loans owing to any Borrower shall not exceed $10,000,000 at any
time and the aggregate balance of all such intercompany loans owing to all
Credit Parties not a Borrower shall not exceed $1,000,000; and (G) the recipient
of such intercompany loans shall be creditworthy as determined by Agent.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations, (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Section 6.8 and (iii) other Indebtedness not in excess of $250,000.
6.4 Employee Loans and Affiliate Transactions. (a) Except as otherwise
-----------------------------------------
expressly permitted in this Section 6 with respect to Affiliates, no Credit
Party shall enter into or be a party to any transaction with any other Credit
Party or any Affiliate thereof except in the ordinary course of and pursuant to
the reasonable requirements of such Credit Party's business and upon fair and
reasonable terms that are no less favorable to such Credit Party than would be
obtained in a comparable arm's length transaction with a Person not an Affiliate
of such Credit Party. In addition, if any such transaction or series of related
transactions involves payments in excess of $250,000 in the aggregate, the terms
of these transactions must be disclosed in advance to Agent and Lenders. All
such transactions existing as of the date hereof are described on Disclosure
Schedule (6.4(a)).
(b) From and after the date hereof, no Credit Party shall
enter into any lending or borrowing transaction with any employees of any Credit
Party, except loans to their respective employees on an arm's-length basis in
the ordinary course of business consistent with past practices for travel
expenses, relocation costs and similar purposes and stock option financing up to
a maximum of $250,000 to any employee and up to a maximum of $500,000 in the
aggregate at any one time outstanding.
6.5 Capital Structure and Business. No Credit Party shall (a) make any
------------------------------
changes in any of its business objectives, purposes or operations which could in
any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as described on
Disclosure Schedule (3.8), including the issuance of any shares of Stock,
warrants, options or other securities convertible into Stock or any revision of
the terms of its outstanding Stock, except that Holdings may issue any share of
Stock, warrants, options or other securities convertible into Stock, so long as
no Change of Control occurs after giving effect thereto, or (c) amend its
charter or bylaws in a manner which would adversely affect Agent or Lenders or
such Credit Party's duty or ability to repay the Obligations. No Credit Party
shall engage in any business other than the businesses currently engaged in by
it.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur,
------------------------
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is expressly permitted by this
Agreement.
6.7 Liens. No Credit Party shall create, incur, assume or permit to
-----
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7); (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $1,000,000 outstanding at any one
time for all such Liens (provided that such Liens attach only to the assets
subject to such purchase money debt and such Indebtedness is incurred within
twenty (20) days following such purchase and does not exceed 100% of the
purchase price of the subject assets). In addition, no Credit Party shall become
a party to any agreement, note, indenture or instrument, or take any other
action, which would prohibit the creation of a Lien on any of its properties or
other assets in favor of Agent, on behalf of itself and Lenders, as additional
collateral for the Obligations, except operating leases, Capital Leases or
Licenses which prohibit Liens upon the assets that are subject thereto.
6.8 Sale of Stock and Assets. (a) No Credit Party shall sell, transfer,
------------------------
convey, assign or otherwise dispose of any of its properties or other assets,
including the capital Stock of any of its Subsidiaries (whether in a public or a
private offering or otherwise) or any of their Accounts, other than (i) the sale
of Inventory in the ordinary course of business, (ii) the sale, transfer,
conveyance or other disposition by a Credit Party of Equipment, Fixtures or Real
Estate that are obsolete or no longer used or useful in such Credit Party's
business and having a value not exceeding $1,000,000 in any single transaction
or $3,000,000 in the aggregate in any Fiscal Year, (iii) other Equipment,
Fixtures or Real Estate having a value not exceeding $1,000,000 in any single
transaction or $3,000,000 in the aggregate in any Fiscal Year, and (iv) the
Switch Gear Division Sale, provided that, Agent receives for application against
the Obligations, all proceeds from such sale including the cash proceeds paid at
the closing thereof, plus all deferred payments
payable in connection therewith. The Switch Gear Division Sale shall not be
included within the limitations set forth in Sections 6.8(a)(ii) and (iii)
above.
(b) Notwithstanding anything to the contrary contained herein,
so long as no Default or Event of Default exists, any Borrower or any Canadian
Subsidiary may sell all or substantially all of its assets in a non-affiliated,
arms-length transaction, provided that, (i) Borrower Representative provides
Agent with no less than sixty (60) days prior written notice of any such
intended sale setting forth the name and address of the purchaser, the purchase
price and such other information as Agent may request, (ii) the net proceeds to
be received in connection with such sale is not less than the book value of the
assets to be sold and not less than the greater of (A) the Revolving Loan
outstanding to such Borrower or, in the case of any Canadian Subsidiary, to AEC
Funding and (B) the book value of the Eligible Accounts of such Borrower or
Canadian Subsidiary, as the case may be, as reflected in the Borrowing Base
which shall be delivered as of the date of the closing of such sale, and (iii)
all of the net proceeds of such sale shall be remitted to Agent for application
to the Obligations in accordance with Section 1.3 above.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
-----
Affiliate to, cause or permit to occur an event which could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrowers shall not breach or fail to comply
-------------------
with any of the Financial Covenants (the "Financial Covenants") set forth in
Annex G.
6.11 Hazardous Materials. No Credit Party shall cause or permit a
--------------------
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities which could not reasonably be
expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any
---------------
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
------------------------------
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
--------------------
Payment, except (a) intercompany loans and advances between Credit Parties to
the extent permitted by Sections 6.2 and 6.3 above, (b) dividends and
distributions by Subsidiaries of Holdings or any Credit Party paid to Holdings
or any Credit Party to the extent permitted by Sections 6.2 and 6.3, (c)
employee loans permitted under Section 6.4(b) above, and (d) regularly scheduled
payments of interest (determined on a pre-default, non-accelerated basis) with
respect to the Indenture Debt;
provided that (i) no Default or Event of Default shall have occurred and be
continuing or would result after giving effect to any payment pursuant to this
clause (d), and (ii) Borrowers collectively shall have Net Borrowing
Availability of at least fifteen (15%) percent of the Aggregate Borrowing Base
after giving effect to any payment pursuant to this clause (d).
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No
-------------------------------------------------------------
Credit Party shall (a) change its corporate name, or (b) change its chief
executive office, principal place of business, corporate offices or warehouses
or locations at which Collateral is held or stored, or the location of its
records concerning the Collateral, in any case without at least thirty (30) days
prior written notice to Agent and after Agent's written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to
continue the perfection of any Liens in favor of Agent, on behalf of Agent and
Lenders, in any Collateral, has been completed or taken, and provided that any
such new location shall be in the continental United States or for the Canadian
Subsidiaries only, in Canada. Without limiting the foregoing, no Credit Party
shall change its name, identity or corporate structure in any manner which might
make any financing or continuation statement filed in connection herewith
seriously misleading within the meaning of Section 9-402(7) of the Code or any
other then applicable provision of the Code or materially misleading within the
meaning of the PPSA or any other applicable provision of the PPSA, except upon
prior written notice to Agent and Lenders and after Agent's written
acknowledgment that any reasonable action requested by Agent in connection
therewith, including to continue the perfection of any Liens in favor of Agent,
on behalf of Agent and Lenders, in any Collateral, has been completed or taken.
No Credit Party shall change its Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
------------------------------------------
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement, the other Loan
Documents and as set forth on Disclosure Schedule 6.16) which could directly or
indirectly restrict, prohibit or require the consent of any Person with respect
to the payment of dividends or distributions or the making or repayment of
intercompany loans by a Subsidiary of any Borrower to any Borrower or between
Borrowers.
6.17 No Speculative Transactions. No Credit Party shall engage in any
----------------------------
transaction involving commodity options, futures contracts or similar
transactions.
6.18 Leases. No Credit Party shall enter into any operating lease for
------
Equipment or Real Estate, if the aggregate of all such operating lease payments
payable in any year for Borrowers and their Subsidiaries on a consolidated basis
would exceed $2,000,000.
6.19 Changes Relating to the Indenture. No Credit Party shall change or
---------------------------------
amend the terms of the Indenture (or any note or agreement in connection
therewith) if the effect of such amendment is to: (a) increase the interest rate
on such Indenture Debt; (b) change the dates upon which payments of principal or
interest are due on such Indenture Debt other than to extend such dates; (c)
change any default or event of default other than to delete or make less
restrictive any default provision therein, or add any covenant with respect to
such Indenture Debt; (d) change the redemption or prepayment provisions of such
Indenture Debt other than to extend the dates therefor or to reduce the premiums
payable in connection therewith; (e) grant any security or collateral to secure
payment of such Indenture Debt; or (f) change or amend any other term if
such change or amendment would materially increase the obligations of the Credit
Party thereunder or confer additional material rights to the holder of such
Indenture Debt in a manner adverse to any Credit Party, Agent or any Lender.
7. TERM
7.1 Termination. The financing arrangements contemplated hereby shall
-----------
be in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
------------------------------------------------------------------
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders
relating to any unpaid portion of the Loans or any other Obligations, due or not
due, liquidated, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall
survive any such termination or cancellation and shall continue in full force
and effect until the Termination Date; provided however, that in all events the
provisions of Section 11, the payment obligations under Sections 1.14 and 1.15,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
-------------------
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Any Borrower (i) fails to make any payment of principal
of, or interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) days following Agent's demand for such reimbursement or payment
of expenses.
(b) Any Credit Party fails or neglects to perform, keep or
observe any of the provisions of Sections 1.4, 1.7, 5.4 or 6, or any of the
provisions set forth in Annexes C or G, respectively.
(c) Any Borrower fails or neglects to perform, keep or observe
any of the provisions of Section 4 or any provisions set forth in Annexes E or
F, respectively, and the same shall remain unremedied for three (3) days or
more.
(d) Any Credit Party fails or neglects to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for twenty (20) days
or more.
(e) A default or breach occurs under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party (A) if such Indebtedness is not being
contested in accordance with Section 5.2(b), in excess of $500,000 in the
aggregate, or the Equivalent Amount thereof, or (B) if such Indebtedness is
being contested in accordance with Section 5.2(b), in excess of $1,000,000 in
the aggregate, or the Equivalent Amount thereof, or (ii) causes, or permits any
holder of such Indebtedness or a trustee to cause, Indebtedness or a portion
thereof (A) in excess of $500,000 in the aggregate, or the Equivalent Amount
thereof, if such Indebtedness is not being contested in accordance with Section
5.2(b), or (B) in excess of $1,000,000 in the aggregate, or the Equivalent
Amount thereof, if such Indebtedness is being contested in accordance with
Section 5.2(b), to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment, regardless of whether such default is
waived, or such right is exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base
Certificate is untrue or incorrect in any respect (other than inadvertent
immaterial errors not exceeding $1,000 in the aggregate in any Borrowing Base
Certificate, or any representation or warranty herein or in any Loan Document or
in any written statement, report, financial statement or certificate (other than
a Borrowing Base Certificate) made or delivered to Agent or any Lender by any
Credit Party is untrue or incorrect in any material respect as of the date when
made or deemed made.
(g) Assets of any Credit Party with a fair market value of
$250,000, or the Equivalent Amount thereof, or more shall be attached, seized,
levied upon or subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors of any Credit Party and such condition continues for thirty (30) days
or more.
(h) any involuntary case or proceeding (including the filing
of any notice in respect thereof) is commenced against any Credit Party under
any Insolvency Law, any incorporation law or other applicable law in any
jurisdiction in respect of the: (i) bankruptcy, liquidation, winding-up,
dissolution or suspension of general operations, (ii) composition, rescheduling,
reorganization, arrangement or readjustment of, or other relief from, or stay of
proceedings to enforce, some or all of the debts or obligations, (iii)
appointment of a trustee, interim receiver, receiver, receiver and manager,
liquidator, administrator, custodian, sequestrator, agent or other similar
official for, or for all or a substantial part of the assets, or (iv)
possession, foreclosure, seizure or retention, sale or other disposition of, or
other proceedings to enforce security over, all or a substantial part of the
assets, of any Credit Party, and such case or proceeding shall remain
undismissed or unstayed for sixty (60) days or more or such court shall enter a
decree or order granting the relief sought in such case or proceeding by a court
of competent jurisdiction;
(i) Any Credit Party (i) files a petition seeking relief under
any Insolvency Law, (ii) consents or fails to contest in a timely and
appropriate manner or consents to the institution of proceedings thereunder or
to the filing of any such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) for such Credit Party or of any substantial part of any such
Credit Party's assets, (iii) makes an assignment for the benefit of creditors,
(iv) takes any corporate action in furtherance of any of the foregoing; or (v)
admits in writing its inability to, or shall be generally unable to, pay its
debts as such debts become due.
(j) A final judgment or judgments for the payment of money in
excess of $500,000, or the Equivalent Amount thereof, in the aggregate at any
time are outstanding against one or more of the Credit Parties and the same are
not, within thirty (30) days after the entry thereof, have been discharged or
execution thereof stayed or bonded pending appeal, or such judgments are not
discharged prior to the expiration of any such stay.
(k) Any material provision of any Loan Document for any reason
ceases to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any Lien created under any Loan Document ceases to be a valid and perfected
first priority security interest or Lien (except as otherwise permitted herein
or therein) in any of the Collateral purported to be covered thereby.
(l) Any Change of Control occurs.
(m) Any event occurs, whether or not insured or insurable, as
a result of which revenue-producing activities cease or are substantially
curtailed at one or more facilities of Borrowers generating more than twenty
(20%) percent of Borrowers' consolidated revenues for the Fiscal Year preceding
such event and such cessation or curtailment continues for more than 20 days.
(n) Any default or breach by any Credit Party occurs and is
continuing (i) under the Indenture or (ii) under any material agreements or
Contracts, which, if terminated, would have a Material Adverse Effect.
8.2 Remedies. (a) If any Default or Event of Default has occurred and
--------
is continuing and Agent or Requisite Lenders shall have determined not to make
any Advances or incur any Letter of Credit Obligations so long as that specific
Default or Event of Default is continuing, Agent may (and at the written request
of the Requisite Lenders shall), without notice, suspend the Revolving Loan
facility with respect to additional Advances and/or the incurrence of additional
Letter of Credit Obligations whereupon any additional Advances and the
incurrence of additional Letter of Credit Obligations shall be made or extended
in Agent's sole discretion (or in the sole discretion of the Requisite Lenders,
if such suspension occurred at their direction) so long as such Default or Event
of Default has occurred and is continuing. If any Default or Event of Default
shall have occurred and be continuing, Agent may (and at the written request
of Requisite Lenders shall), without notice except as otherwise expressly
provided herein, increase the rate of interest applicable to the Loans and the
Letter of Credit Fees to the Default Rate.
(b) If any Default or Event of Default has occurred and is
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice, (i) terminate the Revolving Loan facility with respect
to further Advances or the incurrence of further Letter of Credit Obligations;
(ii) declare all or any portion of the Obligations, including all or any portion
of any Loan to be forthwith due and payable, and require that the Letter of
Credit Obligations be cash collateralized as provided in Annex B, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrowers and each other Credit Party; and (iii) exercise
any rights and remedies provided to Agent under the Loan Documents and/or at law
or equity, including all remedies provided under the Code; provided, however,
that upon the occurrence of a Default which would constitute an Event of Default
under Section 8.1(h) or the occurrence of an Event of Default specified in
Sections 8.1(g) or (i), the Revolving Loan facility shall be immediately
terminated and all of the Obligations, including the aggregate Revolving Loan,
shall become immediately due and payable without declaration, notice or demand
by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
-------------------------
Agreement or by applicable law, each Credit Party waives (including for purposes
of Section 12): (a) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent on which any
Credit Party may in any way be liable, and hereby ratifies and confirms whatever
Agent may do in this regard, (b) all rights to notice and a hearing prior to
Agent's taking possession or control of, or to Agent's replevy, attachment or
levy upon, the Collateral or any bond or security which might be required by any
court prior to allowing Agent to exercise any of its remedies, and (c) the
benefit of all valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations. (a) The Credit Parties signatory
-------------------------------
hereto consent to any Lender's assignment of, and/or sale of participations in,
at any time or times, the Loan Documents, Loans, Letter of Credit Obligations
and any Commitment or of any portion thereof or interest therein, including any
Lender's rights, title, interests, remedies, powers or duties thereunder,
whether evidenced by a writing or not. Any assignment by a Lender shall (i)
require the consent of Agent (which shall not be unreasonably withheld or
delayed) and the execution of an assignment agreement (an "Assignment
Agreement") substantially in the form attached hereto as Exhibit 9.1(a) and
otherwise in form and substance satisfactory to, and acknowledged by, Agent;
(ii) be conditioned on such assignee Lender representing to the assigning Lender
and Agent that it is purchasing the applicable Loans to be assigned to it for
its own account, for investment purposes and not with a view to the distribution
thereof; (iii) if a partial assignment, be in an amount at least equal to
$5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; and (iv) include a payment to Agent of an assignment fee of $3,500.
In the case
of an assignment by a Lender under this Section 9.1, the assignee shall have, to
the extent of such assignment, the same rights, benefits and obligations as it
would if it were a Lender hereunder. The assigning Lender shall be relieved of
its obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. Each Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrowers and Borrowers shall, upon the
request of Agent or such Lender, execute new Notes in exchange for the Notes, if
any, being assigned. Notwithstanding the foregoing provisions of this Section
9.1(a), any Lender may at any time pledge the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to a Federal
Reserve Bank, and any Lender that is an investment fund may assign the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to another investment fund managed by the same investment
advisor; provided, however, that no such pledge to a Federal Reserve Bank shall
release such Lender from such Lender's obligations hereunder or under any other
Loan Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled repayment of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.12,
1.14, 1.15 and 9.8, each Borrower acknowledges and agrees that a participation
shall give rise to a direct obligation of Borrowers to the participant and the
participant shall be considered to be a "Lender". Except as set forth in the
preceding sentence no Borrower or Credit Party shall have any obligation or duty
to any participant. Neither Agent nor any Lender (other than the Lender selling
a participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrowers and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist
any Lender permitted to sell assignments or participations under this Section
9.1 as reasonably required to enable the assigning or selling Lender to effect
any such assignment or participation, including the execution and delivery of
any and all agreements, notes and other documents and instruments
as shall be requested and, if requested by Agent, the preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants. Each Credit Party executing this
Agreement shall certify the correctness, completeness and accuracy of all
descriptions of the Credit Parties and their affairs contained in any selling
materials provided by them and all other information provided by them and
included in such materials, except that any Projections delivered by Borrowers
shall only be certified by Borrowers as having been prepared by Borrowers in
compliance with the representations contained in Section 3.4(b).
(e) A Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants). Each Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.
(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.15(a),
increased costs under Section 1.15(b), or withholding taxes in accordance with
Section 1.14(a).
9.2 Appointment of Agent. GE Capital is hereby appointed to act on
---------------------
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Neither Agent nor any of its Affiliates nor any of their
respective officers, directors, employees, agents or representatives shall be
liable to any Lender for any action taken or omitted to be taken by it hereunder
or under any other Loan Document, or in connection herewith or therewith, except
for damages caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders or
all affected Lenders with respect to any act or action (including failure to
act) in connection with this Agreement or any other Loan Document, then Agent
shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from Requisite Lenders or all
affected Lenders, as the case may be, and Agent shall not incur liability to any
Person by reason of so refraining. Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Loan Document (a) if
such action would, in the opinion of Agent, be contrary to law or the terms of
this Agreement or any other Loan Document, (b) if such action would, in the
opinion of Agent, expose Agent to Environmental Liabilities or (c) if Agent
shall not first be indemnified to its satisfaction against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. Without limiting the foregoing,
no Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of Requisite Lenders or all
affected Lenders, as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor
----------------------
any of their respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, Agent: (a) may treat the payee of any Note as
the holder thereof until Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to Agent; (b) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
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 the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments
----------------------------
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender, and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
------------------------
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action
under this Agreement. Each Lender acknowledges the potential conflict of
interest of each other Lender as a result of Lenders holding disproportionate
interests in the Loans, and expressly consents to, and waives any claim based
upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent
---------------
not reimbursed by Credit Parties and without limiting the obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent in connection therewith;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that Agent is not reimbursed for
such expenses by Credit Parties.
9.7 Successor Agent. Agent may resign at any time by giving not less
----------------
than thirty (30) days' prior written notice thereof to Lenders and Borrower
Representative. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Agent's giving notice of resignation, then
the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, by the 30th day after the date such notice of resignation was given
by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Requisite Lenders hereunder
shall be subject to the approval of Borrower Representative, such approval not
to be unreasonably withheld or delayed; provided that such approval shall not be
required if a Default or an Event of Default has occurred and is continuing.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall succeed to and become vested with all the rights,
powers, privileges and duties of the resigning Agent. Upon the earlier of the
acceptance of any appointment as Agent hereunder by a successor Agent or the
effective date of the resigning Agent's resignation, the resigning Agent shall
be discharged from its duties and obligations under this Agreement and the other
Loan Documents, except that any indemnity rights or other rights in favor of
such resigning Agent shall continue. After any resigning Agent's resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
--------------------------------
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without notice to any Credit Party or to any other Person,
any such notice being hereby expressly waived to the fullest extent permitted by
law, to offset and to appropriate and to apply any and all balances held by it
at any of its offices for the account of any Borrower or Guarantor (regardless
of whether such balances are then due to such Borrower or Guarantor) and any
other properties or assets any time held or owing by that Lender or that holder
to or for the credit or for the account of any Borrower or Guarantor against and
on account of any of the Obligations which are not paid when due. Any Lender or
holder of any Note exercising a right to offset or otherwise receiving any
payment on account of the Obligations in excess of its Pro Rata Share thereof
shall purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares (other than offset rights exercised by any
Lender with respect to Sections 1.12, 1.14 and 1.15). Each Credit Party that is
a Borrower or Guarantor agrees, that (a) any Lender or holder may exercise its
right to offset with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amount so offset to other
Lenders and holders and (b) any Lender or holders so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of offset, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the
offset amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of offset, the purchase of participations by
that Lender shall be rescinded and the purchase price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
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Concert.
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(a) Advances; Payments. (i) Agent shall notify Revolving
-------------------
Lenders, promptly after receipt of a Notice of Revolving Credit Advance and in
any event prior to 1:00 p.m. (New York time) on the date such Notice of
Revolving Advance is received, by telecopy, telephone or other similar form of
transmission. Each Revolving Lender shall make the amount of such Lender's Pro
Rata Share of such Revolving Credit Advance available to Agent in same day funds
by wire transfer to Agent's account as set forth in Annex H not later than 3:00
p.m. (New York time) on the requested funding date, in the case of an Index Rate
Loan or BA Rate Loan, as the case may be. After receipt of such wire transfers
(or, in the Agent's sole discretion, before receipt of such wire transfers),
subject to the terms hereof, Agent shall make the requested Revolving Credit
Advance to the Borrower designated by Borrower Representative in the Notice of
Revolving Credit Advance. All payments by each Revolving Lender shall be made
without setoff, counterclaim or deduction of any kind.
(ii) On the second (2nd) Business Day of each
calendar week or more frequently as aggregate cumulative payments in excess of
$2,000,000 are received with respect to the Loans (each, a "Settlement Date"),
Agent will advise each Lender by telephone, or telecopy
of the amount of such Lender's Pro Rata Share of principal, interest and Fees
paid for the benefit of Lenders with respect to each applicable Loan. Provided
that such Lender has funded all payments or Advances required to be made by it
and has purchased all participations required to be purchased by it under this
Agreement and the other Loan Documents as of such Settlement Date, Agent will
pay to each Lender such Lender's Pro Rata Share of principal, interest and Fees
paid by Borrowers since the previous Settlement Date for the benefit of that
Lender on the Loans held by it. To the extent that any Lender (a "Non-Funding
Lender") has failed to fund all such payments and Advances or failed to fund the
purchase of all such participations, Agent shall be entitled to set off the
funding short-fall against that Non-Funding Lender's Pro Rata Share of all
payments received from Borrowers. Such payments shall be made by wire transfer
to such Lender's account (as specified by such Lender in Annex H or the
applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on the
next Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume
that each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each funding date. If such Pro Rata Share is not,
in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender without set-off,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower Representative and Borrowers shall immediately repay such amount
to Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Agent to advance funds on behalf
of any Revolving Lender or to relieve any Revolving Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that Borrowers
may have against any Revolving Lender as a result of any default by such
Revolving Lender hereunder. To the extent that Agent advances funds to any
Borrower on behalf of any Revolving Lender and is not reimbursed therefor on the
same Business Day as such Advance is made, Agent shall be entitled to retain for
its account all interest accrued on such Advance until reimbursed by the
applicable Revolving Lender.
(c) Return of Payments. (i) If Agent pays an amount to a
Lender under this Agreement in the belief or expectation that a related payment
has been or will be received by Agent from Borrowers and such related payment is
not received by Agent, then Agent will be entitled to recover such amount from
such Lender on demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to any Borrower or paid
to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to any Borrower or such other
Person, without set-off, counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender
-------------------
to make any Revolving Credit Advance or any payment required by it hereunder
shall not relieve any other Revolving Lender (each such other Revolving Lender,
an "Other Lender") of its obligations to make such Advance or purchase such
participation on such date, but neither any Other Lender nor Agent shall be
responsible for the failure of any Non-Funding Lender to make an Advance or to
purchase a participation or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a "Lender" or a "Revolving Lender" (or be included in the
calculation of "Requisite Lenders" hereunder) for any voting or consent rights
under or with respect to any Loan Document.
(e) Dissemination of Information. Agent will use reasonable
-----------------------------
efforts to provide Lenders with any notice of Default or Event of Default
received by Agent from, or delivered by Agent to, any Credit Party, with notice
of any Event of Default of which Agent has actually become aware and with notice
of any action taken by Agent following any Event of Default; provided, however,
that Agent shall not be liable to any Lender for any failure to do so, except to
the extent that such failure is attributable to Agent's gross negligence or
willful misconduct. Lenders acknowledge that Borrowers are required to provide
Financial Statements and Collateral Reports to Lenders in accordance with
Annexes E and F hereto and agree that Agent shall have no duty to provide the
same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the
-------------------
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of set-off) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
------------------------
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
----------------------------------------------
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2 below. Any letter of interest, commitment letter and/or
fee letter (other than the GE Capital Fee Letter) between any Credit Party and
Agent or any Lender or any of their respective Affiliates, predating this
Agreement and relating to a financing of substantially similar form, purpose or
effect shall be superseded by this Agreement.
11.2 Amendments and Waivers. (a) Except for actions expressly permitted
----------------------
to be taken by Agent, no amendment, modification, termination or waiver of any
provision of this Agreement or any other Loan Document, or any consent to any
departure by any Credit Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Agent and Borrowers, and by Requisite
Lenders or all affected Lenders, as applicable. Except as set forth in clauses
(b) and (c) below, all such amendments, modifications, terminations or waivers
requiring the consent of any Lenders shall require the written consent of
Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement which increases the
percentage advance rates set forth in the definition of the Domestic Borrowers
Borrowing Base, or AEC Funding Borrowing Base, or which makes less restrictive
the nondiscretionary criteria for exclusion from Eligible Accounts set forth in
Section 1.6, shall be effective unless the same shall be in writing and signed
by Agent, Requisite Lenders and Borrowers. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement which waives compliance with the conditions precedent set forth in
Section 2.2 to the making of any Loan or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed by
Agent, Requisite Lenders and Borrowers. Notwithstanding anything contained in
this Agreement to the contrary, no waiver or consent with respect to any Default
(if in connection therewith Agent or Requisite Lenders, as the case may be, have
exercised its or their right to suspend the making or incurrence of further
Advances or Letter of Credit Obligations pursuant to Section 8.2(a)) or any
Event of Default shall be effective for purposes of the conditions precedent to
the making of Loans or the incurrence of Letter of Credit Obligations set forth
in Section 2.2 unless the same shall be in writing and signed by Agent,
Requisite Lenders and Borrowers.
(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby,
do any of the following: (i) increase the principal amount of any Lender's
Commitment (which action shall be deemed to directly affect all Lenders); (ii)
reduce the principal of, rate of interest on or Fees payable with respect to any
Loan or Letter of Credit Obligations of any affected Lender; (iii) extend any
scheduled payment date or final maturity date of the principal amount of any
Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any
payment of interest or Fees as to any affected Lender; (v) release any Guaranty
or, except as otherwise permitted herein or in the other Loan Documents,
release, or permit any Credit Party to sell or otherwise dispose of, any
Collateral with a value exceeding $5,000,000 in the aggregate (which action
shall be deemed to directly affect all Lenders); (vi) change the percentage of
the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for Lenders or any
of them to take any action hereunder; and (vii) amend or waive this Section 11.2
or the definitions of the term "Requisite Lenders" insofar as such definitions
affect the substance of this Section 11.2. Furthermore, no amendment,
modification, termination or waiver affecting the rights or duties of Agent
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by Agent, in addition to Lenders required hereinabove to take
such action. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
No amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note.
No notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 11.2 shall be binding upon
each holder of the Notes at the time outstanding and each future holder of the
Notes.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders,
the consent of Requisite Lenders is obtained, but the consent of other Lenders
whose consent is required is not obtained (any such Lender whose consent is not
obtained as described this clause (i) and in clauses (ii), (iii) and (iv) below
being referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Requisite Lenders, the
consent of Lenders holding 51% or more of the aggregate Revolving Loan
Commitments is obtained, but the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request, Agent or a Person acceptable to Agent shall have the
right with Agent's consent and in Agent's sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Commitments of such Non-Consenting
Lender for an amount equal to the principal balance of all Loans held by the
Non-Consenting Lender and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
(e) Upon indefeasible payment in full in cash and performance
of all of the Obligations (other than indemnification Obligations under Section
1.12), termination of the Commitments and a release of all claims against Agent
and Lenders, and so long as no suits, actions, proceedings, or claims are
pending or threatened against any Indemnified Person asserting any damages,
losses or liabilities that are Indemnified Liabilities, Agent shall deliver to
Borrowers termination statements, mortgage releases and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.
11.3 Fees and Expenses. Borrowers shall reimburse (i) Agent for all
------------------
fees, costs and expenses (including the reasonable fees and expenses of all of
its special counsel, advisors, consultants and auditors) and (ii) Agent (and,
with respect to clauses (c) and (d) below, all Lenders) for all fees, costs and
expenses, including the reasonable fees, costs and expenses of counsel or other
advisors (including environmental and management consultants and appraisers)
incurred in connection with the negotiation and preparation of the Loan
Documents and for advice, assistance, or other representation in connection
with:
(a) the forwarding to Borrowers or any other Person on behalf
of Borrowers by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, consent with
respect to, or termination of, any of the Loan Documents or advice in connection
with the administration of the Loans made pursuant hereto or its rights
hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, any Borrower or any other
Person and whether as a party, witness or otherwise) in any way relating to the
Collateral, any of the Loan Documents or any other agreement to be executed or
delivered in connection therewith or herewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of the
Borrowers or any other Person that may be obligated to Agent by virtue of the
Loan Documents; including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(d) any attempt to enforce any remedies of Agent against any
or all of the Credit Parties or any other Person that may be obligated to Agent
or any Lender by virtue of any of the Loan Documents; including any such attempt
to enforce any such remedies in the course of any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default;
(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all attorneys' and other
professional and service providers' fees arising from such services, including
those in connection with any appellate proceedings; and all expenses, costs,
charges and other fees incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or
actions described in this Section 11.3 shall be payable, on demand, by Borrowers
to Agent. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: fees, costs and expenses of accountants,
environmental advisors, appraisers, investment bankers, management and other
consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times,
---------
to require strict performance by the Credit Parties of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrowers specifying
such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
--------
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the
other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement
------------
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement
-----------------
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use commercially
---------------
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all confidential information provided to them by the Credit
Parties and designated as confidential for a period of two (2) years following
receipt thereof, except that Agent and any Lender may disclose such information
(a) to Persons employed or engaged by Agent or such Lender in evaluating,
approving, structuring or administering the Loans and the Commitments; (b) to
any bona fide assignee or
participant or potential assignee or participant that has agreed to comply with
the covenant contained in this Section 11.8 (and any such bona fide assignee or
participant or potential assignee or participant may disclose such information
to Persons employed or engaged by them as described in clause (a) above); (c) as
required or requested by any Governmental Authority or reasonably believed by
Agent or such Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Agent's or such
Lender's counsel, required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any Litigation to
which Agent or such Lender is a party; or (f) which ceases to be confidential
through no fault of Agent or such Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
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THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXX XXXX
XXXXXX, XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY, CITY OF NEW YORK, NEW YORK AND, PROVIDED, FURTHER NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT PARTY
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE
ADDRESS SET FORTH IN Annex I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF
OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is
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provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10), (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated on Annex I or to such other address
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower Representative or Agent)
designated on Annex I to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
11.11 Section Titles. The Section titles and Table of Contents
---------------
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
--------------------
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases, etc.. Each Credit Party executing this Agreement
---------------------
agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure using the name of GE Capital or its
affiliates or referring to this Agreement or the other Loan
Documents without at least two (2) Business Days' prior notice to GE Capital and
without the prior written consent of GE Capital unless (and only to the extent
that) such Credit Party or Affiliate is required to do so under law and then, in
any event, such Credit Party or Affiliate will consult with GE Capital before
issuing such press release or other public disclosure. Each Credit Party
consents to the publication by Agent or any Lender of a tombstone or similar
advertising material relating to the financing transactions contemplated by this
Agreement. Agent or such Lender shall provide a draft of any such tombstone or
similar advertising material to each Credit Party for review and comment prior
to the publication thereof. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements with Borrowers' consent which shall not be unreasonably
withheld or delayed.
11.15 Reinstatement. This Agreement shall remain in full force and
-------------
effect and continue to be effective should any petition be filed by or against
any Borrower for liquidation or reorganization, should any Borrower become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Borrower's assets, and shall continue to be effective or to be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
-----------------
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
-----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
12. CROSS-GUARANTY
12.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is
--------------
jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 12 shall not be
discharged until payment and performance, in full, of the Obligations has
occurred, and that its obligations under this Section 12 shall be absolute and
unconditional, irrespective of, and unaffected by,
(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this Agreement, any other Loan Document
or any other agreement, document or instrument to which any Borrower is or may
become a party;
(b) the absence of any action to enforce this Agreement
(including this Section 12) or any other Loan Document or the waiver or consent
by Agent and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any action, or the
absence of any action, by Agent and Lenders in respect thereof (including the
release of any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
12.2 Waivers by Borrowers. Each Borrower expressly waives all rights it
--------------------
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel Agent or Lenders to xxxxxxxx assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, Agent and Lenders would
decline to enter into this Agreement.
12.3 Benefit of Guaranty. Each Borrower agrees that the provisions of
-------------------
this Section 12 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
12.4 Subordination of Subrogation, Etc. Notwithstanding anything to the
---------------------------------
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in
cash. Each Borrower acknowledges and agrees that this subordination is intended
to benefit Agent and Lenders and shall not limit or otherwise affect such
Borrower's liability hereunder or the enforceability of this Section 12, and
that Agent, Lenders and their respective successors and assigns are intended
third party beneficiaries of the waivers and agreements set forth in this
Section 12.4.
12.5 Election of Remedies. If Agent or any Lender may, under applicable
--------------------
law, proceed to realize its benefits under any of the Loan Documents giving
Agent or such Lender a Lien upon any Collateral, whether owned by any Borrower
or by any other Person, either by judicial foreclosure or by non-judicial sale
or enforcement, Agent or any Lender may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 12. If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, each Borrower hereby consents to such action by Agent or
such Lender and waives any claim based upon such action, even if such action by
Agent or such Lender shall result in a full or partial loss of any rights of
subrogation which each Borrower might otherwise have had but for such action by
Agent or such Lender. Any election of remedies which results in the denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower's obligation to pay the
full amount of the Obligations. In the event Agent or any Lender shall bid at
any foreclosure or trustee's sale or at any private sale permitted by law or the
Loan Documents, Agent or such Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by Agent or such Lender
but shall be credited against the Obligations. The amount of the successful bid
at any such sale, whether Agent, Lender or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance
of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 12, notwithstanding that any present
or future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which Agent or any Lender might otherwise be
entitled but for such bidding at any such sale.
12.6 Limitation. Notwithstanding any provision herein contained to the
----------
contrary, each Borrower's liability under this Section 12 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any date of
determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower
under this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
(b) the amount which could be claimed by Agent and Lenders
from such Borrower under this Section 12 without rendering such claim voidable
or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 12.7.
12.7 Contribution with Respect to Guaranty Obligations. (a) To the
----------------------------------------------------
extent that any Borrower shall make a payment under this Section 12 of all or
any of the Obligations (other than Loans made to that Borrower for which it is
primarily liable) (a "Guarantor Payment") which, taking into account all other
Guarantor Payments then previously or concurrently made by any
other Borrower, exceeds the amount which such Borrower would otherwise have paid
if each Borrower had paid the aggregate Obligations satisfied by such Guarantor
Payment in the same proportion that such Borrower's "Allocable Amount" (as
defined below) (as determined immediately prior to such Guarantor Payment) bore
to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of
any Borrower shall be equal to the maximum amount of the claim which could then
be recovered from such Borrower under this Section 12 without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 12.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 12.7 is intended to or
shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Agreement, including Section 12.1. Nothing contained in this
Section 12.7 shall limit the liability of any Borrower to pay the Loans made
directly or indirectly to that Borrower and accrued interest, Fees and expenses
with respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other
Credit Parties under this Section 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
12.8 Liability Cumulative. The liability of Borrowers under this
---------------------
Section 12 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
AEC FUNDING CORP.
ACTION CONTRACT SERVICES, INC.
BROOKFIELD CORP.
C.A. XXXXXX CONSTRUCTION COMPANY
C.A. XXXXXX MAINTENANCE, INC.
CHEMPOWER, INC.
ECO SYSTEMS, INC.
GLOBAL POWER COMPANY
INDUSTRA, INC.
INDUSTRA SERVICE CORP.
SEPARATION AND RECOVERY SYSTEMS, INC.
SOUTHWICK CORP.
SPECIALTY MANAGEMENT GROUP, INC.
THE XXXXXX GROUP, INC.
UNITED ECO SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Title: Vice President Of Each
----------------------------------
CONTROLLED POWER LIMITED PARTNERSHIP
By: Southwick Corp., its general partner
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Title: Vice President
----------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Title: Duly Authorized Signatory
----------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
The following Persons are signatories to this Agreement in
their capacity as set forth below and not as Borrowers.
AMERICAN ECO CORPORATION, as a Credit Party
and as Borrower Representative
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Title: Vice President
----------------------------------
CAMBRIDGE CONSTRUCTION SERVICE CORP., as
a Credit Party
H.E. CO. SERVICES, INC., as a Credit Party
INDUSTRA SERVICE CORPORATION, as a Credit
Party
INDUSTRA THERMAL SERVICE CORP., as a Credit
Party
INDUSTRA THERMAL SERVICE CORPORATION, as a
Credit Party
LAKE XXXXXXX CONSTRUCTION CORPORATION, as a
Credit Party
MM INDUSTRA LIMITED, as a Credit Party
NUS, INC., as a Credit Party
SEPARATION AND RECOVERY SYSTEMS CALIFORNIA,
as a Credit Party
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Title: Vice President Of Each
----------------------------------
SCHEDULE A
BORROWERS
---------
1. AEC FUNDING CORP., a Delaware corporation
2. ACTION CONTRACT SERVICES, INC., a Delaware corporation
3. BROOKFIELD CORP., an Ohio corporation
4. C.A. XXXXXX MAINTENANCE, INC., a Texas corporation
5. C.A. XXXXXX CONSTRUCTION COMPANY, a Delaware corporation
6. CHEMPOWER, INC., an Ohio corporation
7. CONTROLLED POWER LIMITED PARTNERSHIP, an Illinois limited partnership
8. ECO SYSTEMS, INC., a Delaware corporation
9. GLOBAL POWER COMPANY, an Ohio corporation
10. INDUSTRA, INC., a Washington corporation
11. INDUSTRA SERVICE CORP., a Washington corporation
12. SEPARATION AND RECOVERY SYSTEMS, INC., a Nevada corporation
13. SOUTHWICK CORP., an Ohio corporation
14. SPECIALTY MANAGEMENT GROUP, INC., a Texas corporation
15. THE XXXXXX GROUP, INC., a Delaware corporation
16. UNITED ECO SYSTEMS, INC., a Delaware corporation
