EXHIBIT 99.2
LOAN AND SECURITY AGREEMENT
Dated as of June 14, 2002
among
AMERICAN NATIONAL BANK
AND TRUST COMPANY OF CHICAGO,
as Agent
CERTAIN FINANCIAL INSTITUTIONS,
as Lender
and
WEBCO INDUSTRIES, INC.
TABLE OF CONTENTS
1. DEFINITIONS......................................................................................... 1
1.1 General Terms.................................................................................. 1
1.2 Accounting Terms.............................................................................. 16
1.3 Other Terms Defined in Illinois Uniform Commercial Code....................................... 17
1.4 Other Definitional Provisions; Construction................................................... 17
2. CREDIT............................................................................................. 17
2.1 Term Loan Facility............................................................................ 17
2.2 Revolving Loan Facility....................................................................... 18
2.3 Determination of Current Asset Base........................................................... 18
2.4 Borrowing Mechanics........................................................................... 19
2.5 Settlements Among Agent and Lenders........................................................... 21
2.6 Mandatory Payments; Reduction of Commitments.................................................. 23
2.7 Payments and Computations..................................................................... 25
2.8 Borrower's Loan Account....................................................................... 25
2.9 Statements.................................................................................... 26
2.10 Taxes......................................................................................... 26
2.11 Affected Lenders.............................................................................. 28
2.12 Sharing of Payments........................................................................... 29
2.13 Defaulting Lenders............................................................................ 29
2.14 Term of this Agreement........................................................................ 31
2.15 Additional Costs, Etc. With Respect to LIBOR Rate Advances.................................... 31
2.16 Indemnification for Losses.................................................................... 32
2.17 Capital Adequacy.............................................................................. 33
2.18 Certificate................................................................................... 33
2.19 Letters of Credit............................................................................. 33
2.20 Interest, Fees and Expenses................................................................... 36
3. REPORTING AND ELIGIBILITY REQUIREMENTS............................................................. 41
3.1 Monthly Reports and Intra-Monthly Reports..................................................... 41
3.2 Eligible Accounts............................................................................. 42
3.3 Account Warranties............................................................................ 43
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3.4 Verification of Accounts...................................................................... 44
3.5 Account Covenants............................................................................. 44
3.6 Collection of Accounts and Payments........................................................... 44
3.7 Appointment of Agent as Borrower's Attorney-in-Fact........................................... 45
3.8 Instruments and Chattel Paper................................................................. 46
3.9 Notice to Account Debtors..................................................................... 46
3.10 Eligible Inventory; Valuation of Eligible Inventory........................................... 46
3.11 Inventory Warranties.......................................................................... 47
3.12 Inventory Records............................................................................. 47
3.13 Safekeeping of Inventory and Inventory Covenants.............................................. 47
3.14 Equipment Warranties.......................................................................... 48
3.15 Equipment Records............................................................................. 48
3.16 Safekeeping of Equipment...................................................................... 48
3.17 Third Party Goods............................................................................. 48
4. CONDITIONS OF LOANS, ADVANCES AND LETTER OF CREDIT................................................. 49
4.1 Conditions to Initial Loans and Letters of Credit............................................. 49
4.2 Conditions to Each Term Loan, Revolving Loan, Advance and Letter of Credit.................... 49
5. COLLATERAL......................................................................................... 50
5.1 Security Interest............................................................................. 50
5.2 Preservation of Collateral and Perfection of Security Interests Therein....................... 50
5.3 Real Property and Leaseholds.................................................................. 51
5.4 Loss of Value of Collateral................................................................... 52
5.5 Setoff........................................................................................ 52
5.6 Cash Collateral............................................................................... 53
5.7 Letter of Credit Rights....................................................................... 53
5.8 Commercial Tort Claims........................................................................ 54
5.9 Electronic Chattel Paper and Transferable Records............................................. 54
6. WARRANTIES, ETC.................................................................................... 54
6.1 Corporate Existence........................................................................... 54
6.2 Corporate Authority........................................................................... 54
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6.3 Binding Effect................................................................................ 55
6.4 Financial Data................................................................................ 55
6.5 Collateral.................................................................................... 55
6.6 Solvency...................................................................................... 55
6.7 Chief Place of Business; Name................................................................. 56
6.8 Other Corporate Names......................................................................... 56
6.9 Tax Liabilities............................................................................... 56
6.10 Loans......................................................................................... 56
6.11 Margin Security............................................................................... 56
6.12 Survival of Warranties........................................................................ 56
6.13 Subsidiaries.................................................................................. 56
6.14 Litigation and Proceedings.................................................................... 57
6.15 Other Agreements.............................................................................. 57
6.16 Employee Controversies........................................................................ 57
6.17 Compliance with Laws and Regulations.......................................................... 57
6.18 Patents, Trademarks, Licenses, etc............................................................ 58
6.19 ERISA......................................................................................... 58
6.20 Financial Condition........................................................................... 59
7. AFFIRMATIVE COVENANTS.............................................................................. 60
7.1 Financial Statements.......................................................................... 60
7.2 Inspection.................................................................................... 63
7.3 Conduct of Business; Locations of Collateral and Third Party Goods............................ 64
7.4 Claims and Taxes.............................................................................. 64
7.5 Agent's Costs and Expenses as Additional Liabilities.......................................... 64
7.6 Borrower's Liability Insurance................................................................ 65
7.7 Borrower's Property Insurance and Business Interruption Insurance............................. 65
7.8 ERISA......................................................................................... 65
7.9 Notice of Suit or Adverse Change in Business.................................................. 67
7.10 Supervening Illegality........................................................................ 67
7.11 Environmental Laws............................................................................ 67
7.12 Landlord Consents and Waivers................................................................. 68
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8. NEGATIVE COVENANTS................................................................................. 68
8.1 Encumbrances.................................................................................. 68
8.2 Indebtedness.................................................................................. 69
8.3 Consolidations, Mergers or Acquisitions....................................................... 69
8.4 Investments or Loans.......................................................................... 70
8.5 Guarantees.................................................................................... 71
8.6 Capital Investment Limitations; Lease Limitations............................................. 71
8.7 Dividends and Stock Redemptions............................................................... 71
8.8 Amendment of Certificate of Incorporation or By-Laws; Corporate Name; Places of
Business...................................................................................... 72
8.9 Transactions with Subsidiaries and Affiliates................................................. 72
8.10 ERISA Violations.............................................................................. 72
8.11 Fiscal Year................................................................................... 73
8.12 Subsidiaries.................................................................................. 73
8.13 Financial Covenants........................................................................... 73
8.14 Environmental................................................................................. 74
8.15 Disposal of Property.......................................................................... 75
8.16 Inventory Covenants........................................................................... 76
8.17 Loans by Lenders.............................................................................. 76
9. DEFAULT, RIGHTS AND REMEDIES OF LENDERS AND AGENT.................................................. 76
9.1 Defaults...................................................................................... 76
9.2 Rights and Remedies Generally................................................................. 80
9.3 Entry Upon Premises and Access to Information................................................. 80
9.4 Sale or Other Disposition of Collateral by Agent.............................................. 81
9.5 Waiver of Demand.............................................................................. 81
9.6 Waiver of Notice.............................................................................. 81
9.7 Related Defaults.............................................................................. 82
10. AGENT.............................................................................................. 82
10.1 Appointment of Agent.......................................................................... 82
10.2 Nature of Duties of Agent..................................................................... 82
10.3 Lack of Reliance on Agent..................................................................... 82
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10.4 Certain Rights of Agent....................................................................... 83
10.5 Reliance by Agent............................................................................. 83
10.6 Indemnification of Agent...................................................................... 83
10.7 Agent in its Individual Capacity.............................................................. 84
10.8 Holders of Revolving Notes.................................................................... 84
10.9 Successor Agent............................................................................... 84
10.10 Collateral Matters........................................................................... 85
10.11 Actions with Respect to Defaults............................................................. 86
10.12 Delivery of Information...................................................................... 86
10.13 Allocation of Payments....................................................................... 86
11. MISCELLANEOUS...................................................................................... 87
11.1 Waiver, Amendments........................................................................... 87
11.2 Costs and Attorneys' Fees.................................................................... 88
11.3 Expenditures................................................................................. 88
11.4 Custody and Preservation of Collateral....................................................... 88
11.5 Reliance by Lenders.......................................................................... 89
11.6 Parties; Assignability....................................................................... 89
11.7 CHOICE OF LAW................................................................................ 91
11.8 CONSENT TO JURISDICTION...................................................................... 92
11.9 SERVICE OF PROCESS........................................................................... 92
11.10 WAIVER OF JURY TRIAL AND BOND................................................................ 93
11.11 ADVICE OF COUNSEL............................................................................ 93
11.12 SEVERABILITY................................................................................. 93
11.13 Application of Payments...................................................................... 93
11.14 Marshalling; Payments Set Aside.............................................................. 94
11.15 Section and Subsection Titles................................................................ 94
11.16 Continuing Effect............................................................................ 94
11.17 Notices...................................................................................... 94
11.18 Equitable Relief............................................................................. 95
11.19 Indemnification.............................................................................. 95
11.20 Nonliability of Agent and Lenders............................................................ 96
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11.21 Independent Nature of Lenders' Rights........................................................ 96
11.22 Effectiveness................................................................................ 96
11.23 Counterparts................................................................................. 96
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (this "Agreement"), entered into as of
June 14, 2002, by and among WEBCO INDUSTRIES, INC., an Oklahoma corporation with
its principal place of business and chief executive office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower"), the financial institutions
identified on the Schedule I hereto (together with each of their successors and
assigns, referred to individually as a "Lender" and collectively as the
"Lenders"), and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national
banking association with its chief executive office in Chicago, Illinois acting
as agent for Lenders.
WITNESSETH:
WHEREAS, Borrowers desire to borrow from Lenders up to Forty-Seven
Million Five Hundred Thousand Dollars ($47,500,000) and Lenders are willing to
make certain loans and extend credit to Borrower of up to such amount on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any loans or extensions of credit heretofore, now or hereafter
made to or for the benefit of Borrower by any Lender or Agent, the parties
hereto hereby agree as follows:
1. DEFINITIONS.
1.1 General Terms. When used herein, the following terms shall have the
following meanings:
"Acceptance Date" shall have the meaning given such term set forth in
Subsection 11.6(C).
"Accounts" shall mean all accounts (as such term is defined in the
Code) and all other present and future rights of Borrower to payment for goods
sold or leased or for services rendered, which are not evidenced by instruments
or chattel paper, and whether or not they have been earned by performance.
"Account Debtor" shall mean the party who is obligated on or under an
Account.
"Advance" shall mean a borrowing hereunder consisting of the aggregate
amount of all or a portion of the several Revolving Loans or Term Loans made by
Lenders to Borrower of the same type and, in the case of LIBOR Rate Advances,
for the same Interest Period.
"Adjusted Debt Coverage Ratio" shall have the meaning given such term
in Subsection 8.13.
"Affiliate" shall mean any Person (a) that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with Borrower, (b) that directly or beneficially owns or holds 5%
or more of any class of the voting stock of Borrower, or (c) 5% or more of the
voting stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is owned directly or
beneficially or held by Borrower. Notwithstanding the foregoing, neither any
Lender nor any parent or subsidiary of any Lender shall be deemed to be an
Affiliate of Borrower.
"Agent" shall mean American National Bank and Trust Company of Chicago
in its capacity as Agent for Lenders, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Subsection 10.9.
"Agreement" shall have the meaning given such term set forth in the
preamble hereto.
"ANB" shall mean American National Bank and Trust Company of Chicago,
in its individual capacity and its successors and assigns.
"Applicable L/C Fee Rate" shall mean, at any time, an amount
equal to the Applicable Margin for LIBOR Rate Advances under the
Revolving Loan at such time; provided for the period commencing on the
Closing Date through and including the day immediately preceding the
First Adjustment Date, the Applicable L/C Fee Rate shall equal three
percent (3.00%) per annum.
"Applicable Margin" shall mean:
(a) for the period commencing on the Closing Date through and
including the day immediately preceding the First Adjustment Date, the
Applicable Margin shall equal:
(i) with respect to the Revolving Loan (y) for Base
Rate Advances, one and one-quarter percent (1.25%) per annum,
and (z) for LIBOR Rate Advances, three percent (3.00%) per
annum; and
(ii) with respect to the Term Loan (y) for Base Rate
Advances, one and one-half percent (1.50%) per annum, and (z)
for LIBOR Rate Advances, three and one-quarter percent (3.25%)
per annum; and
(b) commencing on the First Adjustment Date and thereafter,
the Applicable Margin shall equal the percentage per annum in effect
from time to time determined as set forth below based upon the Type of
Loan, the Type of Advance and the Adjusted Debt Coverage Ratio then in
effect pursuant to the appropriate column of the table below:
2
APPLICABLE MARGIN
-----------------
REVOLVING LOAN TERM LOAN
-------------- ---------
ADJUSTED DEBT LIBOR RATE BASE RATE LIBOR RATE BASE RATE
COVERAGE RATIO ADVANCES ADVANCES ADVANCES ADVANCES
------------- ---------- --------- ---------- ---------
Less than 1.25 to 1.00 3.00% 1.25% 3.25% 1.50%
Greater than or equal to 1.25 2.75% 1.00% 3.00% 1.25%
to 1.00, but less than 1.50
to 1.00
Greater than or equal to 1.50 2.50% .75% 2.75% 1.00%
to 1.00
The Applicable Margin shall be adjusted from time to time upon delivery to Agent
and Lenders of the financial statements of Borrower as of the end of each Fiscal
Quarter required to be delivered pursuant to Subsection 7.1(A) hereof
accompanied by a written calculation of the Adjusted Debt Coverage Ratio for the
four Fiscal Quarters then ending certified on behalf of Borrower by an
Authorized Officer as of the end of the Fiscal Quarter for which such financial
statements are delivered. If such calculation indicates that the Applicable
Margin shall increase or decrease, then on the first day of the third month
following the Fiscal Quarter as to which such financial statements relates the
Applicable Margin shall be adjusted in accordance therewith; provided, however,
that if Borrower shall fail to deliver any such financial statements for any
such Fiscal Quarter within five days of the date required pursuant to Subsection
7.1(A), then effective as of the first day of the fiscal month following the end
of the fiscal month during which such financial statements were to have been
delivered, and continuing through the first day of the month following the date
(if ever) when such financial statements and such written calculation are
finally delivered, the Applicable Margin shall be conclusively presumed to equal
the highest Applicable Margin specified in the pricing table set forth above.
"Assignment and Assumption Agreement" shall mean an assignment and
assumption agreement entered into by an assigning Lender and an assignee Lender,
and accepted by Agent, in accordance with Subsection 11.6 substantially in the
form of Exhibit 11.6.
"Authorized Officer" shall mean, at any time, an individual whose
signature has been certified to Agent on behalf of Borrower pursuant to a
Signature Authorization Certificate actually received by Agent at such time and
whose authority has not been revoked prior to such time in the manner prescribed
in such Signature Authorization Certificate.
"Average Availability" shall mean, for any month, an amount equal to
the daily average (determined by the Agent based on the amount reported pursuant
to the Collateral Reports delivered to Agent pursuant to Subsection 3.1(B) for
periods including such month) of the amount by which the Current Asset Base
exceeds the aggregate balance of the unpaid principal amount of the Revolving
Loans.
"Bank One" means Bank One, NA, a national banking association having
its principal office in Chicago, Illinois, in its individual capacity, and its
successors.
"Base Rate" shall mean a rate per annum equal to the corporate base
rate or prime rate of interest (which is not necessarily the lowest rate charged
to its customers) announced by ANB or by its parent, Bank One Corporation, from
time to time, changing when and as said corporate base rate or prime rate
changes. Any change in the Prime Rate shall be effective as of the effective
date stated in the announcement by ANB of such change.
3
"Base Rate Advance" shall mean an Advance bearing interest calculated
by reference to the Base Rate.
"Borrower" shall have the meaning given such term set forth in the
preamble hereto.
"Business Day" shall mean a day, other than a Saturday or Sunday, on
which banks in Chicago, Illinois are open for the transaction of banking
business and, in the case of borrowing, continuation, payment or interest rate
selection of a LIBOR Rate Advance, on which dealings in Dollars are carried on
in the London interbank market.
"Capital Expenditure" shall mean as to any Person any and all
expenditures of such Person for fixed or capital assets, including, without
limitation, the incurrence of capitalized lease obligations, all as determined
in accordance with GAAP, except that capital expenditures shall not include
expenditures for fixed or capital assets to the extent such expenditures are
paid or reimbursed from the proceeds of insurance.
"Capitalized Lease" shall mean as to any Person at any time any lease
which, in accordance with GAAP, is required to be capitalized on the balance
sheet of such Person at such time, and "capitalized lease obligations" of such
Person at any time shall mean the aggregate amount which, in accordance with
GAAP, is required to be reported as a liability on the balance sheet of such
Person at such time as lessee under Capitalized Leases.
"Closing Date" shall mean the date on which Lenders make the initial
loans under this Agreement.
"Code" shall mean the Uniform Commercial Code of the State of Illinois
as in effect on the date hereof.
"Collateral" shall mean all property and interests in property now
owned or hereafter acquired by Borrower in or upon which a Lien is granted to
Agent or any one or more of Lenders by Borrower whether under this Agreement,
the other Financing Agreements, or under any other documents, instruments or
writings executed by Borrower and delivered to Agent or any one or more of
Lenders.
"Collateral Documents" shall mean all contracts, instruments and other
documents now or hereafter executed and delivered in connection with this
Agreement, pursuant to which Liens are granted to Agent or any one or more of
Lenders in the Collateral for the benefit of Agent and/or Lenders and/or the
Issuing Bank and shall, in any event, include the collateral pledged pursuant to
the Bond Pledge Agreement (as defined in the Participation Agreement).
"Collecting Banks" shall have the meaning given such term set forth in
Subsection 3.6.
"Commitment Reduction Fee" shall have the meaning given such term set
forth in Subsection 2.20(C).
4
"Covered Taxes" shall have the meaning given such term set forth in
Subsection 2.10(A).
"Current Asset Base" shall have the meaning given such term set forth
in Subsection 2.3.
"Debt Sale Proceeds" shall mean the aggregate cash proceeds paid or
payable to Borrower or any of its Subsidiaries in connection with the issuance
of any Indebtedness which is subordinate to the Liabilities by such Person of
the type referred to in clauses (a), (b), (c) and (d) of the definition of
"Indebtedness."
"Default" shall mean the occurrence or existence of any one or more of
the events described in Subsection 9.1.
"Defaulting Lender" shall have the meaning given such term set forth in
Subsection 2.13(A).
"Dollars" and the sign "$" shall mean freely transferable lawful money
of the United States.
"Environmental Laws" shall mean the common law and all federal, state,
local and foreign laws or regulations, codes, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder, now or
hereafter in effect, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
constituent substances or wastes, including, without limitation, asbestos, or
asbestos containing materials, polychlorinated biphenyls, petroleum, including
crude oil or any fraction thereof, or any petroleum product (collectively
referred to as "Hazardous Materials"), into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of Hazardous Materials, and
(iii) underground storage tanks, and related piping, and emissions, discharges,
releases or threatened releases therefrom.
"Environmental Lien" shall mean a lien in favor of any governmental
entity for (a) any liability under federal or state environmental laws or
regulations, or (b) damages arising from costs incurred by such governmental
entity in response to a release of a hazardous or toxic waste, substance or
constituent, or other substance into the environment.
"Equipment" shall mean, collectively, all of the equipment and fixtures
(as such terms are defined in the Code) of Borrower, together with any and all
accessions, parts and appurtenances thereto, whether presently owned or
hereafter acquired by Borrower.
"Equity Interests" shall mean the membership interests or capital stock
of any class of any Person and options, warrants and other rights to acquire
capital stock, membership interests or other equity interests of such Person.
5
"Equity Sale" shall mean any issuance, sale, conveyance, transfer or
other disposition of any Equity Interests by any Person or any other change in
the capital structure of such Person (other than Indebtedness).
"Equity Sale Proceeds" shall mean the aggregate cash proceeds paid or
payable to any Person in connection with any Equity Sale, after deduction of all
documented fees, costs and expenses paid to any third party in connection with
such Equity Sale; provided, however, that proceeds to the Borrower from the
exercise of employee stock options shall not be equity sale proceeds.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean with respect to Borrower (i) any
Subsidiary of Borrower; (ii) any corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Internal Revenue Code) as Borrower; (iii) a trade or business under common
control (within the meaning of Section 414(c) of the Internal Revenue Code) with
Borrower; or (iv) a member of the same affiliated service group (within the
meaning of Section 414(m) of the Internal Revenue Code) as Borrower.
"Event of Default" shall mean an event which through the passage of
time or the giving of notice or both would mature into a Default.
"Expenses" shall mean all present and future expenses incurred by or on
behalf of Agent in connection with this Agreement, any other Financing Agreement
or otherwise, whether incurred heretofore or hereafter, which expenses shall
include, without being limited to, the cost of record searches, the reasonable
fees and expenses of attorneys (including the allocated cost of internal
counsel) and paralegals, all costs and out-of-pocket expenses incurred by Agent
in opening bank accounts, depositing checks, receiving and transferring funds,
and any charges imposed on Agent due to insufficient funds of deposited checks
and Agent's standard fee relating thereto, collateral examination fees and
expenses, reasonable fees and out-of-pocket expenses of accountants, appraisers
or other consultants, experts or advisors employed or retained by Agent, fees
and taxes relative to the filing or recording of financing statements, mortgages
and other Financing Agreements, costs of preparing financing statements,
mortgages and other Financing Agreements, all expenses, costs and fees set forth
in Section 2 of this Agreement, all other fees and expenses required to be paid
pursuant to the Fee Letter and all fees and out-of-pocket expenses incurred in
connection with releasing Collateral and the amendment or termination of any of
the Financing Agreements.
"Facility Fee" shall have the meaning given such term set forth in
Subsection 2.20(B).
"Facing Fee" shall have the meaning given such term set forth in
Subsection 2.20(G)(i).
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal
6
Funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by Agent
from three Federal Funds brokers of recognized standing selected by it.
"Fee Letter" shall mean that certain letter agreement captioned "Fee
Letter," dated as of June 14, 2002, between Agent and Borrower, as the same may
be amended, modified or supplemented from time to time.
"Fees" shall mean, collectively, the Facility Fees, the L/C Fee, the
Facing Fee, Issuing Bank Fees, the Commitment Reduction Fee, the Termination
Charge, and the other fees provided for herein or in the Fee Letter.
"Financials" shall have the meaning set forth in Subsection 6.4.
"Financing Agreements" shall mean, collectively, all agreements,
instruments and documents, including, without limitation, this Agreement, the
Related Hedging Agreements and any security agreements, loan agreements, notes,
letter of credit applications, guarantees, mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, subordination agreements, pledges, powers
of attorney, consents, assignments, intercreditor agreements, mortgagee waivers,
reimbursement agreements, contracts, notices, leases, financing statements and
all other written matter whether heretofore, now or hereafter executed by or on
behalf of Borrower and delivered to any one or more of Agent, the Issuing Bank
and Lenders, together with all agreements, documents and instruments referred to
therein or contemplated thereby, and further including without limitation the
Mortgages, the Reimbursement Agreement, the Participation Agreement, the Bond
Pledge Agreement and any other Collateral Documents.
"FIRREA" shall mean the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended from time to time.
"First Adjustment Date" shall mean October 1, 2002.
"Fiscal Year" shall mean the fiscal year of Borrower ending on July 31
of each year.
"Fiscal Quarter" shall mean each fiscal quarter of each fiscal year of
Borrower.
"GAAP" shall mean generally accepted accounting principles as in effect
on the date hereof in accordance with the rules, regulations, pronouncements and
opinions of the Financial Accounting Standards Board and the American Institute
of Certified Public Accountants (or their successors), and as applied in
preparation of the Financials, subject to the provisions of Subsection 1.2.
"General Intangibles" shall mean all general intangibles (as such term
is defined in the Code) and all other choses in action, causes of action and all
other intangible personal property of Borrower of every kind and nature (other
than Accounts) now owned or hereafter acquired by Borrower, including, without
limitation, corporate or other business records,
7
inventions, designs, patents, patent applications, service marks, trademarks,
trademark applications, trade names, trade styles, trade secrets, goodwill,
registrations, computer software, operational manuals, product formulas,
blueprints, drawings, copyrights, copyright applications, licenses, franchises,
customer lists, rights and claims against carriers and shippers, rights to
indemnification and the like, wherever located, proceeds of insurance covering
the lives of key employees on which Borrower is beneficiary, tax refunds, tax
refund claims, and any letter of credit, guarantee, security interest, lien
rights or other security held by or granted to Borrower to secure payment by an
Account Debtor and the like, wherever located.
"Good Faith" shall have the meaning set forth for that term in Section
1-201(19) of the Code as it is in effect on the date hereof, provided that Good
Faith shall also mean the absence of malice or capriciousness.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranteed Indebtedness" of any Person means all Indebtedness referred
to in clauses (a), (b), (c), (d) or (e) of the definition of "Indebtedness" in
this Section guaranteed directly or indirectly in any manner by such Person, or
in effect guaranteed directly or indirectly by such Person (or secured by any
assets of such Person) regardless of whether the liability of such Person is
limited to such assets or otherwise non-recourse through an agreement (i) to pay
or purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (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 Indebtedness or to assure the holder
of such Indebtedness against loss, (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 such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss or to grant a
security interest in property for the benefit of any such creditor.
"Guaranty Agreement" shall mean any guarantee or similar arrangement of
any Liabilities, including the P&J Guaranty.
"Hazardous Materials" shall have the meaning set forth for such term in
the definition of "Environmental Laws" above.
"Hedging Agreement" shall mean any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements evidencing Hedging
Obligations, other than pursuant to which Borrower has hedged actual interest
rate, foreign currency or commodity exposure.
"Hedging Obligations" of a Person shall mean any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange
8
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy-backs, reversals, terminations or assignments of any of the
foregoing.
"Holders of Secured Obligations" shall mean the holders of the Secured
Obligations from time to time and shall include their respective successors,
transferees and assigns.
"Indebtedness" of any Person means (without duplication), as of any
specified date, the aggregate amount outstanding or owing under (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (including, without limitation, all obligations in
respect of principal, and premium, if any, payable on such indebtedness and all
other obligations, contingent or otherwise, of such Person in connection with
letter of credit facilities, acceptance facilities or other similar facilities
and in connection with any agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any capital stock of, or other equity interest in,
such Person or any other Person), but excluding current liabilities for trade
payables and other current liabilities other than for money borrowed, entered
into in the ordinary course of business, (b) all obligations of such Person
evidenced by bonds, notes, debentures or other similar instruments, (c) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (d)
all obligations of such Person under Capitalized Leases, (e) Hedging Obligations
of such Person, (f) all Indebtedness referred to in clauses (a), (b), (c), (d)
or (e) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any lien, security
interest or other charge or encumbrance upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
(f) all Guaranteed Indebtedness of such Person, (g) all liabilities incurred by
such Person or any ERISA Affiliate to the PBGC upon the termination under
Section 4041 or Section 4042 of ERISA of any Pension Plan, (h) all Withdrawal
Liabilities of such Person or any of its ERISA Affiliates and (i) all increase
in the amount of contributions required to be made by such Person and its ERISA
Affiliates in each Fiscal Year of such Person to Multiemployer Plans, due to the
reorganization or termination of any such Multiemployer Plan within the meaning
of Title IV of ERISA, over the average annual amount of such contributions
required to be made during the last three years preceding such reorganization or
termination.
"Indemnified Matters" shall have the meaning given such term set forth
in Subsection 11.19.
"Indemnitees" shall have the meaning given such term set forth in
Subsection 11.19.
"Interest Period" shall mean with respect to any LIBOR Rate Advance, a
period of one, two, three or six months commencing on a Business Day selected by
Borrower pursuant
9
to Subsection 2.4 of this Agreement. Each such Interest Period shall end on (but
exclude) the date which numerically corresponds to such date one, two, three or
six months thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If any Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute.
"Interim Revolving Loan Period" shall have the meaning given such term
set forth in Subsection 2.4(B).
"Interim Revolving Loans" shall have the meaning given such term set
forth in Subsection 2.4(B).
"Inventory" shall mean any and all inventory (as such term is defined
in the Code) and all other goods, including, without limitation, goods in
transit, wheresoever located, whether now owned or hereafter acquired by
Borrower, which are held for sale or lease, furnished under any contract of
service or held as raw materials, work-in-process or supplies, and all materials
used or consumed in Borrower's business, and shall include such property the
sale or other disposition of which has given rise to Accounts and which has been
returned to or repossessed or stopped in transit by Borrower.
"Issuing Bank" shall mean ANB and any other Lender that may be
designated by Agent from time to time as an Issuing Bank, and shall include ANB
as a party to the Participation Agreement and the Reimbursement Agreement.
"Issuing Bank Fees" shall have the meaning given such term set forth in
Subsection 2.20(G)(ii).
"L/C Fee" shall have the meaning given such term set forth in
Subsection 2.20(G)(i).
"Lender" shall have the meaning given that term in the preamble hereto
and, in the case of any Lender, shall include such Lender's successors and
permitted assigns.
"Lending Affiliate" shall mean, as to any Lender, (a) each office and
branch of such Lender, and (b) each entity which, directly or indirectly, is
controlled by or under common control with such Lender or which controls such
Lender and each office and branch thereof.
"Letter of Credit Obligations" shall mean, at any time, the sum of (i)
the aggregate undrawn face amount of all Letters of Credit outstanding at such
time (including without limitation the PEDFA Letter of Credit), plus (ii) the
aggregate amount of all drawings under Letters of Credit (including without
limitation the PEDFA Letter of Credit) or payments to the PEDFA L/C Bank for
which the Issuing Bank has not at such time been reimbursed (either
10
by Borrower, or by a Revolving Loan made by Agent or Lenders), plus (iii) the
aggregate amount of all payments made by each Lender to the Issuing Bank with
respect to such Lender's participation in Letters of Credit (including such
Lender's participation in ANB's obligations and rights under the Reimbursement
Agreement and the Participation Agreement) as provided in Subsection 2.19(C)
hereof for which Borrower has not at such time reimbursed Lenders, whether by
way of the Revolving Loans or otherwise.
"Letter of Credit Request" shall have the meaning given such term set
forth in Subsection 2.19(D).
"Letters of Credit" shall mean all letters of credit issued (or deemed
to be issued) for the account of Borrower (i) prior to the date of this
Agreement by ANB, and (ii) pursuant to Subsection 2.19 hereof, and in any event
shall include the PEDFA Letter of Credit, and in each case all amendments,
renewals, extensions or replacements thereof.
"Leverage Ratio" shall have the meaning given such term set forth in
Subsection 8.13.
"Liabilities" shall mean all of Borrower's liabilities, obligations and
indebtedness to any one or more of Agent, Lenders and the Issuing Bank
(including without limitation all obligations of Borrower under the
Reimbursement Agreement) of any and every kind and nature, whether heretofore,
now or hereafter owing, arising, due or payable and howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise (including obligations of performance) and
whether arising or existing under written agreement, oral agreement or operation
of law, including, without limitation, all of Borrower's contingent
reimbursement obligations with respect to Related Hedging Obligations, Letters
of Credit, all other Letter of Credit Obligations and all of Borrower's other
indebtedness and obligations to any one or more of Agent, any Lender and the
Issuing Bank under this Agreement and the other Financing Agreements.
"LIBOR Base Rate" shall mean, with respect to a LIBOR Rate Advance for
the relevant Interest Period, the applicable British Bankers' Association
Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters
Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, and having a maturity equal to such Interest
Period, provided that, (i) if Reuters Screen FRBD is not available to the Agent
for any reason, the applicable LIBOR Base Rate for the relevant Interest Period
shall instead be the applicable British Bankers' Association Interest Settlement
Rate for deposits in U.S. dollars as reported by any other generally recognized
financial information service as of 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, and having a maturity equal to
such Interest Period, and (ii) if no such British Bankers' Association Interest
Settlement Rate is available to the Agent, the applicable LIBOR Base Rate for
the relevant Interest Period shall instead be the rate determined by the Agent
to be the rate at which Bank One or one of its affiliate banks offers to place
deposits in U.S. dollars with first-class banks in the London interbank market
at approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, in the approximate amount of ANB's relevant LIBOR
Loan and having a maturity equal to such Interest Period.
11
"LIBOR Rate Advance" shall mean an Advance bearing interest calculated
by reference to the LIBOR Rate.
"LIBOR Rate" shall mean the annual rate of interest, rounded upward to
the nearest 1/16th of 1% determined by Agent with respect to an Interest Period,
in accordance with the following formula:
LIBOR Rate = LIBOR Base Rate
-----------------
(1 - Reserve Rate)
"Lien(s)" shall mean any lien, claim, charge, pledge, security
interest, deed of trust, mortgage, other encumbrance or other arrangement having
the practical effect of the foregoing or other preferential arrangement of any
other kind and shall include the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement.
"Loan Account" shall have the meaning given such term set forth in
Subsection 2.8.
"Loans" shall mean, collectively, the Revolving Loans and the Term
Loans, and "Loan" shall mean any thereof.
"Maximum Facility Amount" shall mean $47,500,000.
"Mortgages" shall mean those certain mortgages and deeds of trust
described on the attached Schedule 1.1 and any other mortgage, deed of trust,
leasehold mortgage and similar instrument or agreement executed by Borrower in
favor of Agent in connection herewith, in each case, as amended, supplemented or
otherwise modified from time to time.
"Mortgaged Property" shall have the meaning, collectively, set forth
for such term in the Mortgages.
"Multiemployer Plan" shall mean, with respect to any Person, an
employee benefit plan defined in Section 4001(a) (3) of ERISA which is, or
within the immediately preceding six (6) years was, contributed to by such
Person or an ERISA Affiliate of such Person.
"New QuikWater" shall mean Quik Water Systems, Inc., an Oklahoma
corporation.
"Notes" shall mean, collectively, the Revolving Notes and the Term
Notes, and "Note" shall mean any thereof.
"Notice of Borrowing" shall have the meaning given that term in
Subsection 2.4(A).
"Notice of Conversion" shall have the meaning given that term in
Subsection 2.4(A).
12
"Other Taxes" shall have the meaning given such term set forth in
Subsection 2.10(B).
"Participation Agreement" shall mean the "Participating Bank Agreement"
(as such term is defined in the Reimbursement Agreement).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PDECD Loan" shall mean the loan to Borrower from the Commonwealth of
Pennsylvania acting through the Department of Community and Economic Development
("PDCED") by virtue of the Machinery and Equipment Loan Fund ("MELF") Act, Act
120 of 1988, Pub. L. No. 1050, PDCED in the original principal amount of
$500,000 (the "PDCED Loan") used exclusively to defray a part of the cost of
purchasing certain Equipment with the proceeds of such loan.
"PEDFA L/C Bank" shall mean the "Letter of Credit Bank" (as defined in
the Participation Agreement).
"PEDFA Letter of Credit" shall mean the "Letter of Credit" (as defined
in the Participation Agreement).
"Pension Plan" shall mean any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which Borrower or any ERISA Affiliate is, or
at any time during the immediately preceding five years, was an "employer" as
defined in Section 3(5) of ERISA.
"Percentage" shall mean, with respect to each Lender, such Lender's
Proportionate Share, Term Proportionate Share and Revolving Proportionate Share,
as the case may be.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated organization,
association, corporation, institution, entity, party, or government (whether
national, federal, state, provincial, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"P&J" shall mean ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc., an Illinois corporation.
"P&J Guaranty" shall mean that certain Guaranty Agreement dated as of
June 14, 2002 by P&J in favor of the Agent and the Lenders, as the same may be
amended, modified or supplemented from time to time.
"Post-Default Rate" shall have the meaning given such term set forth in
Subsection 2.20(A).
"Property" shall mean any real property owned, leased or operated by
Borrower or in which Borrower otherwise holds any rights or interests,
including, without limitation, the Mortgaged Property.
13
"Proportionate Share" shall mean, as to each Lender at any time, the
percentage obtained by dividing (i) the sum of (a) the outstanding principal
amount of the Term Loans owed to such Lender at such time, plus (b) the amount
of the Revolving Credit Commitment of such Lender in effect at such time (or, if
the Total Revolving Commitments have been terminated, the sum of the outstanding
principal amount of the Revolving Loans owed to such Lender at such time (after
giving effect to Subsection 2.5), plus such Lender's Revolving Proportionate
Share of Letter of Credit Obligations existing at such time by (ii) the
aggregate amount of each of the foregoing items for all Lenders in effect at
such time.
"Purchase Money Secured Financing" shall have the meaning given such
term set forth in Subsection 8.2.
"Reduced Rate" shall have the meaning given such term set forth in
Subsection 2.10(E).
"Register" shall have the meaning given such term set forth in
Subsection 11.6(E).
"Reimbursement Agreement" shall mean that certain Amended and Restated
Reimbursement Agreement dated as of June 14, 2002 between ANB and Borrower, as
the same may be amended, modified or supplemented from time to time.
"Related Hedging Agreements" shall mean all Hedging Agreements between
Borrower and any Lender or any affiliate of any Lender, whether now or hereafter
arising or entered into, as the same may be amended, modified or supplemented
from time to time, including without limitation those Hedging Agreements
heretofore entered into by Borrower.
"Related Hedging Obligations" shall mean all Hedging Obligations from
Borrower to any Lender or any affiliate of any Lender.
"Required Lenders" shall mean, at any time, one or more Lenders whose
Proportionate Share, in the aggregate, exceeds sixty-six and two-thirds of one
percent (66-2/3%).
"Requirement of Law" shall mean, as to any Person, the organizational
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Reserve Rate" shall mean the maximum reserve rate (including, without
limitation, basic, supplemental, marginal and emergency reserve requirements),
expressed as a decimal, determined by Agent to be the rate which would be
applicable to the relevant Interest Period under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulation
relating to such reserve requirements) with respect to eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D) of a
member of the Federal Reserve System, whether or not such fundings were
outstanding. The Reserve Rate on the Closing Date is zero, but may change
thereafter.
14
"Revolving Credit Commitment" of any Lender shall mean the amount set
forth opposite such Lender's name on the Schedule I, as such schedule may be
amended from time to time, under the heading "Revolving Credit Commitment," as
such Revolving Credit Commitment may be adjusted from time to time pursuant to
the terms of this Agreement.
"Revolving Loans" shall have the meaning given such term in Subsection
2.2(A) hereof, and "Revolving Loan" shall mean any thereof.
"Revolving Notes" shall have the meaning given such term in Subsection
2.2(A) hereof, and "Revolving Note" shall mean any thereof.
"Revolving Proportionate Share" shall mean, as to each Lender at any
time, the percentage obtained by dividing (i) the amount of the Revolving Credit
Commitment of such Lender in effect at such time (or, if the Total Revolving
Commitments have been terminated, the sum of the outstanding principal amount of
the Revolving Loans owed to such Lender at such time (after giving effect to
Subsection 2.5) plus such Lender's ratable share of Letter of Credit Obligations
existing at such time), by (ii) the amount of the Total Revolving Commitments in
effect at such time (or, if the Total Revolving Commitments have been
terminated, the amount of the Total Revolving Commitments immediately prior to
such termination).
"Secured Obligations" means, collectively, (i) the Liabilities and (ii)
all Related Hedging Obligations.
"Settlement Date" shall have the meaning given such term set forth in
Subsection 2.5(B).
"Signature Authorization Certificate" shall mean a certificate
substantially in the form attached hereto as Exhibit 1.1 now or hereafter
executed on behalf of Borrower and delivered to Agent.
"SP Agent" shall have the meaning given such term set forth in
Subsection 11.9.
"Subsidiary" shall mean, with respect to any Person (i) any corporation
of which more than fifty percent (50%) of the outstanding securities having
ordinary voting power (determined without giving effect to any class of
securities that does not possess ordinary voting power but may have ordinary
voting power by reason of the happening of any contingency) shall be owned or
controlled, directly or indirectly by such Person or by one or more of its
Subsidiaries, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization of which more than fifty percent
(50%) of the ownership interests having ordinary voting power (determined
without giving effect to any class of securities that does not possess ordinary
voting power but may have ordinary voting power by reason of the happening of
any contingency) shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of Borrower.
"Tax Transferee" shall have the meaning given such term set forth in
Subsection 2.10(A).
"Taxes" shall have the meaning given such term set forth in Subsection
2.10(A).
15
"Term" shall have the meaning given that term in Subsection 2.14(A).
"Term Loans" shall have the meaning given such term in Subsection
2.1(A) hereof, and "Term Loan" shall mean any thereof.
"Term Notes" shall have the meaning given such term in Subsection
2.1(A) hereof, and "Term Note" shall mean any thereof.
"Term Proportionate Share" shall mean, as to each Lender at any time,
the percentage obtained by dividing (i) the outstanding principal amount of the
Term Loan owed to such Lender at such time, by (ii) the aggregate outstanding
principal amount of the Term Loans owed to all Lenders at such time.
"Termination Charge" shall have the meaning given such term set forth
in Subsection 2.20(E).
"Termination Date" shall mean May 1, 2005 or such other date as may be
the end of the Term that is in effect pursuant to Subsection 2.14.
"Termination Event" shall mean (i) with respect to any Pension Plan,
the occurrence of a reportable event described in Section 4043 of ERISA and the
regulations issued thereunder, or (ii) the withdrawal of Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in which it is a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the occurrence of
an obligation of Borrower or any ERISA Affiliate arising under Section 4041 of
ERISA to provide participants in a Pension Plan and other affected parties with
a written notice of intent to terminate the Pension Plan, or (iv) the
institution of proceedings to terminate a Pension Plan by PBGC, or (v) any other
event or condition which might constitute grounds under Section 4041(A) or 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan, or (vi) the partial or complete withdrawal of Borrower or any
ERISA Affiliate from a Multiemployer Plan.
"Third Party Goods" shall mean all raw materials, work-in-process and
finished goods owned by Persons other than Borrower and in Borrower's
possession.
"Total Revolving Commitments" shall mean the aggregate of the Revolving
Credit Commitments of all Lenders, which in the aggregate shall not exceed
$32,000,000.
"Type of Advance" shall have the meaning given such term set forth in
Subsection 2.1(B) and may be Advances under a Term Loan or a Revolving Loan.
"Type of Loan" shall mean a Revolving Loan or Term Loan, as the case
may be.
"Withdrawal Liability" shall have the meaning given to such term under
Part I of the Subtitle E of Title IV of ERISA.
1.2 Accounting Terms. Any accounting terms used in this Agreement which
are not specifically defined herein shall have the meanings customarily given
them in accordance with GAAP. Calculations and determinations of financial and
accounting terms used and not
16
otherwise specifically defined hereunder and the preparation of financial
statements to be furnished to Lenders pursuant hereto shall be made and
prepared, both as to classification of items and as to amount, in accordance
with GAAP as used in the preparation of the Financials on the date of this
Agreement. If any changes in accounting principles or practices from those used
in the preparation of the Financials are hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or any successor thereto or agencies with similar
functions), which results in a material change in the method of accounting in
the financial statements required to be furnished to Lenders hereunder or in the
calculation of financial covenants, standards or terms contained in this
Agreement or any other Financing Agreement, the parties hereto agree to enter
into negotiations in Good Faith to amend such provisions so as equitably to
reflect such changes to the end that the criteria for evaluating the financial
condition and performance of Borrower will be the same after such changes as
they were before such changes; and if the parties fail to agree on the amendment
of such provisions, Borrower and its Subsidiaries will furnish financial
statements in accordance with such changes but shall provide calculations for
all financial covenants, perform all financial covenants and otherwise observe
all financial standards and terms in accordance with applicable accounting
principles and practices in effect immediately prior to such changes.
Calculations with respect to financial covenants required to be stated in
accordance with applicable accounting principles and practices in effect
immediately prior to such changes shall be reviewed and certified by Borrower's
accountants.
1.3 Other Terms Defined in Illinois Uniform Commercial Code. All other
terms contained in this Agreement (and which are not otherwise specifically
defined herein) shall have the meanings provided in Article 9 of the Code on the
date hereof to the extent the same are used or defined therein.
1.4 Other Definitional Provisions; Construction. Whenever the context
so requires, the neuter gender includes the masculine and feminine, the singular
number includes the plural, and vice versa. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and references to Article, Section, Subsection, Annex, Schedule,
Exhibit and like references are references to this Agreement unless otherwise
specified. A Default shall "continue" or be "continuing" until such Default has
been waived in accordance with Subsection 11.1 hereof. References in this
Agreement to any Person shall include such Person's successors and permitted
assigns. References to any "Subsection" shall be a reference to such Subsection
of this Agreement unless otherwise stated.
2. CREDIT.
2.1 Term Loan Facility.
(A) Subject to the terms and conditions set forth in this Agreement
(including, without limitation, the conditions precedent set forth in
Subsections 4.1 and 4.2), on the Closing Date, upon the request of Borrower,
each Lender shall, severally in proportion to its Proportionate Share of
$15,500,000, make a term loan to Borrower (collectively, the "Term Loans"). The
Term Loans advanced by each Lender shall be evidenced, in part, by a promissory
17
note made by Borrower in favor of such Lender (each, a "Term Note") in the form
attached hereto as Exhibit 2.1 with the blanks appropriately filled and, the
provisions of any Term Note notwithstanding, shall become immediately due and
payable as provided in Subsection 9.1 hereof, and, without notice or demand,
upon the termination of this Agreement pursuant to Subsections 2.14 or 2.20(E)
hereof.
(B) Each of the Term Loans shall consist of one or more Base Rate
Advances or LIBOR Rate Advances (the "Type of Advance"), as duly requested by
Borrower pursuant to this Agreement. Borrower shall maintain a sufficient amount
of Base Rate Advances so that the making of payments on the Term Loans in
accordance with the terms of this Agreement will not necessitate a payment of a
LIBOR Rate Advance on a day other than the last day of the Interest Period
applicable thereto.
(C) Subject to Subsections 9.1, 2.14 and 2.20(E), the Term Loans shall
mature and be due and payable on May 1, 2005. Borrower shall prepay the Term
Loans as set forth in Subsection 2.6 and, subject to Subsections 2.4(E) and
2.20(C), Borrower may prepay the Term Loans, in whole or in part, together with
payment of all accrued interest on the principal amount to be prepaid upon five
(5) Business Days prior written notice to Agent and Lenders; provided, however,
that each such optional prepayment if in part shall be in an aggregate principal
amount of not less than $250,000 or an integral multiple thereof. All payments
on the Term Loans shall be made on a pro rata basis for the account of Lenders
pursuant to their respective Term Proportionate Shares. No portion of any Term
Loan that has been repaid may be reborrowed.
2.2 Revolving Loan Facility.
(A) Subject to the terms and conditions set forth in this Agreement, on
and after the Closing Date and to and excluding the Termination Date, upon the
request of Borrower pursuant to Subsection 2.4, each Lender shall, severally in
proportion to its Revolving Proportionate Share, make loans and advances to
Borrower (including Interim Revolving Loans (as defined below)) on a revolving
credit basis (the "Revolving Loans"). The Revolving Loans advanced by each
Lender shall be evidenced, in part, by a promissory note made by Borrower in
favor of such Lender (each, a "Revolving Note") in the form attached hereto as
Exhibit 2.2 with the blanks appropriately filled and, the provisions of any
Revolving Note notwithstanding, shall become immediately due and payable as
provided in Subsection 9.1 hereof, and, without notice or demand, upon the
termination of this Agreement pursuant to Subsections 2.14 or 2.20(E) hereof.
(B) The Revolving Loans shall consist of either Base Rate Advances or
LIBOR Rate Advances, as duly requested by Borrower pursuant to this Agreement.
Borrower shall maintain a sufficient amount of Base Rate Advances so that
application of the proceeds of Collateral in accordance with Subsections 2.7 and
3.6 will not necessitate a payment of a LIBOR Rate Advance on a day other than
the last day of the Interest Period applicable thereto.
2.3 Determination of Current Asset Base. Subject to Subsection 2.4(B),
the aggregate unpaid principal amount of the Revolving Loans shall not in the
aggregate exceed at any time the lesser of (A) Total Revolving Commitments then
in effect, minus the aggregate amount of all Letter of Credit Obligations, or
(B) the "Current Asset Base" (as defined below).
18
As used herein, "Current Asset Base" shall mean (i) up to eighty-five percent
(85%) of the face amount (less maximum discounts, credits and allowances which
may be taken by or granted to Account Debtors in connection therewith) then
outstanding under existing "Eligible Accounts" (as defined in Subsection 3.2
hereof), less such reserves as Agent in its sole discretion and in Good Faith
elects to establish; plus (ii) an amount equal to up to sixty percent (60%) of
Borrower's existing "Eligible Inventory" (as defined in Subsection 3.10 hereof),
of raw material, work-in-process and finished goods, valued at the lower of
cost, determined on an average cost basis, or market, less such reserves as
Agent in its sole discretion and in Good Faith elects to establish, minus (iii)
the Letter of Credit Obligations. Notwithstanding the foregoing or anything in
Subsection 3.10 to the contrary, the aggregate amount of Inventory deemed to be
Eligible Inventory shall not at any time exceed an amount equal to (the
"Inventory Sublimit") 50% of Borrower's cost of goods sold (excluding costs of
goods sold of Borrower's QuikWater Division), on an average cost basis, for the
most recent six (6) months for which Lenders have received the financial
statements required to be furnished by Borrower pursuant to Subsection 7.1(A)
hereof.
2.4 Borrowing Mechanics.
(A) Base Rate Advances shall be made on irrevocable telephonic or
written notice given to Agent not later than 12:00 noon, Chicago time, on the
Business Day on which the proposed Base Rate Advance is requested to be made. At
any time prior to the occurrence of a Default or an Event of Default, Borrower
may request the continuation of a LIBOR Rate Advance or the conversion of any
Advance from one Type of Advance to another pursuant to this Agreement; provided
that (i) conversions of all or any portion of a LIBOR Rate Advance may be made
only as of the last date of the Interest Period applicable thereto; (ii) such
continuation or conversion would not violate any other provisions of this
Agreement; and (iii) without limiting Subsections 9.1 or 9.2 or any other rights
and remedies of Agent and each Lender, after the occurrence of a Default or
Event of Default, such a continuation or conversion may only be made with the
consent of Agent. LIBOR Rate Advances, and any continuations of, or conversions
to LIBOR Rate Advances, shall be in an aggregate principal amount of $1,000,000
or an integral multiple thereof. LIBOR Rate Advances, or continuation of any
LIBOR Rate Advance, or conversion of any Base Rate Advance to a LIBOR Rate
Advance, may be made upon irrevocable written notice given to Agent by Borrower
no later than 12:00 noon, Chicago time, three Business Days prior to the
commencement of the Interest Period applicable thereto. In each such notice,
Borrower shall specify, as to continuations and conversions, the amount of the
Advance to be so continued or converted, as to new LIBOR Rate Advances, the
requested principal amount thereof, and in any case the applicable Interest
Period, and the first and last day of the Interest Period, each of which shall
be a Business Day. LIBOR Rate Advances shall automatically convert to Base Rate
Advances at the end of the applicable Interest Period unless Borrower gives the
requisite notice in accordance with the procedures set forth above to continue
the same as LIBOR Rate Advances. Borrower shall not be entitled to elect any
Interest Period with respect to a LIBOR Rate Advance if the provisions of this
Agreement would require Borrower to repay or prepay any portion of such LIBOR
Rate Advance prior to the end of such Interest Period.
(i) Each notice described in this Subsection 2.4(A) shall be given
by an Authorized Officer of Borrower either by telephone, telecopy, telex,
or cable, and, if such
19
notice (other than an irrevocable notice of borrowing of a Base Rate
Advance) is by telephone, confirmed in writing, substantially in the form
of Exhibit 2.4 in the case of a request for an Advance (the "Notice of
Borrowing") and in the form of Exhibit 2.5 (the "Notice of Conversion") in
the case of a conversion or continuation of an Advance; provided, however,
that subject to Subsection 2.4(D), telephonic notices requesting a Base
Rate Advance need not be confirmed in writing unless requested by Agent.
Each Notice of Borrowing and Notice of Conversion shall be irrevocable by
and binding on Borrower.
(ii) Agent shall be entitled to rely conclusively on each Authorized
Officer's authority to request, convert or continue Advances on behalf of
Borrower. Agent shall have no duty to verify the authenticity of the
signature appearing on any Notice of Borrowing, Notice of Conversion or
other writing delivered pursuant to this Subsection 2.4(A) and, with
respect to an oral request for an Advance or the conversion or
continuation thereof, Agent shall have no duty to verify the identity of
any individual representing himself as an Authorized Officer. Neither
Agent nor any Lender shall incur any liability to Borrower as a result of
acting upon any telephonic notice referred to in this Subsection 2.4(A)
which notice Agent believes in Good Faith to have been given by an
Authorized Officer or other individual authorized to request an Advance or
convert or continue an Advance on behalf of Borrower or for otherwise
acting in Good Faith under this Subsection 2.4(A) and, upon the funding,
conversion or continuation of an Advance by Lenders in accordance with
this Agreement, pursuant to any such telephonic notice, Borrower shall be
deemed to have borrowed or converted or continued such Advance hereunder.
(iii) Borrower may request one or two (but not more than two (2))
Advances, conversions of Advances and continuations of Advances on a
single day.
By giving notice as set forth above with respect to a LIBOR Rate Advance or with
respect to a conversion into or continuation of a LIBOR Rate Advance, Borrower
shall, subject to the other provisions of this Section 2, specify the applicable
Interest Period. The determination of the Interest Period shall be subject to
the following provisions:
(i) the initial Interest Period for any LIBOR Rate Advance shall
commence on the date of such LIBOR Rate Advance which shall be a Business
Day and each Interest Period (if any) occurring thereafter for such LIBOR
Rate Advance shall commence on the day on which the next preceding
Interest Period for such LIBOR Rate Advance expires;
(ii) there shall be no more than two (2) Interest Periods in the
aggregate in effect at any one time; and
(iii) no Interest Period may be selected which extends beyond the
last day of the Term.
(B) In the event Borrower is unable to comply with (i) the Current
Asset Base limitations set forth in Subsection 2.3 or (ii) the conditions
precedent to the making of a
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Revolving Loan, Lenders authorize Agent, in its sole discretion, to make
Revolving Loans (and Lenders shall fund their Revolving Proportionate Share of
such Revolving Loans upon the request of Agent) ("Interim Revolving Loans"), but
not in excess of the Total Revolving Commitments, for a period commencing on the
date Agent first receives a Notice of Borrowing requesting an Interim Revolving
Loan until the earlier of (x) the 30th Business Day after such date, (y) the
Business Day after the date the Required Lenders give notice to Agent to
terminate Agent's authority to made additional Interim Revolving Loans, or (z)
the date Borrower is again able to comply with the Current Asset Base
limitations and the conditions precedent to the making of Revolving Loans set
forth in Subsections 2.3 and 4.2 hereof, or obtains an amendment or waiver with
respect thereto (in each case, the "Interim Revolving Loan Period"). Agent shall
not, in any event, make any Interim Revolving Loan if at such time the amount of
such Interim Revolving Loan when added to the then aggregate outstanding
principal amount of other Interim Revolving Loans would exceed $3,200,000;
provided that, notwithstanding any of the foregoing limitations in this
Subsection 2.4(B) other than the Required Lenders right to give notice to Agent
to terminate Agent's authority to make additional Interim Revolving Loans as set
forth in clause (y) of this Subsection 2.4(B), Agent may make Revolving Loans
(and Lenders shall fund their Revolving Proportionate Share of such Revolving
Loans upon the request of Agent) intended to preserve, protect or enhance the
liquidation value of the Collateral. All Interim Revolving Loans shall be Base
Rate Advances. An Interim Revolving Loan shall cease to be an Interim Revolving
Loan (and shall be deemed to be an Advance consisting of Revolving Loans) if the
unsatisfied conditions giving rise to such Interim Revolving Loan shall
thereafter be satisfied or the events which cause such Advance to be an Interim
Revolving Loan shall thereafter cease to exist.
(C) Each Lender shall be entitled to earn interest at the then
applicable rate of interest, calculated in accordance with Subsection 2.20
hereof, on outstanding Loans which it has funded to Agent.
(D) Notwithstanding the obligation of Borrower to send written
confirmation of a Notice of Borrowing or Notice of Conversion made by telephone,
in the event that Agent acts upon a Notice of Borrowing or Notice of Conversion
made by telephone, such telephonic notice of borrowing or notice of conversion
shall be binding on Borrower whether or not written confirmation is sent by
Borrower or subsequently requested by Agent. Agent may act prior to the receipt
of any written confirmation, without any liability whatsoever, based upon
telephonic notice believed by Agent in Good Faith to be from Borrower or its
Authorized Officer. Agent's records of the terms of any telephonic Notices of
Borrowing or Notice of Conversion shall be conclusive on Borrower and Lenders in
the absence of gross negligence or willful misconduct on the part of Agent in
connection therewith.
(E) Without limiting Subsection 2.16, or any other provision of this
Agreement, Borrower may not voluntary prepay any LIBOR Rate Advance prior to the
last day of the Interest Period applicable thereto.
2.5 Settlements Among Agent and Lenders.
(A) Except as provided in Subsection 2.5(B) (which provides for the
settlement by Agent of Revolving Loans made, and payments thereon on a weekly
basis at
21
Agent's discretion to avoid daily settlements between Lenders), Agent shall give
to each Lender prompt notice of each Notice of Borrowing or Notice of Conversion
by telecopy, telex or cable. Except for Advances made as provided pursuant to
Subsection 2.5(B), no later than 2:00 p.m. Chicago time on the date of each
Advance to be made hereunder, each Lender will make available to Agent at its
principal office in Chicago, Illinois in immediately available funds, its Term
Proportionate Share of each Advance constituting Term Loans and its Revolving
Proportionate Share of each Advance constituting Revolving Loans, whereupon
Agent shall make such funds available to Borrower at the account of Borrower,
account number ▇▇▇▇▇▇▇, at ANB's offices in Chicago, Illinois. Unless Agent
shall have been notified by any Lender prior to the date of the Advance that
such Lender does not intend to make available to Agent its portion of the
Advance to be made on such date, Agent may assume that such Lender will make
such amount available to Agent on the Settlement Date (as defined below) and
Agent, in reliance upon such assumption, may but shall not be obligated to make
available the amount of the Advance to be provided by such Lender. Except as
provided in Subsection 2.5(B) and subject to Subsection 2.13(C), promptly after
its receipt of payments from or on behalf of Borrower (other than amounts
payable to Agent to reimburse Agent and the Issuing Bank for fees and expenses
payable solely to them), Agent will cause such payments to be distributed
ratably to Lenders. Lenders will apply such payments in accordance with
Subsection 2.7(B).
(B) Agent on behalf of Lenders may (but shall not be obligated to)
make Revolving Loans and receive and retain payments on the Revolving Loans in
accordance with this Subsection 2.5(B) without notice to, or settlement with,
Lenders; provided, Agent shall settle the amount of the Revolving Loans with
Lenders at least once a week as follows:
The amount of each Lender's Revolving Proportionate Share of outstanding
Revolving Loans shall be computed weekly (or more frequently in Agent's
discretion) and shall be adjusted upward or downward on the basis of the
amount of outstanding Revolving Loans as of 3:00 P.M. Chicago time on the
last Business Day of the period specified by Agent (such date being
referred to as the "Settlement Date"). Agent shall deliver to each Lender
promptly after any Settlement Date a summary statement of the amount of
outstanding Revolving Loans for such period. Lenders shall transfer to
Agent, or, subject to Subsection 2.13(C), Agent shall transfer to Lenders,
such amounts as are necessary so that (after giving effect to all such
transfers) the amount of the Revolving Loans made by each Lender shall be
equal to such Lender's Revolving Proportionate Share of the aggregate
amount of the Revolving Loans outstanding as of such Settlement Date. If
the summary statement is received by Lenders prior to 10:00 A.M. Chicago
time on any Business Day, each Lender shall make the transfers described
above in immediately available funds no later than 12:00 noon Chicago time
on the day such summary statement was received; and if such summary
statement is received by Lenders after 10:00 A.M. Chicago time on such
day, each Lender shall make such transfers no later than 12:00 noon
Chicago time on the next succeeding Business Day. The obligation of each
Lender to transfer such funds shall be irrevocable and unconditional and
without recourse to or warranty by Agent. Each of Agent and Lenders agree
to ▇▇▇▇ their respective books and records on the Settlement Date to show
at all times the dollar amount of their respective Revolving Proportionate
Shares of the outstanding Revolving Loans. To the extent that the
settlement described above shall not yet have occurred, upon repayment of
any part of the Revolving Loans by Borrower, Agent may first apply
22
such amounts repaid directly to the amounts made available by Agent
pursuant to this Subsection 2.5(B).
Because Agent on behalf of Lenders may be advancing and/or may be repaid all or
a portion of the Revolving Loans prior to the time when Lenders will actually
advance and/or be repaid all or a portion of Revolving Loans, interest with
respect to the Revolving Loans shall be allocated by Agent to each Lender and
Agent in accordance with the amount of the Revolving Loans actually advanced by
and repaid to each Lender and Agent and shall accrue from and including the date
such Revolving Loans are so advanced to but excluding the date such Revolving
Loans are either repaid by Borrower in accordance with Subsection 2.6 or
actually settled by the applicable Lender as described in this Subsection
2.5(B).
2.6 Mandatory Payments; Reduction of Commitments.
(A) The sum of the aggregate outstanding principal balance of the
Revolving Loans and the aggregate outstanding amount of the Letter of Credit
Obligations may not at any time exceed the Total Revolving Commitments. In
addition, subject to Subsection 2.4(B), if the sum of (i) aggregate balance of
the unpaid principal amount of the Revolving Loans, plus (ii) the aggregate
amount of all Letter of Credit Obligations outstanding at any time, is in excess
of the Current Asset Base, such excess shall be immediately due and payable
without the necessity of any demand. Any amounts paid in excess of the
outstanding balance of the Revolving Loans and Letter of Credit Obligations
otherwise then due and owing shall be held by Agent as cash collateral for the
Letter of Credit Obligations not then due.
(B) On the Termination Date, the Revolving Credit Commitment of each
Lender shall automatically reduce to zero and may not be reinstated.
(C) Borrower may not reduce the Total Revolving Commitments in full
or in part except in whole or in part, and, if in part, in integral multiples of
$1,000,000, upon thirty (30) days' prior written notice to Lenders and upon
payment of a Commitment Reduction Fee as provided in Subsection 2.20(C). Any
such reduction shall be applied ratably to the Lenders' respective Revolving
Credit Commitments.
(D) Borrower shall make a payment on the aggregate outstanding
principal amount of the Term Loans on July 1, 2002 and on the first day of each
month thereafter to and including April 1, 2005 in the aggregate monthly amount
of $184,524 and (subject to subsections 9.1, 2.14 and 2.20 (E)) shall pay the
remaining outstanding principal balance of the Term Loans on May 1, 2005.
(E) In addition to the payments required pursuant to Subsections
2.1(C) and 2.8 and payments and prepayments required by the other subsections of
this Subsection 2.6 and this Agreement, upon receipt of any "Net Proceeds" (as
defined in below in this Subsection 2.6(E)), Borrower shall cause the
Liabilities to be immediately prepaid in an aggregate amount equal to the amount
of such Net Proceeds; provided, that prepayments made pursuant to this
Subsection 2.6(E) shall (i) first, be applied against the outstanding principal
balance of Term Loans in inverse order of their maturity; (ii) second, be
applied against the outstanding principal balance of Revolving Loans, and (iii)
third, be applied against any other outstanding Liabilities
23
or, at Agent's discretion, be held by Agent as cash collateral for Letter of
Credit Obligations or other Liabilities. As used in this Subsection 2.6(E) the
term "Net Proceeds" shall mean the sum of (x) the aggregate "value" (as such
term is defined in Subsection 8.15) of Equipment sold, plus (y) the amount of
"Net Proceeds" and "Net Awards" (as such terms are defined in the Mortgages).
(F) In addition to the payments required pursuant to Subsections
2.1(C) and 2.8 and payments and prepayments required by the other subsections of
this Subsection 2.6 and this Agreement, in the event Borrower or a Subsidiary
receives any Equity Sale Proceeds or any Debt Sale Proceeds, Borrower shall
cause the Liabilities to be immediately prepaid in an aggregate amount equal to
such proceeds (except to the extent that the Required Lenders shall consent in
their discretion to the application of such proceeds ("Applied Financing
Proceeds") to pay for Capital Expenditures as to a designated project on which
the Lenders have received a detailed plan (including an updated budget of
Borrower in the form provided for in Subsection 7.1(C)) from Borrower, in which
event Agent shall hold the same as cash collateral until the earlier of (x)
application of such proceeds to pay for such Capital Expenditures upon request
of Borrower, (y) 180 days after the date specified in such detailed plan and
updated budget as the date for such expenditure, and (z) the election of the
Required Lenders at any time following the occurrence and during the continuance
of a Default); provided, that prepayments made pursuant to this Subsection
2.6(F) shall (i) first, be applied against the outstanding principal balance of
Term Loans in inverse order of their maturity; (ii) second, be applied against
the outstanding principal balance of Revolving Loans, and (iii) third, be
applied against any other outstanding Liabilities or, at Agent's discretion, be
held by Agent as cash collateral for Letter of Credit Obligations or other
Liabilities. Notwithstanding the foregoing, the aggregate amount of Equity Sale
Proceeds and Debt Sale Proceeds applied to pay for Capital Expenditures or
constituting Applied Financing Proceeds after the date hereof shall be limited
to $4,000,000 and any excess thereof shall be applied to the Liabilities as
provided in this Subsection 2.6(F).
(G) In addition to the payments required pursuant to Subsections
2.1(C) and 2.8 and payments and prepayments required by the other subsections of
this Subsection 2.6 and this Agreement, on the fifth (5th) day following the day
on which Borrower's financial statements for each Fiscal Quarter (commencing
with the Fiscal Quarter of Borrower ending July 31, 2002) are required to be
delivered to Agent and Lenders pursuant to Subsection 7.1(B), Borrower shall
make a prepayment on the principal of the Term Loans and the other Liabilities
in an aggregate amount equal to 50% of Excess Cash Flow (if positive) for such
Fiscal Quarter; provided, that prepayments made pursuant to this Subsection
2.6(G) shall (i) first, be applied against the outstanding principal balance of
Term Loans in inverse order of their maturity; (ii) second, be applied against
the outstanding principal balance of Revolving Loans, (iii) third, be held by
Agent as cash collateral for Letter of Credit Obligations, and (iv) fourth, be
applied against any other outstanding Liabilities or, at Agent's discretion, be
held by Agent as cash collateral for other Liabilities; further provided,
however, that the aggregate amount payable as to any Fiscal Quarter shall be
limited so that the aggregate amount prepaid pursuant to this Subsection 2.6(G)
for such Fiscal Quarter and all prior Fiscal Quarters shall not exceed an amount
equal to the sum of (i) the product of the aggregate number of such Fiscal
Quarters and $221,500, less (ii) the aggregate amount of all voluntary
prepayments of principal of the Term Loan during such Fiscal Quarter. As used
herein the term "Excess Cash Flow" shall mean for any Fiscal Quarter the sum of
the following as determined for Borrower for such Fiscal Quarter
24
in accordance with GAAP: (i) earnings before income tax expense (determined
based on the valuation of inventory on an average cost basis) and excluding
gains or losses from or in connection with the QuikWater Division and Borrower's
sale of the assets of such division (including without limitation the QuikWater
Charge, as hereinafter defined); plus (ii) depreciation, amortization, and other
non-cash charges deducted in determining earnings; minus (iii) to the extent
included in the earnings of Borrower for such period, equity in undistributed
earnings of Subsidiaries; minus (iv) the aggregate amount of Dividends and other
Distributions; minus (v) Capital Expenditures for such period other than Capital
Expenditures representing capitalized lease obligations incurred or which were
financed through the incurrence of Purchase Money Secured Financing (other than
the Revolving Loans); minus (v) income taxes paid in cash; minus (vi) the sum of
scheduled payments of principal (including the portions of payments of
Capitalized Lease Obligations not charged to Interest Expense) on all
Indebtedness of Borrower (other than the Revolving Loans); plus (vii) to the
extent not included in earnings, Distributions received from Subsidiaries of
Borrower; minus (viii) the lesser of (x) any gain from the sale of equipment to
the extent included in such earnings before income tax expense for such Fiscal
Quarter, and (y) the mandatory prepayment made on the Liabilities pursuant to
Subsection 2.6(E) as a result of such sale of equipment.
2.7 Payments and Computations.
(A) Borrower shall make each payment hereunder and under the Notes
not later than 12:00 noon Chicago time on the day when due in Dollars to Agent
at its address referred to in Subsection 11.17 hereof in immediately available
funds.
(B) All amounts received by Agent from or for the account of
Borrower for distribution to Agent, Lenders or the Issuing Bank hereunder or
otherwise shall be distributed and applied as soon as practicable in the
following order: first, to the payment of any Fees, Expenses or other
Liabilities due and payable to Agent under any of the Financing Agreements,
including amounts advanced by Agent on behalf of Lenders pursuant to Subsection
2.5(B); second, to the payment of any Fees, Expenses or other Liabilities due
and payable to the Issuing Bank under any of the Financing Agreements; third, to
the ratable payment of any Fees, Expenses or other Liabilities due and payable
to Lenders under any of the Financing Agreements other than those Liabilities
specifically referred to below in this Subsection 2.7(B); fourth, to the ratable
payment of interest due on the Loans; fifth, to the ratable payment of principal
due on the Loans, and, sixth, to the ratable payment of any Related Hedging
Obligations, pro rata, and, seventh, to the payment of any other Secured
Obligations. Application on account of the Liabilities constituting Loans shall
be made by Agent (i) first to all Base Rate Advances and (ii) only when no Base
Rate Advances are outstanding to LIBOR Rate Advances; provided, however, prior
to expiration of the Interest Period applicable thereto in lieu of applying
amounts to LIBOR Rate Advances, Agent may in its discretion retain such balances
as cash collateral for the Liabilities until applied to such LIBOR Rate Advances
at the expiration of the Interest Period applicable thereto. Any payment
received hereunder as a distribution in any proceeding referred to in Subsection
9.1(H) or (I) shall, unless paid with respect to amounts specifically owing to
Agent or the Issuing Bank, be distributed and applied to the payment of the
amounts due hereunder and under the Notes ratably in accordance with such
amounts (or, if a court of competent jurisdiction shall otherwise specify, as
specified by such court).
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2.8 Borrower's Loan Account. Agent shall maintain a loan account
(the "Loan Account") on its internal data control systems in which shall be
recorded (i) all loans and advances made by Agent or Lenders to Borrower or for
Borrower's account pursuant to this Agreement, including without limitation all
Letter of Credit Obligations, (ii) all payments made by Borrower or for
Borrower's account on all such loans and advances and Letter of Credit
Obligations, and (iii) all other appropriate debits and credits as provided in
this Agreement, including, without limitation, all interest, Fees, Expenses, and
other charges, expenses and fees. All entries in Borrower's Loan Account shall
be made in accordance with Agent's customary accounting practices as in effect
from time to time. Borrower will be credited, in accordance with Subsection 2.7
above, with all amounts received by or on behalf of Agent, Lenders or the
Issuing Bank from Borrower or from others for Borrower's account, including, as
set forth above, all amounts received by Agent as set forth in Subsection
2.7(B). In no event shall prior recourse to any Accounts or other Collateral be
a prerequisite to Agent's right to demand payment of any of the Liabilities upon
its maturity. Further, Agent shall have no obligation whatsoever to perform in
any respect any of Borrower's contracts or obligations relating to the Accounts.
Borrower promises to pay to Agent and Lenders the amount reflected as owing by
it under its Loan Account and all of its other obligations hereunder and under
any of the other Financing Agreements as such amounts become due or are declared
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) pursuant to the terms of this Agreement and the other Financing
Agreements. Unless otherwise agreed in writing from time to time hereafter, all
payments which Borrower is required to make to Lenders and Agent under this
Agreement or under any of the other Financing Agreements shall be made by
appropriate debits to Borrower's Loan Account. Agent may in its sole discretion
elect to ▇▇▇▇ Borrower for such amounts in which case the amount shall be
immediately due and payable with interest thereon as provided herein.
2.9 Statements. All Loans, Advances and other financial
accommodations to Borrower, and all other debits and credits provided for in
this Agreement, may be evidenced by Agent in its internal data control systems
showing the date, amount and reason for each such debit or credit. Until such
time as Agent shall have rendered to Borrower written statements of account as
provided herein, the balance in Borrower's Loan Account, as set forth on Agent's
most recent printout, shall be rebuttably presumptive evidence of the amounts
due and owing to Agent and Lenders by Borrower. Not more than twenty (20) days
after the last day of each calendar month, Agent shall render to Borrower a
statement setting forth the balance of Borrower's Loan Account, including
principal, interest, Expenses, Fees and any other expenses, fees and charges.
Each such statement shall be subject to subsequent adjustment by Agent but
shall, absent manifest errors or omissions, be presumed correct and binding upon
Borrower and shall constitute an account stated unless, within sixty (60) days
after receipt of any statement from Agent, Borrower shall deliver to Agent
written objection thereto specifying the error or errors, if any, contained in
such statement.
2.10 Taxes.
(A) Any and all payments by Borrower hereunder, under the Notes or
in respect of the Letters of Credit which are made to or for the benefit of any
Lender, the Issuing Bank or Agent shall be made, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings and penalties, interests and all
26
other liabilities with respect thereto ("Taxes"), excluding, (i) in the case of
each such Lender, the Issuing Bank or Agent, taxes imposed on its net income
(including, without limitation, any taxes imposed on branch profits) or capital
and franchise taxes imposed on it by the jurisdiction under the laws of which
such Lender, the Issuing Bank or Agent (as the case may be) is organized or any
political subdivision thereof, (ii) in the case of each such Lender, the Issuing
Bank and Agent, any Taxes that are in effect and that would apply to a payment
to such Lender, the Issuing Bank or Agent, as applicable, as of the date of this
Agreement, and (iii) if any Person acquires any interest in this Agreement, any
Note or Letter of Credit Obligations pursuant to the provisions hereof, or Agent
or any Lender changes the office in which any Loan is made, accounted for or
booked (any such Person or Agent or such Lender in that event being referred to
as a "Tax Transferee"), any Taxes to the extent that they are in effect and
would apply to a payment to such Tax Transferee as of the date of the
acquisition of such interest or change in office, as the case may be (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes"). If Borrower
shall be required by law to deduct any Covered Taxes from or in respect of any
sum payable hereunder, under any Note or in respect of any Letter of Credit
Obligations to or for the benefit of any Lender, the Issuing Bank, Agent or any
Tax Transferee, (A) the sum payable shall be increased as may be necessary so
that after making all required deductions of Covered Taxes (including deductions
of Covered Taxes applicable to additional sums payable under this Subsection
2.10) such Lender, the Issuing Bank, Agent or such Tax Transferee, as the case
may be, receives an amount equal to the sum it would have received had no such
deductions been made, (B) Borrower shall make such deductions and (C) Borrower
shall pay the full amount so deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(B) In addition, Borrower agrees to pay any present or future stamp,
documentary, excise, privilege, intangible or similar levies that arise at any
time or from time to time (other than the Oklahoma Mortgage Registration Tax
pursuant to 68 Oklahoma Stat. Sections 1901 et seq.) (i) from any payment made
under any and all Financing Agreements, (ii) from the transfer of the rights of
any Lender under any Financing Agreements to any transferee, or (iii) from the
execution or delivery by Borrower of, or from the filing or recording or
maintenance of, or otherwise with respect to the exercise by Agent or Lenders of
their rights under, any and all Financing Agreements (hereinafter referred to as
"Other Taxes").
(C) Borrower will indemnify each Lender, the Issuing Bank, Agent,
and any Tax Transferee for the full amount of (i) Covered Taxes imposed on or
with respect to amounts payable hereunder, and (ii) Other Taxes, and any
liability (including penalties, interest and expenses) arising solely therefrom
or with respect thereto. Payment of this indemnification shall be made within
thirty (30) days from the date such Lender, the Issuing Bank, Agent or such Tax
Transferee provides Borrower with a certificate, certifying and setting forth in
reasonable detail the calculation thereof as to the amount and type of such
Taxes. Any such certificate submitted by such Lender, the Issuing Bank, Agent or
such Tax Transferee in Good Faith to Borrower shall, absent manifest error, be
final, conclusive and binding on all parties. The obligations of Borrower under
this Subsection 2.10 shall survive payment of the Liabilities and termination of
this Agreement.
27
(D) Within 30 days after having received a receipt for payment of
Covered Taxes or Other Taxes, Borrower will furnish to Agent, at its address
referred to in Subsection 11.17, the original or a certified copy of a receipt
evidencing payment thereof.
(E) If a Tax Transferee that is organized under the laws of a
jurisdiction outside of the United States acquires an interest in this Agreement
or any Note or Letter of Credit Obligation, the transferor shall cause such Tax
Transferee to agree that on or prior to the effective date of such acquisition,
it will deliver to Borrower and Agent (i) two valid, duly completed copies of
IRS Form 1001 or 4224 or successor applicable form, as the case may be, and any
other required form, certifying in each case that such Tax Transferee is
entitled to receive payments under this Agreement and the Notes payable to it
without deduction or withholding of United States federal income tax or with
such withholding imposed at a reduced rate other than the maximum rate otherwise
required under the Internal Revenue Code (the "Reduced Rate"); and (ii) a valid,
duly completed IRS Form W-8 or W-9 or successor applicable form, as the case may
be, to establish an exemption from United States backup withholding tax. Each
Tax Transferee that delivers to Borrower and Agent a Form 1001 or 4224, and Form
W-8 or W-9 and any other required form, pursuant to the next preceding sentence,
further undertakes to deliver two further copies of the said Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms, or other manner of required
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or otherwise is required to be resubmitted as a
condition to obtaining an exemption from a required withholding of United States
federal income tax or entitlement to having such withholding imposed at the
Reduced Rate or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to Borrower and Agent, and such
extensions or renewals thereof as may reasonably be requested by Borrower and
Agent, certifying (i) in the case of a Form 1001 or 4224 that such Tax
Transferee is entitled to receive payments under this Agreement or the Notes
payable to it without deduction or withholding of any United States federal
income taxes or with such withholding imposed at the Reduced Rate, unless any
change in treaty, law or regulation or official interpretation thereof has
occurred after the effective date of such acquisition or change and prior to the
date on which any such delivery would otherwise be required that renders all
such forms inapplicable or that would prevent such Tax Transferee from duly
completing and delivering any such form with respect to it, and such Tax
Transferee advises Borrower and Agent that it is not capable of receiving
payments (a) without any deduction or withholding of United States federal
income tax or (b) with such withholding at the Reduced Rate, as the case may be,
or (ii) in the case of a Form W-8 or W-9, establishing an exemption from United
States backup withholding tax.
(F) If any Taxes for which Borrower would be required to make
payment under this Subsection 2.10 are imposed, the applicable Lender, the
Issuing Bank, Agent or Tax Transferee, as the case may be, shall use its
reasonable efforts to avoid or reduce such Taxes by taking any appropriate
action (including, without limitation, assigning its rights hereunder to a
related entity or a different office) which would not, in the sole opinion of
such Lender, the Issuing Bank, Agent or Tax Transferee exercised in Good Faith
be otherwise disadvantageous to such Lender, the Issuing Bank, Agent or Tax
Transferee, as the case may be.
(G) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Subsection 2.10 shall survive the payment in full of the Liabilities and
termination of this Agreement.
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2.11 Affected Lenders. If Borrower is obligated to pay to any Lender
any amount under Subsections 2.10, 2.15, 2.17 or 2.20(J) hereof, or if any
Lender is a Defaulting Lender, Borrower may, if no Default or Event of Default
then exists, replace such Lender with another lender acceptable to Agent, and
such Lender hereby agrees to be so replaced subject to the following:
(A) The obligations of Borrower hereunder to such Lender to be
replaced (including such increased or additional costs incurred from the date of
notice to Borrower of such increase or additional costs through the date such
Lender is replaced hereunder) shall be paid in full to such Lender concurrently
with such replacement;
(B) If such replacement is a result of increased costs under
Subsections 2.10, 2.15, 2.17 or 2.20(J), the replacement Lender shall be a bank
or other financial institution that is not subject to such increased costs which
caused Borrower's election to replace any Lender hereunder, and each such
replacement Lender shall execute and deliver to Agent such documentation
satisfactory to Agent pursuant to which such replacement lender is to become a
party hereto, conforming to the provisions of Subsection 11.6 hereof, with a
Revolving Credit Commitment equal to that of Lender being replaced and shall
make Loans in the aggregate principal amount equal to the aggregate outstanding
principal amount of the Loans of Lender being replaced;
(C) Upon such execution of such documents referred to in clause (B)
and repayment of the amounts referred to in clause (A), the replacement lender
shall be a "Lender" with a Revolving Credit Commitment as specified hereinabove
and Lender being replaced shall cease to be a "Lender" hereunder, except with
respect to indemnification provisions under this Agreement, which shall survive
as to such replaced Lender;
(D) Agent shall reasonably cooperate in effectuating the replacement
of any Lender under this Subsection 2.11, but at no time shall Agent be
obligated to initiate any such replacement;
(E) Any Lender replaced under this Subsection 2.11 shall be replaced
at Borrower's sole cost and expense and at no cost or expense to Agent or any
Lender; and
(F) If Borrower proposes to replace any Lender pursuant to this
Subsection 2.11 because Lender seeks reimbursement under either Subsections
2.10, 2.15, 2.17 or 2.20(J), then it must also replace any other Lender who
seeks similar levels of reimbursement (as a percentage of such Lender's
Revolving Credit Commitment) under such Subsections.
2.12 Sharing of Payments. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off or
otherwise) on account of the Loans made by it or its participation in the Letter
of Credit Obligations in excess of its allocable share pursuant to Subsection
10.13, of payments on account of the Loans or Letter of Credit Obligations
obtained by all Lenders, such Lender shall forthwith purchase from the other
Lenders such participations in the Loans made by them or in their participation
in Letters of Credit as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is
29
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect to the total amount so recovered. Borrower agrees
that any Lender so purchasing a participation from another Lender pursuant to
this Subsection 2.12 may, to the fullest extent permitted by law, exercise all
of its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of Borrower in
the amount of such participation.
2.13 Defaulting Lenders.
(A) If any amount described in Subsection 2.4, Subsection 2.5 or in
Subsection 2.19(F) hereof is not made available to Agent by a Lender (such
Lender being hereinafter referred to as a "Defaulting Lender") and Agent has
made such amount available to Borrower or the Issuing Bank, as applicable, Agent
shall be entitled to recover such amount on demand from such Defaulting Lender
together with interest as hereinafter provided. If such Defaulting Lender does
not pay such amount forthwith upon Agent's demand therefor, Agent shall promptly
notify Borrower and Borrower shall immediately (but in no event later than five
Business Days after such demand) pay such amount to Agent together with the
amounts provided for in the immediately succeeding sentence. Agent shall also be
entitled to recover from such Defaulting Lender and/or Borrower, as the case may
be, (x) interest on such amount in respect of each day from the date such
corresponding amount was made available by Agent to Borrower to the date such
amount is recovered by Agent, at a rate per annum equal to either (i) if paid by
such Defaulting Lender, the overnight Federal Funds Rate or (ii) if paid by
Borrower, the then applicable rate of interest, calculated in accordance with
Subsection 2.20(A) hereof, plus (y) in each case, an amount equal to any costs
(including legal expenses) and losses incurred as a result of the failure of
such Defaulting Lender to provide such amount as provided in this Agreement.
Nothing herein shall be deemed to relieve any Lender from its duty to fulfill
its obligations hereunder or to prejudice any rights which Borrower may have
against any Lender as a result of any default by such Lender hereunder,
including, without limitation, the right of Borrower to seek reimbursement from
any Defaulting Lender for any amounts paid by Borrower under clause (y) above on
account of such Defaulting Lender's default.
(B) The failure of any Lender to make the Loans to be made by it as
part of any Advance or fund its participation in any drawing under a Letter of
Credit shall not relieve any other Lender of its obligation, if any, hereunder
to make its Loans on the date of such Advance or fund its participation in any
drawing under any Letter of Credit, but no Lender shall be responsible for the
failure of any other Lender to make its Loans to be made by such other Lender on
the date of any Advance or to fund any Lender's participation in any drawing
under a Letter of Credit.
(C) Notwithstanding anything contained herein to the contrary, so
long as any Lender is a Defaulting Lender or has rejected its Revolving Credit
Commitment, Agent shall not be obligated to transfer to such Lender any payments
made by Borrower to Agent for the benefit of such Lender; and, such Lender shall
not be entitled to the sharing of any payments pursuant to
30
Subsection 2.12. Amounts payable to such Lender under Subsection 2.12 shall
instead be paid to Agent. Agent may hold and, in its discretion, re-lend to
Borrower for the account of such Lender the amount of all such payments received
by it for the account of such Lender. For purposes of voting or consenting to
matters with respect to the Financing Agreements and determining Percentages,
such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Percentages shall be deemed to be zero (O) and each other Lender's Percentage
shall be deemed to be increased pro rata based on its Percentages theretofore
existing. This Subsection 2.13(C) shall remain effective with respect to such
Lender until (x) the Liabilities under this Agreement shall have been declared
or shall have become immediately due and payable or (y) the Required Lenders,
Agent and Borrower shall have waived such Lender's default in writing. No
Revolving Credit Commitment of any Lender shall be increased or otherwise
affected, and performance by Borrower shall not be excused, by the operation of
this Subsection 2.13(C). Any payments of principal or interest which would, but
for this Subsection 2.13, be paid to any Lender, shall be paid to Lenders who
shall not be in default under their respective Revolving Credit Commitments and
who shall not have rejected any Revolving Credit Commitment, for application to
the Revolving Loans, or to provide cash collateral in such manner and order as
shall be determined by Agent.
2.14 Term of this Agreement. This Agreement shall be effective until
the Termination Date (the period during which this Agreement is effective being
the "Term") and shall terminate on the Termination Date; provided, however, that
the Required Lenders shall retain the right to terminate this Agreement at any
time upon the occurrence and during the continuance of a Default; and further
provided, however, that (i) all of Agent's and each Lender's rights and remedies
under this Agreement and the other Financing Agreements and (ii) all of Agent's
and each Lender's security interests shall survive such termination until all of
the Liabilities have been fully paid and satisfied and all Letters of Credit
have expired, been canceled or terminated. Upon the effective date of
termination of this Agreement (including without limitation any termination
pursuant to Subsection 2.20(E)), all of the Liabilities shall become immediately
due and payable without notice or demand. Notwithstanding any termination, until
all of the Liabilities shall have been fully paid, performed and satisfied, all
financing arrangements between Borrower and Agent and Lenders shall have been
terminated and all Letters of Credit shall have expired, been cancelled or
terminated, all of Agent's and each Lender's rights and remedies under this
Agreement and the other Financing Agreements shall survive, Agent shall be
entitled to retain its security interest in and to all existing and future
Collateral, and Borrower shall continue to remit collections of Accounts and
proceeds as provided herein.
2.15 Additional Costs, Etc. With Respect to LIBOR Rate Advances.
(A) If, in the reasonable determination of any Lender, any
applicable "law," which expression, as used in this Section 2, includes
statutes, rules and regulations thereunder and interpretations thereof by any
competent court or by any Governmental Authority or other regulatory body or
official charged with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to such Lender or any Lending Affiliate
by any central bank or other fiscal, monetary or other authority (whether or not
having the force of law) adopted or becoming effective, or any change in the
interpretation or administration thereof, or compliance by such
31
Lender or any Lending Affiliate maintaining any LIBOR Rate Advance, in each case
after the date hereof, shall :
(i) subject such Lender or any Lending Affiliate to any tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature with
respect to LIBOR Rate Advances (other than taxes imposed on or measured by
the overall net income of such Lender), or
(ii) change the taxation of payments to such Lender or any Lending
Affiliate of principal or interest on or any other amount relating to any
LIBOR Rate Advances (other than taxes imposed on or measured by the
overall net income of such Lender), or
(iii) impose or increase or render applicable any special deposit,
assessment, insurance charge, reserve or liquidity or other similar
requirement (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by such Lender or any
Lending Affiliate, or
(iv) impose on such Lender or any Lending Affiliate any other
conditions or requirements with respect to LIBOR Rate Advances, and the
result of any of the foregoing is:
(I) to increase the cost to such Lender of making,
funding or maintaining its LIBOR Rate Advances, or
(II) to reduce the amount of principal, interest or
other amount payable to such Lender hereunder on account of LIBOR
Rate Advances, or
(III) to require such Lender to make any payment or to
forego any interest or other sum payable under this Agreement,
then, and in each such case, Borrower will, upon demand made by such Lender at
any time and from time to time and as often as the occasion therefor may arise,
pay to such Lender such additional amounts as will be sufficient to compensate
such Lender for such additional cost, reduction, payment or foregone interest or
other sum. The foregoing shall not be deemed to apply to any change in the
Reserve Rate applied in the calculation of the LIBOR Rate.
(B) Neither Agent nor any Lender shall in any event be responsible
to Borrower in any way if Agent is not able for any reason beyond its control to
quote a LIBOR Rate with respect to any proposed Interest Period. If, on any
proposed date of determination of a LIBOR Rate, Agent shall determine (which
determination shall be conclusive and binding on Borrower) that it is unable to
determine the LIBOR Rate with respect to any proposed Interest Period, Agent
shall promptly notify Borrower and Lenders of such determination. In such event,
any then pending notice by Borrower requesting the making of a LIBOR Rate
Advance, or conversion of any Base Rate Advance to a LIBOR Rate Advance, or
continuation of any LIBOR Rate Advance shall be deemed and shall constitute a
request for the making of a Base Rate Advance or a conversion to a Base Rate
Advance, as the case may be.
32
(C) If Agent determines that either maintenance of a LIBOR Rate
Advance would violate any applicable law, or that deposits of a type and
maturity appropriate to match fund any LIBOR Rate Advance does not accurately
reflect the cost of making or maintaining such a LIBOR Rate Advance, then Agent
shall suspend the availability of LIBOR Rate Advances so long as any such
condition exists, and all affected LIBOR Rate Advances outstanding shall be
immediately repaid upon notice to Borrower from Agent to do so; provided,
however, that if otherwise permitted under this Agreement Borrower may reborrow,
as a Base Rate Advance, an amount equal to the principal amount of all such
affected LIBOR Rate Advances so repaid.
2.16 Indemnification for Losses. Without limiting any of the other
provisions of this Agreement, Borrower will, on demand by any Lender, at any
time and from time to time and as often as the occasion therefor may arise,
indemnify each Lender against any losses, costs or expenses which such Lender
may at any time or from time to time sustain or incur with respect to LIBOR Rate
Advances as a consequence of:
(A) the failure by Borrower to borrow or continue any LIBOR Rate
Advance on the date of borrowing, conversion or continuation designated by
Borrower, or
(B) the failure by Borrower to pay, punctually on the due date
thereof, any amount payable by Borrower under this Agreement, or
(C) the accelerated payment of Borrower's obligations under this
Agreement as a result of a Default, or
(D) any voluntary repayment or prepayment of any principal of any
LIBOR Rate Advance on a date other than the last day of the Interest Period
relating to the principal so repaid or prepaid or so converted.
Such losses, costs or expenses will include, but will not be limited
to, the reimbursement for any loss, expense or cost in liquidating or employing
deposits acquired to fund any affected LIBOR Rate Advance.
2.17 Capital Adequacy. If, after the date hereof, either (A) the
introduction of or any change in or in the interpretation of any law or (B)
compliance by any Lender or any Lending Affiliate with any guideline or request
from any central bank or Governmental Authority (whether or not having the force
of law) (i) affects or would affect the amount of capital required or expected
to be maintained by any Lender or any of its Lending Affiliates and the
respective Lender reasonably determines that the amount of such capital is
increased by or based upon the existence of the LIBOR Rate Advances then, upon
demand by such Lender, Borrower shall immediately pay to such Lender, from time
to time as specified by such Lender, additional amounts sufficient to compensate
such Lender in light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of LIBOR Rate Advances or (ii) has or would have the effect of reducing the rate
of return on the capital or assets of such Lender or any Person controlling such
Lender as a consequence of, as determined by Lender in its sole discretion and
in Good Faith, the existence of such Lender's commitments or obligations under
this Agreement or any of the other Financing
33
Agreements, then, upon demand by such Lender, Borrower immediately shall pay to
Lender, from time to time as specified by Lender, additional amounts sufficient
to compensate such Lender in light of such circumstances. The obligations of
Borrower under this Subsection 2.17 shall survive payment of the Liabilities and
termination of this Agreement.
2.18 Certificate. A certificate signed by an officer of a Lender,
setting forth any additional amount required to be paid by Borrower to Lender
under any provision of Subsections 2.15 through 2.17 and the computations made
by such Lender to determine such additional amount, shall be submitted by such
Lender to Borrower in connection with each demand made at any time by such
Lender upon Borrower under any of such provisions. Such certificate, in the
absence of manifest error, shall be conclusive as to the additional amount owed.
2.19 Letters of Credit.
(A) Issuance of Letters of Credit. Subject to the terms and
conditions of this Agreement (including, without limitation, the conditions
precedent set forth in Subsections 4.1 and 4.2) on and after the Closing Date
and to and excluding the Termination Date, Agent shall request the Issuing Bank
to issue, and the Issuing Bank shall issue, standby Letters of Credit hereunder
at the request of Borrower and for its account, as more specifically described
below; provided, however, that Agent shall not be obligated to request the
Issuing Bank to issue, and the Issuing Bank shall not be obligated to issue, any
Letter of Credit for the account of Borrower if at the time of such requested
issuance (i) the face amount of such requested Letter of Credit, when added to
the aggregate outstanding principal amount of the Revolving Loans and all Letter
of Credit Obligations then outstanding would cause the sum of the Revolving
Loans and Letter of Credit Obligations to exceed (a) the Total Revolving
Commitments then in effect or (b) the Current Asset Base then in effect; (ii)
the face amount of such Letter of Credit when added to the Letter of Credit
Obligations then outstanding, would exceed $2,000,000; or (iii) any order,
judgment or decree of any Governmental Authority shall purport by its terms to
enjoin or restrain the Issuing Bank from issuing such Letter of Credit, or any
law or governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) from any Governmental Authority with jurisdiction
over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain
from, the issuance of Letters of Credit in particular or shall impose upon the
Issuing Bank with respect to any Letter of Credit any restriction or reserve or
capital requirement (for which the Issuing Bank is not otherwise compensated) or
any unreimbursed loss, cost or expense which was not in effect as of the date of
this Agreement and which the Issuing Bank in Good ▇▇▇▇▇ ▇▇▇▇▇ material to it. In
addition, the Banks hereby ratify and approve ANB's execution of the
Reimbursement Agreement and the Participation Agreement.
(B) Terms of Letters of Credit. Each Letter of Credit shall be in a
form and substance acceptable to Agent and the Issuing Bank. Borrower shall
execute the Issuing Bank's standard form of application and reimbursement
agreement for each Letter of Credit. In no event may the term of any Letter of
Credit issued hereunder exceed twenty four (24) months or such greater period as
may be acceptable to the Issuing Bank in its sole discretion, and all Letters of
Credit issued hereunder shall expire no later than the date that is five (5)
Business Days prior to the last day of the Term. Any Letter of Credit containing
an automatic renewal provision shall also contain a provision pursuant to which,
notwithstanding any other provisions thereof, it shall expire no later than the
date that is five (5) Business Days prior to the last day of the Term.
34
Notwithstanding the foregoing, the PEDFA Letter of Credit shall be in the form
issued by the PEDFA L/C Bank, and contain the terms set forth therein, and
Borrower has entered into the Reimbursement Agreement with respect thereto.
(C) Lenders' Participation. Immediately upon issuance or amendment
by the Issuing Bank of any Letter of Credit in accordance with the procedures
set forth in Subsection 2.19(A), each Lender shall be deemed to have irrevocably
and unconditionally purchased and received from the Issuing Bank, without
recourse or warranty, an undivided interest and participation to the extent of
such Lender's Revolving Proportionate Share in the liability with respect to
such Letter of Credit (including, without limitation, all obligations of
Borrower with respect thereto, other than amounts owing to the Issuing Bank
consisting of Issuing Bank Fees) and any security therefor or guaranty
pertaining thereto. Each Lender shall, by their execution of this Agreement, be
deemed to have irrevocably and unconditionally purchased and received from the
ANB, without recourse or warranty, an undivided interest and participation to
the extent of such Lender's Revolving Proportionate Share in the liability,
obligations and rights of ANB under the Participation Agreement, the
Reimbursement Agreement (including, without limitation, all obligations of
Borrower with respect thereto, other than amounts owing to the Issuing Bank
consisting of Issuing Bank Fees) and any security therefor or guaranty
pertaining thereto.
(D) Notice of Issuance. Whenever Borrower desires the issuance of a
Letter of Credit, Borrower shall give Agent a fully completed and duly executed
letter of credit application and agreement in such form as the Issuing Bank and
Agent may require and in accordance with the Issuing Bank's customary practices
for letters of credit of the type requested (a "Letter of Credit Request") no
later than 12:00 noon Chicago time at least four (4) Business Days in advance of
the proposed date of issuance of any Letter of Credit (or, in each case, such
shorter period as may be agreed to by the Issuing Bank). The transmittal by
Borrower of each Letter of Credit Request shall be deemed to be a representation
and warranty by Borrower that the Letter of Credit may be issued in accordance
with and will not violate any of the requirements of Subsection 2.19(A). No
Letter of Credit shall require payment against a conforming draft to be made
thereunder prior to the second business day (under the laws of the jurisdiction
of the Issuing Bank) after the date on which such draft is presented, together
with all documents and/or certificates required to be presented in connection
therewith under the terms of the applicable Letter of Credit. A Letter of Credit
Request may be given to Agent telephonically and, if requested by Agent, with
prompt confirmation in writing. The foregoing provisions of this Subsection
2.19(D) shall not apply to the PEDFA Letter of Credit.
(E) Payment of Amounts Drawn Under Letters of Credit. In the event
of any drawing under any Letter of Credit (other than the PEDFA Letter of
Credit) by the beneficiary thereof, the Issuing Bank shall notify Agent, which
shall notify Borrower of such draw, not later than 12:00 Noon, Chicago time, on
the Business Day immediately prior to the date on which the Issuing Bank intends
to honor such drawing. Borrower shall give notice to be received by Agent and
the Issuing Bank not later than 2:00 P.M., Chicago time, on such Business Day if
it intends to reimburse the Issuing Bank for the amount of such drawing with
funds other than the proceeds of Revolving Loans. Such notice from Borrower
shall be irrevocable and, if given, Borrower shall reimburse the Issuing Bank
not later than the close of business Chicago time on the day on which such
drawing is honored in an amount in immediately available funds equal to the
amount
35
of such drawing. If Agent shall not have timely received such notice and in the
case of all payments under the Participation Agreement (i) Borrower shall be
deemed to have timely given a Notice of Borrowing to Agent to make a Base Rate
Advance on the date on which such drawing is honored or payment made in an
amount equal to the amount of such drawing or payment, as the case may be, and
(ii) subject to satisfaction or waiver of the conditions specified in Section 2
hereof and the other terms and conditions of Advances contained herein, Lenders
shall, on the date of such drawing or payment, as the case may be, make
Revolving Loans in the amount of such drawing or payment, as the case may be,
the proceeds of which shall be applied directly by Agent to reimburse the
Issuing Bank for the amount of such drawing or payment, as the case may be. If
for any reason, proceeds of such Revolving Loans are not received by the Issuing
Bank on such date in an amount equal to the amount of such drawing or payment,
Borrower shall be obligated to and shall reimburse the Issuing Bank, on the
business day (under the laws of the jurisdiction of the Issuing Bank)
immediately following the date of such drawing or payment, in an amount in
immediately available funds equal to the excess of the amount of such drawing or
payment over the amount of such Revolving Loans, if any, which are so received,
plus accrued interest on such amount at the rate set forth in Subsection 2.20(A)
hereof for Base Rate Advances on the Revolving Loans.
(F) Payment by Lenders. In the event that Borrower does not
reimburse the Issuing Bank for the full amount of any drawing or any payment
under the Participation Agreement pursuant to Subsection 2.19(E), unless Agent
shall elect to make a Revolving Loan in accordance with Subsection 2.5(B), Agent
shall promptly notify each Lender of the unreimbursed amount of such drawing or
such payment under the Participation Agreement and of such Lender's respective
participation therein. Unless Agent shall have so elected, each Lender shall
make available to Agent for the benefit of the Issuing Bank an amount equal to
such Lender's respective participation in immediately available funds, not later
than 2:00 P.M. Chicago time on the business day (under the laws of the
jurisdiction of the Issuing Bank) after the date notified by Agent. In addition,
in the event that any Lender fails to make available to Agent the amount of any
such Lender's participation in such Letter of Credit Obligations as provided in
this Subsection 2.19(F), Agent may, but shall not be obligated to, fund the
amount of such Defaulting Lender's participation in such Letter of Credit and
recover such amount on demand from such Defaulting Lender in accordance with
Subsection 2.13(A). In the event that any Lender fails to make available to
Agent the amount of such Lender's participation in such Letter of Credit as
provided in this Subsection 2.19(F), and Agent does not elect to fund to the
Issuing Bank such Defaulting Lender's participation in such Letter of Credit as
provided in the immediately preceding sentence, the Issuing Bank shall be
entitled to recover such amount on demand from such Lender together with
interest at the Federal Funds Rate for the first three Business Days while such
amount remains unpaid and thereafter at the Base Rate. Agent shall distribute to
each Lender which has paid all amounts payable by it under this Subsection
2.19(F) with respect to any Letter of Credit issued by the Issuing Bank such
Lender's Revolving Proportionate Share of all payments subsequently received by
Agent from Borrower in reimbursement of drawings honored by the Issuing Bank
under such Letter of Credit or payments made by ANB under the Participation
Agreement when such reimbursement payments are received from Borrower.
(G) Obligations Absolute. The obligations of Lenders under
Subsection 2.19(F) hereof shall be unconditional and irrevocable and shall be
paid strictly in accordance
36
with the terms of this Agreement under all circumstances, provided, however,
that Lenders shall have no obligation under Subsection 2.19(F) in the event of
the Issuing Bank's willful misconduct or gross negligence in determining whether
documents presented under the Letter of Credit comply with the terms of such
Letter of Credit.
2.20 Interest, Fees and Expenses.
(A) Borrower shall pay to Agent for the account of Lenders interest
on the outstanding principal balance of the Loans, other than the outstanding
principal amount of LIBOR Rate Advances, at a per annum rate equal to (i) the
Base Rate plus the Applicable Margin for Base Rate Advances as to the Revolving
Loans, in the case of the Revolving Loans, and (ii) Base Rate plus the
Applicable Margin for Base Rate Advances as to the Term Loans, in the case of
the Term Loans. Borrower shall pay to Agent for the account of Lenders interest
on the outstanding balance of all other Liabilities (other than the Loans) at
the rate applicable to Base Rate Advances comprising the Revolving Loans.
Borrower shall pay to Agent for the account of Lenders interest on the
outstanding principal balance of each LIBOR Rate Advance at a per annum rate
equal (i) the LIBOR Rate for such LIBOR Rate Advance plus the Applicable Margin
for LIBOR Rate Advances as to the Revolving Loans, if such LIBOR Rate Advance
comprises as part of the Revolving Loans, and (ii) LIBOR Rate for such LIBOR
Rate Advance plus the Applicable Margin for LIBOR Rate Advances as to the Term
Loans, if such LIBOR Rate Advance comprises as part of the Term Loans, it being
expressly understood and agreed that interest shall be computed by charging for
the first day in each Interest Period but not for the last day in such Interest
Period. Interest in respect of Base Rate Advances shall be payable monthly in
arrears not later than the first Business Day of each following month,
commencing July 1, 2002. Interest in respect of LIBOR Rate Advances shall be
payable at the end of the applicable Interest Period, and if the applicable
Interest Period is greater than three months at the end of each three-month
period following commencement of the Interest Period. All interest and fees
provided for hereunder shall be computed on the basis of a 360-day year for the
actual number of days elapsed. Following the occurrence of a Default and during
the continuance thereof, Borrower shall pay to Agent for the account of Lenders
interest from the date of such Default (or, in the event of a Default other than
as described in Subsections 9.1(A), (H) or (I) of this Agreement, from the date
of notice to such effect to Borrower from Agent) at a rate (the "Post-Default
Rate") equal to the rate set forth above for each of the Liabilities or, if
higher, the from time to time Base Rate, plus two percent (2.00%) per annum on
the outstanding principal balance of all of the Liabilities and such interest
shall be payable as provided above or, if sooner, on demand.
(B) Facility Fees. Borrower shall pay to Agent for the account of
each Lender a facility fee (the "Facility Fee") on the average daily unused
portion of each Lender's Revolving Credit Commitment for each quarter (or
portion thereof) from the date of the execution of this Agreement at the rate of
one-half of one percent (0.50%) per annum, payable quarterly in arrears on the
first Business Day of each January, April, July and October, and on the
termination of this Agreement, the first such payment to be made on July 1,
2002. The fees provided for in this Subsection 2.20(B) shall be computed on the
basis of a 360-day year for the actual number of days elapsed.
37
(C) Commitment Reduction Fee. In the event of any partial or full
reduction or termination in the Total Revolving Commitments, then Borrower shall
pay to the Agent for the account of the Lenders, in addition to any other
amounts required to be paid under this Agreement, a commitment reduction fee
("Commitment Reduction Fee") equal to the following percentage of such
reduction, such fee to be due and payable on the effective date of such
reduction:
Applicable
Commitment
Period Reduction Fee
------ -------------
Prior to the First Anniversary 1.50%
On or after the First Anniversary 0.75%
but prior to the Second
Anniversary
(D) Maximum Lawful Rate. This Agreement and the Revolving Notes are
hereby limited by this Subsection 2.20(D). In no contingency, whether by reason
of acceleration of the maturity of the amounts due hereunder or otherwise, shall
interest and fees contracted for, charged, received, paid or agreed to be paid
to Agent or any Lender exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, interest and fees would otherwise be
payable to Agent or any Lender in excess of the maximum amount permissible under
applicable law, the interest and fees shall be reduced to the maximum amount
permitted under applicable law. If from any circumstance, Agent or any Lender
shall have received anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excess of interest
shall be applied to the reduction of the principal amount of the Liabilities and
not to the payment of fees or interest, or if such excessive interest exceeds
the unpaid balance of the principal amount of Liabilities, such excess shall be
refunded to Borrower.
(E) Early Termination Charge. Subject to the provisions contained in
Subsection 2.14, Borrower may terminate this Agreement at any time other than at
the end of the Term upon the payment by Borrower to Agent for the account of
Lenders (based on their respective Proportionate Shares), in addition to payment
of the then outstanding principal and accrued interest and payment and
performance of all other Liabilities (including without limitation any fees due
under Section 2 hereof and any other fees owed to Agent or Lenders), of a
termination charge (the "Termination Charge") in an amount equal to one and
one-half percent (1.50%) if such termination is made before the First
Anniversary and three-quarters of one percent (0.75%) if such termination occurs
on or after the First Anniversary but prior to the Second Anniversary of the
Maximum Facility Amount minus the amount of any reduction in the Total Revolving
Commitments on which Borrower has paid a Commitment Reduction Fee.
(F) Reimbursement of Expenses. From and after the Closing Date,
Borrower shall promptly reimburse Agent for all reasonable Expenses of Agent as
the same are incurred by Agent and upon receipt of invoices therefor and, if
requested by Borrower, such reasonable backup materials and information as
Borrower shall reasonably request.
(G) Letter of Credit Fees.
38
(i) Agent, for the ratable benefit of Lenders, shall be entitled to
charge to the account of Borrower on the last day of each month, a fee
(the "L/C Fee"), in an amount equal to the Applicable L/C Fee Rate per
annum of the average daily outstanding Letter of Credit Obligations
(including without limitation the outstanding amount of the PEDFA Letter
of Credit before giving effect to any reductions therein which are subject
to reinstatement) for each month (or portion thereof) from the date of the
execution of this Agreement, payable monthly in arrears on the first
Business Day of each following month. Notwithstanding the foregoing,
following the occurrence and during the continuance of a Default (or, in
the event of a Default other than as described in Subsections 9.1(A), (H)
or (I) of this Agreement, from the date of notice to such effect to
Borrower from Agent) the L/C Fee shall be payable at a rate equal to the
rate at which the L/C Fees are charged pursuant to the immediately
preceding sentence, plus two percent (2.00%) per annum and shall be
payable as provided above or, if sooner, on demand. Borrower shall pay
Issuing Bank a fee in an amount equal to one-quarter percent (0.25%) (the
"Facing Fee") per annum of the average daily outstanding Letter of Credit
Obligations for each month (or portion thereof), payable monthly in
arrears on the first Business Day of each following month. The L/C Fee and
the Facing Fee shall be computed on the basis of a 360-day year for actual
days elapsed.
(ii) Borrower shall pay the Issuing Bank all of the Issuing Bank's
customary charges for out-of-pocket and administrative expenses upon the
issuance of any Letter of Credit and for any other out-of-pocket costs,
fees and expenses incurred by the Issuing Bank in connection with the
application for, issuance of, draws or payments under, or amendment to any
Letter of Credit. Agent shall be entitled to charge to the account of
Borrower therefor, together with, as and when incurred by Agent or any
Lender, any other charges, fees, costs and expenses charged to Agent or
any Lender for Borrower's account by the Issuing Bank (other than any fees
charged to Agent or any Lender which would be duplicative of the L/C Fee
paid to Agent for the benefit of Lenders) (collectively, including the
Facing Fee and amounts described in the first sentence of this Subsection
2.20(G)(ii), the "Issuing Bank Fees") in connection with the issuance of
any Letters of Credit by the Issuing Bank. Each determination by Agent of
L/C Fees, Issuing Bank Fees and other fees under this Subsection 2.20(G)
shall be conclusive and binding for all purposes, absent manifest error.
(H) Additional Fees. In addition, Borrower shall pay to Agent, for
its own benefit, the other fees required to be paid in the Fee Letter.
(I) Authorization to Charge Loan Account. Borrower hereby authorizes
Agent to charge Borrower's Loan Account with the amount of all Fees, Expenses
and other payments to be paid hereunder, under the Fee Letter and under the
other Financing Agreements as and when such payments become due. Borrower
confirms that any charges which Agent may so make to Borrower's Loan Account as
herein provided will be made as an accommodation to Borrower and solely at
Agent's discretion. Agent may in its sole discretion elect to ▇▇▇▇ Borrower for
such amounts in which case such amounts shall be immediately due and payable
with interest as provided herein.
39
(J) Indemnification in Certain Events. If after the date of this
Agreement, either (i) any change in or in the interpretation of any law or
regulation is introduced, including, without limitation, with respect to reserve
requirements, applicable to Agent, any Lender, the Issuing Bank or any Lending
Affiliate or (ii) Agent, any Lender, the Issuing Bank or any Lending Affiliate
complies with any future guideline or request from any central bank or other
Governmental Authority or (iii) Agent, any Lender, the Issuing Bank or any
Lending Affiliate determines that the adoption after the date of this Agreement
of any applicable law, rule or regulation regarding capital adequacy, or any
change therein after the date of this Agreement, or any change after the date of
this Agreement in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or Agent, any Lender, the Issuing Bank or any Lending Affiliate complies
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, and
in the case of any event set forth in this clause (iii), such adoption, change
or compliance has or would have the direct or indirect effect of reducing the
rate of return on Agent's, any Lender's, the Issuing Bank's or any Lending
Affiliate's capital as a consequence of its obligations hereunder to a level
below that which Agent, such Lender, the Issuing Bank, or any Lending Affiliate
could have achieved but for such adoption, change or compliance (taking into
consideration Agent's, such Lender's, the Issuing Bank's or the Lending
Affiliate's policies as the case may be with respect to capital adequacy) by an
amount deemed by Agent, such Lender, the Issuing Bank or the Lending Affiliate
to be material, and any of the foregoing events described in clauses (i), (ii)
or (iii) increases the cost to Agent, the Issuing Bank, any Lender or any
Lending Affiliate of (A) funding or maintaining any of the Total Revolving
Commitments, or (B) issuing, making or maintaining any Letter of Credit, or
entering into the Participation Agreement or the Reimbursement Agreement or with
respect to or in connection with obligations thereunder, or of purchasing or
maintaining any participation therein, or reduces the amount receivable in
respect thereof by Agent, the Issuing Bank, any Lender or any Lending Affiliate,
then Borrower shall upon demand by Agent, pay to Agent, for the account of
Agent, each applicable Lender or, as applicable, the Issuing Bank or Lending
Affiliate, additional amounts sufficient to indemnify Agent, Lenders, the
Issuing Bank or the Lending Affiliate against such increase in cost or reduction
in amount receivable. A certificate as to the amount of such increased cost and
setting forth in reasonable detail the calculation thereof shall be submitted to
Borrower by Agent, or the applicable Lender, Issuing Bank or Lending Affiliate,
and shall be conclusive absent manifest error. The obligations of Borrower under
this Subsection 2.20(J) shall survive payment of the Liabilities and termination
of this Agreement.
(K) Audit Fees. Borrower shall pay to Agent, on the last day of each
calendar month during which an audit, inventory analysis or other business
analysis is performed by or for the benefit of Agent, or, if earlier, upon the
completion of such audit or analysis, an audit fee in an amount equal to $750
per day for each Person employed to perform such audit or analysis, which Person
may be an employee of Agent or an independent contractor; plus all reasonable
out-of-pocket costs or expenses incurred by Agent in the performance of such
audit or analysis; provided that Borrower shall not be obligated to reimburse
Agent for more than four (4) such audits per calendar year per location of
Borrower, except that such provision shall not apply to audits performed at any
time when a Default or Event of Default has occurred.
40
3. REPORTING AND ELIGIBILITY REQUIREMENTS.
3.1 Monthly Reports and Intra-Monthly Reports.
(A) Monthly Reports. Borrower shall submit to Agent, not later than
the twentieth (20th) day of each fiscal month, a monthly report (the "Monthly
Report"), accompanied by a certificate in the form attached hereto as Exhibit
3.1-1, which shall be signed by an Authorized Officer. The Monthly Report shall
include, as of the last Business Day of the preceding fiscal month:
(i) an aged trial balance of Borrower's Accounts ("Accounts Trial
Balance") prepared in a manner reasonably acceptable to Agent and
separately identifying each Account Debtor on a ▇▇▇▇-and-hold basis;
(ii) a schedule of Inventory owned by Borrower and in Borrower's
possession or otherwise, by location, valued at the lesser of cost,
determined on an average cost basis, or market, and adjusted for such
reserves as Agent has previously indicated to Borrower are deemed by Agent
to be appropriate in its sole determination made in Good Faith;
(iii) an aged trial balance of Borrower's accounts payable prepared
in a manner reasonably acceptable to Agent and showing the name of each
party to whom a payable is due and the amounts, including an aging
thereof, in such form as Agent may reasonably request;
(iv) a reconciliation of Borrower's Accounts and Inventory between
the amount shown on Borrower's books and Borrower's collateral reports
delivered to Agent in the form of Exhibit 3.1-2 and Exhibit 3.1-3 attached
hereto, respectively;
(v) the outstanding principal balance of the Liabilities (other than
the Term Loan and Borrower's reimbursement obligations with respect to
then outstanding Letters of Credit) and the aggregate undrawn face amount
of all Letters of Credit outstanding;
(vi) a statement that there exists no Default or Event of Default,
or, if any Default or Event of Default exists, a specific description of
the nature and the period of existence thereof and the action Borrower has
taken and proposes to take with respect thereto;
(vii) a statement that no Equipment has been sold, damaged,
destroyed, abandoned, become obsolete or has otherwise diminished in value
(except for (a) ordinary depreciation and wear and tear and (b) damage to,
or the destruction, retirement or sale of, Equipment to the extent
permitted to be made without Lenders' consent pursuant to Subsection 8.17
hereof), since the later of the date of the last Monthly Report or the
schedule of Equipment most recently delivered to Agent by Borrower or, if
any such events have occurred, describing the same with such specificity
as is satisfactory to Agent; and
(viii) such other information Agent shall reasonably require.
41
(B) Collateral Reports.
In addition, Borrower shall provide Agent with a written report (the
"Collateral Report") within two (2) Business Days of the end of each week
substantially in the form attached hereto as Exhibit 3.1-4, describing or
including, in a form and with such specificity as is reasonably satisfactory to
Agent:
(i) all Eligible Accounts created or acquired by Borrower subsequent
to the immediately preceding Collateral Report and specifically
identifying those Accounts and Account Debtors on a ▇▇▇▇-and-hold basis
and describing agreements of Borrower with such Account Debtors (using,
for purposes of determining whether an Account is an Eligible Account, the
criteria set forth in Subsection 3.2 hereof and such other criteria as
Agent has previously indicated to Borrower are deemed by Agent to be
appropriate in its sole determination made in Good Faith); together with
copies of any other reports or information, in a form and with such
specificity as is reasonably satisfactory to Agent, concerning Accounts
included, described or referred to in the Collateral Reports and any other
documents in connection therewith requested by Agent, including, without
limitation, but only if specifically requested by Agent, copies of all
invoices and bills of lading prepared in connection with such Accounts;
(ii) if requested by Agent, information in connection with (a) any
Account which has ceased to be an Eligible Account since the most recent
Collateral Report and (b) any other Account with respect to which any
setoff, counterclaim or dispute has been asserted by any Account Debtor or
any allegation of delayed performance or nonperformance has been made by
any Account Debtor accompanied by a statement of any modification,
adjustment or compromise with respect to any such Account which affects
the amount due or the time when payment of such Account is to be made;
(iii) information on all amounts collected by Borrower on
Accounts subsequent to the immediately preceding Collateral Report;
(iv) a calculation of Borrower's Current Asset Base, including
information on all material claims against Borrower; and
(v) such additional information as Agent shall reasonably require,
including, if requested by Agent, an itemized statement of the amount of
Third Party Goods.
Borrower shall furnish each Lender with a copy of each Collateral Report, but
without exhibits.
3.2 Eligible Accounts. Agent shall have the sole right, in its
discretion exercised in Good Faith, to determine which Accounts are eligible
(the "Eligible Accounts"). Without limiting Agent's discretion, the following
Accounts shall not be Eligible Accounts: (i) Accounts which remain unpaid (X)
ninety (90) days after the original date of the applicable invoice, provided
that this clause (X) shall only apply to Accounts which are initially provided
to be due in 59 or fewer days from the date of invoice, and (Y) the earlier of
(I) one hundred and twenty (120) days after the original date of the applicable
invoice or (II) thirty-one (31) days after the original date on which any such
Account was due and payable, provided that this clause (Y) shall only apply to
Accounts which are initially provided to be due by their terms in 60 or
42
more days from the date of invoice; (ii) all Accounts owing by a single Account
Debtor, including a currently scheduled Account, if twenty-five percent (25%) or
more of the balance owing by such Account Debtor to Borrower is not an Eligible
Account as a result of the application of the provisions of the preceding clause
(i); (iii) Accounts with respect to which the Account Debtor is a director,
officer, employee, Subsidiary or Affiliate of Borrower; (iv) Accounts with
respect to which the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless with respect to any such
Account, Borrower has complied to Agent's satisfaction with the provisions of
the Federal Assignment of Claims Act of 1940, including, without limitation,
executing and delivering to Agent all statements of assignment and/or
notification which are in form and substance acceptable to Agent and which are
deemed necessary by Agent to effectuate the assignment to Agent of such
Accounts; (v) Accounts with respect to which the Account Debtor is not a
resident of the United States or the provinces of Canada that, on the date
hereof, have adopted the Personal Property Security Act, unless the Account
Debtor has supplied Borrower with an irrevocable letter of credit, issued by a
financial institution satisfactory to Agent, sufficient to cover such Account
and in form and substance satisfactory to Agent, or unless Agent shall otherwise
consent to the inclusion of such Account as an Eligible Account; (vi) Accounts
with respect to which the Account Debtor has asserted a counterclaim or has a
right of setoff; (vii) Accounts for which the prospect of payment or performance
by the Account Debtor is or may be impaired as determined by Agent in its sole
discretion exercised in Good Faith; (viii) Accounts with respect to which Agent
does not have a first and valid fully perfected security interest; (ix) Accounts
with respect to which the Account Debtor is the subject of bankruptcy or a
similar insolvency proceeding or has made an assignment for the benefit of
creditors or whose assets have been conveyed to a receiver or trustee; (x)
Accounts with respect to which the Account Debtor's obligation to pay the
Account is conditional upon the Account Debtor's approval or is otherwise
subject to any repurchase obligation or return right, as with sales made on a
▇▇▇▇-and-hold (except to the extent the provisions of Subsection 3.13 are fully
complied with, but only to the extent that the aggregate amount of Accounts
arising from sales on a ▇▇▇▇-and-hold basis does not at any time exceed
$500,000, or such greater amount to which Agent may consent in its sole
discretion), guaranteed sale, sale-or-return, sale on approval or consignment
basis; (xi) Accounts to the extent that the Account Debtor's indebtedness to
Borrower exceeds a credit limit determined by Agent in Agent's sole discretion
exercised in Good Faith; (xii) Accounts with respect to which the Account Debtor
is located in Indiana, Minnesota, New Jersey or Tennessee unless at the time the
Account was created Borrower (A) was qualified to do business in such state as a
foreign corporation and is in good standing as a foreign corporation in each
such state or (B) has filed a notice of business activities report or comparable
required report with the appropriate state authorities of such state. In the
event that a previously scheduled Eligible Account ceases to be an Eligible
Account under the above described criteria, Borrower shall notify Agent thereof
immediately after Borrower has obtained knowledge thereof.
3.3 Account Warranties. With respect to Accounts scheduled, listed
or referred to on Borrower's initial Accounts Trial Balance or on any subsequent
Accounts Trial Balance, Borrower warrants and represents to Agent and Lenders
that: (i) they are genuine, are in all respects what they purport to be, and are
not evidenced by a judgment; (ii) they represent undisputed, bona fide
transactions the performance of which has been completed by Borrower in
accordance with the terms and provisions contained in the documents delivered to
Agent and Lenders with respect thereto; (iii) the amounts shown on the
respective Accounts Trial Balance,
43
Borrower's books and records and all invoices and statements which may be
delivered to Agent with respect thereto are actually and absolutely owing to
Borrower and are not in any way contingent; (iv) no payments have been or shall
be made thereon except payments immediately delivered to Agent pursuant to this
Agreement; (v) to the best of Borrower's knowledge, there are no setoffs,
counterclaims or disputes and Borrower has not made any agreement with any
Account Debtor for any deduction therefrom except a discount or allowance
allowed by Borrower in the ordinary course of its business for prompt payment;
(vi) to the best of Borrower's knowledge, there are no facts, events or
occurrences known to Borrower which in any way impair the validity or
enforcement thereof or tend to reduce the amount payable thereunder as shown on
the Accounts Trial Balance, Borrower's books and records and all invoices and
statements delivered to Agent with respect thereto; (vii) to Borrower's
knowledge, all Account Debtors have the capacity to contract and are solvent;
(viii) the services furnished and/or goods sold giving rise thereto are not
subject to any lien, claim, encumbrance or security interest except that of
Agent and except as specifically permitted below; (ix) Borrower has no knowledge
of any fact or circumstance which would tend to impair the validity or
collectibility thereof; and (x) to Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any Account
Debtor which might result in any material adverse change in such Account
Debtor's financial condition. Borrower agrees to notify Agent with respect to
any Accounts scheduled on Borrower's Account Trial Balance with respect to which
the warranties in this Subsection 3.3 are not true.
3.4 Verification of Accounts. Agent shall have the right, at any
time or times hereafter, in Agent's name or in the name of a nominee of Agent,
to verify the validity, amount or any other matter relating to any Accounts, by
mail, telephone, telegraph or otherwise.
3.5 Account Covenants. Borrower shall promptly upon Borrower's
learning thereof: (i) inform Agent in writing of any material delay in
Borrower's performance of any of its obligations to any Account Debtor or of any
assertion of any claims, setoff or counterclaims by any Account Debtor
(provided, however, that Borrower shall not be deemed to be in breach of this
clause (i) unless the aggregate amount of Accounts as to which Borrower has
failed to inform Agent as required above exceeds $100,000); (ii) furnish to and
inform Agent of all material adverse information of which Borrower obtains
knowledge relating to the financial condition of any Person who is then an
Account Debtor as to open Accounts with a face amount, in the aggregate, in
excess of $100,000; and (iii) notify Agent in writing if any of its then
existing Accounts previously scheduled to Agent with respect to which Agent or
any Lender has made an advance are no longer Eligible Accounts.
3.6 Collection of Accounts and Payments. Borrower shall establish
lock box accounts ("Lock Box Accounts") in, and blocked accounts (the "Blocked
Accounts") with, ANB or such banks as are acceptable to Agent (collectively, the
"Collecting Banks") to which all Account Debtors shall directly remit all
payments on Accounts and in which Borrower will immediately deposit all cash and
other payments made for Inventory and other payments constituting proceeds of
its Collateral in the identical form in which such payment was made, whether by
cash or check. The Collecting Banks shall acknowledge and agree, in a manner
satisfactory to Agent, that all payments made to the Blocked Accounts are the
sole and exclusive property of Agent, that the Collecting Banks have no right to
setoff against the Blocked Accounts and that the Collecting Banks will transfer
(i) by wire transfer of immediately available
44
funds, (ii) by acceptance of an Automated Clearing House ("ACH") debit or (iii)
by any other method of transfer of immediately available funds in a manner
satisfactory to Agent, funds deposited into the Blocked Accounts to Agent on a
daily basis or, in the case of ACH debits, as presented for acceptance. Borrower
hereby agrees that all payments made to its respective Lock Box Accounts, the
Blocked Accounts or otherwise received by the Collecting Banks or Agent, whether
on the Accounts or as proceeds of other Collateral or otherwise will be the sole
and exclusive property of Agent and will be applied on account of Borrower's
Liabilities as follows: (i) when collected, for collection of checks and other
instruments (including automatic clearing house electronic funds transfers and
depository transfer checks) received by Agent at its offices in Chicago,
Illinois, Agent will credit (conditional upon final collection) all such
payments to Borrower's Loan Account and (ii) all cash payments received by Agent
at its offices in Chicago, Illinois, including, without limitation, payments
made by wire transfer of immediately available funds received by Agent in time
for posting to the account of Agent on the date received, will be credited to
Borrower's Loan Account immediately upon receipt. Application on account of the
Liabilities constituting the Term Loan or the Revolving Loan shall be made by
Agent (i) first to all Base Rate Advances and (ii) only when no Base Rate
Advances are outstanding to LIBOR Rate Advances; provided, however, in lieu of
applying amounts to LIBOR Rate Advances, Agent may in its discretion release the
available balances in Borrower's Blocked Account to Borrower or if deemed
necessary by Agent retain such balances as cash collateral for the Liabilities.
Borrower and all of its Affiliates, Subsidiaries, shareholders, directors,
officers, employees, agents or those Persons acting for or in concert with
Borrower shall, acting as trustee for Agent, receive, as the sole and exclusive
property of Agent, any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Borrower's Accounts or the other Collateral which
come into the possession or under the control of Borrower or any of its
Affiliates, Subsidiaries, shareholders, directors, officers, employees, agents
or those Persons acting for or in concert with Borrower and immediately upon
receipt thereof, Borrower shall remit the same or cause the same to be remitted,
in kind, to Agent, at Agent's address set forth below. Borrower agrees to pay to
Agent any and all reasonable fees, costs and expenses which Agent incurs in
connection with opening and maintaining Borrower's Lock Box Accounts and Blocked
Accounts and depositing for collection by Agent any check or item of payment
received and/or delivered to any Collecting Bank or Agent, respectively, on
account of the Liabilities and Borrower further agrees to reimburse Agent for
(i) any claims asserted by the Collecting Banks in connection with Borrower's
Lock Box Accounts and Blocked Accounts or any returned or uncollected checks
received by the Collecting Banks and (ii) any amounts paid to any Collecting
Bank arising out of Agent's indemnification of such Collecting Bank against
damages incurred by the Collecting Bank in the operation of Borrower's Lock Box
Accounts and Blocked Accounts.
3.7 Appointment of Agent as Borrower's Attorney-in-Fact. Borrower
hereby irrevocably designates, makes, constitutes and appoints Agent (and all
persons designated by Agent) as Borrower's true and lawful attorney-in-fact, and
authorizes Agent, in Borrower's or Agent's name, at any time and from time to
time to: (i) demand payment of Borrower's Accounts; (ii) enforce payment of such
Accounts by legal proceedings or otherwise; (iii) exercise all of Borrower's
rights and remedies with respect to proceedings brought to collect any Account;
(iv) sell or assign any of Borrower's Accounts upon such terms, for such amount
and at such time or times as Agent deems advisable; (v) settle, adjust,
compromise, extend or renew any of Borrower's Accounts; (vi) discharge and
release any of Borrower's Accounts; (vii) take control in any manner of any item
of payment or proceeds thereof; (viii) prepare, file and sign
45
Borrower's name on any proof of claim in bankruptcy or other similar document
against an Account Debtor of Borrower; (ix) endorse Borrower's name upon any
items of payment or proceeds thereof and deposit the same in Agent's account for
application by Agent to such Liabilities; (x) endorse Borrower's name upon any
chattel paper, document, instrument, invoice, or similar document or agreement
relating to any of Borrower's Accounts or any goods pertaining thereto; (xi)
sign Borrower's name on any verification of its Accounts and notices thereof to
Borrower's Account Debtors; (xii) notify the post office authorities to change
the address for delivery of Borrower's mail to an address designated by Agent,
have access to any lock box or postal box into which any of the Borrower's mail
is deposited, and open and deal with all mail addressed to Borrower; and (xiii)
do all acts and things which are necessary, in Agent's sole discretion, to
fulfill Borrower's obligations under this Agreement; provided, however, that
Agent shall not be authorized to take any such action described in clauses
(i)-(vi), (viii), (x), (xi), (xii) or (xiii) until after the occurrence of a
Default (provided that in the case of clause (xiii) Agent may take such action
after the occurrence of an Event of Default).
3.8 Instruments and Chattel Paper. Immediately upon Borrower's
receipt thereof, Borrower shall deliver or cause to be delivered to Agent, with
appropriate endorsement and assignment to vest title and possession in Agent,
with full recourse to Borrower, all chattel paper and instruments which Borrower
now owns or may at any time or times hereafter acquire.
3.9 Notice to Account Debtors. Agent may, in its sole discretion, at
any time or times following the occurrence of a Default, and without prior
notice to Borrower, notify any or all Account Debtors that the Accounts have
been assigned to Agent and that Agent has a security interest therein. Agent may
direct any or all Account Debtors to make all payments upon the Accounts
directly to Agent. Agent shall furnish Borrower with a copy of such notice.
3.10 Eligible Inventory; Valuation of Eligible Inventory. Agent
shall have the sole right in its discretion exercised in Good Faith to determine
which Inventory is eligible (the "Eligible Inventory"). Without limiting Agent's
discretion, the following Inventory shall not be Eligible Inventory: (i)
Inventory which is obsolete, not in good condition, or not either currently
usable or currently salable in the ordinary course of Borrower's business; (ii)
Inventory which Agent determines, in Agent's sole discretion exercised in Good
Faith and in accordance with Agent's customary business practices, to be
unacceptable due to age, type, category and/or quantity and such Inventory shall
include, but not be limited to, supplies; (iii) Inventory which is not subject
to internal control and management procedures acceptable to Agent substantially
similar to the controls now in place, in Agent's sole discretion exercised in
Good Faith; (iv) Inventory with respect to which Agent does not have a first and
valid fully perfected security interest; (v) Inventory which is stored or placed
with a bailee, consignee, warehouseman, supplier, lessor, processor or similar
party, except as to Inventory at any time stored with (x) warehousemen or in the
possession of processors who have entered into an agreement with Agent in form
and substance satisfactory to Agent, or (y) a consignee if such consignee has
entered into an agreement with Agent in form and substance satisfactory to Agent
and if Borrower has taken all actions required by the Uniform Commercial Code to
establish a valid first priority perfected security interest in the consigned
Inventory and to assign such valid first priority perfected security interest to
Agent; (vi) Inventory delivered to Borrower on consignment; (vii) any goods sold
or subject to a sale on a ▇▇▇▇-and-hold basis; and (viii) Inventory which is not
located at one of the locations designated on Schedule 6.5 hereto. In the
46
event that previously scheduled Inventory ceases to be Eligible Inventory under
the above-described criteria, Borrower shall notify Agent thereof immediately
after Borrower has obtained knowledge thereof.
3.11 Inventory Warranties. With respect to Inventory scheduled,
listed or referred to in any Monthly Report or Collateral Report, Borrower
warrants that (i) it is located at one of the premises listed on Schedule 6.5
and is not in transit; (ii) it is located at the location shown thereon for it;
(iii) it is not subject to any lien or security interest whatsoever except for
the security interest granted to Agent hereunder and except as specifically
permitted in Subsection 8.1 below; and (iv) to the best of Borrower's knowledge,
it is of good and merchantable quality, free from any defects which would affect
the market value of such Inventory. Borrower agrees to notify Agent with respect
to any of its Inventory with respect to which the warranties in this Subsection
3.11 are not true and which Borrower, therefore, does not want Agent to consider
as Eligible Inventory.
3.12 Inventory Records. Borrower shall at all times hereafter
maintain a perpetual inventory of items included in Inventory (adjusted as of
the end of each month to include costs), keeping correct and accurate records
itemizing and describing the kind, type, quality and quantity of Inventory,
Eligible Inventory, and Borrower's cost therefor and daily withdrawals therefrom
and additions thereto, all of which records shall be available during Borrower's
usual business hours at the request of any of Agent's officers, employees or
agents. Borrower shall continue to make cycle counts and other physical counts
of Inventory substantially in accordance with its current practices and as may
be required by its independent public accountants and by good accounting
practices (and, following the occurrence of an Event of Default or a Default,
Borrower shall make such additional counts as may be reasonably requested by
Agent) and, upon Agent's request, promptly following any such counts of
Inventory shall supply Agent with a report in a form and with such specificity
as may be reasonably satisfactory to Agent concerning such physical count of the
Inventory.
3.13 Safekeeping of Inventory and Inventory Covenants. Neither Agent
nor any Lender shall be responsible for: (i) the safekeeping of the Inventory;
(ii) any loss of or damage to the Inventory; (iii) any diminution in the value
of the Inventory; or (iv) any act or default of any carrier, warehouseman,
bailee, forwarding agency or any other Person. All risk of loss, damage,
destruction or diminution in value of the Inventory shall be borne by Borrower.
Except as expressly set forth in this Agreement, no Inventory shall, without
Agent's prior written consent, be at any time or times hereafter stored with a
bailee, warehouseman, consignee or similar third party. Borrower shall not sell
any of its Inventory on a ▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale
on approval or consignment basis or any other basis subject to a repurchase
obligation or return right, except that Borrower may sell Inventory on a
▇▇▇▇-and-hold basis to the Persons set forth on Schedule 3.13 and such
additional Persons as Borrower may advise Agent of in the Weekly Report
(provided that Borrower shall have provided Agent an accurate description of the
arrangements and agreements (if not reduced to writing) and true, correct and
complete copies of all written agreements, instruments and documents with
respect to its ▇▇▇▇-and-hold arrangements with such Persons). If Borrower sells
any of its Inventory on a ▇▇▇▇-and-hold basis such that it would cause the
aggregate outstanding amount of all Accounts arising therefrom to exceed at any
time $500,000 with respect to all such Account Debtors, such amounts in excess
of $500,000 shall not constitute Eligible Accounts unless otherwise consented
47
to by Agent. No Inventory shall be at any time or times hereafter stored with a
bailee, warehouseman, consignee or similar third party unless Borrower first (i)
obtains Agent's written consent as to the identity of such third party, and (ii)
furnishes to Agent such agreements, instruments and documents as Agent shall in
its sole discretion specify with respect to such stored Inventory, except as
specifically described on Schedule 3.13 (B) with respect to Inventory maintained
with processors.
3.14 Equipment Warranties. With respect to all Equipment listed,
scheduled or described by Borrower in a report to Agent as Equipment of Borrower
or in any equipment listing or inventory of Borrower provided to Agent, Borrower
warrants that (i) it is owned by Borrower, Borrower has the right to subject the
same to a security interest in favor of Agent, and it is located on premises
listed on Schedule 6.5; (ii) it is not subject to any lien or security interest
whatsoever except for the security interest granted to Agent hereunder and
except as specifically permitted by Subsection 8.1 below; and (iii) it is in
good condition and repair and is currently used or usable in Borrower's
business.
3.15 Equipment Records. Borrower shall at all times hereafter keep
correct and accurate records itemizing and describing the kind, type, age and
condition of Equipment, Borrower's cost therefor and accumulated depreciation
thereof; and retirements, sales or other dispositions thereof, all of which
records shall be available during Borrower's usual business hours on demand to
any of the officers, employees or agents of Agent. All Equipment is and shall be
kept at the locations specified on Schedule 6.5.
3.16 Safekeeping of Equipment. Neither Agent nor any Lender shall be
responsible for: (i) the safekeeping of the Equipment; (ii) any loss or damage
to the Equipment; (iii) any diminution in the value of the Equipment; or (iv)
any act or default of any repairmen, bailee or any other Person with respect to
the Equipment. All risk of loss, damage, destruction or diminution in value of
the Equipment shall be borne by Borrower.
3.17 Third Party Goods. Borrower shall not hold or accept any Third
Party Goods, whether on a consignment basis or otherwise, except (a) from a
Person listed on Schedule 3.17 attached hereto or such other Person consented to
by Agent, provided that, with respect to any such Person, Agent has (i) been
furnished with an accurate description of the arrangements and agreements (if
not reduced to writing) with respect to such Third Party Goods, together with
true, correct and complete copies of any written instruments, documents or
agreements with respect thereto and (ii) received an executed intercreditor
agreement from such Person in form and substance satisfactory to Agent, (b) for
tolling of Third Party Goods to the extent permitted by Subsection 8.18 hereof
and (c) ▇▇▇▇-and-hold arrangements permitted by Subsection 3.13 hereof. If any
of the arrangements or instruments, documents or agreements referred to in this
Subsection 3.17 are amended, modified or supplemented, Borrower promptly shall
provide Agent with notice thereof and copies of such amendment, modification or
supplement. Schedule 3.17 attached hereto sets forth a complete listing of all
Persons now having an interest in any Third Party Goods. Borrower shall take
such action as Agent may from time to time require to assure Agent that no
Person storing any Third Party Goods with Borrower has any interest in the
Collateral. The aggregate value of all Third Party Goods, other than goods
subject to ▇▇▇▇-and-hold arrangements to the extent permitted hereby, shall not
at any time exceed $10,000,000 without Agent's consent.
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4. CONDITIONS OF LOANS, ADVANCES AND LETTER OF CREDIT.
4.1 Conditions to Initial Loans and Letters of Credit.
Notwithstanding any other provision of this Agreement, the obligation of each
Lender to make the initial Loans on the Closing Date, the obligation of Agent to
request the Issuing Bank to issue Letters of Credit hereunder on the Closing
Date and the obligation of the Issuing Bank to issue any Letter of Credit on the
Closing Date are subject to the satisfaction of, or waiver of, immediately prior
to or concurrently with the making of such Loans or issuance of such Letters of
Credit on the Closing Date, the conditions precedent set forth on Exhibit 4.1
and the use of proceeds of such Loans to repay all existing "Liabilities", as
such term is defined in that certain Loan and Security Agreement dated as of
July 15, 1997 among Borrower, ANB, individually and as Agent, and certain other
lenders.
4.2 Conditions to Each Term Loan, Revolving Loan, Advance and Letter
of Credit. Notwithstanding any other provision contained in this Agreement, the
making of any Term Loan and Revolving Loan and the issuance of any Letter of
Credit under this Agreement, including without limitation the continuation of
any LIBOR Rate Advance from one Interest Period to another or conversion of one
Type of Advance to another Type of Advance, shall be conditioned upon receipt by
Agent of all notices and other communications required under Subsection 2.4 and
upon the satisfaction of the following, in each case to the satisfaction of
Agent, both before and after giving effect thereto and to the application of the
proceeds therefrom (and each request for the borrowing of a Term Loan or
Revolving Loan or request for a Letter of Credit, as the case may be, and the
continuation of any LIBOR Rate Advance from one Interest Period to another or
conversion of one Type of Advance to another Type of Advance, and the acceptance
by Borrower of the proceeds of such Term Loan, Revolving Loan or Advance or
issuance of such Letter of Credit, shall constitute a representation and
warranty by Borrower that on the date of such Loan or Advance or issuance of
such Letter of Credit before and after giving effect thereto and to the
application of the proceeds therefrom, the following such statements are true);
provided, however, that the following shall not apply to a conversion of a LIBOR
Rate Advance to a Base Rate Advance:
(A) Letters of Credit. With respect to the issuance of any Letter of
Credit, none of the events set forth in Subsection 2.19(A) hereof which would
prohibit Agent from requesting the Issuing Bank to issue a Letter of Credit has
occurred and is continuing or would result from the issuance of such Letter of
Credit.
(B) Material Adverse Change. No material adverse change, as
determined by Agent in its sole discretion exercised in Good Faith, in the
business, operations, condition (financial or otherwise), properties or
prospects of Borrower shall have occurred (i) at any time or times subsequent to
the most recent annual financial statements provided pursuant to Subsection
7.1(B) hereof, and (ii) prior to the receipt of the first of such statements, at
any time subsequent to July 31, 2001.
(C) No Default. There shall not have occurred any Default or Event
of Default which is then continuing, nor shall any such Default or Event of
Default occur after giving effect to the Loan, Advance or Letter of Credit as
the case may be.
49
(D) Representations and Warranties True and Correct. The
representations and warranties of Borrower contained in this Agreement and the
other Financing Agreements shall be true and correct in all material respects on
and as of the date of any Loan, Advance or Letter of Credit as though made on
and as of such date other than any such representations or warranties that by
their terms, refer to a specific date.
(E) Other Requirements. Agent shall have received, in form and
substance reasonably satisfactory to Agent, all drafts, certificates, orders,
authorities, consents, opinions, affidavits, applications, schedules,
instruments, security agreements, financing statements, mortgages and other
documents which are provided for hereunder or under the other Financing
Agreements, or which Agent may at any time reasonably request, including without
limitation all documents required to be delivered to Agent under Subsections 5.2
and 7.1, and all Monthly Reports and Collateral Reports required as set forth in
Subsection 3.1 hereof.
5. COLLATERAL.
5.1 Security Interest. To secure payment and performance of the
Liabilities and the other Secured Obligations, Borrower hereby grants to Agent,
for the benefit of Agent, Lenders, the Issuing Bank and the other Holders of
Secured Obligations, a right of setoff against and a continuing security
interest in and to all of the property, and interests in property, of Borrower,
whether real or personal, whether now owned or hereafter acquired by Borrower
and wheresoever located, including without limitation: (i) Accounts, contract
rights, General Intangibles, tax refunds, letters of credit, letter of credit
rights (whether or not the letter of credit is evidenced by a writing),
instruments (including promissory notes), chattel paper (whether tangible or
electronic), documents, documents of title, and commercial tort claims; (ii)
Inventory; (iii) Equipment; (iv) Borrower's deposit accounts with and credits
and other claims against Agent or any Lender, or any other financial institution
with which Borrower maintains deposits; (v) Borrower's investment property,
money, and any and all other property and interests in property of Borrower;
(vi) insurance proceeds of or relating to any of the foregoing; (vii) insurance
proceeds relating to any key man life insurance policy covering the life of any
director, officer, employee or former director, officer or employee of Borrower;
(viii) insurance proceeds relating to business interruption insurance; (ix)
books and records relating to any of the foregoing; and (x) all accessions and
additions to, substitutions for, and replacements, products and proceeds of, and
supporting obligations relating to, any of the foregoing.
5.2 Preservation of Collateral and Perfection of Security Interests
Therein. Borrower shall execute and deliver to Agent, concurrently with the
execution of this Agreement, and at any time or times hereafter at the request
of Agent, all financing statements, instruments or other documents (and pay the
cost of filing or recording the same in all public offices reasonably deemed
necessary by Agent), as Agent may request, in a form reasonably satisfactory to
Agent, to perfect and keep, as a first priority perfected security interest, the
security interest and Liens in the Collateral granted by Borrower to Agent for
the benefit of Agent, Lenders and the Issuing Bank to secure the payment and
performance of all of the Liabilities, or to otherwise protect and preserve the
Collateral and Agent's security interest and Liens therein or to enforce Agent's
security interests and Liens in the Collateral, Borrower (i) shall deliver to
Agent, at any time and from time to time, at the request of Agent, all financing
statements, amendments to financing statements, instruments or other documents
(and pay the cost of filing or recording the
50
same in all public offices reasonably deemed necessary by Agent) and do such
acts as Agent may request, in a form and substance reasonably satisfactory to
Agent, and (ii) irrevocably authorizes Agent at any time, and from time to time,
to file (and if necessary to execute) in any jurisdiction any financing
statements and any amendment to any financing statement. Borrower further agrees
that a carbon, photographic, photostatic or other reproduction of this Agreement
or of a financing statement is sufficient as a financing statement. Borrower
hereby irrevocably authorizes Agent at any time, and from time to time, to file
in any jurisdiction any initial financing statements and amendments thereto that
(a) indicate the Collateral (i) as all assets of Borrower or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the Uniform Commercial Code of the
jurisdiction wherein such financing statement or amendment is filed, or (ii) as
being of an equal or lesser scope or within greater detail, and (b) contain any
other information required by Section 5 of Article 9 of the Uniform Commercial
Code of the jurisdiction wherein such financing statement or amendment is filed
regarding the sufficiency or filing office acceptance of any financing statement
or amendment, including (i) whether Borrower is an organization, the type of
organization and any organization identification number issued to Borrower, and
(ii) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates.
Borrower agrees to furnish any such information to Agent promptly upon request.
Borrower further ratifies and affirms its authorization for any financing
statements and/or amendments thereto, executed and filed by Agent in any
jurisdiction prior to the date of this Agreement.
5.3 Real Property and Leaseholds. Borrower shall, at its own
expense, with respect to any interest in real estate existing on the date of
this Agreement or acquired after such date, upon Agent's reasonable request
therefor (i) as soon as practicable and in any event within thirty (30) days of
such request, duly execute and deliver to Agent any and all mortgages, trust
deeds, deeds of trust, leasehold mortgages, leasehold deeds of trust, pledges,
assignments and other security agreements (collectively, the "Mortgages") as
specified by and in form and substance reasonably satisfactory to Agent in
respect of the real properties owned by Borrower and leaseholds of Borrower as
may be reasonably designated by Agent, (ii) as soon as practicable and in any
event within ten (10) days of such request, deliver to Agent a description of
such properties and leaseholds in detail sufficient for recordation and
otherwise satisfactory to Agent, (iii) as soon as practicable and in any event
within forty-five (45) days of such request, deliver to Agent an ALTA survey of
said real estate in form and substance acceptable to Agent and certified to
Agent, stating that said real estate is located in an area of minimal flooding
or accompanied by evidence that flood insurance to cover any flood risk has been
obtained, together with flood zone maps for the area in which the property is
located from the Federal Emergency Management Agency; (iv) as soon as
practicable and in any event within forty-five (45) days of such request,
deliver to Agent an environmental survey with respect to said real estate in
form and substance reasonably satisfactory to Agent and made by an engineer
reasonably satisfactory to Agent; (v) as soon as practicable and in any event
within forty-five (45) days of such request, if the interest being acquired is a
leasehold interest (other than leases that individually or in the aggregate are
not material to Borrower as reasonably determined by Agent), deliver to Agent
the lease, and an agreement from the landlord to Agent, in each case in form and
substance reasonably satisfactory to Agent; (vi) as soon as practicable and in
any event within forty-five (45) days of such request, deliver to Agent an ALTA
loan policy in form and substance reasonably satisfactory to Agent and from a
title insurance company reasonably
51
satisfactory to Agent insuring that the Lien of the Mortgages delivered pursuant
to this Subsection 5.3 is a valid Lien on such interest in real estate (but
subject to the lien of any encumbrance permitted pursuant to Subsection 8.1
hereof then of record against the property upon which any such Mortgage is
sought) with the following endorsements if such endorsements are available from
such title insurance company (or, if not, comparable endorsements available from
such title insurance company): revolving credit (if applicable), contiguity (if
applicable), 3.1 zoning, encroachments (if applicable), comprehensive mortgage,
usury, doing business, location, last dollar, access, tie-in and such other
endorsements as Agent may require and if such a provision is in the loan policy,
waiver of compulsory arbitration; (vii) as soon as practicable and in any event
within thirty (30) days of such request, deliver to Agent and Lenders an opinion
of counsel authorized to practice law in the state in which such real estate is
located, as to such matters reasonably required by Agent and in form and
substance reasonably satisfactory to Agent; and (viii) as soon as practicable
and in any event within thirty (30) days of such request, take whatever action
(including, without limitation, the recording of any mortgage, the filing of
financing statements, the giving of notices and the endorsement of notices on
title documents) as may be necessary or advisable in the opinion of Agent to
vest in Agent (or in any representative of Agent designated by it), for the
benefit of Agent, Lenders and the Issuing Bank, valid and subsisting first
priority liens and charges and valid and first priority, perfected security
interests in and to the properties purported to be subject to the Mortgages
delivered pursuant to this Subsection 5.3, enforceable in accordance with their
terms (but subject to Permitted Liens then of record against the property upon
which any such Mortgage is sought). At any time and from time to time, Borrower
shall promptly execute and deliver any and all further financing statements,
instruments and documents (and pay the cost of filing or recording the same in
all places reasonably deemed necessary by Agent) and take all such other action
as Agent may reasonably deem necessary in obtaining the full benefits of, or in
preserving the Liens of, the Mortgages delivered pursuant to this Subsection
5.3. Agent may from time to time have any or all of the real property and
equipment of Borrower and appraised and Borrower agrees to pay, or reimburse
Agent for, the costs of such appraisals, and any and all surveys, title
policies, title commitments, environmental surveys and other reasonable expenses
incurred by Agent or any Lender in connection therewith.
5.4 Loss of Value of Collateral. Borrower shall immediately notify
Agent of any loss or damage or destruction (other than ordinary wear and tear),
in excess of $100,000 in the aggregate in the value of the Collateral in any
Fiscal Year, other than loss or depreciation occurring in the ordinary course of
business.
5.5 Setoff. Borrower agrees that Agent, each Lender and the Issuing
Bank has all rights of setoff and banker's lien provided by applicable law and,
in addition thereto, Borrower agrees that (in addition to Agent's rights with
respect to proceeds of Collateral) at any time (a) any amount owing by it under
this Agreement or any other Financing Agreement is then due or (b) any Default
exists, Agent, each Lender and the Issuing Bank may apply to the payment of the
Liabilities, any and all balances, credits, deposits, accounts or moneys of
Borrower then or thereafter with Agent, such Lenders or Issuing Bank. Without
limitation of the foregoing and in addition to Agent's rights with respect to
the proceeds of the Collateral, Borrower agrees that upon and after the
occurrence of a Default, Agent, each Lender and the Issuing Bank and each of
their respective branches and offices is hereby authorized, at any time and from
time to time, without notice, (i) to setoff against, and to appropriate and
apply to the
52
payment of, the Liabilities (whether matured or unmatured, fixed or contingent
or liquidated or unliquidated) any and all amounts owing by Agent, any such
Lender or Issuing Bank or any such office or branch to Borrower (whether matured
or unmatured, and, in the case of deposits, whether general or special, time or
demand and however evidenced) and (ii) pending any such action, to the extent
necessary, to hold such amounts as collateral to secure such Liabilities and to
return as unpaid for insufficient funds any and all checks and other items drawn
against any deposits so held as Agent, such Lender or Issuing Bank may elect in
its sole discretion. Each Lender or Issuing Bank exercising such rights shall
notify Agent thereof and any amount received as a result of the exercise of such
rights shall be reallocated among Agent, Lenders, and the Issuing Bank as set
forth in Subsection 2.12 hereof.
5.6 Cash Collateral. In the event that there are any outstanding
Letter of Credit Obligations, at any time after (i) the occurrence of a Default,
(ii) demand by Agent for payment of the Liabilities as provided in Subsection
9.1 hereof, (iii) there exists no unpaid principal balance of the Liabilities,
(iv) this Agreement shall terminate for any reason pursuant to Subsection 2.14
hereof, (v) the amount of (a) the aggregate outstanding principal balance of the
Revolving Loan plus the aggregate amount of Letter of Credit Obligations shall
exceed the amount of (b) the Current Asset Base plus the aggregate amount of
Letter of Credit Obligations, or (vi) termination of the Revolving Credit
Commitments, Agent may request of Borrower, and Borrower thereupon shall deliver
to Agent, cash collateral for any Letter of Credit. If Borrower fails to deliver
such cash collateral to Agent promptly upon Agent's request therefor, Agent may,
without limiting Agent's rights or remedies arising from such failure to deliver
cash, retain, as cash collateral, cash proceeds of the Collateral in an amount
equal to the aggregate undrawn face amount of all Letters of Credit then
outstanding. Agent may at any time apply any or all of such cash and cash
collateral to the payment of any or all of the Liabilities, including, without
limitation, to the payment of any or all of Borrower's reimbursement obligations
with respect to any Letter of Credit or any other Letter of Credit Obligations.
Pending such application, Agent may (but shall not be obligated to) (i) invest
such cash collateral and any other cash collateral provided pursuant to the
terms of this Agreement in a savings account, under which deposits are available
for immediate withdrawal, with ANB or such other bank as Agent may, in its sole
discretion select, or (ii) hold the same as a credit balance in an account with
ANB in Borrower's name. Interest payable on any such savings account described
in the foregoing sentence shall be collected by Agent and shall be paid to
Borrower as it is received by Agent less any fees or other amounts owing by
Borrower to the Issuing Bank, Agent and any Lender with respect to any Letter of
Credit and less any amounts necessary to pay any of the Liabilities which may be
due and payable at such time. Agent shall have no obligation to pay interest on
any credit balances in any account opened for Borrower pursuant to this
Agreement.
5.7 Letter of Credit Rights. If Borrower at any time is a
beneficiary under a letter of credit now or hereafter issued in favor of
Borrower, Borrower shall promptly notify Agent thereof and, at the request and
option of Agent, Borrower shall, pursuant to an agreement in form and substance
satisfactory to Agent, either (i) arrange for the issuer and any confirmer of
such letter of credit to consent to an assignment to Agent of the proceeds of
any drawing under the letter of credit, or (ii) arrange for Agent to become the
transferee beneficiary of the letter of credit, with Agent agreeing, in each
case, that the proceeds of any drawing under the letter to credit are to be
applied as provided in this Agreement.
53
5.8 Commercial Tort Claims. If Borrower shall at any time hold or
acquire a commercial tort claim, Borrower shall immediately notify Agent in
writing signed by Borrower of the details thereof and grant to Agent in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance
satisfactory to Agent.
5.9 Electronic Chattel Paper and Transferable Records. If Borrower
at any time holds or acquires an interest in any electronic chattel paper or any
"transferable record", as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, Borrower shall promptly notify Agent thereof and, at the request
of Agent, shall take such action as Agent may reasonably request to vest in
Agent control under Section 9-105 of the UCC of such electronic chattel paper or
control under Section 201 of the federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction, of such
transferable record."
6. WARRANTIES, ETC.
Borrower represents, warrants and agrees that as of the date hereof
and each day thereafter, continuing so long as Borrower's Liabilities remain
outstanding, and (even if there shall be no Liabilities of Borrower outstanding)
so long as this Agreement remains in effect:
6.1 Corporate Existence. Each of Borrower and its Subsidiaries is a
corporation duly organized and in good standing under the laws of the state of
its incorporation as set forth in the Schedule 6.1 hereto, and is duly qualified
as a foreign corporation and in good standing in all other states where the
nature and extent of the business transacted by it or the ownership of its
assets makes such qualification necessary (which states are set forth in the
Schedule 6.1 hereto), except for those jurisdictions in which the failure so to
qualify would not, in the aggregate, have a material adverse effect on such
Person's financial condition, results of operations or business or the ability
of such Person to perform its obligations hereunder. Borrower's state of
organization is properly identified Schedule 6.1. Borrower's exact legal name is
as set forth in the Schedule 6.1.
6.2 Corporate Authority. The execution and delivery by each of
Borrower and its Subsidiaries of this Agreement and all of the other Financing
Agreements executed by it and the performance of each of Borrower's and such
Subsidiaries' obligations hereunder and thereunder: (i) are within Borrower's
corporate powers; (ii) are duly authorized by Borrower's Board of Directors and,
if necessary, Borrower's stockholders; (iii) are not in contravention of the
terms of its Articles or Certificate of Incorporation or By-Laws or of any
indenture, agreement or undertaking to which it is a party or by which it or any
of its property is bound or any judgment, decree or order applicable to
Borrower; (iv) do not, as of the execution hereof, require it or any guarantor
of the Liabilities to obtain any governmental consent, registration or approval;
(v) do not contravene any contractual or governmental restriction binding upon
it; and (vi) will not, except as contemplated herein, result in the imposition
of any lien, charge, security interest or encumbrance upon any property of
Borrower under any existing indenture, mortgage, deed of trust, loan or credit
agreement or other material agreement or instrument to which
54
Borrower or any such Subsidiary is a party or by which it or any of its property
may be bound or affected.
6.3 Binding Effect. This Agreement and all of the other Financing
Agreements to which Borrower or any Subsidiary is a party are the legal, valid
and binding obligations of such Person and are enforceable against such Person
in accordance with their terms.
6.4 Financial Data. Borrower has furnished to each Lender the
financial statements listed on Schedule 6.4 attached hereto (the "Financials").
The Financials are, and all financial statements to be furnished to Lender in
accordance with Subsection 7.1 below will be, in accordance with the books and
records of Borrower and fairly present, and, as to all financial statements to
be furnished to Lender in accordance with Subsection 7.1 below, will fairly
present, the financial condition of Borrower at the dates thereof and the
results of operations for the periods indicated (subject, in the case of
unaudited financial statements, to normal year-end adjustments), and such
financial statements have been and will be prepared in conformity with generally
accepted accounting principles consistently applied throughout the periods
involved. Since the date of the Financials to the date hereof, there have been
no material adverse changes in the condition, financial or otherwise, of
Borrower as shown on such Financials, except (a) as expressly contemplated
herein, and (b) for changes in the ordinary course of business (none of which
individually or in the aggregate has been materially adverse). All information,
reports and other papers and data to be furnished to Agent or any Lender are or
will be, at the time the same are so furnished to Agent or any Lender, accurate
and correct in all material respects and complete insofar as completeness may be
necessary to give Agent and Lenders a true and accurate knowledge of the subject
matter thereof.
6.5 Collateral. Except as expressly permitted by Subsection 8.1 and
8.17, all of Borrower's Collateral is and will continue to be owned by Borrower
(except for Inventory sold in the ordinary course of business), has been or will
(in the ordinary course of Borrower's business) be fully paid for and is free
and clear of all security interests, liens, claims and encumbrances. As of the
date hereof, the Collateral is located at the locations set forth on Schedule
6.5 attached hereto, except for Inventory in transit or at processors as
permitted hereby. Borrower has rights in or the power to transfer the
Collateral.
6.6 Solvency. Neither Borrower nor any Subsidiary (i) is "insolvent"
as that term is defined in Section 101(32) of the Federal Bankruptcy Code (the
"Bankruptcy Code") (11 U.S.C. Section 101(32)), Section 2 of the Uniform
Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA"), (ii) has "unreasonably small capital," as that term is
used in Section 548 (a)(2)(B)(ii) of the Bankruptcy Code or Section 5 of the
UFCA, (iii) is engaged or about to engage in a business or a transaction for
which its remaining property is "unreasonably small" in relation to the business
or transaction as that term is used in Section 4 of the UFTA, or (iv) is unable
to pay its debts as they mature or become due, within the meaning of Section
548(a)(2)(B) (iii) of the Bankruptcy Code, Section 4 of the UFTA and Section 6
of the UFCA. Each of Borrower and its Subsidiaries now owns assets having a
value both at "fair valuation" and at "present fair salable value" greater than
the amount required to pay such Person's "debts" as such terms are used in
Section 2 of the UFTA and Section 2 of the UFCA. Neither Borrower nor any
Subsidiary shall be rendered insolvent (as defined above) by the
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execution and delivery of this Agreement or any of the other Financing
Agreements or by the transactions contemplated hereunder or thereunder.
6.7 Chief Place of Business; Name. As of the execution hereof, the
corporate name, jurisdiction of organization, principal place of business and
chief executive office of Borrower is located at the address set forth above in
the preamble to this Agreement. If any change in such name, jurisdiction or
location occurs, Borrower shall promptly notify Agent thereof in accordance with
Subsection 8.10 hereof. As of the execution hereof, the books and records of
Borrower and chattel paper and all records of account are located at the
principal place of business and chief executive office of Borrower, and if any
change in such location occurs, Borrower shall promptly notify Lender thereof in
accordance with Subsection 8.10 hereof.
6.8 Other Corporate Names. Except as disclosed on Schedule 6.8
attached hereto, during the five (5) year period preceding the date hereof
Borrower has not used any corporate or fictitious name other than the name shown
for Borrower in the preamble to this Agreement.
6.9 Tax Liabilities. Borrower and each of its Subsidiaries has filed
all federal, state and local tax reports and returns required by any law or
regulation to be filed by it except for extensions duly obtained. Borrower and
each of its Subsidiaries has either duly paid all taxes, duties and charges
indicated due on the basis of such returns and reports, or has made adequate
provision for the payment thereof, and the assessment of any material amount of
additional taxes in excess of those paid and reported is not reasonably
expected. As of the date hereof, no federal income tax returns of Borrower or
any Subsidiary have been audited by the Internal Revenue Service other than the
federal income tax return for the 1988 Fiscal Year of Borrower, which audit has
been closed. The reserves for taxes reflected on the Financials constitute, and
the balance sheets of Borrower submitted to Lenders in accordance with the terms
of Subsection 7.1 below will constitute, reasonable estimations of the amount
necessary for the payment of all liabilities for all federal, state and local
taxes (whether or not disputed) of Borrower accrued through the date of such
balance sheets. There are no material unresolved questions or claims concerning
any tax liability of Borrower or any Subsidiary.
6.10 Loans. Except as disclosed on the Financials and as permitted
under Subsection 8.2 and Subsection 8.5 below, neither Borrower nor any
Subsidiary currently has any loans or other Indebtedness for borrowed money and
no Guaranteed Indebtedness.
6.11 Margin Security. Borrower does not own any margin securities
and none of the Loans advanced hereunder will be used for the purpose of
purchasing or carrying any margin securities or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase any margin
securities or for any other purpose not permitted by Regulation U of the Board
of Governors of the Federal Reserve System.
6.12 Survival of Warranties. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement.
6.13 Subsidiaries. Borrower has no Subsidiaries, except for P&J.
56
6.14 Litigation and Proceedings. Except as disclosed on Schedule
6.14 attached hereto, no judgments are outstanding against Borrower or any
Subsidiary nor is there now pending or, to the best of Borrower's knowledge
after reasonably diligent inquiry, threatened any litigation, contested claim,
or governmental proceeding by or against Borrower or any Subsidiary, except
judgments and pending or threatened litigation, contested claims and
governmental proceedings which are not, in the aggregate, material and adverse
to Borrower's or any Subsidiary's financial condition, results of operations or
business or the ability of Borrower or any Subsidiary to perform its obligations
hereunder or under the other Financing Agreements. To the best of Borrower's
knowledge, the amount of liability set forth on Schedule 6.14 as to each suit
listed thereon is the maximum amount of Borrower's potential liability under
such suit.
6.15 Other Agreements. Neither Borrower nor any Subsidiary is in
default under any material contract, lease, or commitment to which it is a party
or by which it is bound. Borrower knows of no dispute regarding any contract,
lease, or commitment which is material to the continued financial success and
well-being of Borrower or any Subsidiary.
6.16 Employee Controversies. Except as disclosed on Schedule 6.16
attached hereto, there are no controversies pending or, to the best of
Borrower's knowledge after reasonably diligent inquiry, threatened or
anticipated, between Borrower or any Subsidiary and any of their respective
employees, other than employee grievances arising in the ordinary course of
business which are not, in the aggregate, material to the continued financial
success and well-being of Borrower or any Subsidiary. Neither Borrower nor any
Subsidiary has any accrued and unpaid liability to any of its employees arising
under the Fair Labor Standards Act, as amended.
6.17 Compliance with Laws and Regulations.
(A) General Compliance. The execution and delivery by Borrower and
each Subsidiary of this Agreement and all of the other Financing Agreements to
which it is a party and the performance of Borrower's and each such Subsidiary's
obligations hereunder and thereunder are not in contravention of any law or
laws. Each of Borrower and its Subsidiaries is in compliance with all laws,
orders, regulations and ordinances of all federal, foreign, state and local
governmental authorities relating to its business, operations and the assets,
except for laws, orders, regulations and ordinances the violation of which would
not, in the aggregate, have a material adverse effect on its financial
condition, results of operations or business or its ability of Borrower to
perform its obligations hereunder or under the other Financing Agreements.
(B) Environmental Compliance. (i) Borrower and each Subsidiary have
obtained all permits, licenses and other authorizations which are required with
respect to the ownership and operation of its business and the Property under
any and all applicable Environmental Laws, (ii) unless and to the extent
contested by Borrower in accordance with the provisions of Subsection 8.14(B)
hereof, Borrower and each Subsidiary is in compliance with all terms and
conditions of all such required permits, licenses and authorizations, and is
also in compliance with all Environmental Laws, including, without limitation,
all limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws, (iii) there is no civil, criminal or administrative action,
request for information, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice of demand letter pending or threatened against
Borrower or any Subsidiary
57
under the Environmental Laws which could result in a material fine, penalty or
other cost or expense, (iv) there are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans which Borrower
reasonably expects may interfere with or prevent compliance with the
Environmental Laws, or which Borrower reasonably expects may give rise to any
common law or legal liability, including, without limitation, liability under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or any other Environmental Law or related common law theory or
which otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing or notice of violation, study or investigation, based on or related to
the manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Materials which could
result in a fine, penalty or other cost or expense, (v) except as expressly set
forth on Schedule 6.17(b) hereto, neither Borrower nor any Subsidiary has filed
any notice under any federal or state law indicating past or present treatment,
storage or disposal of a hazardous waste or reporting a spill or release of a
hazardous or toxic waste, substance or constituent, or other substance into the
environment, and (vi) except as expressly set forth on Schedule 6.17(b) hereto,
neither Borrower nor any Subsidiary has any contingent liability of which
Borrower has knowledge or reasonably should have knowledge in connection with
any release of any hazardous or toxic waste, substance or constituent, or other
substance into the environment.
6.18 Patents, Trademarks, Licenses, etc. Borrower and each
Subsidiary possesses adequate assets, licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, trade styles and
trade names, governmental approvals or other authorizations and other rights
that are necessary for Borrower to continue to conduct its business as
heretofore conducted by it. Except as disclosed on Schedule 6.18 hereto,
Borrower possesses no licenses, patents, patent applications, copyrights,
service marks, trademarks, trademark applications, trade styles or trade names
and, except as disclosed on Schedule 6.18, no such items are necessary for
Borrower to continue to conduct its business as heretofore conducted by it.
6.19 ERISA. Neither Borrower nor any ERISA Affiliate of Borrower
maintains or contributes to any Pension Plan other than those listed on Schedule
6.19 attached hereto. Each Pension Plan which is intended to be a qualified plan
under Section 401(a) of the Internal Revenue Code has been determined by the
Internal Revenue Service to be so qualified and each trust related to any such
Pension Plan has been determined to be exempt from federal income tax under
Subsection 501(a) of the Internal Revenue Code. Except as otherwise disclosed on
Schedule 6.19 attached hereto, neither Borrower nor any ERISA Affiliate of
Borrower maintains or contributes to any employee welfare benefit plan within
the meaning of Subsection 3(1) of ERISA which provides lifetime medical benefits
to retirees. Each Pension Plan has been administered in all material respects in
accordance with its terms and the terms of ERISA, the Internal Revenue Code and
all other statutes and regulations applicable thereto. Neither Borrower nor any
ERISA Affiliate of Borrower has breached in any material respect any of the
responsibilities, obligations or duties imposed on it by ERISA or regulations
promulgated thereunder with respect to any Pension Plan. No accumulated funding
deficiency (as defined in Subsection 302(a)(2) of ERISA and Section 412(a) of
the Internal Revenue Code) exists in respect to any Pension Plan. Neither
Borrower nor any ERISA Affiliate of Borrower nor any fiduciary of any Pension
Plan which is not a Multiemployer Plan (i) has engaged in a nonexempt
58
"prohibited transaction" described in Section 406 of ERISA or Section 4975 of
the Internal Revenue Code which could result in any liability to Borrower, or
(ii) has taken any action which would constitute or result in a Termination
Event with respect to any Pension Plan which could result in any liability to
Borrower. Schedule B, if any, to the most recent annual report filed with the
Internal Revenue Service with respect to each Pension Plan has been furnished to
Lender and is complete and accurate; since the date of each such Schedule B,
there has been no material adverse change in the funding status or financial
condition of the Pension Plan relating to such Schedule B. Neither Borrower nor
any ERISA Affiliate of Borrower has incurred any liability to the PBGC which
remains outstanding. Neither Borrower nor any ERISA Affiliate of Borrower has
(i) failed to make a required contribution or payment to a Multiemployer Plan,
or (ii) made or expects to make a complete or partial withdrawal under
Subsections 4203 or 4205 of ERISA from a Multiemployer Plan for which Borrower
or any ERISA Affiliate of Borrower has any liability which as not been
satisfied. Neither Borrower nor any ERISA Affiliate of Borrower has failed to
make a required installment under Subsection (m) of Section 412 of the Internal
Revenue Code or any other payment required under Section 412 of the Internal
Revenue Code on or before the due date for such installment or other payment.
Neither Borrower nor any ERISA Affiliate of Borrower is required to provide
security to a Pension Plan under Section 401(a) (29) of the Internal Revenue
Code due to a Pension Plan amendment that results in an increase in current
liability for the plan year. The present value of the benefits of each Pension
Plan of Borrower and each ERISA Affiliate of Borrower as of the last day of the
year for such Plan, as determined by such Pension Plan's independent actuaries,
does not exceed the aggregate value, as determined by such actuaries, of all
assets under such Pension Plan. Borrower is not required to contribute to any
Multiemployer Plan. No matter is pending relating to any Pension Plan before any
court or governmental agency. Borrower has given to Lender all of the following:
copies, if any, of each Pension Plan and related trust agreement (including all
amendments to such Plan and trust) in existence or committed to as of the date
hereof and the most recent summary plan description, actuarial report,
determination letter issued by the Internal Revenue Service and Form 5500 filed
in respect of each such Pension Plan; a listing of all of the Multiemployer
Plans with the aggregate amount of the most recent annual contributions required
to be made by Borrower and all ERISA Affiliates of Borrower to each such
Multiemployer Plan; copies of any information which has been provided to
Borrower or any ERISA Affiliate of Borrower regarding withdrawal liability under
any Multiemployer Plan and all collective bargaining agreements pursuant to
which such contributions are required to be made; and copies of each employee
welfare benefit plan within the meaning of Subsection 3(1) of ERISA which
provides lifetime medical benefits to employees, the most recent summary plan
description for such plan and the aggregate amount of the most recent annual
payments made to terminated employees under each such plan.
6.20 Financial Condition. Since July 31, 2001, (or, if later, the
date of the most recent annual financial statements of Borrower or any
Subsidiary provided pursuant to Subsection 7.1(B) hereof) there has been no
material adverse change in Borrower's or any Subsidiary's financial condition,
results of operations or business or in the value of Borrower's Collateral.
6.21 QuikWater. On or before the date hereof Borrower has sold (the
"QuikWater Sale") the assets of its QuikWater Division to New QuikWater pursuant
to the agreements, instruments and documents described on annexed Schedule 6.21.
Schedule 6.21 is a
59
full and complete list of all such agreements, instruments and documents related
to such sale. As a result of the QuikWater Sale Borrower will incur aggregate
charges (the "QuikWater Charge") to its income in an amount not to exceed
$1,200,000. The assets sold in the QuikWater Sale are accurately described on
Schedule 6.21 as is the consideration for such sale, including the "earn-out"
interest.
7. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any of the
Liabilities remain outstanding, and (even if there shall be no Liabilities
outstanding) so long as this Agreement remains in effect:
7.1 Financial Statements. Borrower and its Subsidiaries shall keep
proper books of record and account in which full and true entries will be made
of all dealings or transactions of or in relation to the business and affairs of
Borrower and its Subsidiaries, in accordance with GAAP, and Borrower shall cause
to be furnished to each Lender:
(A) Monthly. As soon as practicable, and in any event within thirty
(30) days (such period shall be forty-five (45) days in the case of the first
two fiscal months of each Fiscal Year or last month of each Fiscal Quarter)
after the end of each fiscal month (including each fiscal month occurring during
the 90-day delivery period applicable to the delivery of annual financial
statements of Borrower and its Subsidiaries furnished to Lenders pursuant to
Subsection 7.1(B) hereof):
(i) statements of income and cash flow of each of Borrower and of
its Subsidiaries (including separate statements of income by division of
Borrower, including without limitation separate statements of Borrower's
QuikWater Division), and consolidated statements of income and cash flow
of Borrower and its Subsidiaries for such fiscal month, for such Fiscal
Quarter (in the case of each month which is the last month in a Fiscal
Quarter) and for the period from the beginning of the then current Fiscal
Year to the end of such fiscal month and balance sheets of Borrower and
its Subsidiaries, and consolidated balance sheets of Borrower and its
Subsidiaries as of the end of such fiscal month, all in reasonable detail
and certified as accurate by an Authorized Officer pursuant to a
certificate in the form of Exhibit 7.1-1 attached hereto, subject to
changes resulting from normal year-end adjustments;
(ii) financial information in the "blue book" which the Borrower
customarily prepares regarding its monthly financial performance and
statements of cash flow, purchases and sales of inventory and other
similar data;
(iii) together with the financial statements required to be
delivered pursuant to this Subsection 7.1(A) as of the end of each Fiscal
Quarter and for the Fiscal Year to date period then ending, a Compliance
Certificate in the form of annexed Exhibit 7.1-2 setting forth
calculations setting forth the compliance with the financial covenants set
forth in Subsection 8.13 hereof and Borrower's Excess Cash Flow for the
most recently completed fiscal quarter;
60
(iv) if a Default has occurred and is continuing, a written
statement of Borrower's management setting forth a discussion of
Borrower's financial condition, changes in financial condition and results
of operations; and
(v) in the event that any of the foregoing statements indicate that
Borrower or any Subsidiary has varied in any material respect from any
financial projections provided by Borrower to Lenders, a statement of
explanation of such deviation from an Authorized Officer;
(B) Annual. As soon as practicable and in any event within ninety
(90) days after the end of each Fiscal Year of Borrower and its Subsidiaries:
(i) statements of income, stockholders' equity and cash flow of each of Borrower
and its Subsidiaries, (ii) consolidated statements of income, stockholders'
equity and cash flow of Borrower and its Subsidiaries for such Fiscal Year,
(iii) balance sheets of each of Borrower and its Subsidiaries, and (iv)
consolidated balance sheets of Borrower and its Subsidiaries as of the end of
such Fiscal Year, setting forth in each case, in comparative form, corresponding
figures for the period covered by the preceding annual audit (in the case of
statements) and as of the end of the preceding Fiscal Year (in the case of
balance sheets), all in reasonable detail and satisfactory in scope to Lender
and audited by independent certified public accountants selected by Borrower and
reasonably satisfactory to Agent, whose opinion shall be in scope and substance
satisfactory to Agent;
(C) Budget. As soon as practicable, and in any event, before the
start of each Fiscal Year of Borrower and its Subsidiaries, annual budgets of
each of Borrower and its Subsidiaries for the next Fiscal Year, a consolidated
annual budget of Borrower and its Subsidiaries for the next Fiscal Year, and
within the next 90 days, a budget for the succeeding two Fiscal Years, in
reasonable detail (on a fiscal month basis for the immediately succeeding Fiscal
Year), including statements of anticipated income and cash flow and balance
sheets of each of Borrower and its Subsidiaries, and consolidated statements of
anticipated income and cash flow and balance sheets of Borrower and its
Subsidiaries for the succeeding three (3) Fiscal Years (on a fiscal month basis
for the immediately succeeding Fiscal Year) in reasonable detail, and a detailed
statement of the methods and assumptions used in the preparation of such budget;
(D) Letters from Accountants and Consultants. As soon as practicable
and in any event within ten (10) days of delivery to Borrower, a copy of (i)
each "Management Letter" prepared by Borrower's independent certified public
accountants in connection with the financial statements referred to in
Subsection 7.1(B) hereof and (ii) to the extent that such letters may from time
to time be issued by Borrower's independent certified public accountants or
other management consultants (collectively, "Accounting Systems Letters"), any
letter issued by Borrower's independent certified public accountants or other
management consultants with respect to recommendations relating to Borrower's or
any of its Subsidiaries' financial or accounting systems or controls;
(E) Default Notices. As soon as practicable (but in any event not
more than five (5) days after any officer of Borrower or any Subsidiary obtains
knowledge of the occurrence of an event or the existence of a circumstance
giving rise to an Event of Default or a Default), notice of any and all Events
of Default or Defaults hereunder;
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(F) List of Account Debtors. At the request of Agent, names,
addresses and phone numbers of Borrower's Account Debtors;
(G) Information Provided to Shareholders and Other Information.
Promptly upon transmission thereof, copies of all such financial statements,
proxy statements, notices and reports as it shall send to its public
stockholders and copies of all registration statements and all reports and
filings which it files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the Securities and
Exchange Commission) and with reasonable promptness, such other business or
financial data as Agent may reasonably request;
(H) PEDFA Matters. As soon as reasonably practicable, and in any
event within two (2) Business Days thereof, Borrower shall give each Lender
notice of any breach, default or Event of Default under any Related Documents
(as defined in the Participation Agreement);
(I) Loans from Lenders. As soon as reasonably practicable, and in
any event within five (5) Business Days prior to execution thereof, Borrower
shall give each Lender notice of its intent to enter into any documents,
instruments or agreements or other arrangements with any Lender pursuant to
which such Lender will extend credit to Borrower or any of its Subsidiaries as
permitted by Subsection 8.17; and
(J) Other Information. With reasonable promptness, such other
business or financial data as Agent or any Lender may reasonably request.
Borrower further agrees that upon Borrower's receipt of any
Accounting Systems Letters wherein such accountants or consultants have made
recommendations for improvements to Borrower's or any of its Subsidiaries'
financial or accounting systems or controls, Borrower promptly shall, or shall
cause such Subsidiary to, commence actions to correct or cause to be corrected
any material defects in or make improvements to such financial or accounting
systems or controls unless Agent otherwise consents or Borrower reasonably
disagrees with the need for such actions.
All financial statements delivered to Lenders pursuant to the
requirements of this Subsection 7.1 (except where otherwise expressly indicated)
shall be prepared in accordance with GAAP (subject in the case of interim
financial statements to the lack of footnotes and normal year-end adjustments)
consistently applied, except for changes therein with which the independent
certified public accountants issuing the opinion on the financial statements
delivered pursuant to Subsection 7.1(B) hereof have previously concurred in
writing. Together with each delivery of financial statements required by
Subsections 7.1(A) for or as of the end of a Fiscal Quarter and 7.1(B) hereof,
Borrower shall deliver to Lenders a certificate of an Authorized Officer of
Borrower in the form attached hereto as Exhibit 7.1-2 setting forth in such
detail as is reasonably acceptable to Agent calculations with respect to
Borrower's compliance with each of the financial covenants contained in this
Agreement and stating that there exists no Default or Event of Default, or, if
any Default or Event of Default exists, specifying the nature and the period of
existence thereof and what action Borrower proposes to take with respect
thereto. Together with each delivery of financial statements required by
Subsection 7.1(B) hereof,
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Borrower shall deliver to Lenders a certificate of the independent certified
public accountants who performed the audit in connection with such statements
stating that in making the audit necessary to the issuance of a report on such
financial statements, they have obtained no knowledge of any Default or Event of
Default, or, if such accountants have obtained knowledge of a Default or Event
of Default, specifying the nature and period of existence thereof. Such
accountants shall not be liable by reason of any failure to obtain knowledge of
any Default or Event of Default which would not be disclosed in the ordinary
course of an audit.
Each Lender shall exercise reasonable efforts to keep such
information, and all information acquired as a result of any inspection
conducted in accordance with Subsection 7.2 hereof, confidential, provided that
each Lender may communicate such information (a) to any other Person in
accordance with the customary practices of commercial banks relating to routine
trade inquiries, (b) to any regulatory authority having jurisdiction over
Lenders, (c) to any other Person in connection with any Lender's sale of any
participations in the Liabilities or assignment of any rights and obligations of
any Lender under this Agreement and the other Financing Agreements, (d) to any
other Person in connection with the exercise of Agent's or any Lender's rights
hereunder or under any of the other Financing Agreements, (e) to any Person in
any litigation in which Agent or any Lender is a party, (f) to any other Lender,
(g) to any affiliate of such Lender, or (h) any other Person if Agent or any
Lender believes in Good Faith that disclosure is necessary or appropriate to
comply with any applicable law, rule or regulation or in response to a subpoena,
order or other legal process or informal investigative demand, whether issued by
a court, judicial or administrative or legislative body or committee or other
governmental authority. Notwithstanding the foregoing, information shall not be
deemed to be confidential to the extent such information (i) was already
lawfully in the possession of any Lender or Agent prior to December 31, 1996,
(ii) is available in the public domain, (iii) becomes available in the public
domain other than as a result of unauthorized disclosure by Agent or a Lender or
(iv) is acquired from a Person not known by a Lender or Agent to be in breach of
an obligation of secrecy to Borrower. Borrower authorizes Agent and each Lender
to discuss the financial condition of Borrower or any Subsidiary with Borrower's
independent certified public accountants and agrees that such discussion or
communication shall be without liability to Agent, such Lender or Borrower's
independent certified public accountants.
7.2 Inspection. Agent or any Person designated by Agent in writing
and, with respect to clause (i) below, each Lender, shall have the right, from
time to time hereafter, to call at Borrower's place or places of business (or
any other place where the Collateral or any information relating thereto is kept
or located) during reasonable business hours, and, without hindrance or delay,
(i) to inspect, audit, check and make copies of and extracts from Borrower's
books, records, journals, orders, receipts and any correspondence and other data
relating to Borrower's business or to any transactions between the parties
hereto, (ii) to make such verification concerning the Collateral as Agent may
consider reasonable under the circumstances, and (iii) to discuss the affairs,
finances and business of Borrower with any officers, employees or directors of
Borrower. Borrower shall pay on demand all photocopying expenses incurred by
Agent or Lenders under this Subsection 7.2. Agent may in its sole discretion (i)
once a year, and (ii) in addition, at any time and from time to time after the
occurrence and during the continuance of a Default, order and obtain, at
Borrower's expense (and Borrower shall reimburse Agent on demand for its
expenses incurred in connection
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therewith), appraisals (from appraisers selected by Agent) of Borrower's
Equipment, real property and leaseholds, and Borrower shall cooperate in the
conduct thereof.
7.3 Conduct of Business; Locations of Collateral and Third Party
Goods.
(A) Borrower shall, and Borrower shall cause each of its
Subsidiaries to, maintain its corporate existence, shall maintain in full force
and effect all material licenses, permits, authorizations, bonds, franchises,
leases, patents, contracts and other rights necessary for the profitable conduct
of its business, shall continue in, and limit its operations to, the same
general line of business as that presently conducted by it and shall comply with
all applicable laws and regulations of any federal, foreign, state or local
governmental authority, except for such laws and regulations the violation of
which would not, in the aggregate, have a material adverse effect on its
financial condition, results of operations or business or its ability to perform
its obligations.
(B) Borrower shall, and Borrower shall cause each of its
Subsidiaries to, pay promptly all liabilities to all of its employees arising
under the minimum wage and maximum hour provisions of the Fair Labor Standards
Act, as the same may be amended from time to time.
(C) Borrower shall maintain (i) all Collateral at the locations
listed on Schedule 6.5 and (ii) all Third Party Goods which are the subject of
consignment arrangements clearly marked and separately identified as consigned,
unslit and uncommingled.
7.4 Claims and Taxes. Borrower agrees to indemnify and hold Agent,
each Lender, the Issuing Bank and each of their respective officers, directors,
employees, attorneys and agents harmless from and against any and all claims,
demands, liabilities, losses, damages, penalties, costs, and expenses (including
without limitation reasonable attorneys' and consultants' fees) relating to or
in any way arising out of the possession, use, operation or control of any of
Borrower's assets. Borrower shall, and Borrower shall cause each of its
Subsidiaries to, pay or cause to be paid all license fees, bonding premiums and
related taxes and charges, and shall pay or cause to be paid all of its real and
personal property taxes, assessments and charges and all of its franchise,
income, unemployment, use, excise, old age benefit, withholding, sales and other
taxes and other governmental charges assessed against it, or payable by it, at
such times and in such manner as to prevent any penalty from accruing or any
lien or charge from attaching to its property, provided that Borrower shall have
the right to contest in good faith, by an appropriate proceeding promptly
initiated and diligently conducted, the validity, amount or imposition of any
such tax, assessment or charge, and during the pendency of such good faith
contest to delay or refuse payment thereof, if (i) Borrower and its Subsidiaries
establish adequate reserves in accordance with GAAP to cover such contested
taxes, assessments or charges, and (ii) such contest does not have a material
adverse effect on Borrower's or any Subsidiary's financial condition, results of
operations or business, the ability of Borrower to pay any of the Liabilities,
or the priority or value of Agent's security interest in the Collateral or any
collateral under any other Financing Agreement.
7.5 Agent's Costs and Expenses as Additional Liabilities. Borrower
shall reimburse Agent on demand for all allocated costs and reasonable expenses
and fees of Agent's in-house attorneys and paralegals and all reasonable
out-of-pocket expenses and fees paid or
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incurred in connection with the analysis, documentation, negotiation and closing
of the Loans and other extensions of credit described herein, including, without
limitation, lien search, filing and recording fees and taxes and the reasonable
fees and expenses of Agent's attorneys and paralegals and consultants (whether
such attorneys and paralegals are employees of Agent or are separately engaged
by Agent), whether such expenses and fees are incurred prior to or after the
date hereof. All costs and expenses incurred by Agent with respect to the
negotiation, documentation and closing of the Loans and other extensions of
credit described herein and the enforcement, collection and protection of
Agent's interests in the Collateral shall be additional Liabilities of Borrower
to Agent, payable on demand, repaid as provided in Subsection 2.8 hereof and
secured by the Collateral.
7.6 Borrower's Liability Insurance. Borrower shall maintain, at its
expense, such public liability and third party property damage insurance in such
amounts and with such deductibles as is acceptable to Agent in its discretion
exercised in Good Faith.
7.7 Borrower's Property Insurance and Business Interruption
Insurance. Borrower shall, and Borrower shall cause each of its Subsidiaries to,
at its expense, maintain business interruption insurance (in amounts reasonably
satisfactory to Agent) and keep and maintain its assets insured against loss or
damage by fire, theft, burglary, pilferage, loss in transit, explosion, spoilage
and all other hazards and risks ordinarily insured against by other owners or
users of such properties in similar businesses, in an amount at least equal to
the greater of the full insurable value of all such property or the amount which
is necessary to avoid the application of co-insurance provisions, and in any
event insurance on Equipment and Inventory in amounts greater than the
respective amounts of the Term Loan and the portion of the Current Asset Base
attributable to Inventory. All such policies of insurance shall be in form and
substance satisfactory to Agent and Borrower shall not amend or otherwise change
any such policies in any way which may adversely affect Agent or the Lenders
without the prior written consent of Agent. Borrower shall deliver to Agent the
original (or a certified) copy of each policy of insurance and evidence of
payment of all premiums therefor. Such policies of insurance shall contain an
endorsement, in substantially the form of Exhibit 7.7 hereto, showing all loss
payable to Agent as provided below in this Subsection 7.7. Borrower hereby
directs all insurers under such policies of insurance to pay all proceeds of
insurance policies directly to Agent. Borrower irrevocably makes, constitutes
and appoints Agent (and all officers, employees or agents designated by Agent)
as Borrower's true and lawful attorney-in-fact for the purpose of making,
settling and adjusting claims as to the Collateral under all such policies of
insurance, endorsing the name of Borrower on any check, draft, instrument or
other item of payment pertaining to the Collateral received by Borrower or Agent
pursuant to any such policies of insurance and for making all determinations and
decisions with respect to such policies of insurance as they relate to the
Collateral. If Borrower, at any time or times hereafter, shall fail to obtain or
maintain any of the policies of insurance required above or to pay any premium
in whole or in part relating thereto, then Agent, without waiving or releasing
any obligation or default by Borrower hereunder, may at any time or times
thereafter (but shall be under no obligation to do so) obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which Agent deems advisable. If Agent receives proceeds of
insurance or is holding proceeds of insurance theretofore received by Agent,
Agent may apply the same to the Liabilities at any time and from time to time as
it may determine.
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7.8 ERISA. Borrower shall deliver to Agent and Lenders, at
Borrower's expense, the following information as and when provided below:
(i) as soon as possible, and in any event within twenty (20) days
after Borrower or an ERISA Affiliate of Borrower knows or has reason to
know that a Termination Event has occurred, a written statement from an
Authorized Officer of Borrower describing such Termination Event and the
action, if any, which Borrower or such ERISA Affiliate of Borrower has
taken, is taking or proposes to take with respect thereto, and when known,
any action taken or threatened by the Internal Revenue Service ("IRS"),
the Department of Labor ("DOL") or PBGC with respect thereto;
(ii) as soon as possible, and in any event within thirty (30) days,
after Borrower or an ERISA Affiliate of Borrower knows or has reason to
know that a prohibited transaction (defined in Section 406 of ERISA and
Section 4975 of the Internal Revenue Code) has occurred, a statement from
an Authorized Officer of Borrower describing such transaction;
(iii) promptly after the filing thereof with the DOL, IRS or PBGC,
copies of each annual report, including schedule B thereto, filed with
respect to each Pension Plan;
(iv) promptly after the filing thereof with the IRS, a copy of each
funding waiver request filed with respect to any Pension Plan and all
communications received by Borrower or any ERISA Affiliate of Borrower
with respect to such request;
(v) promptly upon the occurrence thereof, notification of any
increases in the benefits of any existing Pension Plan or the
establishment of any new Pension Plan or the commencement of contributions
to any Pension Plan to which Borrower or any ERISA Affiliate of Borrower
was not previously contributing;
(vi) promptly upon, and in any event within ten (10) Business Days
after, receipt by Borrower or an ERISA Affiliate of Borrower of the PBGC's
intention to terminate a Pension Plan or to have a trustee appointed to
administer a Pension Plan, copies of each such notice;
(vii) promptly upon, and in any event within ten (10) Business Days
after, receipt by Borrower or an ERISA Affiliate of Borrower of an
unfavorable determination letter from the IRS regarding the qualification
of a Pension Plan under Section 401(a) of the Internal Revenue Code,
copies of such letter;
(viii) promptly upon, and in any event within ten (10) Business Days
after, receipt by Borrower or an ERISA Affiliate of Borrower of a notice
from a Multiemployer Plan regarding the imposition of withdrawal
liability, copies of such notice; and
(ix) promptly upon, and in any event within twenty (20) Business
Days after either Borrower or an ERISA Affiliate of Borrower fails to make
a required installment under Subsection (m) of Section 412 of the Code or
any other payment required under Section 412 on or before the due date for
such installment or payment, a notification of such failure.
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Borrower shall, and shall cause each of its ERISA Affiliates to, (a)
keep in full force and affect any Pension Plans that are presently in existence
or may, from time to time, come into existence, (b) make contributions to all
Pension Plans in a timely manner and in a sufficient amount to comply with the
requirements of the Pension Plans, the Code and ERISA, (c) comply with all
requirements of ERISA and the Code which relate to all Pension Plans and (d)
notify each Lender immediately upon receipt by Borrower or any of its ERISA
Affiliates of any notice of the institution of any proceeding or other action
which may result in the termination of any Pension Plan or where there may
constitute a Termination Event. Borrower shall, and shall cause each of its
ERISA Affiliates to, make any and all payments to any Multiemployer Plan that
Borrower or any ERISA Affiliate thereof may be required to make under any
agreement relating to any Multiemployer Plan or any law pertaining thereto,
except for any such payments being contested in Good Faith by appropriate
proceedings.
7.9 Notice of Suit or Adverse Change in Business. Borrower shall,
and shall cause its Subsidiaries to, as soon as possible, and in any event
within five (5) days after any officer of Borrower or any Subsidiary learns of
the following, give written notice to each Lender of (i) any material
proceeding(s) (including, without limitation, litigation, arbitration or
governmental proceedings) being instituted or threatened to be instituted by or
against Borrower or any Subsidiary in any federal, state, local or foreign court
or before any commission or other regulatory body (federal, state, local or
foreign), (ii) notice that Borrower's or any Subsidiary's operations are in
material noncompliance with requirements of applicable federal, state or local
environmental, health and safety statutes and regulations, (iii) notice that
Borrower, any Subsidiary or any guarantor is subject to federal or state
investigation evaluating whether any material remedial action is needed to
respond to the release of any hazardous or toxic waste, substance or
constituent, or other substance into the environment, (iv) notice that any
material portion of the properties or assets of Borrower, any Subsidiary or any
guarantor are subject to an Environmental Lien, (v) any material adverse change
in the business, assets or condition, financial or otherwise, of Borrower, and
(vi) any changes in the locations of any Collateral from the locations listed on
Schedule 6.5.
7.10 Supervening Illegality. If, at any time or times hereafter,
there shall become effective any amendment to, deletion from or revision,
modification or other change in any provision of any statute, or any rule,
regulation or interpretation thereunder or any similar law or regulation,
affecting, in Agent's reasonable determination, Lenders' or the Issuing Bank's
extension of credit described in this Agreement or the selling of participations
therein, Borrower shall, at Borrower's option, either (i) pay to Lenders the
then outstanding balance of the Liabilities, and hold Lenders harmless from and
against any and all obligations, fees, liabilities, losses, penalties, costs,
expenses and damages, of every kind and nature, imposed upon or incurred by
Borrower by reason of Agent's, any Lender's or the Issuing Bank's failure or
inability to comply with the terms of this Agreement or any of the other
Financing Agreements, or (ii) indemnify and hold Agent, Lenders and the Issuing
Bank harmless from and against any and all obligations, fees, liabilities,
losses, penalties, costs, expenses and damages, of every kind and nature,
imposed upon or incurred by Agent, any Lender or the Issuing Bank by reason of
such amendment, deletion, revision, modification, or other change. The
obligations of Borrower under this Subsection 7.10 shall survive payment of the
Liabilities and termination of this Agreement.
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7.11 Environmental Laws. If Borrower or any Subsidiary shall (a)
receive notice that any violation of any federal, state or local environmental
law or regulation may have been committed or is about to be committed by
Borrower or any Subsidiary, (b) receive notice that any administrative or
judicial complaint or order has been filed or is about to be filed against
Borrower or any Subsidiary alleging a violation of any federal, state or local
environmental law or regulation or requiring Borrower or any Subsidiary to take
any action in connection with the release of toxic or hazardous substances into
the environment or (c) receive any notice from a federal, state, or local
governmental agency or private party alleging that Borrower or any Subsidiary
may be liable or responsible for any material amount of costs associated with a
response to or cleanup of a release of a toxic or hazardous substance into the
environment or any damages caused thereby, Borrower shall provide Agent with a
copy of such notice within fifteen (15) days after Borrower's or such
Subsidiary's receipt thereof. Within fifteen (15) days after Borrower or any
Subsidiary has learned of the enactment or promulgation of any federal, state or
local environmental law or regulation which may result in any material adverse
change in the condition, financial or otherwise, of Borrower, Borrower shall
provide Agent with notice thereof.
7.12 Landlord Consents and Waivers. Borrower shall, upon the
execution of this Agreement with respect to each lease of premises then in
effect on the date hereof and on or before the date of execution of any lease of
premises to Borrower with respect to any lease in effect thereafter, deliver to
Agent a landlord's waiver (including, upon Agent's request therefor, a consent
to a leasehold mortgage) executed by the lessor of each location leased to
Borrower. Each landlord's waiver so delivered shall be in form and substance
satisfactory to Agent. Borrower shall pay all of its obligations under such
leases of real property when due and promptly shall notify Agent of any breach
of, or default under, any such lease.
8. NEGATIVE COVENANTS.
Borrower covenants and agrees that so long as any of the Liabilities
remain outstanding, and (even if there shall be no Liabilities outstanding) so
long as this Agreement remains in effect:
8.1 Encumbrances. Except as set forth on Schedule 8.1 hereto, or
contemplated herein, neither Borrower nor any Subsidiary will create, incur,
assume or suffer to exist any security interest, mortgage, pledge, lien or other
encumbrance of any nature whatsoever on any of its assets, including, without
limitation, the Collateral, other than: (i) involuntary liens on real property
(and not personal property of Borrower or any Subsidiary), either not yet due or
the validity of which is being contested in good faith by appropriate
proceedings, and as to which Borrower or such Subsidiary shall, if appropriate
under GAAP, have set aside on its books and records adequate reserves; (ii)
deposits under workmen's compensation, unemployment insurance, social security
and other similar laws, or to secure the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business; (iii) the
liens and security interests in favor of Agent; (iv) liens which arise by
operation of law, other than Environmental Liens; (v) zoning restrictions,
easements, licenses, covenants and other restrictions affecting the use of real
property; (vi) liens securing Purchase Money Secured
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Financing permitted under Subsection 8.2(iv) hereof; (vii) consignments of goods
to Borrower provided such consignment arrangement is permitted by Subsection
3.17; (viii) consignment of goods to any Subsidiary; (ix) liens on assets of P&J
securing indebtedness of P&J to American National Bank and Trust Company of
Chicago and its successors, not to exceed $2,000,000 in aggregate amount at any
time outstanding; and (x) other liens and encumbrances on property which are not
in the aggregate in excess of $150,000 or, which do not, in Agent's sole
determination, (a) materially impair the use of such property, or (b) materially
lessen the value of such property for the purposes for which the same is held by
Borrower or such Subsidiary. Borrower shall promptly give Lender notice of any
liens of a type referred to in clause (i) above (other than liens for taxes not
yet due).
8.2 Indebtedness. Except as set forth on Schedule 8.2 attached
hereto, Borrower shall not, and Borrower shall not permit any of its
Subsidiaries to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, except (i) the Liabilities,
(ii) unsecured indebtedness not to exceed $250,000 in the aggregate for Borrower
and its Subsidiaries at any time outstanding incurred on terms reasonably
acceptable to Agent, (iii) obligations of P&J in favor of Agent and the Lenders
under the P&J Guaranty, (iv) indebtedness not to exceed $250,000 (plus, to the
extent the same are incurred in Borrower's Fiscal Year ending July 31, 2003, an
additional $2,000,000) in the aggregate for Borrower and its Subsidiaries
outstanding at any time incurred in connection with the purchase of any
hereafter acquired Equipment so long as such indebtedness is used to finance not
more than 100% of the purchase price of such property and provided that, after
giving effect to the incurrence of such indebtedness, no Default or Event of
Default has occurred and is continuing ("Purchase Money Secured Financing"), (v)
indebtedness owed by Borrower to P&J permitted under Subsection 8.4, (vi)
indebtedness by P&J to Borrower permitted under Subsection 8.4, (vii)
Indebtedness in respect of Hedging Agreements used to hedge interest rates on
all or any portion of the Liabilities, (viii) refinancings by P&J of
indebtedness of P&J that do not increase the aggregate outstanding amount of
such indebtedness; and (ix) obligations under guaranty agreements not to exceed
$4,000,000 made by Borrower in favor of ANB guarantying obligations of P&J under
the financing arrangements described on Schedule 8.2
8.3 Consolidations, Mergers or Acquisitions. Neither Borrower nor
any Subsidiary shall recapitalize or consolidate or merge with, or otherwise
acquire all or substantially all of the assets or properties of, any other
Person; provided, however, P&J may merge with and into Borrower upon ten (10)
days prior written notice to Lenders, provided that the Borrower is the
surviving corporation and no Default or Event of Default exists or will occur as
a result thereof.
8.4 Investments or Loans. Borrower shall not, and Borrower shall not
permit any of its Subsidiaries to, make or permit to exist investments or loans
in or to any other Person, except (i) investments in short-term direct
obligations of the United States Government, (ii) investments in negotiable
certificates of deposit issued by any Lender or an affiliate of a Lender or by
any other bank satisfactory to Agent, in its reasonable discretion, and payable
to the order of Borrower or to bearer and delivered to Agent, (iii) investments
in commercial paper rated A1 or P1, (iv) advances and reimbursements for travel,
entertainment and other reasonable and customary out-of-pocket expenses to
Borrower's or its Subsidiaries' officers, directors or employees incurred in the
ordinary course of Borrower's or its Subsidiaries' business, (v)
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investments of Borrower in P&J as of the date hereof, (vi) obligations due from
P&J to Borrower representing amounts due to Borrower for goods sold or services
rendered in the ordinary course of business of Borrower on terms not materially
less favorable to Borrower than Borrower would obtain in an arms-length
transaction, provided that (a) any such obligation is paid in full within thirty
(30) days of the transaction giving rise thereto, and (b) all such intercompany
obligations due from P&J to Borrower do not at any time exceed $2,000,000 in the
aggregate, (vii) advances and loans from P&J to Borrower, (viii) the existing
loan by Borrower to F. ▇▇▇▇▇▇▇ ▇▇▇▇▇ described on Schedule 8.11 hereto, (ix)
Accounts arising in the ordinary course of business of Borrower (provided that
Borrower shall not permit the aggregate outstanding amount of accounts
receivable from, and investments in and advances to New QuikWater to at any time
exceed $15,000), and (x) loans by Borrower described on Schedule 8.11 to
officers of Borrower.
8.5 Guarantees. Except as contemplated herein, Borrower shall not,
and Borrower shall not permit any of its Subsidiaries to, guarantee, endorse or
otherwise in any way become or be responsible for obligations of any other
Person, whether by agreement to purchase the indebtedness of any other Person or
through the purchase of goods, supplies or services, or maintenance of working
capital or other balance sheet covenants or conditions, or by way of stock
purchase, capital contribution, advance or loan for the purpose of paying or
discharging any indebtedness or obligation of such other Person or otherwise,
except (i) endorsements of negotiable instruments for collection in the ordinary
course of business, and (ii) as listed on Schedule 8.5 hereto.
8.6 Capital Investment Limitations. Borrower shall not incur Capital
Expenditures in any Fiscal Year in an amount in excess of the sum of (i) the net
proceeds received by Borrower in such Fiscal Year from the sale of Equipment,
plus (ii) Capital Expenditures paid for with Applied Financing Proceeds, plus
(iii) the amount set forth below opposite such Fiscal Year, plus (iv) the lesser
of (x) $500,000, and (y) any excess amount from the immediately prior Fiscal
Year (commencing with any excess from the Fiscal Year ending July 31, 2002 and
excluding, for the purpose of computing such excess, any excess amount from a
prior Fiscal Year), plus (v) for the Fiscal Year ending July 31, 2003, up to
$2,000,000 to the extent funded with additional Indebtedness permitted by
Subsection 8.2(iv):
Fiscal Years Ending: Amount:
-------------------- -------
July 31, 2002 $3,000,000
July 31, 2003 $3,500,000
July 31, 2004 and thereafter $3,500,000
8.7 Dividends and Stock Redemptions. Borrower shall not, and
Borrower shall not permit any of its Subsidiaries to, without the prior written
consent of the Required Lenders, directly or indirectly, (i) redeem, purchase or
otherwise retire any of its shares of capital stock, or enter into any agreement
to redeem, purchase or otherwise retire any of its shares of capital stock, (ii)
declare or pay any dividends in any Fiscal Year on any class or classes of
capital stock, (iii) return capital of Borrower or any Subsidiary to its
stockholders, or (iv) make any other distribution on or in respect of any shares
of any class of capital stock of Borrower or any Subsidiary, including without
limitation any distribution or payment on or in respect of any stock
appreciation rights, or enter into any agreement to make any such distribution
or payment
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(clauses (i) through (iv) are hereinafter collectively referred to as "Dividends
and Distributions"); provided, however, that if no Default or Event of Default
has occurred and is continuing or would occur as a result thereof, then (i)
Borrower may make cash payments for the redemption or repurchase of capital
stock of Borrower, provided that all such cash payments do not exceed $250,000
in the aggregate in any Fiscal Year and Borrower may otherwise redeem or
repurchase capital stock of Borrower with other capital stock of the Borrower,
and (ii) any Subsidiary may declare and pay (A) cash dividends and distributions
to Borrower, and (B) stock dividends if any pledge agreement from Borrower to
Agent is amended to reflect the addition of such shares and such shares are
delivered to the Agent, along with stock powers executed in blank.
8.8 Amendment of Certificate of Incorporation or By-Laws; Corporate
Name; Places of Business. Borrower shall not amend its Certificate of
Incorporation or By-Laws, except that Borrower may amend its Certificate of
Incorporation to effect a change in its corporate name, provided that Borrower
gives Lender thirty (30) days prior written notice thereof and Borrower
furnishes to Agent such financing statements executed by Borrower which Agent
may request prior to the filing of such amendment and furnishes to Agent a copy
of such amendment, certified by the Secretary of State of Oklahoma within ten
(10) days of the date such amendment is filed with such Secretary of State.
Borrower shall not make any change to the location of its principal place of
business or chief executive office unless prior to the effective date of such
change in location, Borrower delivers to Agent such financing statements
executed by Borrower which Agent may request to reflect such change in location.
Lenders shall not unreasonably withhold their consent to any requested change in
Borrower's By-Laws. Borrower shall deliver such other documents and instruments
as Agent may request in connection with such change in name or location within
ten (10) days of the effectiveness of such change or Agent's request therefor.
8.9 Transactions with Subsidiaries and Affiliates. Except as
expressly contemplated by Subsections 8.1, 8.2, 8.3, 8.4, 8.5 and 8.7, Borrower
will not, and will not permit any of its Subsidiaries to, enter into any
transaction with any Affiliate, including, without limitation: (a) the making of
any loans to, or the payment of any bonuses, fees or other money to, any
Affiliate, and (b) the purchase, sale or exchange of property or the rendering
of any service to any Subsidiary or Affiliate, except for (i) salaries and
bonuses paid to officers of Borrower or any Subsidiary, (ii) sales to New
QuikWater, provided that Borrower shall not permit the aggregate outstanding
amount of accounts receivable from, and investments in and advances to, New
QuikWater to at any time exceed $15,000, and (iii) the transactions listed on
Schedule 8.11, in each case to the extent the same are in the ordinary course of
and pursuant to the reasonable requirements of Borrower's and such Subsidiary's
business and upon fair and reasonable terms no less favorable to Borrower or
such Subsidiary than Borrower or such Subsidiary would obtain in a comparable
arm's-length transaction with an unaffiliated person or corporation. The term
"Affiliate" as used in this Subsection 8.9 only shall have the meaning in
Subsection 1.1 and shall also include (i) any officer, director, employee or
stockholder of any Affiliate of Borrower, and (ii) any Person related to any
such Person described in clause (i) of this Subsection within the third degree
of consanguinity.
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8.10 ERISA Violations. Borrower shall not:
(A) engage, or permit an ERISA Affiliate of Borrower to engage, in
any prohibited transaction described in Section 406 of ERISA or Section 4975 of
the Internal Revenue Code for which a class exemption is not available or a
private exemption has not been previously obtained from the DOL;
(B) permit to exist any accumulated funding deficiency for any
Pension Plan (as defined in Subsection 302 of ERISA and Section 412 of the
Internal Revenue Code), whether or not waived;
(C) fail, or permit an ERISA Affiliate of Borrower to fail, to pay
timely required contributions or annual installments due with respect to any
Plan including without limitation any installments due with respect to any
waived funding deficiency to any Pension Plan;
(D) terminate, or permit an ERISA Affiliate of Borrower to
terminate, any Pension Plan which would result in any liability of Borrower or
an ERISA Affiliate of Borrower under Title IV of ERISA;
(E) fail, or permit an ERISA Affiliate of Borrower to fail, to pay
to any Pension Plan any required installment under section (m) of Section 412 of
the Internal Revenue Code or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or other
payment;
(F) amend, or permit an ERISA Affiliate of Borrower to amend, a
Pension Plan resulting in an increase in current liability for the plan year
such that either Borrower or an ERISA Affiliate of Borrower is required to
provide security to such Plan under Section 401(a) (29) of the Internal Revenue
Code;
(G) permit any reportable event (as defined in Section 4043 of
ERISA) to occur;
(H) withdraw, or permit any ERISA Affiliate to withdraw, from any
Pension Plan during a plan year for which Borrower or any ERISA Affiliate of
Borrower is a substantial employer with respect to such plan if Borrower or such
ERISA Affiliate of Borrower would incur liability to the PBGC with respect to
such plan under Sections 4063 or 4064 of ERISA; or
(I) withdraw, or permit any ERISA Affiliate of Borrower to withdraw,
from any Multiemployer Plan if a withdrawal liability would result to Borrower
or any ERISA Affiliate of Borrower pursuant to Section 4201 of ERISA.
8.11 Fiscal Year. Borrower shall not, and shall not permit any
Subsidiary to, change its Fiscal Year, provided that P&J may change its
Fiscal Year to July 31.
8.12 Subsidiaries. Borrower shall not form or acquire any
Subsidiaries other than P&J.
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8.13 Financial Covenants. Borrower shall not:
(A) Leverage Ratio. Permit its Leverage Ratio to at any time exceed
(i) 2.00 to 1.0 as of January 31, 2002, or (ii) 1.75 to 1.0 as of the end of any
Fiscal Quarter ending thereafter. As used herein the term "Leverage Ratio" shall
mean, at any time, Borrower's ratio of (i) Indebtedness and all other
liabilities that would appear on a balance sheet of Borrower prepared in
accordance with GAAP, to (ii) Tangible Net Worth, minus Borrower's investment
in, and loans or advances from, Borrower to any Subsidiary or Affiliate at such
time. As used herein, the term "Tangible Net Worth" shall mean at any time the
net worth of Borrower (less any intangible assets, including, without
limitation, prepayments, vendor deposits and other goodwill that would appear on
a consolidated balance sheet of Borrower and its Subsidiaries).
(B) Adjusted Debt Coverage Ratio. Permit its Adjusted Debt Coverage
Ratio for any period of four Fiscal Quarters ending (i) on January 31, 2002 to
be less than 1.0 to 1.0, (ii) on April 30, 2002 to be less than 1.10 to 1.0, or
(iii) after April 30, 2002 to be less than 1.20 to 1.0. As used herein the term
"Adjusted Debt Coverage Ratio" shall mean for any period, without duplication,
Borrower's ratio of (A) EBITDA, to (B) an amount equal to the sum of the
following for such period: the sum of (i) interest expense (other than non-cash
interest expense representing the amortization of deferred finance charges or
original issue discount); plus (ii) the sum of all scheduled or mandatory
principal payments on Indebtedness of Borrower, other than payments required
pursuant to Subsections 2.6(E), (F) and (G) hereof and payments on the Revolving
Loan. As used herein, the term "EBITDA" shall mean, as to any period, an amount
equal to the sum of the following for Borrower for such period: (i) earnings
before income tax expense (determined based on the valuation of inventory on an
average cost basis, and excluding gains or losses from or in connection with the
QuikWater Division and Borrower's sale of the assets of such division (including
without limitation the QuikWater Charge)); plus (ii) interest expense subtracted
in determining earnings; plus (iii) depreciation, amortization, and other
non-cash charges deducted in determining earnings; minus (iv) gains from the
sales of assets other than the sale of inventory or obsolete equipment in the
ordinary course of business of Borrower; minus (v) to the extent included in the
earnings of Borrower for such period, equity in undistributed earnings of
Subsidiaries; minus (vi) the aggregate amount of Dividends and other
Distributions; minus (vii) Capital Expenditures for such period other than
Capital Expenditures representing capitalized lease obligations incurred or
which were financed through the incurrence of Purchase Money Secured Financing
(other than the Revolving Loans) or paid for with Applied Financing Proceeds;
and minus (viii) income taxes paid in cash.
(C) Average Availability. Permit its Average Availability for any
month to be less than (i) $500,000 prior to October, 2002, (ii) $750,000 from
and including October, 2002 to and including ▇▇▇▇▇, ▇▇▇▇, (▇▇▇) $1,000,000 from
and including April, 2003 to and including March, 2004, or (iv) $1,500,000 for
any month after March, 2004.
8.14 Environmental.
(A) Borrower shall not, and Borrower shall not permit any of its
Subsidiaries to, (i) fail to comply with any and all present and future
Environmental Laws unless and to the extent contested in accordance with the
provisions of Subsection 8.16 (B) below, (ii) release, store, treat, handle,
generate, discharge or dispose of any Hazardous Materials on, under or from
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any Property in violation of or in a manner that Borrower reasonably expects
could result in any liability under any Environmental Law, and (iii) fail to
take any necessary steps to initiate and expeditiously complete all remedial,
corrective and other action to eliminate any such effect. Agent shall have the
right at any time that the Liabilities are outstanding but not more than once
every year, at the sole cost and expense of Agent and each Lender, to conduct an
environmental audit of the Mortgaged Property by such Persons appointed by
Agent, and Borrower shall, and Borrower shall cause its Subsidiaries to
cooperate in all respects in the conduct of such environmental audit, including,
without limitation, by providing access to the Mortgaged Property and to all
records relating thereto; provided, however, that if (1) such audit reveals any
non-compliance by Borrower or any Subsidiary with the terms of this Subsection
8.14 or (2) there exists at the time of such audit any Event of Default, then
all costs and expenses incurred by Agent or the Lenders in connection such
environmental audit shall be immediately due and payable by Borrower to Agent
upon Agent's demand therefor and if not then paid shall accrue interest at the
Post-Default Rate. To the extent that any environmental audit identifies
conditions which do not satisfy the covenants of this Subsection 8.14, Borrower
agrees, within thirty (30) days after receipt of the Non-Compliance Notice, to,
and to cause each Subsidiary to, initiate and thereafter continue with due
diligence all reasonable steps to correct any failure to comply with such
covenants. Borrower shall indemnify and hold Agent and each Lender harmless from
and against all loss, cost, damage or expense (including, without limitation,
reasonable attorneys' fees and disbursements and the allocated costs of staff
counsel) that Borrower, any Subsidiary, Agent or such Lender may sustain by
reason of the assertion against Agent or such Lender by any party of any claim
relating to any Hazardous Materials on, under or from any Property or actions
taken with respect thereto as authorized hereunder. The foregoing
indemnification shall survive repayment of all Liabilities and any release or
assignment of any Financing Agreement.
(B) Borrower may at its own expense contest the amount or
applicability of any of the obligations described in Subsection 8.14(A) by
appropriate legal proceedings, prosecution of which operates to prevent the
collection or enforcement thereof and the sale or forfeiture of any Property or
any part thereof to satisfy such obligations; provided, however, that in
connection with such contest, Borrower shall have made provision for the payment
or performance of such contested obligation on Borrower's and its Subsidiaries'
books if and to the extent required by GAAP or, at the option of Agent,
deposited with Agent to hold for the benefit of Borrower a sum sufficient to pay
and discharge such obligation and Agent's estimate of all interest and penalties
related thereto. Any such deposit (and any income earned thereon) not otherwise
needed or used to pay such obligation, interest or penalties after the same
shall be finally determined shall be promptly returned to Borrower.
Notwithstanding the foregoing provisions of this Subsection 8.14(B), (i) no
contest of any such obligations may be pursued by Borrower if such contest would
expose Agent or any Lender to any possible criminal liability or, unless
Borrower shall have furnished a bond or other security therefor satisfactory to
Agent or such Lender, as the case may be, any civil liability for failure to
comply with such obligations and (ii) if at any time payment or performance of
any obligation contested by Borrower pursuant to this Subsection 8.14(B) shall
become necessary to prevent the delivery of a tax or similar deed conveying any
Property or any portion thereof or the forfeiture of, or termination of
Borrower's or any Subsidiary's interest in, any Property or any portion thereof
because of nonpayment or nonperformance, Borrower shall pay or perform the same,
in sufficient time to prevent the delivery of such tax or similar deed or such
termination or forfeiture.
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8.15 Disposal of Property. Borrower shall not sell, lease, transfer
or otherwise dispose of any of the Collateral or any of its other properties,
assets and rights to any Person, except for (i) sales of Inventory to customers
in the ordinary course of business and (ii) the sale of Equipment in the
ordinary course of Borrower's business at any time when no Default or Event of
Default has occurred and is continuing; provided that Borrower shall not sell
Equipment with an aggregate value greater than $250,000 during any Fiscal Year
without the consent of the Required Lenders (provided that no Lender shall
unreasonably withhold its consent to such a sale). The term "value" as used in
this Subsection 8.15 shall mean, as to any item of Equipment, the greater of (a)
the proceeds received for such items of Equipment upon disposition (net of taxes
and reasonable expenses incurred by Borrower in connection with such
disposition) or (b)(i) if such item is listed on the equipment appraisal
delivered to Agent in December, 2001 (the "Appraisal"), the appraised "orderly
liquidation value" set forth for such item thereon, or (ii) if such item is not
listed on the Appraisal, Borrower's net book value for such item. Agent does not
authorize Borrower or any Subsidiary to take any action in contravention to the
foregoing.
8.16 Inventory Covenants. Except as permitted by Subsection 3.13,
Borrower shall not sell any of the Inventory on a ▇▇▇▇-and-hold, guaranteed
sale, sale-or-return, sale on approval or consignment basis or any other basis
subject to a repurchase obligation or return right (other than Borrower's
customary practice of accepting returns of Inventory within stated time periods
as such practice is now in effect as heretofore described to Agent). Borrower
shall not hold any inventory of others, whether on a consignment basis or
otherwise, except (i) inventory of National Material Limited Partnership
("NMLP") held by Borrower on a consignment basis pursuant to that certain
Amended and Restated Consignment Agreement dated February 14, 1992 by and
between NMLP and Borrower, provided that NMLP has entered into an agreement with
Agent in form and substance satisfactory to Agent with respect to such Amended
and Restated Consignment Agreement, (ii) separately crated and identified
inventory of Alcobex consisting of brass heat exchanger tubes not to exceed
$250,000 in value at the lower of cost, determined on an average cost basis, or
market, (iii) separately identified inventory of Nooter ▇▇▇▇▇▇▇ stored with the
Borrower on the date hereof consisting of slit steel coils until the earlier of
the date such slit steel coils are purchased by Borrower or the date Nooter
▇▇▇▇▇▇▇ takes possession of such slit steel coils, and (iv) Borrower may from
time to time accept inventory of third parties for tolling provided that it is
performed by Borrower on a sporadic, exceptional basis, and provided, however,
in each case, that such inventory is not included in Borrower's Inventory.
8.17 Loans by Lenders. Without the prior written consent of the
Required Lenders, Borrower shall not enter into any documents, instruments or
agreements or other arrangements with any Lender pursuant to which such Lender
will extend credit to Borrower or any of its Subsidiaries (other than credit
that is incidental to the maintenance of deposit accounts, leases, and interest
rate, commodity or foreign currency exchange, swap, collar, cap or similar
agreements), except pursuant to this Agreement.
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9. DEFAULT, RIGHTS AND REMEDIES OF LENDERS AND AGENT.
9.1 Defaults. If any of the following events ("Defaults") shall
occur:
(A) Borrower fails to pay (i) any of its Liabilities (other than
interest or fees) when such Liabilities are due or are declared due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) or
(ii) any of its Liabilities constituting interest or fees within two days of the
date such Liabilities are due or declared due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise);
(B) Borrower or any Subsidiary fails or neglects to perform, keep or
observe any of its covenants, conditions or agreements contained in any of the
other Financing Agreements or Borrower fails or neglects to perform, keep or
observe any of its covenants, conditions or agreements contained in:
(i) Subsection 7.2 above and such failure shall continue for more
than 24 hours after notice of such failure by Agent to Borrower;
(ii) Subsection 3.1 above and such failure shall continue for three
(3) Business Days; provided that such grace period shall not apply, and a
Default shall be deemed to have occurred promptly upon such breach, if
such breach may not, in Agent's reasonable determination, be cured during
such grace period;
(iii) Subsections 7.1 (other than clause (E) thereof), 7.3 (other
than clause (c) thereof), or 7.8 above and such failure shall continue for
five (5) days; provided that such grace period shall not apply, and a
Default shall be deemed to have occurred promptly upon such breach, if
such breach may not, in Agent's reasonable determination, be cured during
such grace period;
(iv) Subsection 7.6 above and such failure shall continue for 14
days after Borrower knew or should have known thereof; provided that such
grace period shall not apply, and a Default shall be deemed to have
occurred promptly upon such breach, if such breach may not, in Agent's
reasonable determination, be cured during such grace period;
(v) Subsections 7.4, 7.5, 7.10 or 7.12 and such failure shall
continue for thirty (30) days (such 30 days to begin solely for the
purposes of a failure to comply with Subsection 7.4, when Borrower knew or
should have known of such failure); provided that such grace period shall
not apply, and a Default shall be deemed to have occurred promptly upon
such breach, if such breach may not, in Agent's reasonable determination,
be cured during such grace period; and
(vi) any other covenant, condition or agreement contained in this
Agreement;
(C) any warranty or representation now or hereafter made by Borrower
or any Subsidiary is untrue or incorrect in any material respect when made, or
any schedule, certificate, statement, report, financial data, notice, or writing
furnished at any time by Borrower or any Subsidiary to Agent or any Lender is
untrue or incorrect in any material respect on the date as of
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which the facts set forth therein are stated or certified or any of the
foregoing omits to state a fact necessary to make the statements therein
contained not misleading in any material respect;
(D) one or more judgment or order requiring a payment or payments in
excess of $250,000 in the aggregate (except for judgments which are not a lien
on personal property and which are being contested by Borrower and its
Subsidiaries in good faith) shall be rendered against Borrower or any Subsidiary
and such judgment or order shall remain unsatisfied or undischarged and in
effect for thirty (30) consecutive days without a stay of enforcement or
execution, provided that this Subsection 9.1(D) shall not apply to any judgment
for which Borrower and its Subsidiaries is fully insured (except for normal
deductibles in connection therewith) and with respect to which the insurer has
assumed the defense and is not defending under reservation of right and with
respect to which Agent reasonably believes the insurer will pay the full amount
thereof (except for normal deductibles in connection therewith);
(E) a notice of lien, levy or assessment is filed or recorded with
respect to all or a substantial part of the assets of Borrower or any Subsidiary
by the United States, or any department, agency or instrumentality thereof, or
by any state, county, municipality or other governmental agency or any taxes or
debts owing at any time or times hereafter to any one or more of them become a
lien upon all or a substantial part of Borrower's Collateral or any Subsidiary's
assets, and (i) such lien, levy or assessment is not discharged or released or
the enforcement thereof is not stayed within thirty (30) days of the notice or
attachment thereof, or (ii) if the enforcement thereof is stayed, such stay
shall cease to be in effect, provided that this Subsection 9.1(E) shall not
apply to any liens, levies or assessments which relate to current taxes not yet
due and payable;
(F) there shall occur any loss, theft, substantial damage or
destruction of any item or items of Borrower's Collateral for which Borrower is
not fully insured as required by this Agreement, the other Financing Agreements
or any guarantee (a "Loss"), if the amount of such Loss not fully covered by
insurance (including any deductible in connection therewith), together with the
amount of all other Losses not fully covered by insurance (including any
deductibles in connection therewith) occurring in the same Fiscal Year, exceeds
$500,000;
(G) all or any part of Borrower's Collateral is attached, seized,
subjected to a writ or distress warrant, or is levied upon, or comes within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors and on or before the thirtieth (30th) day thereafter such assets are
not returned to Borrower and/or such writ, distress warrant or levy is not
dismissed, stayed or lifted if the amount of such Collateral or assets or
collateral, together with any other such Collateral, assets and collateral that
is so attached, seized, subjected to writ or distress warrant or levied upon,
exceeds $250,000 at any time;
(H) a proceeding under any bankruptcy, reorganization, arrangement
of debt, insolvency, readjustment of debt or receivership law or statute is
filed (i) against Borrower or any of its Subsidiaries and an adjudication or
appointment is made or order for relief is entered, or such proceeding remains
undismissed for a period in excess of sixty (60) days, or (ii) by Borrower or
any of its Subsidiaries or Borrower or any of its Subsidiaries makes an
assignment for the benefit of creditors or Borrower or any of its Subsidiaries
takes any corporate action to authorize any of the foregoing;
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(I) Borrower or any of its Subsidiaries voluntarily or involuntarily
dissolves or is dissolved, terminates or is terminated;
(J) Borrower or any of its Subsidiaries becomes insolvent or fails
generally to pay its debts as they become due;
(K) Borrower or any of its Subsidiaries is enjoined, restrained, or
in any way prevented by the order of any court or any administrative or
regulatory agency from conducting all or any part of its business affairs;
(L) a breach by Borrower or any Subsidiary shall occur under any
material agreement, document or instrument (other than an agreement, document or
instrument evidencing the lending of money), whether heretofore, now or
hereafter existing between Borrower or any Subsidiary and any other Person, and
such breach continues unwaived for more than thirty (30) days after such breach
first occurs, provided that such grace period shall not apply, and a Default
shall be deemed to have occurred promptly upon such breach, if such breach may
not, in Agent's reasonable determination, be cured by Borrower or such
Subsidiary, as the case may be, during such thirty (30) day grace period;
(M) (i) a default, breach, or Event of Default shall occur under any
Related Document or (ii), as to more than $250,000 in Indebtedness in the
aggregate at any time (a) Borrower or any Subsidiary shall fail to make any
payment due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) on any other obligation for borrowed money and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness; or (b) any such
Indebtedness shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled required prepayment) or accelerated prior
to the stated maturity thereof;
(N) a material and adverse change shall occur (i) in the present or
reasonably foreseeable prospective operations or financial condition of Borrower
or in the value of any material portion of the Collateral, or (ii) which
materially impairs the ability of Borrower to perform Borrower's obligations
under this Agreement and the other Financing Agreements, in each case as
determined by the Required Lenders in its sole discretion exercised in Good
Faith;
(O) (i) F. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇ shall fail to possess the
power to direct or cause the direction of the management and policies of
Borrower, (ii) F. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or any of their lineal descendants shall cease to own
beneficially (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended) 30% of the combined voting power of all classes of capital
stock of Borrower having the power to elect directors of Borrower, (iii) any
"Change in Control" (as defined that certain Officer Employment Contract, dated
October 1, 1999, by and between Borrower and F. ▇▇▇▇▇▇▇ ▇▇▇▇▇, as in effect on
the date hereof) shall occur, (iv) any "Change in Control" (as defined in that
certain Officer Employment Contract, dated October 1, 1999, by and between
Borrower and ▇▇▇▇ ▇. ▇▇▇▇▇, as in effect on the date hereof) shall occur, or (v)
Borrower shall cease to own 100% of the issued and outstanding capital stock of
P&J, unless P&J merges into Borrower;
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(P) the plan administrator of any Pension Plan applies under Section
412(d) of the Internal Revenue Code for a waiver of the minimum funding
standards of Section 412(a) of the Internal Revenue Code and Agent in good faith
believes that the approval of such waiver could subject either Borrower or an
ERISA Affiliate of Borrower to liability in excess of $100,000;
(Q) an accumulated funding deficiency (as defined in Section 203 of
ERISA and Section 412 of the Code) exists with respect to any Pension Plan as of
the last day of any plan year;
(R) as of the last day of any plan year, the present value of the
benefits under any Pension Plan, as determined by such Plan's independent
actuaries, exceeds the value as of such date, as determined by such actuaries,
of all assets of such Plan by $100,000;
(S) the aggregate present value of the benefits under all Pension
Plans that do not satisfy clause (R) above, as of the end of each Plan's plan
year, as determined by such Plans' independent actuaries, exceeds the aggregate
value as of such date, as determined by such actuaries, of all assets of all
such Pension Plans by $100,000; or
(T) a Termination Event occurs which Agent in Good Faith believes
could individually, or together with any other Termination Event subject either
Borrower or an ERISA Affiliate of Borrower to liability in excess of $100,000;
then Agent shall, upon the written, telecopied or telex request of the Required
Lenders, upon notice to Borrower take any or all of the following actions,
without prejudice to the rights of Agent, any Lender or the holder of any
Revolving Note or Term Note to enforce its claim against Borrower, (i) terminate
Lenders' obligations to make Revolving Loans to Borrower pursuant to Subsection
2.2 and the obligation of Agent to request the Issuing Bank to issue any Letters
of Credit and the obligation of the Issuing Bank to issue any Letter of Credit
pursuant to Subsection 2.19, and/or (ii) declare all of the Liabilities to be
immediately due and payable, whereupon all of the Liabilities shall become
immediately due and payable, except that in the event a Default described in
Subsection 9.1(H) or 9.1(I) hereof shall exist or occur, all of the Liabilities
shall automatically, without notice of any kind, be immediately due and payable.
If at any time after acceleration of the maturity of the
Liabilities, Borrower shall pay all arrears of interest and all payments on
account of principal of the Liabilities which shall have become due otherwise
than by acceleration (with interest on principal and, to the extent permitted by
law, on overdue interest, at the rates specified in this Agreement) and all
Events of Default and Defaults (other than nonpayment of principal of and
accrued interest on the Liabilities due and payable solely by virtue of
acceleration) shall be remedied or waived, then by written notice to Borrower,
the Required Lenders may elect, in the sole discretion of such Required Lenders,
to rescind and annul the acceleration of its consequences and return any cash
collateral; but such action shall not affect any subsequent Default or Event of
Default or impair any right or remedy consequent thereon. The provisions of the
preceding sentence are intended merely to bind Lenders to a decision which may
be made at the election of the Required Lenders; they are not intended to
benefit Borrower and do not give Borrower the right to require Lenders
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to rescind or annul any acceleration hereunder or to return any cash collateral,
even if the conditions set forth herein are met.
9.2 Rights and Remedies Generally. In the event of a Default, Agent
shall have, in addition to any other rights and remedies contained in this
Agreement or in any of the other Financing Agreements, all of the rights and
remedies of a secured party under the Code or other applicable laws. All of the
rights and remedies of Agent and each Lender, whether under this Agreement, the
other Financing Agreements, the Code or other applicable laws or otherwise,
shall be cumulative, and non-exclusive, to the extent permitted by law. In
addition to all such rights and remedies, the sale, lease or other disposition
of the Collateral, or any part thereof, by Agent after Default may be for cash,
credit or any combination thereof, and Agent or any Lender may purchase all or
any part of the Collateral at public or, if permitted by law, private sale, and
in lieu of actual payment of such purchase price, may set-off the amount of such
purchase price against the Liabilities then owing. Any sales of the Collateral
may be adjourned from time to time with or without notice. Agent may, in its
sole discretion, cause the Collateral to remain on the premises of Borrower, at
Borrower's expense, pending sale or other disposition of the Collateral. Agent
shall have the right to conduct such sales on such premises, at Borrower's
expense, or elsewhere, on such occasion or occasions as Agent may see fit.
9.3 Entry Upon Premises and Access to Information. In the event of a
Default, Agent shall have the right to enter upon the premises of Borrower where
the Collateral is located (or is believed to be located) without any obligation
to pay rent to Borrower, or any other place or places where the Collateral is
believed to be located and kept, and render the Collateral unusable or remove
the Collateral therefrom to the premises of Agent, any Lender or any agent of
Agent or any Lender, for such time as Agent may desire, in order effectively to
collect or liquidate the Collateral, and/or Agent may require Borrower to
assemble the Collateral and make it available to Agent or any Lender at a place
or places to be designated by Agent. In the event of a Default, Agent shall have
the right to obtain access to data processing equipment, computer hardware and
software of Borrower relating to the Collateral and to use all of the foregoing
and the information contained therein in any manner Agent deems appropriate; and
Agent shall have the right to notify post office authorities to change the
address for delivery of mail of Borrower to an address designated by Agent and
to receive, open and deal with all mail addressed to Borrower.
9.4 Sale or Other Disposition of Collateral by Agent. Any notice
required to be given by Agent of a sale, lease or other disposition or other
intended action by Agent with respect to any of the Collateral which is
deposited in the United States mails, postage prepaid and duly addressed to
Borrower at the address specified in Subsection 11.17 hereof, at least ten (10)
Business Days prior to such proposed action shall constitute fair and reasonable
notice of any such action. The net proceeds realized by Agent upon any such sale
or other disposition, after deduction for the expense of retaking, holding,
preparing for sale, selling or the like and the reasonable attorneys' fees and
legal expenses incurred by Agent in connection therewith, shall be applied as
provided herein toward satisfaction of the Liabilities, including, without
limitation, the Liabilities described in Subsections 7.5 and 11.2 hereof. Agent
and Lenders shall account to Borrower for any surplus realized upon such sale or
other disposition, and Borrower shall remain liable to Agent and each Lender for
any deficiency. The commencement of any action, legal or equitable, or the
rendering of any judgment or decree for any deficiency shall not affect Agent's
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security interest in the Collateral until the Liabilities are fully paid.
Borrower agrees that neither Agent nor any Lender has obligation to preserve
rights to the Collateral against any other parties. Agent is hereby granted a
license or other right to use, without charge, labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service marks
and advertising matter, or any property of a similar nature of Borrower, as it
pertains to the Collateral, in completing production of, advertising for sale
and selling any Collateral and rights under all licenses and all franchise
agreements of Borrower shall inure to Agent's benefit until the Liabilities are
paid. Neither Agent nor any Lender has any obligation to attempt to satisfy the
Liabilities by collecting them from any other Person liable for them and Agent
may release, modify or waive any collateral provided by any other Person to
secure any of the Liabilities, all without affecting Agent's rights against the
Borrower. Borrower waives any right it may have to require Agent to pursue any
third person for any of the Liabilities. Agent may comply with any applicable
state or federal law requirements in connection with a disposition of the
Collateral and compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral. Agent may sell the
Collateral without giving any warranties as to the Collateral and Agent may
specifically disclaim any warranties of title or the like. This procedure will
not be considered adversely to affect the commercial reasonableness of any sale
of the Collateral. If Agent sells any of the Collateral upon credit, Borrower
will be credited only with payments actually made by the purchaser, received by
Agent and applied to the indebtedness of the purchaser. In the event the
purchaser fails to pay for the Collateral, Agent may resell the Collateral and
Borrower shall be credited with the proceeds of the sale.
9.5 Waiver of Demand. Demand, presentment, protest and notice of
nonpayment are hereby waived by Borrower. Borrower also waives the benefit of
all valuation, appraisal and exemption laws.
9.6 Waiver of Notice. UPON THE OCCURRENCE AND DURING THE CONTINUANCE
OF A DEFAULT, BORROWER (PURSUANT TO AUTHORITY GRANTED BY ITS BOARD OF DIRECTORS)
HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE
BY AGENT OR ANY LENDER OF ITS RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT
JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR
NOTICE OR HEARING. BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF
ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS AGREEMENT.
9.7 Related Defaults. The occurrence of any Default under this
Agreement shall constitute an Event of Default and default under any Related
Rate Hedging Agreement and any lease between any Lender or any Lender's
affiliates and Borrower.
10. AGENT
10.1 Appointment of Agent.
(A) Each Lender hereby designates ANB as Agent to act as herein
specified. Each Lender hereby irrevocably authorizes, and each holder of any
Note or participation in any Letter of Credit by the acceptance of a Note or
participation shall be deemed irrevocably to
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authorize, Agent to take such action on its behalf under the provisions of this
Agreement and the Notes and any other instruments and agreements referred to
herein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto.
Agent shall hold all Collateral and all payments of principal, interest, Fees,
charges and Expenses received pursuant to this Agreement or any other Financing
Agreements for the benefit of Lenders and the Issuing Bank to be distributed as
provided herein. Agent may perform any of its duties hereunder by or through its
agents or employees.
(B) The provisions of this Section 10 are solely for the benefit of
Agent, Lenders and the Issuing Bank, and Borrower shall not have any rights as a
third party beneficiary of any of the provisions hereof (other than Subsection
10.9) nor shall Borrower have any obligations under this Section 10. In
performing its functions and duties under this Agreement, Agent shall act solely
as agent of Lenders and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for Borrower.
10.2 Nature of Duties of Agent. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
other Financing Agreements. Neither Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it as
such hereunder or in connection herewith, unless caused by its or their own
gross negligence or willful misconduct. The duties of Agent shall be mechanical
and administrative in nature; Agent shall not have by reason of this Agreement
or the other Financing Agreements a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or the other Financing Agreements,
expressed or implied, is intended to or shall be so construed as to impose upon
Agent any obligations in respect of this Agreement or the other Financing
Agreements except as expressly set forth herein or therein.
10.3 Lack of Reliance on Agent.
(A) Independently and without reliance upon Agent, each Lender, to
the extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial or other condition and affairs of
Borrower in connection with the taking or not taking of any action in connection
herewith and (ii) its own appraisal of the creditworthiness of Borrower, and,
except as expressly provided in this Agreement, Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the making of any Loan, Advance or issuance of any Letter
of Credit or at any time or times thereafter.
(B) Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Notes or the
other Financing Agreements or the financial or other condition of Borrower.
Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement, the Notes or any of the other Financing Agreements, or the financial
condition of Borrower, or the existence or possible existence of any Default or
Event of Default, unless specifically requested to do so in writing by any
Lender.
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10.4 Certain Rights of Agent. Agent shall have the right to request
instructions from the Required Lenders at any time. If Agent shall request
instructions from the Required Lenders with respect to any act or action
(including the failure to act) in connection with this Agreement or any of the
other Financing Agreements, Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received instructions from
the Required Lenders, and Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders.
10.5 Reliance by Agent. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person. Agent may consult with legal counsel (including counsel
for Borrower with respect to matters concerning Borrower and any of its
Subsidiaries), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it in
Good Faith in accordance with the advice of such counsel, accountants or
experts.
10.6 Indemnification of Agent. To the extent Agent is not reimbursed
and indemnified by Borrower, each Lender will reimburse and indemnify Agent, in
proportion to its Proportionate Share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
or nature whatsoever (including all Expenses) which may be imposed on, incurred
by or asserted against Agent in performing its duties hereunder, in any way
relating to or arising out of this Agreement, provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from Agent's gross negligence or willful misconduct.
10.7 Agent in its Individual Capacity. With respect to its
obligation to lend under this Agreement, any Loans made by it and the Notes
issued to it, and its participation in Letters of Credit issued hereunder, or
its issuance as the Issuing Bank of any Letter of Credit or as a party to the
Participation Agreement and Reimbursement Agreement, Agent in its individual
capacity shall have the same rights and powers hereunder as any other Lender or
holder of a Note or participation interests or the Issuing Bank, as the case may
be and may exercise the same as though it was not performing the duties
specified herein; and the terms "Lenders," "Required Lenders," "Holders of
Notes," or "Issuing Bank" or any similar terms shall, unless the context clearly
otherwise indicates, include Agent in its individual capacity. Subject to
Subsection 8.17 hereof, Agent in its individual capacity may accept deposits
from, lend money to, acquire equity interests in, and generally engage in any
kind of banking, trust, financial advisory or other business with Borrower or
any Affiliate of Borrower as if it were not performing the duties specified
herein, and may accept fees and other consideration from Borrower for services
in connection with this Agreement and otherwise without having to account for
the same to Lenders.
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10.8 Holders of Revolving Notes. Agent may deem and treat the
original named payee of any Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment or transfer thereof shall
have been filed with Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note or of any Note or Notes issued in exchange
therefor.
10.9 Successor Agent.
(A) Agent may, upon five (5) Business Days' notice to Lenders and
Borrower, resign at any time (effective upon the appointment of a successor
Agent pursuant to the provisions of this Subsection 10.9) by giving written
notice thereof to Lenders and Borrower. Upon any such resignation, the Required
Lenders shall have the right, upon five (5) days' notice and approval by
Borrower (which approval shall not be unreasonably withheld), to appoint a
successor Agent. If no successor Agent (i) shall have been so appointed by the
Required Lenders, and (ii) shall have accepted such appointment, within thirty
(30) days after the retiring Agent's giving of notice of resignation, then, upon
five (5) days' notice, the retiring Agent may, on behalf of Lenders, appoint a
successor Agent. In the event that Agent ceases to be, in its individual
capacity, a Lender whose aggregate holding of outstanding Term Loans and
Revolving Loans plus the amount of its Revolving Loan Commitment (net of the
principal amount of its outstanding Revolving Loans) plus the amount of its
Revolving Proportionate Share of Letter of Credit Obligations equals or exceeds
$10,000,000 then such Agent may be removed by the Required Lenders (other than
Agent in its capacity as a Lender or as the Issuing Bank and without giving
effect to any portion of the Loans or Revolving Credit Commitment made by Agent
in its capacity as a Lender or Letter of Credit issued by Agent in its capacity
as the Issuing Bank) provided that the Required Lenders concurrently appoint a
successor Agent to which Borrower consents (which consent shall not be
unreasonably withheld).
(B) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
(C) In the event of a material breach by Agent of its duties
hereunder, Agent may be removed by the Required Lenders (other than Agent in its
capacity as a Lender or as the Issuing Bank and without giving effect to any
portion of the Loans or Revolving Credit Commitment made by Agent in its
capacity as a Lender or Letters of Credit issued by Agent in its capacity as the
Issuing Bank) for cause and the provisions of this Subsection 10.9 shall apply
to the appointment of a successor Agent.
(D) If ANB is removed or resigns as Agent, ANB shall no longer be
required to act as the Issuing Bank with respect to Letters of Credit issued
after the effective date of its removal or resignation.
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10.10 Collateral Matters.
(A) Each Lender authorizes and directs Agent to enter into the
Financing Agreements for the benefit of Lenders. Each Lender hereby agrees, and
each holder of any Note by the acceptance thereof will be deemed to agree, that,
except as otherwise set forth herein, any action taken by the Required Lenders
in accordance with the provisions of this Agreement or the Financing Agreements
and the exercise by the Required Lenders of the powers set forth herein or
therein, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all of Lenders. Agent is hereby authorized
on behalf of all of Lenders, without the necessity of any notice to or further
consent from any Lender, from time to time prior to a Default, to take any
action with respect to any Collateral or Financing Agreements which may be
necessary to perfect and maintain perfected the security interest in and Liens
upon the Collateral granted pursuant to any of the Financing Agreements.
(B) Lenders hereby authorize Agent to release any Lien granted to or
held by Agent upon any Collateral upon termination of this Agreement and the
Revolving Credit Commitments and payment and satisfaction of all of the
Liabilities at any time arising under or in respect of this Agreement and the
other Financing Agreements or the transactions contemplated hereby or thereby.
In addition, Lenders hereby authorize Agent to release any Lien granted to or
held by Agent upon any Collateral (i) constituting property being sold or
disposed of upon receipt of the proceeds of such sale by Agent if Borrower
certifies to Agent that the sale or disposition is made in compliance with
Subsection 8.17 hereof (and Agent may rely conclusively on any such certificate,
without further inquiry), or (ii) constituting Collateral with a value as
certified to Agent by Borrower of less than $1,000,000 in the aggregate in any
Fiscal Year (and Agent may rely conclusively on any such certificate, without
further inquiry). Upon request by Agent at any time, Lenders will confirm in
writing Agent's authority to release particular types or items of Collateral
pursuant to this Subsection 10.10.
(C) Upon the release of any Lien in accordance with Subsection
10.10(B), and upon at least five (5) Business Days' prior written request by
Borrower, Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to evidence the release of such
Liens; provided that (i) Agent shall not be required to execute any such
document on terms which, in Agent's reasonable opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty and (ii) such release shall
not in any manner discharge, affect or impair the Liabilities or any Liens upon
(or obligations of Borrower in respect of) all interests retained by Borrower,
including (without limitation) the proceeds of the sale, all of which shall
continue to constitute part of the Collateral. In the event of any sale or
transfer of Collateral, or any foreclosure with respect to any of the
Collateral, Agent shall be authorized to deduct all of the Expenses reasonably
incurred by Agent from the proceeds of any such sale, transfer or foreclosure.
(D) Agent shall have no obligation whatsoever to Lenders or to any
other Person to assure that the Collateral exists or is owned by Borrower or any
other Person or is cared for, protected or insured or that the Liens granted to
Agent herein or pursuant hereto have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any manner or
under
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any duty of care, disclosure or fidelity any of the rights, authorities and
powers granted or available to Agent in this Subsection 10.10 or in any of the
Financing Agreements it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, Agent may act in any
manner it may deem appropriate, in its sole discretion, given Agent's own
interest in the Collateral as one of Lenders and that Agent shall have no duty
or liability whatsoever to Lenders, except for its gross negligence or willful
misconduct.
10.11 Actions with Respect to Defaults. In addition to Agent's right
to take actions on its own accord as permitted under this Agreement, Agent shall
take such action with respect to a Default or Event of Default as shall be
directed by the Required Lenders; provided that until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable.
10.12 Delivery of Information. Agent shall not be required to
deliver to any Lender originals or copies of any documents, instruments,
notices, communications or other information received by Agent from Borrower,
the Required Lenders, any Lender or any other Person under or in connection with
this Agreement or any other Financing Agreement except (i) as specifically
provided in this Agreement or any other Financing Agreement and (ii) as
specifically requested from time to time in writing by any Lender with respect
to a specific document, instrument, notice or other written communication
received by and in the possession of Agent at the time of receipt of such
request and then only in accordance with such specific request.
10.13 Allocation of Payments. Prior to the occurrence of a Default
described in Subsection 9.1(H), or acceleration of the maturity of the
Liabilities, payments on the Liabilities shall be allocated to Lenders as
follow: (i) payments of principal of, and interest on, the Term Loans and
Prepayment Fees relating to the prepayment of Term Loans shall be allocated to
Lenders based on their respective Term Proportionate Share, and (ii) payments of
principal of, and interest on, the Revolving Loans and the Facility Fees, the
L/C Fees, Prepayment Fees, and the Commitment Reduction Fees relating to any
payments on the Revolving Loans or any reduction in the Total Revolving
Commitments shall be allocated based on their respective Revolving Proportionate
Share, subject to Subsection 2.5. Subject to Subsections 2.5 and 2.7, after the
occurrence and during the continuance of a Default described in Subsections
9.1(H) or after the acceleration of the maturity of the Liabilities, payments of
principal of, and interest on, all Loans shall be allocated to Lenders based on
their respective Proportionate Share.
11. MISCELLANEOUS.
11.1 Waiver, Amendments. Any failure by Agent, the Issuing Bank or
any Lender, at any time or times hereafter, to require strict performance by
Borrower of any provision of this Agreement or any of the other Financing
Agreements shall not waive, affect or diminish any right of Agent, the Issuing
Bank or any Lender thereafter to demand strict compliance and performance
therewith. In addition, Borrower and Lenders hereby authorize Agent to modify
this Agreement by unilaterally amending or supplementing Schedule I from time to
time in the manner requested by Borrower, Agent or any Lender in order to
reflect any assignments or transfers of the Loans, and assignments, transfers or
reductions in the Total
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Revolving Commitment as provided for hereunder; provided, however, that Agent
shall promptly deliver a copy of any such modification to Borrower and each
Lender. All Defaults shall continue until the same are waived in accordance with
this Subsection 11.1. No amendment or waiver of any provision of this Agreement
or any other Financing Agreement, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders (or, with the written consent of the Required
Lenders, by Agent on their behalf), or if Lenders shall not be parties thereto,
by the parties thereto and consented to by the Required Lenders (or by Agent on
their behalf), and each such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided that no amendment, waiver or consent shall, unless in writing and
signed by all Lenders, do any of the following: (i) increase the Total Revolving
Commitments of Lenders or subject Lenders to any additional obligations, (ii)
except as otherwise expressly provided in this Agreement, reduce the principal
of, or interest on, the Notes, any Letter of Credit reimbursement obligations or
any fees hereunder, (iii) postpone any date fixed for any payment in respect of
principal of, or interest on, the Notes, any Letter of Credit reimbursement
obligations or any fees hereunder, (iv) change the percentage of the Revolving
Credit Commitments or the Term Loans, or any minimum requirement, necessary for
Lenders or the Required Lenders to take any action hereunder, (v) amend or waive
this Subsection 11.1, or change the definition of Required Lenders, (vi) extend
the Termination Date, (vii) increase the maximum percentage advance rates used
to determine the Current Asset Base, or (viii) except as otherwise expressly
provided in this Agreement (including without limitation as provided in
Subsection 10.10(B) hereof), and other than in connection with the financing,
refinancing, sale or other disposition of any asset of Borrower permitted under
this Agreement, release any Liens in favor of Agent on all or any substantial
portion of the Collateral; provided, further, that no amendment, waiver or
consent affecting the rights or duties of Agent or the Issuing Bank under any
Financing Agreements shall in any event be effective, unless in writing and
signed by Agent or the Issuing Bank, in addition to Lenders required hereinabove
to take such action. Notwithstanding any of the foregoing to the contrary, the
consent of Borrower shall not be required for any amendment, modification or
waiver of the provisions of Section 10 (other than the provisions of Subsection
10.9). In addition, Borrower and Lenders hereby authorize Agent to modify this
Agreement by unilaterally amending or supplementing Schedule I from time to time
in the manner requested by Borrower, Agent or any Lender in order to reflect any
assignments or transfers of the Loans, and reductions in the Total Revolving
Commitment as provided for hereunder; provided, however, that Agent shall
promptly deliver a copy of any such modification to Borrower and each Lender.
All Defaults shall continue until the same are waived in accordance with this
Subsection 11.1.
11.2 Costs and Attorneys' Fees. If at any time or times hereafter
Agent employs counsel (including internal counsel) in connection with protecting
or perfecting Agent's security interest in the Collateral or in connection with
any matters contemplated by or arising out of this Agreement or any of the other
Financing Agreements, whether (a) to prepare, negotiate or execute (i) any
amendment to or modification or extension of this Agreement, any other Financing
Agreements or any instrument, document or agreement executed by any Person in
connection with the transactions contemplated by this Agreement, (ii) any new or
supplemental Financing Agreements, or any instrument, document or agreement to
be executed by any Person in connection with the transactions contemplated by
this Agreement, or (iii) any instrument, document or agreement in connection
with any sale or attempted sale of any interest
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herein to any Person, including any participant, (b) to commence, defend, or
intervene in any litigation or to file a petition, complaint, answer, motion or
other pleadings, (c) to take any other action in or with respect to any suit or
proceeding (bankruptcy or otherwise), (d) to consult with officers of Agent or
to advise Agent, (e) to protect, collect, lease, sell, take possession of,
release or liquidate any of the Collateral, or (f) to attempt to enforce or to
enforce any security interest in any of the Collateral, or to enforce any rights
of Agent or any Lender, including, without limitation, Agent's or any Lender's
rights to collect any of the Liabilities, then in any of such events, all of the
reasonable attorneys' fees (including the allocated cost of internal counsel)
arising from such services, and any expenses, costs and charges relating
thereto, including, without limitation, all reasonable fees of all paralegals
and other staff employed by such attorneys, together with interest following
demand for payment thereof at the from time to time rate applicable to Base Rate
Advances, shall be part of the Liabilities, payable on demand and secured by the
Collateral.
11.3 Expenditures. In the event Borrower shall fail to pay taxes,
insurance, assessments, costs or expenses which Borrower is, under any of the
terms hereof, required to pay, or fail to keep the Collateral free from other
Liens, except as permitted herein, Agent or the Required Lenders may, in its or
their sole discretion, make expenditures for any or all of such purposes, and
the amount so expended, together with interest thereon at the rate applicable to
Base Rate Advances, shall be part of the Liabilities, payable on demand and
secured by the Collateral.
11.4 Custody and Preservation of Collateral. Agent shall be deemed
to have exercised reasonable care in the custody and preservation of any of the
Collateral in its possession if it takes such action for that purpose as
Borrower shall request in writing, but failure by Agent to comply with any such
request shall not of itself be deemed a failure to exercise reasonable care, and
no failure by Agent to preserve or protect any right with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by Borrower shall of itself be
deemed a failure to exercise reasonable care in the custody or preservation of
such Collateral.
11.5 Reliance by Lenders. All covenants, agreements, representations
and warranties made herein by Borrower shall, notwithstanding any investigation
by Agent or any Lender, be deemed to be material to and to have been relied upon
by Agent and each Lender.
11.6 Parties; Assignability.
(A) Whenever in this Agreement there is reference made to Borrower,
Agent, the Issuing Bank or any Lender, such reference shall be deemed to
include, wherever applicable, a reference to the successors and permitted
assigns of Borrower and the successors and permitted assigns of Agent, the
Issuing Bank and such Lender, and the provisions of this Agreement shall be
binding upon and shall inure to the benefit of said successors and permitted
assigns. Notwithstanding anything herein to the contrary, Borrower may not
assign or otherwise transfer its rights or obligations under this Agreement
without the prior written consent of Lenders.
(B) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its Lending Affiliates.
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(C) Upon 15 days' prior written notice to Agent, each Lender may,
with the consent of Agent (which consent shall not be unreasonably withheld and
which consent shall not be required for an assignment by a Lender to an
affiliate of such Lender), but without the consent of any other Lender, assign
to one or more banks or other financial institutions all or a portion of its
rights and obligations under this Agreement and the Notes; provided that (i)
such Lender has first offered to assign such portion of its rights and
obligations under this Agreement and the Notes, at par, to Agent, (ii) for each
such assignment, the parties thereto shall execute and deliver to Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and
Assumption Agreement, together with any Notes subject to such assignment, (iii)
the aggregate outstanding Loans and unused Total Revolving Commitments so
assigned shall not be less than $5,000,000, unless such assignment is to a
then-current holder of a Note or consented to by Agent in writing, and (iv) each
assignment shall be of a constant, and not a varying, percentage interest of the
assigning Lender's rights and obligations and such assignment shall be of the
same proportionate amount of the assigning Lender's rights and obligations with
respect to each type of Loan hereunder, the Total Revolving Commitments and the
Letter of Credit Obligations. Upon such execution and delivery of the Assignment
and Assumption Agreement to Agent, together with (i) any consents required by
this Subsection 11.6(C), and (ii) payment of a $4,000 fee to Agent for
processing such assignment (unless such fee is waived by Agent or the assignment
is made by the assigning Lender to an affiliate of such Lender), from and after
the date specified as the effective date in the Assignment and Assumption
Agreement (the "Acceptance Date"), (x) the assignee thereunder shall be a party
hereto, and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Assumption Agreement, such
assignee shall have the rights and obligations of a Lender hereunder and (y) the
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Assumption Agreement,
relinquish its rights (other than any rights it may have pursuant to Subsections
2.10, 2.15, 2.16, 2.17, 2.20(J), 7.4, 7.10, 11.2, and 11.19 hereof which will
survive) and be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption Agreement covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(D) By executing and delivering an Assignment and Assumption
Agreement, the assignee thereunder confirms and agrees as follows: (i) other
than as provided in such Assignment and Assumption Agreement, the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, the Notes
or any other instrument or document furnished pursuant hereto, (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto, (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Subsection 7.1 hereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Assumption
Agreement, (iv) such assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit
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decisions in taking or not taking action under this Agreement, (v) such assignee
appoints and authorizes Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to Agent by the terms
hereof, together with such powers as are reasonably incidental thereto and (vi)
such assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(E) Agent shall maintain at its address referred to in Subsection
11.17 hereof a copy of each Assignment and Assumption Agreement delivered to and
accepted by it and a register for the recordation of the names, addresses and
Percentages of Lenders and the Revolving Credit Commitments of each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes absent manifest error, and Borrower, Agent and
Lenders may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register and copies of each
Assignment and Assumption shall be available for inspection by Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(F) Upon its receipt of an Assignment and Assumption Agreement
executed by an assigning Lender, together with the Notes subject to such
assignment, Agent shall, if such Assignment and Assumption Agreement has been
completed and is in substantially the form of Exhibit 11.6 hereto and Agent
consents thereto, (i) accept such Assignment and Assumption Agreement, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to Borrower. Within five (5) Business Days after its receipt of
such notice, Borrower shall execute and deliver to Agent, in exchange for the
surrendered Notes, new Notes to the order of the assignee in an amount equal to
the Revolving Credit Commitment, and Term Loans assumed by it pursuant to such
Assignment and Assumption Agreement and, if the assigning Lender has retained a
Revolving Credit Commitment or Term Loan hereunder, new Notes to the order of
the assigning Lender in an amount equal to the Revolving Credit Commitment and
Term Loan retained by it hereunder. Such new Notes shall re-evidence the
Liabilities outstanding under the old Notes and shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Notes, shall be dated the closing date and shall otherwise be in substantially
the form of the Notes subject to such assignments.
(G) Upon 15 days' prior written notice to Agent, each Lender may
(provided such Lender shall have first offered to resell to Agent at par its
interest in the Liabilities) sell participations (without the consent of Agent,
Borrower or any other Lender) to one or more parties in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Credit Commitment and the Loans
owing to it and the Notes held by it); provided that (i) such Lender's
obligations under this Agreement (including, without limitation, its Revolving
Credit Commitment to Borrower hereunder) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
any such Note for all purposes of this Agreement, (iv) Borrower, Agent, and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
(v) such Lender shall not transfer, grant, assign or sell any participation
under which the participant shall have rights to approve any amendment or waiver
of this Agreement except to the extent such amendment or waiver would (A) extend
the final
90
maturity date or the date for the payments of any installment of fees or
principal or interest of any Loans or Letter of Credit Obligations in which such
participant is participating, (B) reduce the amount of any installment of
principal of the Loans or Letter of Credit Obligations in which such participant
is participating, (C) except as otherwise expressly provided in this Agreement,
reduce the interest rate applicable to the Loans or Letter of Credit
reimbursement obligations in which such participant is participating, or (D)
except as otherwise expressly provided in this Agreement, reduce any Fees
payable to Lenders hereunder.
(H) Each Lender agrees that, without the prior written consent of
Borrower and Agent, it will not make any assignment hereunder in any manner or
under any circumstances that would require registration or qualification of, or
filings in respect of, any Loan, Note or other Liabilities under the securities
laws of the United States of America or of any jurisdiction.
(I) In connection with the efforts of any Lender to assign its
rights or obligations or to participate interests, such Lender may disclose any
information in its possession regarding Borrower, subject to Subsection 7.1.
11.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE DEEMED TO BE EXECUTED
AND HAS BEEN DELIVERED AND ACCEPTED IN CHICAGO, ILLINOIS BY SIGNING AND
DELIVERING IT THERE. ANY DISPUTE BETWEEN THE PARTIES HERETO ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL
LAWS AND NOT THE CONFLICTS OF LAW PROVISIONS OF THE STATE OF ILLINOIS.
11.8 CONSENT TO JURISDICTION.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION 11.8(B)
HEREOF, EACH OF THE PARTIES HERETO AGREE THAT ALL DISPUTES BETWEEN THEM ARISING
OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS
LOCATED IN ▇▇▇▇ COUNTY, ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY BE HEARD BY A COURT LOCATED OUTSIDE OF ▇▇▇▇
COUNTY, ILLINOIS. BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. BORROWER AGREES THAT AGENT AND ANY LENDER
SHALL HAVE THE RIGHT TO PROCEED AGAINST BORROWER OR ITS PROPERTY ("PROPERTY") IN
A COURT IN ANY LOCATION TO ENABLE AGENT OR ANY LENDER TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE LIABILITIES, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER ENTERED IN FAVOR OF AGENT OR ANY LENDER. BORROWER AGREES
THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIM IN ANY
91
PROCEEDING BROUGHT BY AGENT OR ANY LENDER TO REALIZE ON PROPERTY, COLLATERAL OR
ANY OTHER SECURITY FOR THE LIABILITIES, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF AGENT OR ANY LENDER. BORROWER WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH AGENT OR ANY LENDER HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS SUBSECTION 11.8(B).
11.9 SERVICE OF PROCESS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND IRREVOCABLY APPOINTS ▇▇▇▇▇▇▇▇-▇▇▇▇ CORPORATION
SYSTEM, INC., BORROWER'S REGISTERED AGENT, AS BORROWER'S AGENT FOR THE PURPOSE
OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF ILLINOIS (THE "SP AGENT").
AGENT AND EACH LENDER AGREES TO PROMPTLY FORWARD BY REGISTERED MAIL (NO RETURN
RECEIPT REQUIRED) A COPY OF ANY PROCESS SO SERVED BY IT UPON THE SP AGENT TO
BORROWER AT ITS ADDRESS SET FORTH IN SUBSECTION 11.17 HEREOF. BORROWER HEREBY
CONSENTS TO SERVICE OF PROCESS AS AFORESAID. BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF THE COURTS REFERRED TO IN SUBSECTION
11.8 HEREOF IN ANY SUCH ACTION OR PROCEEDING BY MAILING COPIES OF SUCH SERVICE
BY REGISTERED MAIL, POSTAGE PREPAID TO BORROWER AT SAID ADDRESS. NOTHING IN THIS
AGREEMENT SHALL AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW BUT ANY FAILURE TO RECEIVE SUCH COPY SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
11.10 WAIVER OF JURY TRIAL AND BOND.
(A) WAIVER OF JURY TRIAL. BORROWER, AGENT AND LENDERS EACH WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN ANY OF THEM ARISING OUT OF, CONNECTED
WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS RELATED
THERETO. BORROWER, AGENT AND LENDERS HEREBY AGREE AND CONSENT THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(B) WAIVER OF BOND. BORROWER WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF AGENT OR ANY LENDER IN CONNECTION WITH ANY JUDICIAL
PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON
COLLATERAL OR ANY OTHER SECURITY FOR THE LIABILITIES, TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF AGENT OR ANY LENDER, OR TO ENFORCE BY
SPECIFIC
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PERFORMANCE, TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION,
THIS AGREEMENT, OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN AGENT OR ANY LENDER
AND BORROWER.
11.11 ADVICE OF COUNSEL. BORROWER ACKNOWLEDGES AND REPRESENTS TO
AGENT AND LENDERS THAT BORROWER HAS DISCUSSED THIS AGREEMENT AND THE OTHER
FINANCING AGREEMENTS WITH ITS LAWYERS AND ANY AND ALL ISSUES WITH RESPECT TO
THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS HAVE BEEN RESOLVED TO
BORROWER'S SATISFACTION.
11.12 SEVERABILITY. WHEREVER POSSIBLE, EACH PROVISION OF THIS
AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT SHALL BE PROHIBITED BY OR
INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE ONLY TO THE
EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF
SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS AGREEMENT.
11.13 Application of Payments. Notwithstanding any contrary
provision contained in this Agreement or in any of the other Financing
Agreements, Borrower irrevocably waives the right to direct the application of
any and all payments at any time or times hereafter received by Agent or any
Lender from Borrower or with respect to any of the Collateral, and Borrower does
hereby irrevocably agree that Agent and each Lender shall have the continuing
exclusive right to apply and reapply any and all payments received at any time
or times hereafter, whether with respect to the Collateral or otherwise, against
the Liabilities in such manner as Agent or such Lender may deem advisable,
notwithstanding any entry by Agent or any Lender upon any of its books and
records.
11.14 Marshalling; Payments Set Aside. Neither Agent nor any Lender
shall be under any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of Borrower or any
other party or against or in payment of any or all of the Liabilities. To the
extent that Borrower makes a payment or payments to Agent or any Lender or Agent
or any Lender enforces its security interests or exercises its rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
11.15 Section and Subsection Titles. The section and subsection
titles contained in this Agreement shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties.
11.16 Continuing Effect. This Agreement, Agent's security interests
in the Collateral, and all of the other Financing Agreements shall continue in
full force and effect so
93
long as any Liabilities shall be owed to Agent or any Lender, and (even if there
shall be no Liabilities outstanding) so long as this Agreement has not been
terminated as provided herein.
11.17 Notices. Except as otherwise expressly provided herein, any
notice required or desired to be served, given or delivered hereunder shall be
in writing, and shall be deemed to have been validly served, given or delivered
(i) three (3) Business Days after deposit in the United States mails, with
proper postage prepaid, (ii) when sent after receipt of confirmation or
answerback if sent by telecopy, or other similar facsimile transmission, (iii)
one (1) Business Day after deposited with a reputable overnight courier with all
charges prepaid, or (iv) when delivered, if hand-delivered by messenger, all of
which shall be properly addressed to the party to be notified and sent to the
address or number indicated as follows:
(i) If to Agent at:
American National Bank and
Trust Company of Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
Telecopy: 312/661-6929
Confirmation: 312/661-5648
(ii) If to any Lender to the address set forth for such Lender on
Schedule I hereto.
(iii) If to Borrower at:
Webco Industries, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telecopy: 918/245-1305
Confirmation: 918/241-1094
or to such other address or number as each party designates to the other in the
manner herein prescribed.
11.18 Equitable Relief. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Agent or any Lender; therefore, Borrower agrees that Agent or any
Lender, if Agent or such Lender so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages and the granting of any such relief shall not preclude Agent or
any Lender from pursuing any other relief or remedies for such breach.
11.19 Indemnification. Borrower agrees to defend, protect, indemnify
and hold harmless Agent, the Issuing Bank and each Lender and each of their
respective officers, directors, employees, attorneys, consultants and agents
(collectively, the "Indemnitees") from
94
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the allocated cost of
internal counsel and the reasonable fees and disbursements of external counsel
for and consultants of such Indemnitees in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnitees shall be
designated a party thereto), which may be imposed on, incurred by, or asserted
against such Indemnitees (whether direct, indirect, or consequential and whether
based on any federal or state laws or other statutory regulations, including,
without limitation, securities, environmental and commercial laws and
regulations, under common law or at equitable cause or on contract or otherwise)
in any manner relating to or arising out of this Agreement or the other
Financing Agreements, or any act, event or transaction related or attendant
thereto, the agreements of Agent, the Issuing Bank and each Lender contained
herein, the making of any Loans or any other advances, the issuance of any
Letter of Credit, or entering into the Participation Agreement or the
Reimbursement Agreement or with respect to or in connection with obligations
thereunder, the management of such Loans, advances or Letters of Credit or the
Collateral (including any liability under federal, state or local environmental
laws or regulations) or the use or intended use of the proceeds of such Loans,
advances or Letters of Credit (collectively, the "Indemnified Matters");
provided that Borrower shall have no obligation to any Indemnitee hereunder with
respect to Indemnified Matters finally judicially determined in a proceeding
which is binding upon such Indemnitee to have been caused by or resulting from
the willful misconduct or gross negligence of such Indemnitee or to reimburse
any Lender (other than ANB in its capacity as Agent) for its legal fees and
expenses incurred prior to the occurrence of a Default or Event of Default in
connection with the documentation and closing of the matters contemplated by
this Agreement. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Subsection 11.19 may be unenforceable because it is
violative of any law or public policy, Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
In addition, Borrower shall, upon demand, pay to Agent, any Lender and the
Issuing Bank all costs and expenses (including, without limitation, the
allocated cost of internal counsel and the reasonable fees and disbursements of
external counsel and other professionals) paid or incurred by Agent, the Issuing
Bank or such Lender in (i) enforcing or defending its rights under or in respect
of this Agreement, the other Financing Agreements or any other document or
instrument now or hereafter executed and delivered in connection herewith, (ii)
in collecting the Loans, (iii) in foreclosing or otherwise collecting upon the
Collateral or any part thereof and (iv) obtaining any legal, accounting or other
advice in connection with any of the foregoing after the occurrence of a Default
or Event of Default. Borrower's obligations hereunder shall survive any
termination of this Agreement and the other Financing Agreements and the payment
in full of the Liabilities, and are in addition to, and not in substitution of,
any other of their obligations set forth in this Agreement.
11.20 Nonliability of Agent and Lenders. The relationship between
Borrower and each Lender and Agent shall be solely that of borrower and lender.
Neither Agent nor any Lender shall have any fiduciary responsibilities to
Borrower. Neither Agent nor any Lender undertakes any responsibility to Borrower
to review or inform Borrower of any matter in connection with any phase of
Borrower's business or operations.
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11.21 Independent Nature of Lenders' Rights. The amounts payable
at any time hereunder to each Lender under such Lender's Notes shall be a
separate and independent debt.
11.22 Effectiveness. This Agreement shall become effective on the
date on which all of the parties hereto shall have signed a copy hereof (whether
the same or different copies) and shall have delivered the same to Agent
pursuant to Subsection 11.17 or, in the case of any Lenders which have not
executed and delivered the same as provided above, shall have given to Agent
written, telecopied or telex notice (actually received) at such office that the
same has been signed and mailed to it.
11.23 Counterparts. This Agreement may be executed and accepted in
any number of counterparts, each of which shall be an original with the same
effect as if the signatures were on the same instrument. The delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
11.24 QuikWater Sale. Lenders' acknowledge and agree that the
QuikWater Sale shall not be deemed to have a material adverse effect to the
extent that the representations and warranties set forth in Subsection 6.21 are
true and correct.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
WEBCO INDUSTRIES, INC.
By: ________________________________
Title:______________________________
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
individually and as Agent
By: ________________________________
Title:______________________________
PNC BANK, NATIONAL ASSOCIATION
By: ________________________________
Title:______________________________
TRANSAMERICA BUSINESS CAPITAL
CORPORATION
By: ________________________________
Title:______________________________
SCHEDULE 1.1
MORTGAGES AND DEEDS OF TRUST
1. Term Loan and Revolving Credit Mortgage, Assignment of Leases, Security
Agreement and Fixture Filing dated as of June 14, 2002 made by Borrower in favor
of Agent regarding real property located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (Creek County)
2. Term Loan and Revolving Credit Mortgage, Assignment of Leases, Security
Agreement and Fixture Filing dated as of June 14, 2002 made by Borrower in
favor of Agent regarding real property located at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Tulsa County) - parcel one
3. Term Loan and Revolving Credit Mortgage, Assignment of Leases, Security
Agreement and Fixture Filing dated as of June 14, 2002 made by Borrower in
favor of Agent regarding real property located at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Tulsa County) - parcel two
4. Term Loan and Revolving Credit Mortgage, Assignment of Leases, Security
Agreement and Fixture Filing dated as of June 14, 2002 made by Borrower in favor
of Agent regarding real property located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Tulsa County)
5. Open-End Term Loan and Revolving Credit Mortgage, Assignment of Leases,
Security Agreement and Fixture Filing, dated as of June 14, 2002 made by
Borrower in favor of Agent regarding real property located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Venago County)
SCHEDULE I
FINANCIAL INSTITUTIONS
REVOLVING
CREDIT
NAME OF LENDER COMMITMENT TERM LOANS ADDRESS FOR NOTICES
-------------- ---------- ---------- -------------------
American National $15,157,900 $ 7,342,100 American National Bank
Bank and Trust and Trust Company of Chicago
Company of Chicago ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------
Tel: 312/▇▇▇-▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
PNC Bank, National $ 8,421,050 $ 4,078,950 PNC Bank, National
Association Association
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
Tel: 214/▇▇▇-▇▇▇▇
Fax: 214/▇▇▇-▇▇▇▇
Transamerica Business $ 8,421,050 $ 4,078,950 Transamerica Business
Capital Corporation Capital Corporation
------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Tel: 773/▇▇▇-▇▇▇▇
Fax: 773/▇▇▇-▇▇▇▇
----------- -----------
TOTAL: $32,000,000 $15,500,000
=========== ===========