Exhibit 4(b)
REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT is dated as of March 1, 1993 ("this
Agreement") between LESCO, INC. (the "Company"), a corporation established and
existing under the laws of the State of Ohio, and PITTSBURGH NATIONAL BANK, a
national banking association (the "Bank").
PRELIMINARY STATEMENT
The County of Belmont, Ohio (the "Issuer") has entered into an Indenture
of Trust dated as of January 1, 1988 (the "Indenture") with The Bank of New
York, formerly Irving Trust Company, as trustee (the "Trustee"), for the purpose
of issuing $5,875,000 in aggregate principal amount of its Industrial
Development Revenue Bonds (Lesco, Inc. Project) (the "Bonds"). The Issuer and
the Company have entered into a Loan Agreement dated as of January 1, 1988 (the
"Loan Agreement") pursuant to which the Issuer has loaned the net proceeds from
the issuance of the Bonds to the Company to enable the Company to finance the
cost of acquisition, construction and rehabilitation of a manufacturing facility
and the acquisition of certain machinery and equipment.
In order that the Bonds may have been marketed at an interest rate lower
than that available based solely on the credit of the Company and to provide
funds for the payment of principal of, premium on and interest on the Bonds and
the purchase of Bonds at the demand of the holders thereof at the times and in
accordance with the conditions provided in the Indenture, Irving Trust Company,
the predecessor to The Bank of New York ("BONY"), issued an irrevocable letter
of credit in the original amount of $6,230,720.00 to the Trustee and for the
account of the Company (the "Original Letter of Credit").
The Obligations of the Company under this Agreement shall be secured by a
first-priority pledge of and security interest in Pledged Bonds and Funds
Collateral and in a Mortgage dated as of January 1, 1988 (as amended or
supplemented from time to time, the "Mortgage") between the Company, the Bank
(as assignee of BONY) and the Trustee, wherein the Company has granted a
first-priority Lien on and security interest in the Mortgaged Property of the
Project.
The first-priority Lien and security interest of the Bank under the
Mortgage shall be shared co-equally with the Trustee. The obligations of the
Company to the Director of Development of the State of Ohio under the Credit
Agreement (as defined herein) shall also be secured under the Mortgage by a
first-priority Lien and security interest on the Project in accordance with the
terms and conditions of the Mortgage.
The Company has requested that the Bank issue its letter of credit in the
form attached hereto as Schedule I (such letter of credit as the same may be
duly amended or supplemented from time to time, and any letter of credit issued
in connection with the transfer of such letter of credit as so amended and
supplemented, being hereinafter referred to as the "Letter of Credit") in
substitution for and replacement of the Original Letter of Credit, and the Bank
has agreed to issue the Letter of Credit, but only upon the terms and conditions
set forth herein.
In consideration of the foregoing and in order to induce the Bank to issue
the Letter of Credit, the Company and the Bank hereby agree as follows:
ARTICLE I
CERTAIN DEFINED TERMS
SECTION 1.01 Definitions. As used in this Agreement, the following terms
shall have the following meanings unless specifically stated otherwise (such
meanings to be equally applicable to both the singular and the plural forms of
the terms defined):
"A Drawing" means a drawing under the Letter of Credit by presentation of
a certificate in the form of Exhibit A thereto to pay principal on the Bonds.
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Law" means all applicable provisions of all constitutions;
statutes, rules, regulations and orders of all governmental and non-governmental
bodies, all Governmental Approvals and all orders, judgments and decrees of all
courts and arbitrators.
"B Drawing" means a drawing under the Letter of Credit by presentation of
a certificate in the form of Exhibit B thereto to pay purchase price, or a
portion of purchase price, corresponding to the principal amount of Bonds
delivered for purchase pursuant to the Indenture.
"Bank" means Pittsburgh National Bank, a national banking association, and
its successors and assigns, in its capacity as the issuer of the Letter of
Credit.
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"Bond Fund" has the meaning assigned to that term in the Indenture.
"Bonds" has the meaning assigned to that term in the preliminary statement
hereto.
"Bond Purchase Agreement" means the Bond Purchase Agreement with respect
to the Bonds dated January 28, 1988 among the Issuer, the Company and the
Initial Purchaser (as defined therein) of the Bonds, as amended from time to
time.
"Business Day" means a day on which banks located in the city in which the
principal corporate trust office of the Trustee is located and banks in New
York, New York and Pittsburgh, Pennsylvania are not required or authorized by
law or executive order to remain closed and on which the New York Stock Exchange
is not closed.
"C Drawing" means a drawing under the Letter of Credit by presentation of
a certificate in the form of Exhibit C thereto to pay interest due and payable
on Bonds.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with generally accepted accounting principles
and the amount of such Indebtedness shall be the capitalized amount of such
obligations determined in accordance with such principles.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Lesco, Inc., an Ohio corporation, and its successors and
assigns.
"Consolidated" refers to the consolidation in accordance with generally
accepted accounting principles of the accounts of a Person and those
Subsidiaries of such Person that are consolidated in accordance with generally
accepted accounting principles.
"Credit Agreement" means the loan agreement dated January 28, 1988 between
the Director of Development of the State of Ohio and the Company, as amended
from time to time.
"Current Assets" means the aggregate amount on any date, as shown on a
consolidated balance sheet as of such date prepared in accordance with
generally accepted accounting principles, of total current assets.
"Current Debt" means current maturities of Long Term Debt and Capitalized
Lease obligations.
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"Current Liabilities" means the aggregate amount on any date, as shown on
a consolidated balance sheet as of such date prepared in accordance with
generally accepted accounting principles, of total current liabilities.
"Current Ratio" means the ratio of Current Assets to Current Liabilities.
"D Drawing" means a drawing under the Letter of Credit by a certificate in
the form of Exhibit D thereto to pay a portion of purchase price corresponding
to accrued interest on Bonds delivered for purchase pursuant to the Indenture.
"Date of Issuance" means the date of issuance of the Letter of Credit.
"Debt" of any Person means at any time, without duplication, (i)
indebtedness for borrowed money or for the deferred purchase price of property
or services, (ii) Capitalized Lease Obligations and (iii) liabilities in
respect of Unfunded Vested Accrued Benefits under Plans; provided that the term
"Debt" shall exclude trade payables incurred in the ordinary course of business.
"Default" means any event which with the passage of time or giving of
notice or both would constitute an Event of Default.
"EBIT" means, as applied to any Person for any period, the aggregate
amount of Net Income, interest expense and tax expenses, as determined in
accordance with generally accepted accounting principles.
"E Drawing" means a drawing under the Letter of Credit of a certificate in
the form of Exhibit E thereto to pay the premium payable on the Bonds as a
result of an Event of Taxability as provided in the Indenture.
"Environmental Laws" means all provisions of laws, statutes, ordinances,
rules, regulations, permits, licenses, judgments, writs, injunctions, decrees,
orders, awards and standards promulgated by any governmental authority
concerning health, safety and protection of, or regulation of the discharge of
substances into the environment.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Event of Default" has the meaning assigned to that term in Section 10.01
hereof.
"Event of Taxability" has the meaning assigned to that term in the
Indenture.
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"Funded Indebtedness" means Indebtedness (as defined herein) which matures
or which (including each renewal or extension, if any, in whole or in part)
remains unpaid for more than twelve months after the date originally incurred,
it being understood that in the case of any Indebtedness payable in
installments, those payments maturing within 12 months after the date of
determination shall be considered Current Debt.
"Funds Collateral" means all the rights of the Company to receive any
remaining moneys held by the Trustee under the Indenture in trust for the
Bondholders and the Bank, including moneys on deposit in the Bond Fund and
Project Fund at such time following the making of, or provision for, payment of
the principal, premium, if any, and interest on the Bonds as such moneys become
due and payable to the Company pursuant to the express terms of the Indenture or
the Company otherwise has or acquires rights therein, including but not limited
to, in each case, any and all certificates or other instruments held pursuant to
the Indenture, and the proceeds thereof and replacements all substitutions
therefor.
"Governmental Approval" means any authorization, consent, approval,
license or exemption of, registration, or filing with, or report to, any
governmental or regulatory unit.
"Guaranty" means to guaranty, directly or indirectly, through an agreement
(i) to pay or purchase Debt of another person or to advance or supply funds for
the payment or purchase of such Debt, or (ii) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Debt or to assure the
holder of such Debt against loss, or (iii) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay for property or
services irrespective of whether or not such property is received or such
services are rendered), or (iv) otherwise to assure a creditor against loss.
"Guaranteed Debt" of any Person means all Debt of the kind referred to in
clauses (i) and (ii) of the definition of "Debt" which is Guaranteed directly
or indirectly in any manner by such Person.
"Indebtedness" as applied to any Person means, without duplication, (a)
all items (including capitalized Lease Obligations but excluding items of
capital stock or of surplus or of general contingency or deferred tax reserves)
which in accordance with generally accepted accounting principles would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Indebtedness is to be
determined, (b) all obligations (including, during the non-cancellable term of
any lease in the nature of a title retention agreement, all future payment
obligations under
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such lease discounted to their present value in accordance with generally
accepted accounting principles) secured by any Lien to which any property or
asset owned or held by such Person is subject, whether or not the obligation
secured thereby shall have been assumed, and (c) all obligations of other
Persons which such Person has Guaranteed, including but not limited to all
obligations of such Person consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of by such Person.
"Indenture" has the meaning assigned to that term in the preliminary
statement hereof.
"Intercompany Indebtedness" means Indebtedness of the Company or any of
its Consolidated Subsidiaries that is payable to the Company or any such
Subsidiary.
"Issuer" has the meaning assigned to that term in the preliminary
statement hereof.
"Letter of Credit" has the meaning assigned to that term in the
preliminary statement hereof.
"Letter of Credit Commitment" means the lesser of (i) $6,230,720.00 and
(ii) the aggregate amount available for drawing under the Letter of Credit.
"Liability", as applied to any Person, means an obligation or liability,
whether arising under contract, Applicable Law or otherwise, in each case to the
extent such obligation or liability does not otherwise constitute Debt of such
Person.
"Lien", as applied to the property or assets (or the income or profits
therefrom) of any Person means (in each case, whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise): (a) any mortgage, lien, pledge, attachment, charge, conditional sale
or other title retention agreement, or other security interest or encumbrance
of any kind in respect of any property of such Person, or upon the income or
profits therefrom; and (b) any arrangement, express or implied, under which any
property of such Person is transferred, sequestered or otherwise identified for
the purpose of subjecting or making available the same to the payment of Debt or
performance of any other obligation in priority to the payment of the general,
unsecured creditors of such Person.
"Loan Agreement" has the meaning assigned to that term in the preliminary
statement hereof.
"Long Term Debt" means the aggregate amount of all Debt with an original
term or maturity, or renewable at the option of the borrower for a period from
the date originally incurred, of more than one year.
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business prospects, and with respect to a group of Persons as a whole a
materially adverse effect upon such Person's business, assets, liabilities,
financial conditions, results of operations or business prospects taken as a
whole and (b) with respect to any agreement or obligation, a materially adverse
effect upon the binding nature, validity or enforceability of such agreement or
obligation.
"Mortgage" means the Open-End Shared Mortgage and Security Agreement dated
as of January 1, 1988 from the Company to the Trustee, the Bank (as assignee of
BONY) and the Director of Development of the State of Ohio, as amended from time
to time.
"Mortgaged Property" has the meaning assigned to that term in the
Mortgage.
"Multiemployer Plan" has the meaning set forth in Section 4001(a)(3) of
ERISA.
"Net Income" means, as applied to any Person for any period, the aggregate
amount of net income of such Person for such period as determined in accordance
with generally accepted accounting principles.
"Net Worth" means shareholders' equity as determined by the sum of all net
contributed capital accounts plus net unearned capital accounts plus net
retained earnings.
"Obligations" means all obligations and all liabilities of the Company to
the Bank under this Agreement and the Related Documents, including, but not
limited to, its obligations to make the payments required by Section 2.01
hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor.
"Patents" means patents, patent rights or licenses, trademarks, trademark
rights, trade names, trade name rights, copyrights and any other right with
respect to the foregoing.
"Paying Agent" has the meaning ascribed to that term in the Indenture.
"Payment Date" means the last Business Day of each March, June, September
and December.
"Permitted Guaranty" means a Guaranty that is an endorsement of a
negotiable instrument for collection in the ordinary course of business.
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"Permitted Lien" means: (a) a Lien securing a tax, assessment or other
governmental charge or levy (excluding any Lien arising under any of the
provisions of ERISA) or the claim of a materialman, mechanic, carrier,
warehouseman or landlord for labor, materials, supplies or rentals incurred in
the ordinary course of business, but only if payment thereof shall not at the
time be required to be made in accordance with Section 7.01 (a)(v) and
foreclosure, distraint, sale or other similar proceedings shall not have been
commenced; (b) a Lien on the properties and assets of a Subsidiary of the
Company securing Debt owing to the Company; (c) a Lien consisting of a deposit
or pledge made, in the ordinary course of business, in connection with, or to
secure payment of, obligations under worker's compensation, unemployment
insurance or similar legislation; (d) a Lien constituting an encumbrance in the
nature of zoning restrictions, easements, and rights or restrictions of record
on the use of real property and landlord's and lessor's liens under leases on
the premises rented, which does not materially detract from the value of such
property or impair the use thereof in the business of the Company or any
Subsidiary of the Company; (e) a Lien constituting a lease or sublease granted
by the Company or any Subsidiary of the Company to others in the ordinary course
of business; (f) a Lien (including deposits) incurred in the ordinary course of
business to secure bids or tenders or the performance of statutory obligations,
leases, contracts, surety and appeal bonds, performance bonds and other
obligations of a like nature; (g) a Lien existing on (i) property of any Person
at the time such Person becomes a Consolidated Subsidiary of the Company or (ii)
any asset prior to the acquisition thereof by the Company or a Consolidated
Subsidiary of the Company, but only, in the case of either (i) or (ii), if such
Lien was not created in contemplation thereof and so long as the obligation
secured by such Lien is not in default and such Lien is and will remain confined
to the property subject to it at the time such Person becomes a Consolidated
Subsidiary of the Company or such property is acquired and to fixed improvements
thereafter erected on such property; (h) a Lien in existence on the Date of
Issuance to the extent set forth on Schedule 1.01(a) hereto, but only, in the
case of each such Lien, to the extent it secures Existing Debt; (i) a Lien
securing Purchase Money Debt but only if, in the case of each such Lien: (i)
such Lien shall at all times be confined solely to the asset the purchase price
of which was financed through the incurrence of the Purchase Money Debt secured
by such Lien and to fixed improvements then or thereafter erected on such asset;
(ii) such Lien attached to such asset within 30 days of the acquisition of such
property; and (iii) the aggregate principal amount of Purchase Money Debt
secured by such Lien at no time exceeds an amount equal to 75% of the lesser of
(A) the cost (including the principal amount of such Debt, whether or not
assumed) to the Company or a Consolidated Subsidiary of the Company of the asset
subject to such Lien and (B) the fair value of such asset at the time of such
acquisition; (j) a Lien constituting a renewal, extension or replacement of a
Lien constituting a
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Permitted Lien by virtue of clause (f), (g) or (h) of this definition, but
only, in the case of each such renewal, extension or replacement Lien, to the
extent that the principal amount of indebtedness secured by such Lien does not
exceed the principal amount of such indebtedness so secured at the time of the
extension, renewal or replacement, and that such renewal, extension or
replacement Lien is limited to all or a part of the property that secured the
Lien extended, renewed or replaced and to fixed improvements then or thereafter
erected on such property; and (k) a Lien arising pursuant to an order of
attachment, distraint or similar legal process arising in connection with legal
proceedings, but only if and so long as the execution or other enforcement
thereof is not unstayed for more than 20 days. For this purpose "Existing Debt"
means Debt issued and outstanding on the Date of Issuance, to the extent set
forth on Schedule 1.01(b) hereto.
"Person" means an individual, corporation, partnership, trust or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Plan" means a pension plan providing benefits for employees of the
Company.
"Pledged Bonds" means any Bonds which, at the time of the determination
thereof, shall be held by the Bank under the terms of Section 3.01 hereof.
"Prime Rate" means the rate of interest publicly announced by the Bank
from time to time as its "prime rate."
"Prohibited Transaction" means a transaction which is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA.
"Project" has the meaning assigned to that term in the Loan Agreement.
"Project Fund" has the meaning assigned to that term in the Indenture.
"Project Site" has the meaning assigned to that term under the Mortgage.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Purchase Money Debt" means Debt of the Company or any Consolidated
Subsidiary of the Company which, within 30 days of such purchase, is incurred to
finance part or all of (but not more than) the purchase price of a tangible
asset in which neither the Company nor any Subsidiary had at any time prior to
such purchase
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but not any of the foregoing that results on any increase in the principal
amount thereof or interest rate thereon, except for an increase in interest rate
upon the occasion of any such renewal, extension or refunding that is
commercially reasonable at such time.
"Related Documents" means the Indenture, the Bond Purchase Agreement, the
Remarketing Agreement, the Mortgage, as amended, the Letter of Credit, the
Credit Agreement, the Loan Agreement, the Bonds and any other agreement or
instrument relating thereto and to the transactions contemplated thereby.
"Remarketing Agent" means the remarketing agent, at the time serving as
such in its capacity as Remarketing or Placement Agent under the Indenture.
"Remarketing Agreement" means the Remarketing Agreement dated as of March
1, 1993 between the Company and PNC Securities Corp, as amended from time to
time.
"Reportable Event" has the meaning set forth in Section 4043(b) of ERISA
(other than a "Reportable Event" as to which the provision for 30 days' notice
to the PBGC is waived under applicable regulations).
"Restricted Payment" means, with respect to any Person, (a) any dividend
or other distribution on any shares of such Person's capital stock (other than
dividends payable solely in shares of its capital stock) and (b) any acquisition
of any shares of such Person's capital stock (except shares acquired solely upon
the conversion thereof into other shares of its capital stock).
"Revolving Credit" means the principal amounts available under (1) a
certain agreement date March 31, 1992 between the Company and National City
Bank, a banking corporation organized and existing under the laws of the United
States of America, as Agent and the banks named therein, involving the extension
of revolving credit up to the amount of $45,000,000, as amended, and (2) any
successor agreement between the Company and National City Bank or any other
lending or financial institution.
"Revolving Loans" mean any principal amounts drawn under the Revolving
Credit.
"Single Employer Plan" means any Plan which is not a Multiemployer Plan.
"Subsidiary" means, with respect to any Person, any corporation, voluntary
association, joint stock company, voting trust or similar organization of which
such Person owns directly or indirectly more than 50% of the shares of stock
having general voting power under ordinary circumstances to elect a majority of
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indirectly more than 50% of the shares of stock having general voting power
under ordinary circumstances to, elect a majority of the board of directors,
managers, trustees or others performing similar functions.
"Subordinated" means, as applied to the Indebtedness of the Company,
Indebtedness subordinated (by written instrument) in favor of the prior payment
in full of the Company's Indebtedness to the Bank.
"Tax" means any Federal, State or foreign tax, assessment or other
governmental charge or levy upon a Person or upon its assets, revenues, income
or profits.
"Termination Date" means the last day a drawing is available under the
Letter of Credit.
"Termination Event" means (i) a Reportable Event, (ii) the termination of
a Single Employer Plan, or the treatment of a Single Employer Plan amendment as
a termination of such Plan under Section 4041 of ERISA, or the filing of a
notice of intent to terminate a Single Employer Plan, (iii) the institution of
proceedings to terminate a Single Employer Plan by the PBGC under Section 4042
of ERISA, or (iv) the appointment of a trustee to administer any Single Employer
Plan.
"Total Liabilities" means, with respect to any Person, all items, except
items of capital stock or of surplus or of general contingency or deferred tax
reserves, which in accordance with generally accepted accounting principles
would be included in determining total liabilities as shown on the liabilities
side of a balance sheet of such Person as at the date as of which total
liabilities is to be determined.
"Trustee" means Bank of New York, successor to Irving Trust Company, a New
York banking corporation, and its successors and assigns as trustee under the
Indenture.
"Unfunded Vested Accrued Benefits" means with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan.
"Working Capital" means the excess of net book value of Current Assets
over Current Liabilities.
SECTION 1.02 Accountinq Matters. Unless otherwise defined herein or in the
Related Documents all accounting terms used herein and in the Related Documents,
are used with the meanings ascribed to such terms in accordance with generally
accepted accounting
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principles. All computations utilized by the Company in complying with any
covenant contained herein shall, unless there is an express direction to the
contrary, be computed on a basis consistent with that used in the preparation of
the financial statements referred to in Section 6.01(h) applying generally
accepted accounting principles.
ARTICLE II
LETTER OF CREDIT REIMBURSEMENT AND OTHER PAYMENTS
SECTION 2.01 Letter of Credit Reimbursement. (a) Payments. The Company
hereby agrees to pay to the Bank:
(i) not later than 3:00 p.m. (Pittsburgh time) on each date that any
amount is drawn under the Letter of Credit pursuant to any A Drawing, C Drawing,
D Drawing or E Drawing, an amount equal to the amount of such drawing;
(ii) on the earlier of the Termination Date and the 180th day
following each date that any amount is drawn under the Letter of Credit pursuant
to any B Drawing, an amount (and interest on such amount as provided in clause
(v) below) equal to the amount of such drawing less the amount of any prepayment
pursuant to Section 2.01 (e); provided, however, that if on the date of any
such drawing an Event of Default has occurred and is continuing, such amount
shall be due and payable on the date of such drawing;
(iii) upon each transfer of the Letter of Credit in accordance with
its terms, such amount (and interest on such amount as provided in clause (v)
below) as shall at the time of any transfer then be the charge which the Bank is
customarily making for transfers of similar letters of credit;
(iv) on each date of each A Drawing or B Drawing, a drawing fee of
$50.00 and on each date of any C Drawing or D Drawing, a drawing fee of $75.00;
(v) subject to the crediting procedure set forth in paragraph (f) of
this Section 2.01, interest on the amount of each unreimbursed drawing under
clause (ii) above from the date of drawing of such amount until payment
(including prepayment) in full thereof, payable quarterly in arrears on each
Payment Date and at any time an unreimbursed drawing is prepaid pursuant to
subsection (e) of Section 2.01 hereof at a fluctuating interest rate per annum
(computed on the basis of a year of 360 days and the actual number of days
elapsed) equal to the Prime Rate (adjusted automatically as of the opening of
business on the effective day of each change in the Prime Rate) , provided that
no such interest shall be payable on
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(vi) subject to the crediting procedure set forth in paragraph (f)
of this Section 2.01, interest on any and all amounts due and unpaid hereunder
from the date such amounts become due until paid in full (after as well as
before judgment) , payable on demand, at a fluctuating interest rate per annum-
(computed on the basis of a year of 360 days and the actual number of days
elapsed equal to the Prime Rate plus 1%
(vii) on demand any and all reasonable charges and expenses which
the Bank may pay or incur relative to the Letter of Credit; and
(viii) on demand any and all reasonable expenses incurred by the
Bank in enforcing any rights under this Agreement.
(b) Commission. The Company hereby agrees to pay to the Bank a commission
with respect to the Letter of Credit, computed from and including the Date of
Issuance until the Termination Date, at the rate of one percent (l%) per annum
on the daily Letter of Credit Commitment (i) payable first on the Date of
Issuance in an amount equal to $5,365.34 and, then, (ii) payable quarterly in
advance beginning on March 31, 1993 and on each Payment Date thereafter until
the Termination Date and on the Termination Date.
(c) Immediately Available Funds. All payments by the Company to the Bank
hereunder shall be made in lawful currency of the United States and in
immediately available funds not later than 3:00 P.M., Pittsburgh time, to the
Bank at its office to which at the time notices are required to be sent in
accordance with Section 11.02 hereof and shall be made without any set-off,
counterclaim or deduction whatsoever.
(d) Change in Circumstances. If, after the Agreement Date, any change in
any law or regulation or in the interpretation, administration or enforcement
thereof by any court or administrative or governmental authority charged with
the administration thereof or any action by any governmental authority (whether
or not constituting or resulting from such change) which shall either (i)
impose, modify or deem applicable any reserve, assessment, capital allocation,
special deposit or similar requirement against letters of credit issued by the
Bank or (ii) impose on the Bank any other condition regarding this Agreement or
the Letter of Credit, and the result of any event referred to in clause (i) or
(ii) above shall be to increase the cost to the Bank of issuing or maintaining
the Letter of Credit (which increase in cost shall be the result of the Bank's
reasonable allocation of the aggregate of such cost increases resulting from
such events and shall be calculated without giving effect to any participation
granted in the Letter of Credit), then, upon demand by the Bank, the Company
shall immediately pay to the Bank from time to time as specified by the Bank,
additional amounts which shall be sufficient to compensate the Bank for such
increased cost, from the date such
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the Company shall immediately pay to the Bank from time to time as specified by
the Bank, additional amounts which shall be sufficient to compensate the Bank
for such increased cost, from the date such change or action is effective,
together with interest on each such amount from the date demanded until payment
in full thereof at the rate provided in clause (v) of paragraph (a) of this
Section 2.01. A certificate as to such increased cost incurred by the Bank as a
result of any event referred to in clause (i) or (ii) of this paragraph
submitted by the Bank to the Company shall be conclusive, absent manifest error,
as to the amount thereof. With regard to any change in circumstance resulting in
an increase in cost for which the Bank shall seek compensation under this
Section 2.01(d), the Bank shall provide the company with notice of such change
in circumstance and shall request compensation 60 days prior to the date on
which such compensation shall be paid to the Bank by the Company. During the
period commencing on the day on which notice is given and ending upon the
expiration of 60 days thereafter, the Company shall have the right to replace
the Letter of Credit with a separate credit facility without paying to the Bank
compensation under this Section 2.01(d). However, if, at the end of the
aforementioned 60 day period, the Letter of Credit is still in place to satisfy
the obligations of the Company under the Bonds, then the Company shall pay to
the Bank the compensation required hereunder, retroactive to the date on which
the Bank first sent notice of the change in circumstance for which compensation
was requested.
(e) Prepayment of "B Drawings"
(i) By the Company. Any amounts from time to time owing to the Bank
pursuant to clause (ii) of paragraph (a) of this Section 2.01 above may be
prepaid, together with accrued interest to the date of such prepayment, at
any time by the Company on one Business Days irrevocable written notice
delivered to the Bank stating the principal amount to be prepaid (which
shall be $100, 000 or a whole multiple thereof). As a condition to such
prepayment, the Bank shall instruct the Trustee to cancel Pledged Bonds in
an amount equal to the principal amount of such prepayment; or
(ii) From Remarketing Proceeds. Any amounts from time to time owing
to the Bank pursuant to clause (ii) of paragraph (a) of this Section 2.01
may be prepaid at any time by the Remarketing Agent on behalf of the
Company, through the Trustee, on one Business Day's written notice
delivered to the Bank stating the principal amount to be prepaid (which
shall be $100,000 or a whole multiple thereof). Upon payment to the Bank
of the principal amount to be prepaid as stated above, together with the
portion of interest accrued thereon to the date of such prepayment in an
amount equal to the amount of interest accrued and previously unpaid on
the Bonds to the date of such prepayment, the outstanding obligations of
the
14
company under clause (ii) of paragraph (a) of this section 2.01 shall be
reduced by the amount of such payment, interest shall cease to accrue on
the amount paid and the Bank shall (A) release from the pledge and
security interest created BY Article III hereof a principal amount of
Pledged Bonds held by the Bank or its designated agent equal to the
principal amount of such payment, and (B) deliver, or cause its designated
agent, if any, to deliver, to the Remarketing Agent a principal amount of
Bonds equal to the principal amount of such payment. At the time of such
prepayment, the Trustee shall deliver a certificate to the Bank in the
form of Exhibit I to the Letter of Credit requesting the reinstatement of
the Letter of Credit in an amount equal to the amount of such principal
prepayment.
(f) Interest Credit. The amount of any interest received by the Bank on
Pledged Bonds held by it pursuant to Article III hereof shall be credited first
to the payment obligation pursuant to clause (vi) of paragraph (a) of this
Section 2.01, second to the interest payment obligation pursuant to clause (v)
of paragraph (a) of this Section 2.01, and then to such other obligations of the
Company arising pursuant to this Agreement as the Bank may elect.
SECTION 2.02 Maximum Interest Rate. Nothing contained in this Agreement
shall be deemed to establish or require the payment of a rate of interest in
excess of the maximum rate permitted by any Applicable Law. In the event that
any rate of interest required to be paid under this Agreement exceeds the
maximum rate permitted by any such law, such rate shall automatically be reduced
to the maximum rate permitted by such law.
ARTICLE III
SECURITY INTEREST
SECTION 3.01 Pledge and Security Interest. The Company hereby pledges,
assigns, hypothecates and transfers to the Bank, and grants to the Bank a
security interest in, all of the Company's right, title and interest in and to
(i) all Bonds as delivered from time to time to the Remarketing Agent by the
holders thereof and not remarketed on the date of delivery thereof with respect
to which a "B Drawing" occurs under the Letter of Credit, (ii) the interest
thereon and all proceeds thereof, and (iii) the Funds Collateral as collateral
security for the prompt and complete payment when payable from time to time by
the Company (by acceleration, at stated maturity or otherwise) of all
Obligations. The Company has authorized the Trustee to deliver or cause to be
delivered to the Bank or its designated agent, and registered in the name of the
Bank, as pledgee, all Bonds with respect to which any "B Drawing" occurs under
the Letter of Credit.
15
SECTION 3.02 Interest ON the Pledged Bonds. If, while the Bank or its
designated agent holds Pledged Bonds, the Company shall receive any interest
payment in respect of such Pledged Bonds, the Company agrees to accept the same
as agent for the Bank and to hold the same in trust on behalf of the Bank and to
deliver the same forthwith to the Bank. All sums of money so paid in respect of
such Pledged Bonds which are received by the Company and paid to the Bank, or
which shall be received directly by the Bank from the Trustee or Paying Agent,
shall be credited (as provided in Section 2.01(f)) against the obligation of
the Company to pay interest to the Bank under Section 2.O1(a).
SECTION 3.03 Rights of the Bank. The Bank shall not be liable for failure
to collect or realize upon the Obligations or any collateral security or
guarantee therefor, or any part thereof, or for any delay in so doing, nor shall
it be under any obligation to take any action whatsoever with regard thereto. If
an Event of Default has occurred and is continuing, the Bank may thereafter
without notice exercise all rights, privileges or options pertaining to any
Pledged Bonds or the Funds Collateral as if it were the absolute owner thereof,
upon such terms and conditions as it may determine, all without liability
except to account to the Company for property actually received by it. In
addition to the rights and remedies granted to it in this Agreement and in any
other instrument or agreement securing, evidencing or relating to any of the,
Obligations, the Bank or its designated agent shall have the authority to
exercise all the rights and remedies of a secured party under the Uniform
Commercial Code of the State, of Ohio, the Commonwealth of Pennsylvania or other
Applicable Law. The Company shall be liable for the deficiency if the proceeds
of any sale or other disposition of the Pledged Bonds are insufficient to pay
all amounts to which the Bank is entitled, and for the reasonable fees of any
attorneys employed by the Bank to collect such deficiency. The Bank shall have
no duty to exercise any of the aforesaid rights, privileges or options and shall
not be responsible for any failure to do so or delay in so doing.
SECTION 3.04 No Disposition of Collateral by Company. Except as
contemplated herein, without the prior written consent of the Bank, the Company
agrees that at will not sell, assign, transfer, exchange, or otherwise dispose
of, or grant all option with respect to the Pledged Bonds nor will it create,
incur or permit to exist any pledge, lien, mortgage, hypothecation, security
interest, charge, option or any other encumbrance with respect to any of the
Pledged Bonds, or any interest therein, or any proceeds thereof, except for the
lien and security interest provided for by this Agreement and the Indenture.
SECTION 3.05 Disposition of Collateral by Bank. The Company further agrees
to do or cause to be done all such other reasonable acts and things as may be
necessary to make any disposition or sale of any portion or all of the Pledged
Bonds permitted by this
16
Agreement valid and binding and in compliance with any and all Applicable Laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such deposition or sales, all at the Company's
expense.
ARTICLE IV
AGREEMENT OF THE BANK; CONDITIONS PRECEDENT
SECTION 4.01 Agreement of the Bank. Subject to the satisfaction of the
terms and conditions of Sections 4.02 and 4.03 of this Agreement, the Bank
agrees to issue the Letter of Credit.
SECTION 4.02 Conditions Precedent to Issuance of the Letter of Credit. (a)
The Bank shall have received on or before the Date of Issuance the following,
each dated such date, in form and substance satisfactory to the Bank:
(i) certified copies of the articles of incorporation and code of
regulations, of the Company as in effect on the Date of Issuance;
(ii) a copy of the action by of the board of directors of the
Company authorizing the execution, delivery and performance of this
Agreement and the Related Documents certified by the Secretary or an
Assistant Secretary of the Company (which certificate shall state that
such resolutions are in full force and effect on the Date of Issuance)
accompanied by an incumbency certificate certifying the incumbency and
signatures of the officers signing this Agreement and all related
documents to which the Company is a party on behalf of the Company;
(iii) a favorable opinion of Xxxxxxxx Xxxxxxxx, General Counsel to
the Company, in form and substance satisfactory to the Bank, and as to
such matters as the bank may reasonably request;
(iv) a favorable opinion of Messrs. Xxxxx & Xxxxxx, bond counsel, as
to such matters as the Bank may reasonably request;
(v)a specimen Bond;
(vi) an executed copy of this Agreement;
(vii) true and correct copies of each of the other Related
Documents;
17
(viii) true and correct copies of each Governmental Approval, if
any, necessary for the Company to execute, deliver and perform this
Agreement and the Related Documents;
(ix) Uniform Commercial Code financing statements shall have been
filed and the Mortgage shall have been filed and recorded in such
jurisdictions as shall be necessary to grant to the Bank, as assignee of
BONY, the Trustee and the Director of Development of the State of Ohio
first-priority security interests in and a first-priority Lien on the
Project (in accordance with the terms and conditions of the Mortgage) and
all existing Liens other than Permitted Encumbrances, as defined in the
Mortgage, shall have been discharged;
(x) an appraisal of the Project Site by an appraiser acceptable to
the Bank indicating the fair market value of the Project Site and prepared
in form and substance satisfactory to the Bank;
(xi) a Phase I environmental audit/assessment of the Project Site,
by an environmental engineering firm acceptable to the Bank, to determine
the presence of absence or absence of environmental contamination;
(xii) title insurance covering the real property of the Project any
and all improvements thereto in form and substance satisfactory to the
Bank;
(xiii) such other documents, instruments, approvals (and, if
requested by the Bank, certified duplicates of executed copies thereof) or
opinions as the Bank may reasonably request; and
(xiv) a nonrefundable fee for issuing the Letter of Credit in the
amount of $7,788.00.
(b) the Indenture shall be in full force and effect; and
(c) all conditions precedent to the issuance of the Bonds shall have
occurred.
SECTION 4.03 Additional Conditions Precedent. The following
statements shall be true and correct on the Date of Issuance and the Bank
shall have received upon request a certificate signed by a duly authorized
officer or person of the Company dated such date, stating that:
(i) the representations and warranties contained in Article VI
of this Agreement applicable to such party are correct on and as of
such date as though made on and as of such date; and
18
(ii) no Default or Event of Default has occurred and is
continuing, or would result from the issuance of the Letter of
Credit.
ARTICLE V
OBLIGATIONS ABSOLUTE
SECTION 5.01 The Obligations of the Company. The Obligations of the
Company under this Agreement shall be absolute, unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement, under
all circumstances whatsoever, including, without limitation, the following
circumstances:
(a) any lack of validity or enforceability of the Letter of Credit,
the Bonds or any other Related Document;
(b) any amendment or waiver of or any consent to departure from all
or any of the Related Documents;
(c) the existence of any claim, set-off, defense or other rights
which the Company, may have at any time against the Issuer, the Trustee, the
Remarketing Agent, any holder of a Bond, any beneficiary or any transferee of
the Letter of Credit (or any persons or entities for whom the Trustee, any such
beneficiary or any such transferee may be acting), the Bank or any other person
or entity, whether in connection with this Agreement, any of the Related
Documents or any unrelated transaction;
(d) any statement or any other document presented under the Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever;
(e) payment by the Bank under the Letter of Credit against
presentation of a sight draft or certificate which does not comply with the
terms of the Letter of Credit provided that such payment shall not have
constituted negligence or misconduct of the Bank; and
(f) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, provided that such other circumstance or
happening shall not have been the result of negligence or misconduct of the
Bank.
SECTION 5.02. No Waiver By The Company. The Company's satisfaction of its
Obligations to the Bank in accordance with the foregoing section 5.01 shall not
be construed as a waiver of any right that the Company may have against the
Bank, including any
19
right that the company might have against the Bank which is enumerated in
Section 5.0l(c) above.
ARTICLE VI
REPRESENTATIONS AND-WARRANTIES
SECTION 6.01 Representations and Warranties of the Company. The Company
represents and warrants as follows:
(a) Organization; Power; Qualification; Subsidiaries. The Company and each
Subsidiary of the Company are corporations duly organized, validly existing and
in good standing under the laws of their respective jurisdictions of
incorporation, have the corporate power and authority to own their respective
properties and to carry on their respective businesses as now being and
hereafter proposed to be conducted and are duly qualified and are in good
standing as foreign corporations, and authorized to do business, in all
jurisdictions in which the character of their respective properties or the
nature of their respective businesses requires such qualification or
authorization, except for qualifications and authorizations the lack of which,
singly or in the aggregate, has not had and will not have a Materially Adverse
Effect upon the Company and its Consolidated Subsidiaries taken as a whole.
Schedule 6.01 (a) is a complete and correct list of all Subsidiaries of the
Company as of the Agreement Date, with all Consolidated Subsidiaries of the
Company being identified as such. The Company owns, with unrestricted right to
vote, all of the issued and outstanding shares of the capital stock of each
such Subsidiary to the extent set forth in such Schedule and all such shares of
capital stock have been duly authorized and issued and are fully paid and
nonassessable.
(b) Authorization of Agreement and Related Documents. the company has the
corporate power, and has taken all necessary corporate (including stockholder,
if necessary) action to authorize it, to borrow hereunder and to execute,
deliver and perform its obligations under this Agreement and each of the Related
Documents to which It is a party or by which it is bound in accordance with
their respective terms. This Agreement has been duly executed and delivered by
the duly authorized officers of the Company and is, and each of the Related
Documents to which it is a party or by which it is bound when executed and
delivered will be a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as such enforceability may be
limited by (i) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally;
and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
20
(c) Compliance of Agreement and Related Documents and with Code of
Regulations, etc. The execution, delivery and performance of this Agreement and
each of the Related Documents to which the Company is a party or by which it is
bound in accordance with their respective terms and the borrowings hereunder
(and the application of the proceeds thereof) do not and will not (i) contravene
the Company's articles of incorporation or code of regulations, (ii) require any
consent or approval of any creditor of the Company that has not been obtained
and is not listed on Schedule 6.01(c), (iii) require any Governmental Approval,
or any consent or approval of the stockholders of the Company or of any of its
Subsidiaries, that has not been obtained and is not listed on, and a copy of
which (certified in the case of Governmental Approvals) is not attached to,
Schedule 6.01(c), (iv) violate or conflict with, result in a breach of, or
constitute a default under, (A) any contract (except a contract for the sale or
purchase of raw materials and supplies used in the ordinary course of business)
evidencing any transfer of value of $100,000 or more to which the Company or any
of its Subsidiaries is a party or by which any of them or any of their
respective properties may be bound or (B) any Applicable Law or (v) result in or
require the creation or imposition of any Lien upon any assets of the Company or
any of its Consolidated Subsidiaries. In connection with clause 6.01(c) (iv)
hereof, the Company hereby represents and warrants that, to the best of its
knowledge. no contract evidencing a transfer of value of less than $100,000 to
which the Company or its Subsidiaries is a party or by which any of them or any
of their respective properties may be bound will violate or conflict with,
result in a breach of or the execution, delivery and performance of this
Agreement or any of the Related Documents.
(d) Regulatory Approvals. All authorizations and approvals necessary for
the Company to enter into this Agreement and the Related Documents to which it
is a party or by which it is bound and perform the transactions contemplated
hereby and thereby have been obtained and remain in full force and effect and
are subject to no further administrative or judicial review. No other
authorization or approval or other action by, and no notice to or filing with,
any. governmental authority or regulatory body is required for the due
execution, delivery and performance by the Company of this Agreement or the
Related Documents to which it is a party or be which it is bound.
(e) Business. Neither the Company nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any margin stock as defined in
Regulations U and X of the Board of Governors of the Federal Reserve System.
Neither the Company nor any of its Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
21
(f) Compliance with Law. The Company and each of its Subsidiaries is in
compliance with all Applicable Law, including all Governmental Approvals except
for non-compliances that singly or in the aggregate have not had and will not
have a Materially Adverse Effect on the Company and its Subsidiaries taken as a
whole or on the Company's obligations pursuant to this Agreement.
(g) Litigation. Except as set forth on Schedule 6.01(g), there are not, in
any court or before any arbitrator of any kind or before or by any governmental
or non-governmental body, any actions, suits or proceedings, pending or
threatened (nor, is there any basis therefor) against or in any other way
relating to or affecting (i) the Company or any Subsidiary of the Company or the
business or any property of the Company or any Subsidiary of the Company, except
actions, suits or proceedings that, if adversely determined, would not, singly
or in the aggregate, have a Materially Adverse Effect on the Company and its
Consolidated Subsidiaries taken as a whole, or (ii) this Agreement or any
Related Document. In determining whether any suit, action, or proceeding will
have a Materially Adverse Effect on the Company, this Agreement or any related
Document, the Bank shall consider, among other things, any insurance coverage
held by the Company.
(h) Financial Statements. (A) The Company has furnished to the Bank copies
of the audited balance sheets of the Company and its Subsidiaries as at November
30, 1991 and the related audited statements of income, stockholder's equity and
changes in financial position as at such date as reported on by Ernst & Young,
each certified by the Treasurer or Chief Financial Officer of the Company, to
be, in his opinion, in compliance with the next succeeding sentence. Such
Consolidated financial statements present fairly the revenues and expenses and
the financial position of the Company and its Subsidiaries as at November 30,
1991. Except as disclosed or reflected in such statements, as at November 30,
1991, the Company and its Subsidiaries had no liabilities, contingent or
otherwise, and there were no unrealized or anticipated losses of either the
Company and its Subsidiaries which individually or in the aggregate may have a
Materially Adverse Effect on the Company or its obligations pursuant to this
Agreement or any Related Document.
(B) The Company has furnished to the Bank copies of its 10-Q Report dated
September 30, 1992 prepared in accordance with the rules and regulations of the
Securities and Exchange Commission. Such 10-Q Report presents fairly the
financial position of the Company as of September 30, 1992. Except as reflected
in such 10-Q. Report dated September 30, 1992, the Company had no liabilities,
contingent or otherwise, and there were no unrealized or anticipated losses of
the Company which may have a materially Adverse Effect on the Company.
22
(i) Absence of Defaults. No Default or Event of Default has occurred and
is continuing, and no defaults by the Company or any of its Subsidiaries exist
under any contracts or Applicable Law, except for defaults that, singly or in
the aggregate, have not had and will not have a Materially Adverse Effect on the
Company and its Subsidiaries taken as a whole or on the Company's ability to
perform its obligations pursuant to this Agreement.
(j) Accuracy and Completeness of Information. All information, reports and
other papers and data furnished by the Company and its Subsidiaries to the Bank
were, at the time the same were so furnished, complete and correct in all
material respects, to the extent necessary to give the recipient true and
accurate knowledge of the subject matter. No document furnished or other written
statement made to the Bank by the Company and its Subsidiaries in connection
with the negotiation, preparation or execution of this Agreement or the Related
Documents to which the Company is a party or by which it is bound contains or
will contain any untrue statement of a fact material to the creditworthiness of
the Company or its Subsidiaries or omits or will omit to state such a material
fact necessary in order to make the statements contained therein not misleading.
(k) Collateral Security. The provisions of the Indenture, this Agreement
and the Mortgage are effective to create in favor of the Bank a legal, valid and
enforceable first-priority pledge, security interest and lien in all of the
Company's interest in (i) the Funds Collateral (subject only to the rights of
the Trustee and the holders of the Bonds under the Indenture), (ii) the Pledged
Bonds upon the delivery of the Pledged Bonds to the Bank or its agent and (iii)
the Project, subject however in the case of the Project, to Permitted
Encumbrances (as such term is defined in the Mortgage). The Director of
Development of the State of Ohio shall also share a first-priority security
interest in the Project in accordance with the terms and conditions of the
Mortgage and as described in the Preliminary Statement.
(1) Pledged Bonds. The Company has, and on the date of delivery to the
Bank of any Pledged Bonds will have, full power, authority and legal right to
pledge all of its right, title and interest in and to the Pledged Bonds pursuant
to this Agreement.
(m) Taxes. All Tax returns of the Company and its Subsidiaries required by
Applicable Law to be filed have been duly filed, and all Taxes upon the Company
or its Subsidiaries or any of its or their assets, revenues, income or profits
which are due and payable have been paid, except any such Tax (a) payment of
which the Company or such Subsidiary is contesting in good faith be appropriate
proceedings and for which adequate reserves have been provided on the
appropriate books or (b) the non-payment of which will not have a Materially
Adverse Effect on the Company and its Subsidiaries taken as a whole.
23
(n) ERISA. Each Plan of the Company and Affiliate of the Company is in
compliance with ERISA in all material respects. No material liability to the
PBGC or to a Multiemployer Plan has been, or is expected by the Company or any
of its Affiliates to be, incurred by the Company or any of its Affiliates.
(o) Burdensome Provisions. To the knowledge of the Company, neither the
Company nor any Subsidiary of the Company is a party to or bound by any contract
or Applicable Law, that could have a Materially Adverse Effect on the Company
and its Consolidated Subsidiaries taken as a whole.
(p) No Adverse Change. Since September 30, 1992 no materially adverse
change in the business, assets, liabilities, financial condition, results of
obligations or business prospects of the Company or any Subsidiary of the
Company has occurred, and no event has occurred or failed to occur, which has
had or may have, either alone or in conjunction with all other such events and
failures, a Materially Adverse Effect on the Company and its Consolidated
Subsidiaries taken as a whole or on this Agreement or any Related Document.
(q) No Adverse Fact. No fact or circumstance is known to the Company, as
of the Date of Issuance, which, either alone or in conjunction with all other
such facts and circumstances, has had or might in the future have (so far as the
Company can foresee) a Materially Adverse Effect upon the Company and its
Consolidated Subsidiaries taken as a whole or on this Agreement or any Related
Document which has not been set forth or referred to in the financial statements
referred to in Section 6.01(g) or in a writing specifically captioned
"Disclosure Statement" and delivered to the Bank prior to the Date of Issuance.
If a fact or circumstance disclosed in such financial statements or Disclosure
Statement, or if an action, suit or proceeding disclosed in Schedule 6.01(g),
should in the future have a Materially Adverse Effect upon the Company and its
Consolidated Subsidiaries taken as a whole, or upon this Agreement or any
Related Document, such Materially Adverse Effect shall be a change or event
subject to Section 6.01(p) notwithstanding such disclosure.
(r) Environmental Compliance. The Company is in substantial compliance
with all Environmental Laws with respect to the Project. No litigation or
proceeding arising under, relating to or in connection with any Environmental
Law is pending or threatened against the Company, on the Project. No release,
threatened release or disposal of hazardous waste, solid waste or other wastes
is occurring, or has occurred, on, under or to the Project, in violation of any
Environmental Law. As used in this Section, "litigation or proceeding" means any
demand, claim notice, suit, suit in equity, action, administrative action,
investigation or inquiry whether brought by a governmental authority or other
person.
24
SECTION 6.02. Survival of Representations and Warranties, Etc. In addition
to the representations and warranties set forth in this Agreement, all
statements contained in any certificate, financial statement or other instrument
required to be delivered as a condition to the issuance of the Letter of Credit
or required to be delivered from time to time under Articles VI and VII of this
Agreement by or on behalf of the Company (including but not limited to any such
made in or in connection with any amendment hereto) shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement shall be made and shall be true at and
as of the Date of Issuance, except that any representation and warranty
specifically referring to the Date of Issuance shall, when made at a later time
pursuant to this Section 6.03, be required to be true only as of the Date of
Issuance. Wherever a representation and warranty made under this Agreement
refers to a Schedule or amended Schedule, it shall be deemed to refer to the
Schedule attached hereto or, if one or more amended Schedules have been
furnished, the amended Schedule most recently so furnished prior to the date as
of which the representations and warrants is made, and the later delivery of an
amended Schedule shall not effect a correction of any representation and
warranty which was incorrect or untrue when made.
ARTICLE VII
AFFIRMATIVE COVENANTS
SECTION 7.01 Affirmative Covenants. From the Date of Issuance and until
the Termination Date and payment in full of all amounts payable hereunder, the
Company shall and shall cause its Subsidiaries to:
(a) Preservation of Existence and Properties; Scope of Business;
Compliance with Law; Payment of Taxes and Claims. (i) Except as otherwise
permitted by Section 8.01(c), preserve and maintain its corporate existence and
all of its other franchises, licenses, rights and privileges, (ii) preserve,
protect and obtain all Patents and preserve and maintain in good repair, working
order and condition and all other properties, required for the conduct of its
business, (iii) engage primarily in business substantially related to turf and
golf course care and maintenance, (iv) comply with all Applicable Laws, and (v)
pay or discharge when due all Taxes and all claims which might become a Lien on
any of its properties, except that this Section 7.01 (other than clauses (i), in
so far as it requires the Company and its Subsidiaries to preserve their
respective corporate existences, and (iii)) shall not apply in any circumstance
where non-compliance, together with all other noncompliances, will not have a
Materially Adverse Effect on the Company and its Subsidiaries, taken as a whole.
25
(b) Accounting Methods and Financial Records. Maintain a system of
accounting and keep such books, records and accounts (which shall be true and
complete), as may be required or necessary to permit the preparation of
financial statements in accordance with generally accepted accounting
principles.
(c) Insurance. Keep itself and all of its insurable properties insured
at all times to such extent, by such insurers and against such hazards and
liabilities as is generally and prudently done by like businesses. The Company
will forthwith upon the Bank's request, furnish to the Bank such information
about the Company's insurance as the Bank may from time to time reasonably
request, which information shall be prepared in form and substance satisfactory
to the Bank and certified by an officer of the Company.
(d) Visits and Inspections. Permit representatives (whether or not
officers or employees) of the Bank, from time to time, as often as may be
reasonably requested, but only during normal business hours, to (i) visit and
inspect any of its properties, (ii) inspect and make extracts from its books and
records, including but not limited to management letters prepared by its
independent accountants, and (iii) discuss with its principal officers, and its
independent accountants, its businesses, assets, liabilities, financial
conditions, results of operations and business prospects.
(e) Compliance with ERISA. Maintain each Plan as to which it may have any
liability in compliance in all material respects with the applicable provisions
of ERISA and the regulations and published interpretations thereunder, the
failure to comply with which could subject it to any tax or penalty which tax or
penalty, taken together with all other taxes and penalties which could be
assessed against it by reason of all other non-compliances, would have a
Materially Adverse Effect on it.
(f) Interest on Indebtedness. Pay, or cause to be paid, the principal of,
and premium, if any, and interest on, any indebtedness thereof for borrowed
monies at the times and in the manner specified in the agreements regarding such
indebtedness; provided, however, that it shall not be required to pay, or cause
to be paid, any such principal of, and premium, if any, and interest on any such
indebtedness so long as the legality thereof shall be contested in good faith
and by appropriate proceedings an other acts and it shall set aside on its books
adequate reserves with respect thereto.
(g) No Default. Make all payments and comply with all other terms,
conditions and provisions on its part to be performed under, and not allow any
default to exist or any right of termination to accrue under, this Agreement,
the Related Documents or any other
26
material agreement to which it shall be a party or by which it may be bound.
(h) Maintenance of Properties. Maintain or cause to be maintained in good
repair, working order and condition all properties from time to time used or
useful in its business (whether owned or held under lease), and from time to
time make or cause to be made all needed and appropriate repairs, renewals,
replacements, additions, betterments and improvements thereto.
(i) Current Ratio. Maintain a minimum Current Ratio of 2.0 to 1.0 for any
twelve month period ending on the last day of any fiscal quarter of the Company.
(j) Minimum Working Capital. Maintain minimum Working Capital of at least
$40,000,000 at the end of each fiscal quarter.
(k) Judgments. Notify promptly the Bank of any unsatisfied judgments or
orders for the payment of money entered against the Company by any court or any
warrants of attachment or execution or similar process shall be issued or levied
against property of the Company which in the aggregate exceed $1,000,000. In the
case where the Company has become obligated hereunder to give the Bank notice of
and adjustments, orders, warrants or other process in excess of $1,000,000 in
the aggregate, the Company shall thereafter notify promptly the Bank each time
any judgments or orders for the payment of money entered against the Company by
any court or any warrants or attachment or execution or similar process which
shall be issued or levied against the property or the Company equaling $100,000
in the aggregate have accumulated.
(1) Notice of Construction in Flood Hazard Area. If, for any reason, the
Company shall intend to make any improvement to the Project Site which
improvement shall be located in an area designated by the Secretary to the
United States Department of Housing and Urban Development as an area having
special flood hazards, then the Company shall notify the Bank of said intention
no fewer than 30 days prior to the commencement of the construction of said
improvement.
(m) Environmental Covenants. (i) Cause all activities at the Project
during the term of this Agreement to be conducted in substantial compliance with
all Environmental Laws. The Company will cause permits, licenses or approvals to
be obtained and will cause all notifications to be made, as required by
Environmental Laws, and will, at all times, cause substantial compliance with
the terms and conditions of any such approvals or notifications. During the term
of this Agreement, if requested by the Bank, the Company will provide to the
Bank copies of (1) applications or other materials submitted to any governmental
agency in compliance with Environmental Laws applicable to the Project, (2) any
notifications submitted to any person pursuant to Environmental
27
Laws applicable to the Project, (3) any permit, license, approval, amendment or
modification thereto granted pursuant to Environmental Laws applicable to the
Project, (4) any record or manifest required to be maintained pursuant to
Environmental Laws applicable to the Project, and (5) any correspondence, notice
of violation, summons, order, complaint or other document received by the
Company its lessees, sublessees or assigns, pertaining to compliance with any
Environmental Laws applicable to the Project.
(ii) The Company hereby agrees to indemnify and to hold harmless the Bank
of, from and against any and all expense, loss or liability suffered by the Bank
by reason of the Company's breach of any of the provisions of Section 6.01(s) or
this Section including (but not limited to) (1) any and all expense that the
Bank may incur in complying with any Environmental Laws; (2) any and all fines,
penalties or other sanctions (including a voiding of any transfer of the
Project) assessed upon the Bank by reason of a failure of the Company to have
complied with Environmental Laws; (3) any and all loss of value of the Project
by reason of failure to comply with Environmental Laws but not to exceed the
amount available to be drawn under the Letter of Credit; and (4) any and all
legal and professional fees and costs incurred by the Bank in connection with
the foregoing.
ARTICLE VIII
NEGATIVE COVENANTS
SECTION 8.01 Negative Covenants. From the Date of Issuance and until the
Termination Date and payment in full of all amounts payable hereunder, the
Company shall not, nor shall the Company allow its Subsidiaries to:
(a) Liens. Create, assume or incur, or permit or suffer to exist or to be
created, assumed or incurred, any Lien upon any of its properties or assets of
any character, whether now owned or hereafter with the other indebtedness
secured thereby, and the holder of such other indebtedness, by accepting such
Lien, shall be deemed to have agreed thereto and to share with the Bank, on that
basis, the proceeds of such Lien, whether or not the Bank's security interest
shall be perfected, provided further, however, that notwithstanding such equal
and ratable securing and sharing, the existence of such Lien shall constitute a
default in the performance or observance of this Section 8.01.
(b) Guaranties. Become or remain liable with respect to any Guaranties of
any Debt or Liability of any other Person such that the total amount guaranteed
by the Company at any one time with respect to all Guaranties exceeds
$500,000.00 in aggregate, except that this Section 8.01 shall not apply to
Permitted Guaranties.
28
(c) Merger Consolidation and Sale of Assets. (i) Merge or consolidate with
any Person, except that, if after giving effect thereto no Default would exist,
this Section 8.01 shall not apply to (A) any merger or consolidation involving
the Company or any Subsidiary of the Company provided that the Company or such
Subsidiary, as the case may be, shall be the continuing Person, (B) any merger
or consolidation of any Subsidiary of the Company with any one or more other
Subsidiaries of the Company, (C) any merger or consolidation with any Person
approved in writing prior to such merger or consolidation by the Bank and (D)
any merger or consolidation with any Person having a cost to the Company of less
than $2,000,000; which such merger or consolidation shall not require the
approval of the Bank, or (ii) sell, lease, transfer or otherwise dispose of any
assets, except that this Section 8.01 shall not apply to (A) any disposition of
assets in the ordinary course of business and (B) any disposition of and
obsolete or retired property not used or useful in the Company's business.
(d) Transactions with Affiliates. Effect any transaction (except a
transaction in the ordinary course of business) with any Affiliate on a basis
less favorable to the Company or any Subsidiary than would be the case if such
transaction had been effected with a Person not an Affiliate.
(e) Indebtedness. Create, assume, incur or otherwise become obligated in
respect of any Indebtedness (other than the Bonds) except:
(i) Indebtedness outstanding on the Agreement Date and set forth in
Schedule 1.10(b) hereto;
(ii) Unsecured Indebtedness incurred after the Agreement Date to
financial institutions; provided that after giving effect to the incurrence of
such Indebtedness no Default or Event of Default would occur and be continuing;
(iii) Indebtedness for Taxes that (A) have accrued but are not yet
due and payable and (B) are due and payable but which payment is being contested
in good faith by appropriate proceedings and for which adequate reserves have
been provided on the appropriate books;
(iv) Intercompany Indebtedness; and
(v) Indebtedness represented by Current Liabilities created assumed
or incurred in the ordinary course of business.
(f) Amendments. Unless the Bank shall otherwise consent in writing, which
consent shall not be unreasonably withheld, agree to enter into or consent to
any amendments of, or accept the benefit of any waivers of any provision of the
Related Documents which affect any rights or obligations of the Bank.
29
(g) ERISA. (i) Voluntarily terminate any Plan maintained for employees of
the Company or any Subsidiary of the Company so as to result in any liability of
the Company or any Subsidiary of the Company to the PBGC or (ii) enter into any
Prohibited Transaction (as defined in Section 4975 of the Code, and in ERISA)
involving any Plan which results in any liability of the Company or any
Subsidiary of the Company, (iii) cause any occurrence of any Reportable Event
(as defined in Title IV of ERISA) which results in any liability of the Company
or any Subsidiary of the Company or PBGC or (iv) allow or suffer to exist any
other event or condition known to the Company or any Subsidiary or the Company
which results in liability of the Company or any Subsidiary of the Company to
PBGC, the results of which with respect to clauses (i), (ii), (iii) and (iv)
above may have a Materially Adverse Effect on the ability of the Company to
perform its obligations under the terms of this Agreement.
(h) Leverage Ratio. Suffer or permit the ratio of aggregate unpaid
principal balance of its Funded Indebtedness (other than Subordinated
Indebtedness, if any, and other than the Revolving Loans) at the end of each
fiscal quarter to the sum of its Net Worth plus its Subordinated Indebtedness,
if any, to be greater than that specified for the period set forth below:
Period Ratio
------ -----
Agreement Date to
December 30, 1992 2.5 to 1.0
December 31, 1992 2.0 to 1.0
January 1, 1993 to
December 30, 1993 2.3 to 1.0
December 31, 1993 1.8 to 1.0
January 1, 1994 and
thereafter 2.1 to 1.0
(i) Ratio of EBIT to Interest Expense. Permit its ratio of EBIT to
interest expense to be less than 1.5 to 1.0 for any twelve month period ending
on the last day if any fiscal quarter of the Company.
(j) Restricted Payments. Declare or make any Restricted Payment, except
that this Section 8.01 (j) shall not apply to any Restricted Payment if at the
time of the declaration or making thereof, and immediately after giving effect
thereto, a Default would not exist. This Section 8.01 (j) shall not prohibit the
payment of a dividend that constitutes a Restricted Payment if such Restricted
Payment is made within 45 days of the declaration thereof and such declaration
was permitted at the time.
30
(k) Net Worth. Suffer or permit the sum of its Net Worth plus
Subordinated Indebtedness, if any, to be less than the required minimum in
effect at the time in question.
(i) The required minimum on and after the first day of each fiscal
Year of Company shall be the starting figure for that year, except that
the required minimum shall be permanently increased on the last day of
each quarter-annual period by an amount equal to seventy percent (70%) of
Company's net income, if any, for that period (with no deduction for any
loss);
(ii) The starting figure for each fiscal year shall be an amount
equal to ninety percent (90%) of Company's Net Worth as at the end of
the next preceding fiscal year.
ARTICLE IX
INFORMATION
SECTION 9.01 Information to Be Furnished. The Company shall furnish to the
Bank the following:
(a) Quarterly Financial Statements. Within 60 days after the close of each
of the first three quarterly accounting periods in each fiscal year of the
Company, consolidated balance sheets of the Company and the Consolidated
Subsidiaries as at the end of such quarterly period and the related consolidated
statements of income and changes in financial position of the Company and the
Consolidated Subsidiaries for the elapsed portion of the fiscal Year ended with
the last day of such quarterly period, setting forth in each case in
comparative form the figures for the corresponding periods of the previous
fiscal year, each of which shall be accompanied by a certificate of the
president or chief financial officer of the Company in the form of Schedule
9.01(a).
(b) Audited Year-End Statements: No Default Certificate. Within 90 days
after the end of each fiscal year of the Company consolidated balance sheets of
the Company and the Consolidated Subsidiaries as at the end of such fiscal year
and the related consolidated statements of income and changes in financial
position of the Company and the Consolidated Subsidiaries for such fiscal year,
setting forth in comparative form the figures as at the end of and for the
previous fiscal year, in each case reported on by Ernst & Young or other
independent certified public accountants of recognized standing satisfactory to
the Bank, whose report shall be unqualified as to scope and opinion. Together
with such financial statements the Company shall deliver a certificate of such
accountants addressed to the Bank (i) stating that (A) the Company is
authorized to deliver such financial statements and their certifications thereof
to the Bank pursuant to this Agreement and (B) they have caused this Agreement
to be reviewed and that, in
31
making the examination necessary for the certification of such financial
statements, nothing has come to their attention to lead them to believe that
any Default exists and, in particular, they have no knowledge of any Default
under the provisions of Article VIII or, if such is not the case, specifying
such Default and its nature, when it occurred and whether it is continuing and
(ii) having attached the calculations required to establish whether or not the
Company and the Consolidated Subsidiaries were in compliance with the covenants
contained in Sections 7.01(i) and (j), and 8.01(h), (i), (j) and (k).
(c) Officer's Certificate. At the time the financial statements are
furnished pursuant to Sections 9.01(a) and 9.01(b), a certificate of its
president or chief financial officer, in the form of Schedule 9.01(c).
(d) Additional Materials.
(i) Reports and Filings. As soon as practicable, copies of all
such financial statements and reports as the Company shall send to its
stockholders and of all registration statements and all regular or
periodic reports which the Company shall file, or may be required to
file, with the Securities and Exchange Commission or any successor
commission.
(ii) Requested Materials. From time to time and promptly upon
request of the Bank, (A) copies of all reports, if any, submitted to the
Company or its board of directors by its independent certified public
accountants, including without limitation any management report; (B) such
data, certificates, reports, statements, opinions of counsel, documents
and further information regarding this Agreement, any Related Document
and the business, assets, liabilities, financial condition, results of
operations or business prospects of the Company and the Subsidiaries as
the Bank may request, in each case in form and substance and certified in
a manner satisfactory to the Bank.
(e) Notice of Defaults, Litigation and Other Matters. Prompt notice of:
(i) any Default; (ii) any Event of Default; (iii), the commencement of any
actions, suits or proceedings or investigations in any court or before any
arbitrator of any kind or by or before any governmental or non-governmental body
against or in any other was relating adversely to, or affecting, the Company or
any of its Subsidiaries or any of their respective businesses or properties,
which, singly or in the aggregate, might have a Materially Adverse Effect on the
Company and the Consolidated Subsidiaries taken as a whole; (iv) any amendment
of the articles of incorporation or code of regulations of the Company; and (v)
any Event of Taxability or event which, with the passage of time, could mature
into an Event of Taxability.
32
SECTION 9.02. Accuracy of Information.
(a) Historical Information. The Company hereby represents and warrants to
the Bank (i) that the financial statements and 10-Q Report listed on Schedule
9.02 (a) are complete and correct and present fairly, in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, the consolidated financial position of the Company and the
Consolidated Subsidiaries as at their respective dates and the consolidated
results of operations, cash flows and the changes in financial position of the
Company and such Subsidiaries for the respective periods to which such
statements relate, and (ii) that, except as disclosed or reflected in such 10-Q
Report, as at September 30, 1992, neither the Company nor any Subsidiary has any
liabilities, contingent or otherwise, and there were no unrealized or
anticipated losses of the Company or any Subsidiary, which, singly or in the
aggregate, have had or will have a Materially Adverse effect on the Company and
the Consolidated Subsidiaries taken as a whole.
(b) Future Information. All data, certificates, reports, statements,
opinions of counsel, documents and other information furnished to the Bank
pursuant to any provision of this Agreement or any Related Document or in
connection with or pursuant to any amendment or modification of, or waiver
under, this Agreement, shall, at the time the same are so furnished, but in the
case of information dated as of a prior date, as of such date, (x) in the case
of any such prepared in the ordinary course of business, be complete and correct
in the light of the purpose prepared, and, in the case of any such request by
the Bank, be complete and correct in all material respects to the extent
necessary to give the Bank true and accurate knowledge of the subject matter
thereof, (y) not contain any untrue statement of a material fact, and (z) not
omit to state a material fact necessary in order to make the statements
contained therein not misleading, and the furnishing of the same to the Bank
shall constitute a representation and warranty by the Company made on the date
the same are furnished to the Bank to the effect specified in clauses (x),
(y) and (z).
ARTICLE X
EVENTS OF DEFAULT
SECTION 10.01 Events of Default. Each of the following shall constitute an
Event of Default, unless waived by the Bank in writing, whatever the reason for
such event and whether it shall be voluntary or involuntary, or within or
without the control of the Company, or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any governmental or non-governmental body:
33
(a) any representation or warranty made by the Company under this
Agreement, the Mortgage or any other Related Document shall at any time prove to
have been incorrect or misleading in any material respect when made; or
(b) the Company shall fail to pay when due (whether at maturity, by reason
of acceleration or otherwise) any amount specified in paragraph (a) of Section
2.01 and any such failure shall remain unremedied for three Business Days; or
(c) the Company shall fail to pay when due (whether at maturity, by reason
of acceleration or otherwise) any amount specified in paragraph (b) or (d) of
Section 2.01 hereof and any such failure shall remain unremedied for five
Business Days; or
(d) the Company shall fail to perform or observe any covenants contained
in Article III or Section 11.04 hereof or shall be in default under any other
agreement with the Bank; or
(e) the Company shall fail to perform or observe any term, covenant,
condition or agreement contained or incorporated by reference in Article VII or
Article VIII herein (other than a term, covenant, condition or agreement a
Default in the performance or observance of which is elsewhere in this Section
specifically dealt with) and such failure shall remain unremedied for 10
Business Days; provided that, if the Company shall give the Bank prompt, written
notice of a Default under Article VII or Article VIII before it matures into an
Event of Default, the Company shall have 30 days to remedy any such default and
such 30 day period shall begin to run upon the Bank's delivery to the Company of
notice acknowledging the Default and granting of a 30 day remedy period; or
(f) the Company shall fail to perform or observe any other term, covenant,
condition or agreement contained or incorporated by reference herein (other than
a term, covenant, condition or agreement a default in the performance or
observance of which is elsewhere in this Section specifically dealt with) and
any such failure shall remain unremedied for 30 days after written notice
thereof shall have been given to the Company by the Bank; or
(g) the Company shall fail to pay when due and payable, after giving
effect to any applicable grace period, the principal of or interest on any
Indebtedness in an aggregate amount over $ 1,000,000 (excluding Indebtedness
under this Agreement) or the maturity of any such Indebtedness shall have been
accelerated or have been required to be prepaid prior to the stated maturity
thereof or any event shall have occurred and be continuing which with the
passage of time or the giving of notice or both, would permit any holder or
holders of such Indebtedness, any trustee or agent acting on behalf of such
holder or holders or any other Person so to accelerate such maturity, unless the
Company's obligation to pay, or the
34
acceleration or required prepayment of, such Indebtedness is being contested or
any right of set-off is being asserted by the Company in good faith by
appropriate proceedings and adequate reserves in respect thereof have been
established on the books of the Company; or
(h) (i) the Company shall (A) commence a voluntary case under the Federal
bankruptcy laws (as now or hereafter in effect), (B) file a petition seeking to
take advantage of any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for adjustment of debts,
(C) consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws or
other laws, (D) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of a substantial part of
its property, domestic or foreign, (E) admit in writing its inability to pay, or
generally not be paying its debts as they become due, (F) make a general
assignment for the benefit of creditors, or (G) take any corporate action for
the purpose of effecting any of the foregoing; or (ii) a case or other
proceeding shall be commenced against the Company in any court of competent
jurisdiction seeking (A) relief under the Federal bankruptcy laws (as now or
hereafter in effect) or under any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts, or
(B) the appointment of a trustee, receiver, custodian, liquidator or the like of
the Company, or of all or any substantial part of the assets, domestic or
foreign, of the Company, and such case or proceeding shall continue undismissed
or unstayed for a period of 30 consecutive calendar days, or an order granting
the relief requested in such case or proceeding against the Company
(including, but not limited to, an order for relief under such Federal
bankruptcy laws) shall be entered; or
(i) a judgment or order for the payment of money which is not fully
covered by insurance shall be entered against the Company by any court or a
warrant of attachment or execution or similar process shall be issued or levied
against property of the Company which shall continue undischarged or unstayed
for 60 consecutive calendar days, and which will cause a Materially Adverse
effect on the Company, this Agreement or the Related Documents; or
(j) (i) a Termination Event with respect to a Plan shall occur, (ii) any
Person shall engage in any Prohibited Transaction involving any Plan, (iii) an
Accumulated Funding Deficiency, whether or not waived, shall exist with respect
to any Plan, (iv) the Company or any ERISA Affiliate shall be in "default" (as
defined in Section 4219 (c) (5) of ERISA) with respect to payments due to a
Multiemployer Plan resulting from the Company's or such Affiliate's complete or
partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Plan, or (v) any other event or
35
condition shall occur or exist with respect to a Single Employer Plan, which
event or condition referred to in any of the clauses (i) through (v), together
with all such other events or conditions at the time existing, would subject the
Company, or any Subsidiaries of the Company to any Tax, penalty, Debt or
Liability which has not been adequately provided or reserved for by the Company
or such Subsidiary and which, alone or in the aggregate, would have a Materially
Adverse Effect on the Company and its Subsidiaries taken as a whole; or
(k) the Company or its Subsidiaries shall default in the payment when due
(beyond any applicable grace period), on any material obligation, or in the
performance or observance of, or the condition of any material contract unless
such default, together with all other such defaults, has not had and will not
have a Materially Adverse Effect on the Company and its Subsidiaries taken as a
whole; or
(1) any provision of this Agreement or of any of the Related Documents
shall at any time for any reason cease to be valid and binding in accordance
with its terms on the Company or shall be declared to be null and void, or the
validity or enforceability thereof shall be contested by the Company or a
proceeding shall be commenced by the Company seeking to establish the invalidity
or unenforceability thereof, or the Company shall deny that it has any or
further liability or obligation under this Agreement or under any of the Related
Documents to which it is a party or by which it is bound; or
(m) any "Event of Default" under and as defined in the Indenture or any of
the Related Documents or any "Default" under and as defined in the Mortgage
shall have occurred and be continuing and any applicable grace period shall have
expired.
SECTION 10.02 Remedies. If any Event of Default, other than an Event of
Default under 10.01(h), shall occur and be continuing, the Bank may, in
addition to enforcing all other rights and remedies available to it under
Applicable Law, (i) upon notice to the Company, declare the obligation of the
Bank to issue the Letter of Credit to be terminated, whereupon the same shall
forthwith terminate, or if the Letter of Credit shall have been issued, give
notice of such Event of Default to the Trustee in order that the Trustee may
pursue the remedies available to it pursuant to Article IX of the Indenture,
and (ii) upon notice to the Company declare all amounts, if any, not otherwise
immediately due under this Agreement to be, and all such amounts shall thereupon
become, due and payable to the Bank. Upon the occurrence of an Event of Default
specified in Section 10.01(h), automatically and without any notice to the
Company, the obligation of the Bank to issue the Letter of Credit shall be
terminated, or if the Letter of Credit shall have been issued all amounts, if
any, not otherwise immediately due under this Agreement shall be due and
36
payable to the Bank. Presentment, demand, protest, or notice of any kind (other
than the notice provided for in the first sentence of this Section 10.02) are
expressly waived, anything in this Agreement to the contrary notwithstanding.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Company therefrom shall be
effective unless the same shall be in writing and signed by the parties hereto
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 11.02 Addresses for Notices. All notices and other communications
provided for hereunder shall be sent to all other parties hereunder and shall
(a) (i) be by prepaid telex, telecopier or bank wire except that notices
under Section 10.02 by the Bank may be by telephone, confirmed in writing (but
the failure to give any such written confirmation shall not invalidate any such
telephonic notice);
(ii) be (x) by registered or certified mail, postage prepaid,
return receipt requested, (y) delivered by hand or (z) where so specified, by
telephone, confirmed in confirmation shall not invalidate any notice given as
provided in this Section 11.02);
(b) be given to the Person to whom addressed at the following respective
addresses and telecopier, telex and telephone numbers:
(i) if to the Company, to it at:
Lesco, Inc.
00000 Xxxx Xxxx
Xxxxx Xxxxx, Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx,
Chief Operating Officer
37
with a copy to:
Xxxxx & Xxxxxx
0000 Xxxxxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esquire
(ii) if to the Bank, to it at:
Pittsburgh National Bank
3rd Floor Annex
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Letter of Credit Department
with a copy to
Pittsburgh National Bank
0000 Xxxx 0xx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(iii) if to the Trustee, to it at:
The Bank of New York
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Corporate Trust Department
or in any of the foregoing cases, at such other address or telecopier, telex or
telephone number as the addressee may hereafter specify for the purpose in a
notice to the other parties specifically captioned "Notice of Change of Address
Pursuant to Section 11.02"; and
(c) be effective (i) if given by mail, on the fifth Business Day
after such communication is deposited in the mail, postage prepaid, addressed as
above provided, (ii) if given by telex or telecopier, when such communication is
transmitted to the appropriate number determined as above provided in this
Section 11.02 and the appropriate answer-back is received or receipt is
otherwise acknowledged, (iii) if given by hand delivery, when
38
delivered to the addressee at the address determined as provided in this Section
11.02, and (iv) if given by telephone, when communicated to the Person or to the
holder of the office specified as the Person or officeholder to whose attention
communications are to be given, or, in the case of telephonic notice by the Bank
under Section 10.02, if such Person or officeholder is unavailable at the time,
to either the Chairman or Treasurer of the Company.
SECTION 11.03 Rights Cumulative. The rights and remedies of the Bank under
this Agreement shall be cumulative and not exclusive of any rights or remedies
which it would otherwise have, and no failure or delay by the Bank in exercising
any right shall operate as a waiver of it, nor shall any single or partial
exercise of any power or right preclude its other or further exercise or the
exercise of any other power or right.
SECTION 11.04 Indemnification. The Company hereby indemnifies and holds
harmless the Bank from and against any and all claims, damages, losses,
liabilities, reasonable costs or expenses whatsoever which the Bank may incur
(or which may be claimed against the Bank by any person or entity whatsoever) by
reason of or in connection with the execution and delivery or transfer of, or
payment or failure to pay under, the Letter of Credit; provided, that the
Company shall not be required to indemnify the Bank for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (a) the misconduct or negligence of the Bank in determining whether a
sight draft or certificate presented under the Letter of Credit complied with
the terms of the Letter of Credit or (b) the Bank's negligence or failure to pay
under the Letter of Credit after the presentation to it by the Trustee (or a
successor Trustee under the Indenture to whom the Letter of Credit has been
transferred in accordance with its terms) of a sight draft and certificate
strictly complying with the terms and conditions of the Letter of Credit.
Nothing in this Section 11.04 is intended to limit the reimbursement obligation
of the Company contained in Section 2.01 hereof.
SECTION 11.05 Continuing Obligation. This Agreement is a continuing
obligation and shall (a) be binding upon the Company, the Bank, and their
successors and assigns, and (b) inure to the benefit of and be enforceable by
the Company and Bank and their successors, transferees and assigns; provided,
that except as otherwise permitted by this Agreement, the Company may not assign
all or any part of this Agreement without the prior written consent of the Bank.
SECTION 11.06 Liability of the Bank. The Company shall hold the Bank
harmless from the acts or omissions of the Trustee and any transferee of the
Letter of Credit with respect to its use of the Letter of Credit; provided that
this assumption with respect to the Bank is not intended to and shall not
preclude the Company from
39
pursuing such rights and remedies as it may have against the Trustee under any
other agreements. Neither the Bank nor any of its employees, officers or
directors shall be liable or responsible for: (i) the use which may be made of
the Letter of Credit or for any acts or omissions of the Trustee and any
transferee in connection therewith; (ii) the validity, sufficiency or
genuineness of documents, or of any endorsement(s) thereon, even if such
documents should in fact prove to be in any or all respect invalid,
insufficient, fraudulent or forged; (iii) payment by the Bank against
presentation of documents which do not comply with the terms of the Letter of
Credit, including but not limited to failure of any documents to bear any
reference or adequate reference to the Letter of Credit; or (iv) any other
circumstances, whatsoever in making or failing to make payment under the Letter
of Credit, except only that the Company shall have a claim against the Bank,
and the Bank shall be, liable to the Company, to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered by the
Company which the Company proves were caused by (A) the Bank misconduct or
negligence in determining whether documents presented under the Letter of Credit
comply with the terms of the Letter of Credit or (B) the Bank's willful or
negligent failure to pay under the Letter of Credit after the presentation to it
by the Trustee (or a successor Trustee under the Indenture to whom the Letter of
Credit has been transferred in accordance with its terms) of a sight draft and
certificate strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, the Bank may
accept documents that appear on their face to be in order without responsibility
for further investigation, regardless of any notice or information to the
contrary; provided that, if the Bank shall receive written notification from
the Trustee that sufficiently identifies (in the opinion of the Bank) documents
to be presented to the Bank which are not to be honored, the Bank agrees that
it will not honor such documents.
SECTION 11.07 Costs, Expenses and Taxes. The Company agrees to pay on
demand all costs and expenses, if any, in connection with the administration or
enforcement of this Agreement and such other documents which may be delivered
in connection with this Agreement. In addition, the Company shall pay any and
all stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and any recording of this
Agreement and such other documents and agrees to save the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
SECTION 11.08 Waiver of Right of Set-Off; Limitation on Bank Collateral.
(a) In addition to any other right or remedy that the Bank may have by operation
of law or otherwise, the Bank shall be entitled to exercise its banker's lien or
right to setoff upon an Event of Default; provided, however, that the Bank
hereby
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irrevocably waives any such right of setoff or banker's lien, and any other
right that it may have at law or otherwise to exercise such banker's lien or
right of setoff, 'in order to appropriate and apply to the payment of any and
all of the obligations of the Company now or hereafter due in respect of the
reimbursement obligation of the Company set forth in Section 2.01 of this
Agreement with respect to the Letter of Credit, any balances, credits, deposits,
accounts or moneys of the Company at any time with the Bank when and if there
shall be a drawing under the Letter of Credit during the pendency of any
proceeding by or against the Company, seeking relief in respect of the Company
under Title 11 of the United States Code, as now constituted or hereafter
amended; provided further, however, that such waiver shall cease to be
operative, and such rights of the Bank shall be reinstated; if (i) it is
determined by a court of competent jurisdiction that such reinstatement would
not lead to the Bank being released, prevented or restrained from or delayed in
fulfilling its obligations under the Letter of Credit and (ii) the exercise of
such bankers lien or right of setoff would not constitute any payment (including
pursuant to the Letter of Credit) to the Trustee a voidable preference payment
under Federal bankruptcy law then in effect. For purposes of this paragraph of
Section 11.08 only, the term "Bank" shall include any bank to whom the Bank has
sold a participation interest in the Letter of Credit.
(b) The Bank hereby agrees that it will not at any time accept any
collateral as security for the payment of the reimbursement obligation of the
Company set forth in paragraph (a) of Section 2.01 hereof in addition to that
contemplated by Article II and by the Mortgage unless provision is made prior to
or simultaneously with the taking of such collateral security by the Bank for at
least an equal and ratable security interest in such collateral security to be
granted to the Trustee for the benefit of the holders from time to time of the
Bonds.
SECTION 11.09 Severability any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction, be ineffective to the extent of
such prohibition or unenforceabilty without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction and the remaining portion of such provision and all
other remaining provisions will be construed to render them enforceable to the
fullest extent.
SECTION 11.10. Consent to Jurisdiction; Venue; Waiver of Jury Trial. The
Company hereby irrevocably (a) agrees that any suit, action or other legal
proceeding arising out of or relating to this Agreement or the Letter of Credit
may be brought in any federal or state court located in Pittsburgh, Pennsylvania
and consents to the jurisdiction of such court in any such suit, action or
proceeding and (b) waives any objection which it may have to the laying of venue
of any such suit, action or proceeding in any such court and
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any claim that any such suit, action or proceeding has been brought in an
inconvenient forum. The Company hereby irrevocably consents to the service of
any and all process in any such suit, action or proceeding by mailing of copies
of such process to the Company at its address provided under or pursuant to
Section 11.02. The Company agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. All mailings under
this Section shall be by certified or registered mail, return receipt requested.
Nothing in this Section shall affect the right of the Bank to serve legal
process in any other manner permitted by law or affect the right of the Bank to
bring any suit, action or proceeding against the Company or its property in the
courts of any other jurisdiction. The Company and the Bank hereby waive the
right to trial by jury in any action arising hereunder or under the Mortgage or
otherwise in connection herewith.
SECTION 11.11 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the Commonwealth of Pennsylvania
without reference to its principles of conflicts of laws.
SECTION 11.12 Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
SECTION 11.13 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and shall be
binding upon the parties, their successors and assigns.
SECTION 11.14 Business Days. If any payment under this Agreement shall be
specified to be made upon a day which is not a Business Day, it shall be made on
the next succeeding day which is a Business Day and such extension of time shall
in such case be included in computing interest, if any, in connection with such
payment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or caused
it to be executed and delivered by their duly authorized officers, all as of the
day and year first above written.
ATTEST: LESCO, INC.
By /s/ Xxxxxxx Xxxxxx By /s/ Xxxxxx X. Xxxxxxx
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Title Treasurer Title Chief Operating Officer
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ATTEST: PITTSBURGH NATIONAL BANK
By /s/ By /s/
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Title Vice President Title Vice President
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