EXHIBIT 4.6
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
PCI CHEMICALS CANADA COMPANY
AND
PIONEER AMERICAS LLC
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF DECEMBER 31, 2001
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION.............................................................. 1
1.1 Definitions...................................................................... 1
1.2 Accounting Terms................................................................. 30
1.3 Code............................................................................. 30
1.4 Construction..................................................................... 30
1.5 Schedules and Exhibits........................................................... 30
2. LOAN AND TERMS OF PAYMENT................................................................. 31
2.1 Revolver Advances................................................................ 31
2.2 Intentionally Deleted............................................................ 33
2.3 Borrowing Procedures and Settlements............................................. 33
2.4 Payments......................................................................... 40
2.5 Overadvances..................................................................... 46
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations...... 46
2.7 Cash Management.................................................................. 49
2.8 Crediting Payments; Float Charge................................................. 50
2.9 Designated Accounts.............................................................. 51
2.10 Maintenance of Loan Account; Statements of Obligations........................... 51
2.11 Fees............................................................................. 51
2.12 Letters of Credit................................................................ 52
2.13 LIBOR Option..................................................................... 55
2.14 Capital Requirements............................................................. 58
2.15 Joint and Several Liability of Borrowers......................................... 59
2.16 Noteless Agreement............................................................... 61
2.17 Currency Indemnity............................................................... 62
3. CONDITIONS; TERM OF AGREEMENT............................................................. 62
3.1 Conditions Precedent to the Initial Extension of Credit.......................... 62
3.2 Conditions Subsequent to the Initial Extension of Credit......................... 66
3.3 Conditions Precedent to all Extensions of Credit................................. 67
3.4 Extension of Credit in Excess of $30,000,000.00.................................. 67
3.5 Term............................................................................. 67
3.6 Effect of Termination............................................................ 67
3.7 Early Termination by Borrowers................................................... 68
4. CREATION OF SECURITY INTEREST............................................................. 69
4.1 Grant of Security Interest....................................................... 69
4.2 Negotiable Collateral............................................................ 69
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral........... 69
4.4 Delivery of Additional Documentation Required.................................... 69
4.5 Power of Attorney................................................................ 70
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4.6 Right to Inspect................................................................. 70
4.7 Control Agreements............................................................... 70
5. REPRESENTATIONS AND WARRANTIES............................................................ 70
5.1 No Encumbrances.................................................................. 71
5.2 Eligible Accounts................................................................ 71
5.3 Eligible Inventory............................................................... 71
5.4 Equipment........................................................................ 71
5.5 Location of Inventory............................................................ 71
5.6 Inventory Records................................................................ 71
5.7 Location of Chief Executive Office; FEIN......................................... 71
5.8 Due Organization and Qualification; Subsidiaries................................. 72
5.9 Due Authorization; No Conflict................................................... 73
5.10 Litigation....................................................................... 74
5.11 No Material Adverse Change....................................................... 74
5.12 Fraudulent Transfer.............................................................. 74
5.13 Employee Benefits................................................................ 74
5.14 Environmental Condition.......................................................... 74
5.15 Brokerage Fees................................................................... 75
5.16 Intellectual Property............................................................ 75
5.17 Leases........................................................................... 75
5.18 DDAs............................................................................. 75
5.19 Complete Disclosure.............................................................. 75
5.20 Indebtedness..................................................................... 75
5.21 Taxes............................................................................ 75
5.22 Indenture Documents.............................................................. 76
6. AFFIRMATIVE COVENANTS..................................................................... 76
6.1 Accounting System................................................................ 76
6.2 Collateral Reporting............................................................. 76
6.3 Financial Statements, Reports, Certificates...................................... 77
6.4 Guarantor Reports................................................................ 80
6.5 Return........................................................................... 80
6.6 Maintenance of Properties........................................................ 80
6.7 Taxes............................................................................ 80
6.8 Insurance........................................................................ 80
6.9 Location of Inventory............................................................ 81
6.10 Compliance with Laws............................................................. 81
6.11 Leases........................................................................... 82
6.12 Brokerage Commissions............................................................ 82
6.13 Existence........................................................................ 82
6.14 Environmental.................................................................... 82
6.15 Disclosure Updates............................................................... 82
6.16 Intentionally Deleted............................................................ 82
6.17 Obligation to Pay................................................................ 83
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6.18 Indenture Documents.............................................................. 83
6.19 Parent Taxes..................................................................... 83
7. NEGATIVE COVENANTS........................................................................ 83
7.1 Indebtedness..................................................................... 83
7.2 Liens............................................................................ 84
7.3 Restrictions on Fundamental Changes.............................................. 84
7.4 Disposal of Assets............................................................... 84
7.5 Change Name...................................................................... 84
7.6 Guarantee........................................................................ 84
7.7 Nature of Business............................................................... 85
7.8 Prepayments and Amendments....................................................... 85
7.9 Change of Control................................................................ 85
7.10 Consignments..................................................................... 85
7.11 Distributions.................................................................... 85
7.12 Accounting Methods............................................................... 85
7.13 Investments...................................................................... 86
7.14 Transactions with Affiliates..................................................... 86
7.15 Suspension....................................................................... 86
7.16 Intentionally Deleted............................................................ 86
7.17 Use of Proceeds.................................................................. 86
7.18 Change in Location of Chief Executive Office; Inventory with Bailees............. 87
7.19 Securities Accounts.............................................................. 87
7.20 Financial Covenants.............................................................. 87
7.21 Amendments....................................................................... 88
8. EVENTS OF DEFAULT......................................................................... 88
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................................... 90
9.1 Rights and Remedies.............................................................. 90
9.2 Remedies Cumulative.............................................................. 92
10. TAXES AND EXPENSES....................................................................... 92
11. WAIVERS; INDEMNIFICATION................................................................. 93
11.1 Demand; Protest; etc............................................................. 93
11.2 The Lender Group's Liability for Collateral...................................... 93
11.3 Indemnification.................................................................. 93
12. NOTICES.................................................................................. 94
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................................... 95
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS............................................... 96
14.1 Assignments and Participations................................................... 96
14.2 Successors....................................................................... 98
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15. AMENDMENTS; WAIVERS...................................................................... 99
15.1 Amendments and Waivers.......................................................... 99
15.2 Replacement of Holdout Lender................................................... 100
15.3 No Waivers; Cumulative Remedies................................................. 100
16. AGENT; THE LENDER GROUP.................................................................. 101
16.1 Appointment and Authorization of Agent.......................................... 101
16.2 Delegation of Duties............................................................ 101
16.3 Liability of Agent.............................................................. 102
16.4 Reliance by Agent............................................................... 102
16.5 Notice of Default or Event of Default........................................... 102
16.6 Credit Decision................................................................. 103
16.7 Costs and Expenses; Indemnification............................................. 103
16.8 Agent in Individual Capacity.................................................... 104
16.9 Successor Agent................................................................. 104
16.10 Lender in Individual Capacity................................................... 105
16.11 Intentionally Deleted........................................................... 105
16.12 Collateral Matters.............................................................. 105
16.13 Restrictions on Actions by Lenders; Sharing of Payments......................... 106
16.14 Agency for Perfection........................................................... 107
16.15 Payments by Agent to the Lenders................................................ 107
16.16 Concerning the Collateral and Related Loan Documents............................ 107
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers
by Lenders; Other Reports and Information....................................... 107
16.18 Several Obligations; No Liability............................................... 108
16.19 Legal Representation of Agent................................................... 109
17. GENERAL PROVISIONS....................................................................... 109
17.1 Effectiveness................................................................... 109
17.2 Section Headings................................................................ 109
17.3 Interpretation.................................................................. 109
17.4 Severability of Provisions...................................................... 109
17.5 Amendments in Writing........................................................... 109
17.6 Counterparts; Telefacsimile Execution........................................... 110
17.7 Revival and Reinstatement of Obligations........................................ 110
17.8 Integration..................................................................... 110
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
[Schedule R-1 Real Property Collateral]
Schedule 2.8(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into
as of December 31, 2001, between and among, on the one hand, the lenders
identified on the signature pages hereof (such lenders, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION,
a California corporation, as the arranger and administrative agent for the
Lenders ("Agent"), and, on the other hand, PCI CHEMICALS CANADA COMPANY, A NOVA
SCOTIA UNLIMITED LIABILITY COMPANY, AND PIONEER AMERICAS LLC, A DELAWARE LIMITED
LIABILITY COMPANY (hereinafter each individually is referred to as a "Borrower",
and individually and collectively, jointly and severally, is referred to as the
"Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall have
the following definitions:
"Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.
"Accounts" means all of each Borrower's now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof,
including, without limitation, (a) (i) rights to payment for Inventory or other
goods sold or services rendered by such Borrower, including all accounts arising
from sales or rendition of services made under any of such Borrower's trade
names or styles or through any of such Borrower's divisions, regardless of how
such right is evidenced, whether secured or unsecured (and whether or not
specifically listed on schedules furnished to the Agent), and (ii) other
accounts; (b) unpaid seller's rights (including rights or rescission, replevin,
reclamation and stoppage in transit) relating to the foregoing or arising
therefrom; (c) rights to any goods (including Inventory) represented by any of
the foregoing, including rights to returned or repossessed goods (including
Inventory); (d) reserves and credit balances arising under any of the foregoing;
(e) guarantees, letters of credit, collateral or other supporting obligations
supporting or securing any of the foregoing; and (f) insurance policies or
rights relating to any of the foregoing.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by ▇▇▇▇▇ Fargo or
its Affiliates for the account of any Borrower or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section 4.4.
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"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of the definition of Eligible
Accounts and Section 7.14 hereof: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person; (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person; and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.
"Agent" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"Agent's Account" means the account identified on Schedule A-1.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrowers to Agent for
the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent together with its Affiliates,
officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Law" means all applicable international, foreign,
federal, state, provincial and local statutes, treaties, rules, guidelines,
regulations, ordinances, codes, and administrative or judicial precedents or
authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authority.
"Applicable Margin" means, on any day, and with respect to any
Advance, the applicable per annum percentage set forth at the appropriate
intersection in the table shown below, based on the average Excess Availability
for the immediately preceding month:
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AVERAGE EXCESS MARGIN OVER MARGIN OVER
AVAILABILITY U.S. PRIME LIBOR
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$20MM + .50% 2.75%
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$10MM <= $20MM .75% 3.00%
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$5MM <= $10MM 1.00% 3.25%
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$0MM <= $5MM 1.25% 3.50%
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It is understood and agreed that for the period from and after the
date of the first Advance until the date of the initial calculation of average
Excess Availability, the Applicable Margin shall be calculated as if the Average
Excess Availability were $10MM <= $20MM.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the first anniversary of the Closing Date, three percent (3%) of the Maximum
Revolver Amount on the date immediately prior to the date of determination, (b)
during the period of time from and including the date that is the first
anniversary of the Closing Date up to the date that is the second anniversary of
the Closing Date, two percent (2%) of the Maximum Revolver Amount on the date
immediately prior to the date of determination, and (c) during the period of
time from and including the date that is the second anniversary of the Closing
Date up to the Maturity Date, one percent (1%) of the Maximum Revolver Amount on
the date immediately prior to the date of determination.
"Approved CRC Portfolio" means the following derivative transactions
entered into by the CRC on behalf of Pioneer Americas:
(a) A forward purchase commitment for 365,200 megawatt-hours
of electric power at $46.50 per megawatt-hour from Duke Energy Trading &
Marketing, LLC during the period from 1/1/2002 through 12/31/2006, executed by
CRC on 3/14/2001, and confirmed by Pioneer America on 5/1/2001.
(b) A daily put option for 614,000 megawatt-hours of electric
power at a strike price of $50.00 per megawatt-hour with Duke Energy Trading &
Marketing, LLC during the period 1/1//2002 through 12/31/2006, executed by CRC
on 2/28/2001, and confirmed by Pioneer America on 5/1/2001.
(c) A forward purchase commitment for 481,600 megawatt-hours
of electric power at $55.00 per megawatt-hour from Duke Energy Trading &
Marketing, LLC during the period from 1/1/2002 through 12/31/2006, executed by
CRC on 3/28/01, and confirmed by Pioneer America on 5/1/2001.
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(d) A forward sale commitment for 60,800 megawatt-hours of
electric power at $44.00 per megawatt-hour to Idacorp, during the period from
1/1/2002 through 3/31/2002, executed by CRC on 8/7/2001, and confirmed by
Pioneer America on 8/7/2001.
(e) A one-time call option for 61,600 megawatt-hours of
electric power at a strike price of $50.00 per megawatt-hour with El Paso,
exercisable on 3/22/2002, effective 4/1/2002 through 6/30/2002, executed by CRC
on 8/3/2001, and confirmed by Pioneer America on 8/7/2001.
(f) A forward sale commitment for 61,600 megawatt-hours of
electric power at $44.00 per megawatt-hour to Idacorp during the period from
4/1/2002 through 6/30/2002, executed by CRC on 8/7/2001, and confirmed by
Pioneer America on 8/7/2001.
(g) A forward sale commitment for 96,200 megawatt-hours of
electric power at $32.00 per megawatt-hour to Idacorp during the period from
1/1/2002 through 12/31/2002, executed by CRC on 8/7/2001, and confirmed by
Pioneer America on 8/7/2001.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance in
the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of
Borrowers.
"Availability" means, as of any date of determination, if such date
is a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrowers are entitled to borrow as Advances under Section 2.1
(after giving effect to all then outstanding Obligations (other than Bank
Products Obligations) and all sublimits and reserves applicable hereunder).
"Bank Product Agreements" means those certain cash management
service agreements entered into from time to time by Borrowers in connection
with any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Borrowers to
▇▇▇▇▇ Fargo or its Affiliates pursuant to or evidenced by the Bank Product
Agreements and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all such amounts that Borrowers are obligated
to reimburse to Agent or any member of the Lender Group as a result of Agent or
such member of the Lender Group purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to Borrowers pursuant to the Bank Product Agreements.
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"Bank Products" means any service or facility extended to Borrowers
by ▇▇▇▇▇ Fargo or any Affiliate of ▇▇▇▇▇ Fargo including: (a) credit cards, (b)
credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH
Transactions, (f) cash management, including controlled disbursement, accounts
or services, or (g) Hedge Agreements.
"Bank Product Reserves" means, as of any date of determination, the
amount of reserves that Agent has established (based upon ▇▇▇▇▇ Fargo's or its
Affiliate's reasonable determination of the credit exposure in respect of then
extant Bank Products) for Bank Products then provided or outstanding.
"Bankruptcy Code" means Title 11 of the United States Bankruptcy
Code, as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in such law.
"Bankruptcy Courts" means the United States Bankruptcy Court for the
Southern District of Texas, Houston Division and the Superior Court of Quebec.
"Bankruptcy Law" means the Bankruptcy Code, Canadian Bankruptcy Law
or any law of any other country or jurisdiction relating to bankruptcy,
insolvency, receivership, winding-up, liquidation, reorganization, or relief of
debtors.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/16%), on the basis of the rates at which Dollar deposits are offered
to major banks in the London interbank market on or about 11:00 a.m. (California
time) 2 Business Days prior to the commencement of the applicable Interest
Period, for a term and in amounts comparable to the Interest Period and amount
of the LIBOR Rate Loan requested by Borrowers in accordance with this Agreement,
which determination shall be conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced within ▇▇▇▇▇ Fargo
at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.
"Base Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the Base Rate.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower or ERISA Affiliate of any Borrower has
been an "employer" (as defined in Section 3(5) of ERISA) within the past six
years.
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"Board of Directors" means the board of directors (or comparable
managers) of each Borrower or any committee thereof duly authorized to act on
behalf thereof.
"Books" means all of each Borrower's now owned or hereafter acquired
books and records (including all of its Records indicating, summarizing, or
evidencing its assets (including the Collateral) or liabilities, all of each
Borrower's Records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set forth in
the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances made
on the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender
in the event of a Swing Loan, or by Agent in the case of an Agent Advance, in
each case, to Borrowers.
"Borrowing Base" has the meaning set forth in Section 2.1.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B-1.
"Business Day" means (a) in connection with any Advances or L/C's
made or provided to PCI Chemicals, or other matters related exclusively to PCI
Chemicals, any day other than a Saturday, Sunday or other day on which
commercial banks are authorized or required to close under the laws of the State
of California, the State of Texas or the Province of Ontario and (b) in
connection with any Advances or L/C's made or provided to Pioneer Americas or as
such term is used herein except as otherwise provided in clause (a)(i) of this
definition, any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized or required to close under the laws of the State
of Texas or the State of California; provided, that, in any case (whether under
clause (a) or (b) of this definition or otherwise), if a determination of a
Business Day shall relate to any LIBOR Loans, the term Business Day shall also
exclude any day on which banks are closed for dealings in Dollar deposits in the
London interbank market or other applicable LIBOR Rate market.
"C$" means lawful money of Canada.
"Canadian Bankruptcy Law" means the Bankruptcy and Insolvency Act
(Canada), the Companies Creditors Arrangement Act (Canada), the Winding-Up and
Restructuring Act (Canada), or any similar Canadian or provincial law relating
to bankruptcy, insolvency, receivership, winding-up, liquidation,
reorganization, or relief of debtors, each as amended or changed.
"Canadian Designated Account" means that certain DDA of PCI
Chemicals identified as the Canadian Designated Account on Schedule D-1.
"Canadian Eligible Accounts" means Eligible Accounts owing to PCI
Chemicals.
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"Canadian Eligible Collateral" means Canadian Eligible Accounts and
Canadian Eligible Inventory.
"Canadian Eligible Finished Goods Inventory" means Eligible Finished
Goods Inventory owned by PCI Chemicals and located at one of the locations in
Canada specified in Schedule E-1.
"Canadian Eligible Inventory" means Canadian Eligible Finished Goods
Inventory and Canadian Eligible Raw Materials Inventory.
"Canadian Eligible Raw Materials Inventory" means Eligible Raw
Materials Inventory owned by PCI Chemicals and located in Canada at one of the
locations specified in Schedule E-1.
"Canadian Security Documents" means any and all general security
agreements, deed or deeds of hypothec, assignments of insurance, registrations
and other documents and agreements necessary to create in favor of Agent valid,
perfected, first priority security interests and charges in the Collateral
located in the provinces of ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or ▇▇▇▇▇'▇,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"Cash Management Account" has the meaning set forth in Section
2.7(a).
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"Cash Management Agreements" means those certain cash management
service agreements, in form and substance satisfactory to Agent, each of which
is among Borrowers, Agent, and one of the Cash Management Banks.
"Change of Control" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 10%, or more, of the Stock of any Borrower having the right to vote for the
election of members of the Board of Directors, or (b) a majority of the members
of the Board of Directors do not constitute Continuing Directors, or (c) any
Borrower ceases to directly own and control 100% of the outstanding capital
Stock of each of its Subsidiaries extant as of the Closing Date.
"Chapter 11 Bankruptcy Proceeding" means the bankruptcy proceedings
filed in the Bankruptcy Courts on or about July 31, 2001 regarding the
reorganization of Pioneer Companies, Inc. and its subsidiaries.
"Closing Date" means the date of the making of the initial Advance
(or other extension of credit) hereunder or the date on which Agent sends
Borrowers a written notice that each of the conditions precedent set forth in
Section 3.1 either have been satisfied or have been waived.
"Closing Date Business Plan" means the set of Projections of
Borrowers for the 3 year period following the Closing Date (on a year by year
basis, and for the 1 year period following the Closing Date, on a month by month
basis), in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.
"Code" means the Uniform Commercial Code, as adopted by the State of
Texas.
"Collateral" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Inventory,
(d) General Intangibles relating to Accounts and Inventory,
(e) Intercompany Notes,
(f) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(g) the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any
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and all Accounts, Books, General Intangibles, Inventory, Investment Property,
Negotiable Collateral, money, deposit accounts, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Inventory, in each case, in form and substance
satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Borrowers.
"Commitment" means, with respect to each Lender, its Revolver
Commitment or its Total Commitment, as the context requires, and, with respect
to all Lenders, their Revolver Commitments or their Total Commitments, as the
context requires, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of each Borrower to
Agent.
"Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of any Borrower on the Closing Date,
and (b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of a
Borrower (as such terms are used in Rule 14a-11 under the Exchange Act) and
whose initial assumption of office resulted from such contest or the settlement
thereof.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by the applicable Borrower, Agent,
and the applicable securities intermediary with respect to a Securities Account
or a bank with respect to a deposit account.
"CRC" means the Colorado River Commission created by and existing
pursuant to the laws of the State of Nevada.
"CRC Contracts" means Contract Nos. P03-50, P03-65, P03-70, and
P03-61 by and between Pioneer Americas and CRC, as the same may be amended or
supplemented from time to time.
-9-
"CRC Portfolio" means the Approved CRC Portfolio and the Disputed
CRC Portfolio.
"Currency Due" has the meaning set forth in Section 2.17.
"Daily Balance" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the close of business of
such day.
"DDA" means any checking or other demand deposit account maintained
by any Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3
days from and after the date the relevant payment is due, and (b) thereafter, at
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Applicable Margin applicable thereto.
"Designated Accounts" means the Canadian Designated Account and the
U.S. Designated Account.
"Dilution" means, as of any date of determination, a percentage,
based upon the experience of the immediately prior ninety (90) days, that is the
result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts during such period, by (b) Borrowers' Collections with respect to
Accounts during such period (excluding extraordinary items) plus the Dollar
amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed and
delivered by Borrowers to Agent regarding the extensions of credit to be made on
the Closing Date, the form and substance of which is reasonably satisfactory to
Agent.
"Disputed CRC Portfolio" means all the derivative transactions
purportedly entered into by CRC on behalf of Pioneer Americas, other than the
Approved CRC Portfolio.
"Dollar Equivalent" means on any date of determination, with respect
to any amount expressed in C$, the amount of Dollars that may be purchased with
such amount of C$ at the Spot Exchange Rate.
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"Dollars" or $ means lawful money of the United States of America.
"EBITDA" means, with respect to any fiscal period, Parent and its
Subsidiaries consolidated net earnings (or loss), minus extraordinary gains,
plus interest expense, income taxes, and depreciation and amortization for such
period, as determined in accordance with GAAP.
"Eligible Accounts" means, as to each Borrower, the Dollar
Equivalent of those Accounts created by such Borrower in the ordinary course of
its business, that arise out of its sale of goods or rendition of services, that
comply with each of the representations and warranties respecting Eligible
Accounts made by Borrowers under the Loan Documents, and that are not excluded
as ineligible by virtue of one or more of the criteria set forth below;
provided, however, that such criteria may be fixed and revised from time to time
by Agent in Agent's Permitted Discretion to address the results of any audit
performed by Agent from time to time after the Closing Date. In determining the
amount to be included, Eligible Accounts shall be calculated net of customer
deposits and unapplied cash remitted to Borrowers. Eligible Accounts shall not
include the following:
(a) Accounts that the Account Debtor has failed to pay within
ninety (90) days of original invoice date or Accounts with selling terms of more
than sixty (60) days,
(b) Accounts owed by an Account Debtor (or its Affiliates)
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of any Borrower,
(d) Accounts arising in a transaction wherein goods are placed
on consignment or are sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a ▇▇▇▇ and hold, or any other terms by reason of which the
payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars or C$,
(f) Accounts with respect to which the Account Debtor either
(i) does not maintain its chief executive office in the United States or Canada,
or (ii) is not organized under the laws of the United States or any state
thereof or under the laws of Canada or any province thereof, or (iii) is the
government of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof, unless (y) the
Account is supported by an irrevocable letter of credit reasonably satisfactory
to Agent (as to form, substance, and issuer or United States or Canadian
confirming bank) that has been delivered to Agent and is directly drawable by
Agent, or (z) the Account is covered by
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credit insurance in form, substance, and amount, and by an insurer, reasonably
satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is
either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent, with
the Assignment of Claims Act, 31 USC ss. 3727), or (ii) any state of the United
States (exclusive, however, of (y) Accounts owed by any state that does not have
a statutory counterpart to the Assignment of Claims Act or (z) Accounts owed by
any state that does have a statutory counterpart to the Assignment of Claims Act
as to which the applicable Borrower has complied to Agent's satisfaction),
(h) Accounts with respect to which the Account Debtor is a
creditor of any Borrower, has or has asserted a right of setoff, has disputed
its liability, or has made any claim with respect to its obligation to pay the
Account, to the extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrowers exceed 10% (such percentage as applied to a
particular Account Debtor being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates) of all
Eligible Accounts, to the extent of the obligations owing by such Account Debtor
in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, has gone out of business,
or as to which a Borrower has received notice of an imminent Insolvency
Proceeding or a material impairment of the financial condition of such Account
Debtor,
(k) Accounts with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, or West Virginia (or any other
state that requires a creditor to file a business activity report or similar
document in order to bring suit or otherwise enforce its remedies against such
Account Debtor in the courts or through any judicial process of such state),
unless the applicable Borrower has qualified to do business in New Jersey,
Minnesota, West Virginia, or such other states, or has filed a business
activities report with the applicable division of taxation, the department of
revenue, or with such other state offices, as appropriate, for the then-current
year, or is exempt from such filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(m) Accounts that are not subject to a valid and perfected
first priority Agent's Lien,
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(n) Accounts with respect to which (i) the goods giving rise
to such Account have not been shipped and billed to the Account Debtor, or (ii)
the services giving rise to such Account have not been performed and billed to
the Account Debtor, or
(o) Accounts that represent the right to receive progress
payments or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of
performance by the applicable Borrower of the subject contract for goods or
services.
"Eligible Finished Goods Inventory" means, as to each Borrower,
Inventory of such Borrower consisting of first quality finished goods held for
sale in the ordinary course of such Borrower's business located at one of the
business locations of such Borrower set forth on Schedule E-1 (or in-transit
between any such locations), that complies with each of the representations and
warranties respecting Eligible Inventory made by Borrowers in the Loan
Documents, and that is not excluded as ineligible by virtue of the one or more
of the criteria set forth below; provided, however, that such criteria may be
fixed and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit or appraisal performed by Agent from time to
time after the Closing Date. Eligible Finished Goods Inventory shall not include
any item included in Eligible Raw Materials Inventory. Canadian Eligible
Finished Goods Inventory shall not include any item included in U.S. Eligible
Finished Goods Inventory, and U.S. Eligible Finished Goods Inventory shall not
include any item included in Canadian Eligible Finished Goods Inventory. In
determining the amount to be so included, Inventory consisting of finished goods
shall be valued at the lower of cost or market on a basis consistent with
Borrowers' historical accounting practices. An item shall not be included in
Eligible Finished Goods Inventory if:
(a) a Borrower does not have good, valid, and marketable title
thereto,
(b) it is not located at one of the locations in the United
States or in the Provinces of Quebec, Ontario, Nova Scotia, or New Brunswick,
Canada set forth on Schedule E-1 or in transit from one such location to another
such location,
(c) it is located on real property leased by a Borrower or in
a contract warehouse, in each case, unless it is subject to a Collateral Access
Agreement executed by the lessor, warehouseman, or other third party, as the
case may be, and unless it is segregated or otherwise separately identifiable
from goods of others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first priority
security Agent's Lien,
(e) it consists of goods returned or rejected by a Borrower's
customers, or
(f) it consists of goods that are obsolete or slow moving,
restrictive or custom items, work-in-process, raw materials, or goods that
constitute spare parts,
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packaging and shipping materials, supplies used or consumed in a Borrower's
business, ▇▇▇▇ and hold goods, defective goods, "seconds," or Inventory acquired
on consignment.
"Eligible Inventory" means, as to each Borrower, the Eligible
Finished Goods Inventory and Eligible Raw Materials Inventory of such Borrower.
"Eligible Raw Materials Inventory" means, as to each Borrower,
Inventory of such Borrower consisting of raw materials and work in process
located at one of the business locations of such Borrower set forth on Schedule
E-1 (or in-transit between any such locations), that complies with each of the
representations and warranties respecting Eligible Inventory made by Borrowers
in the Loan Documents, and that is not excluded as ineligible by virtue of the
one or more of the criteria set forth below; provided, however, that such
criteria may be fixed and revised from time to time by Agent in Agent's
Permitted Discretion to address the results of any audit or appraisal performed
by Agent from time to time after the Closing Date. Eligible Raw Materials
Inventory shall not include any item included in Eligible Finished Goods
Inventory. Canadian Eligible Raw Materials Inventory shall not include any item
included in U.S. Eligible Raw Materials Inventory, and U.S. Eligible Raw
Materials Inventory shall not include any item included in Canadian Eligible Raw
Materials Inventory. In determining the amount to be so included, Inventory
consisting of raw materials and work in process shall be valued at the lower of
cost or market on a basis consistent with Borrowers' historical accounting
practices. An item shall not be included in Eligible Raw Materials Inventory if:
(a) a Borrower does not have good, valid, and marketable title
thereto,
(b) it is not located at one of the locations in the United
States or in the Provinces of Quebec, Ontario, Nova Scotia, or New Brunswick,
Canada set forth on Schedule E-1 or in transit from one such location to another
such location,
(c) it is located on real property leased by a Borrower or in
a contract warehouse, in each case, unless it is subject to a Collateral Access
Agreement executed by the lessor, warehouseman, or other third party, as the
case may be, and unless it is segregated or otherwise separately identifiable
from goods of others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first priority
security Agent's Lien, or
(e) it consists of goods that constitute packaging and
shipping materials or supplies used or consumed in a Borrower's business.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of
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any such country and which has total assets in excess of $250,000,000, provided
that such bank is acting through a branch or agency located in the United
States, (c) a finance company, insurance company, or other financial institution
or fund that is engaged in making, purchasing, or otherwise investing in
commercial loans in the ordinary course of its business and having (together
with its Affiliates) total assets in excess of $250,000,000, (d) any Affiliate
(other than individuals) of a Lender that was party hereto as of the Closing
Date, (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by Agent and Borrowers, and (f) during the continuation of
an Event of Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrowers, relating
to the environment, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC Section
1251 et seq; the Toxic Substances Control Act, 15 USC, Section 2601 et seq; the
Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water Act, 42 USC.
Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC. Section 2701 et
seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42
USC. Section 11001 et seq.; the Hazardous Material Transportation Act, 49 USC
Section 1801 et seq.; and the Occupational Safety and Health Act, 29 USC.
Section 651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
-15-
"Equipment" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to equipment, machinery, machine tools,
motors, furniture, furnishings, fixtures, vehicles (including motor vehicles),
tools, parts, goods (other than consumer goods, farm products, or Inventory),
wherever located, including all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers aged in excess of their
historical levels with respect thereto and all book overdrafts in excess of
their historical practices with respect thereto, in each case as determined by
Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Lender" means Congress Financial Corporation (Southwest)
and Congress Financial Corporation (Canada).
"Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrowers and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Foreign Lender" has the meaning set forth in Section 2.4(c)(v).
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
-16-
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to general intangibles
(including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
directly relating to Accounts and Inventory.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, certificate of formation,
operating agreement, or other organizational documents of such Person.
"Governmental Authority" means any (domestic or foreign) federal,
state, province, county, local, or other governmental or administrative body,
instrumentality, department, or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body.
"Guarantors" means Pioneer Companies, Inc., Pioneer (East), Inc.,
Pioneer Licensing, Inc., Imperial West Chemical Co., Kemwater North America
Company, Pioneer Water Technologies, Inc., and KWT, Inc.
"Guaranty" means that certain general continuing guaranty executed
and delivered by Guarantors in favor of Agent, for the benefit of the Lender
Group, in form and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any Environmental Laws as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources regulated under Environmental Laws, (c) any
flammable substances or explosives or any radioactive materials, and (d)
asbestos in any form or electrical equipment that contains any oil or dielectric
fluid containing levels of polychlorinated biphenyls in excess of 50 parts per
million which is regulated by Environmental Law.
"Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into between Borrowers and ▇▇▇▇▇
Fargo or its Affiliates,
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which provide for an interest rate, credit, commodity or equity swap, cap,
floor, collar, forward foreign exchange transaction, currency swap, cross
currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging such
Borrower's exposure to fluctuations in interest or exchange rates, loan, credit
exchange, security or currency valuations or commodity prices.
"Highest Lawful Rate" means with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged, or received on the Obligations owed to
such Lender under the law of any jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding other provisions of this Agreement, or
the law of the United States of America, Canada, or any other jurisdiction
applicable to such Lender and the transactions contemplated by this Agreement,
which would permit such Lender to contract for, charge, take, reserve, or
receive a greater amount of interest than under such jurisdiction's laws.
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, forward contracts, or other financial
and/or hedging products, (c) the capitalized amount of all obligations under
Capital Leases as determined in accordance with GAAP, (d) all obligations or
liabilities of others secured by a Lien on any asset of Borrowers or their
Subsidiaries, irrespective of whether such obligation or liability is assumed,
(e) all obligations for the deferred purchase price of assets (other than trade
debt incurred in the ordinary course of business and repayable in accordance
with customary trade practices), and (f) any obligation guaranteeing or intended
to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Indenture Documents" means the Tranche A Indenture, the Tranche A
Indenture Documents, the Tranche B Indenture, the Tranche B Indenture Documents,
the Term Loan Agreement, and the Term Loan Agreement Documents.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Law.
"Intercompany Loans" has the meaning set forth in Section 7.13.
"Intercompany Notes" has the meaning set forth in Section 7.13.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among Foothill, as Agent for the Lenders, and ▇▇▇▇▇ Fargo Bank Minnesota,
National Association,
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as Collateral Agent for the holders of the indebtedness under the Indenture
Documents, the form and substance of which is satisfactory to Agent.
"Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2, or 3 months thereafter; provided, however, that (a) if any Interest Period
would end on a day that is not a Business Day, such Interest Period shall be
extended (subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and (e)
Borrowers may not elect an Interest Period which will end after the Maturity
Date.
"Inventory" means each Borrower's now owned or hereafter acquired
right, title, and interest with respect to inventory, including all goods held
for sale or lease or to be furnished under contracts of service, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods and materials used or usable in manufacturing, processing,
packaging or shipping the same, in each case in all stages of production, from
raw materials through work-in-process to finished goods, including chlorine,
caustic soda, bleach, hydrochloric acid, other chlorides and aluminum sulfate.
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "investment property" as
that term is defined in the Code, and any and all supporting obligations in
respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"Issuing Lender" means Foothill or any other Lender that, at the
request of Borrowers and with the consent of Agent agrees, in such Lender's sole
discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C
Undertakings pursuant to Section 2.12.
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"Judgment Currency" has the meaning set forth in Section 2.17.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by a Borrower under any of
the Loan Documents that are paid or incurred by the Lender Group, (b) fees or
charges paid or incurred by Agent in connection with the Lender Group's
transactions with Borrowers, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with
the patent and trademark office, or the copyright office, filing, recording,
publication, appraisal (including periodic Collateral appraisals or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement and environmental audits, (c) costs and
expenses incurred by Agent in the disbursement of funds to or for the account of
Borrowers (by wire transfer or otherwise), (d) charges paid or incurred by Agent
resulting from the dishonor of checks, (e) reasonable costs and expenses paid or
incurred by the Lender Group to correct any default or enforce any provision of
the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to
sell the Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Agent related to audit examinations
of the Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by the Lender Group in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or the Lender Group's relationship with any
Borrower or any guarantor of the Obligations, (h) Agent's and each Lender's
reasonable fees and expenses (including attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, or amending the Loan Documents,
and (i) Agent's and each Lender's reasonable fees and expenses (including
attorneys fees) incurred in terminating, enforcing (including attorneys fees and
expenses incurred in connection with a "workout," a "restructuring," or an
Insolvency Proceeding concerning any Borrower or in exercising rights or
remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.
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"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount of outstanding time drafts accepted by an Underlying Issuer as a result
of drawings under Underlying Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Option" has the meaning set forth in Section 2.13(a).
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to
the next 1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Canadian Security
Documents, the Bank Product Agreements, the Cash Management Agreements, the
Control Agreements, the Disbursement Letter, the Fee Letter, the Guaranty, the
Letters of Credit and the applications and agreements executed in connection
therewith, the Officers' Certificate, the Intercreditor Agreement, the Notice
and Acknowledgment of the Oral Agreements, the Hedge Agreements, the Collateral
Access Agreements, any note or notes executed by a
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Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by any
Borrower and the Lender Group in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers taken as a whole, (b) a material
impairment of a Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Agent's Liens with respect to the Collateral
as a result of an action or failure to act on the part of a Borrower.
"Maturity Date" has the meaning set forth in Section 3.5.
"Maximum Revolver Amount" means $50,000,000.00.
"Negotiable Collateral" means all of Borrowers' now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Net Liquidation Percentage" means the percentage of the book value
of Borrowers' Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory, such percentage to be as determined from time to
time by a qualified appraisal company selected by Agent.
"Obligations" means (a) all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Law, would have accrued), contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to Borrowers' Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties of any kind and description owing by Borrowers to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Borrowers are required to pay
or reimburse by the Loan Documents, by law, or otherwise, and (b) all Bank
Product Obligations. Any reference in this Agreement or in the Loan Documents to
the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
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"Offsite Eligible Inventory" means, as to each Borrower, Inventory
of such Borrower which would not be excluded from the definition of Eligible
Inventory but for the fact that it is not located at a location specified in
Schedule E-1.
"Officers' Certificate" means the representations and warranties of
officers form submitted by Agent to Borrowers, together with Borrowers'
completed responses to the inquiries set forth therein, the form and substance
of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" means Pioneer Companies, Inc., a Delaware corporation.
"Participant" has the meaning set forth in Section 14.1(e).
"Pay-Off Letter" means a letter, in form and substance reasonably
satisfactory to Agent, from Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of Borrowers owing to Existing
Lender and obtain a release of all of the Liens existing in favor of Existing
Lender in and to the assets of Borrowers.
"PCI Chemicals" means PCI Chemicals Canada Company, an unlimited
liability company organized and existing under the laws of the Province of Nova
Scotia, Canada.
"Permitted Discretion" means a determination made in good faith and
in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by
Borrowers of Equipment that is substantially worn, damaged, or obsolete in the
ordinary course of business, (b) sales by a Borrower of Inventory to the other
Borrower provided the sale is for fair and equivalent value and after the sale
the Inventory sold remains Collateral, (c) sales by Borrowers of Inventory to
buyers in the ordinary course of business, (d) the use or transfer of money or
Cash Equivalents by Borrowers in a manner that is not prohibited by the terms of
this Agreement or the other Loan Documents, (e) the licensing by Borrowers, on a
non-exclusive basis, of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of business, (f) sales of Equipment by a
Borrower provided the value of any single piece of Equipment sold does not
exceed $50,000.00 and the value all Equipment sold in any calendar year does not
exceed $250,000.00 in the aggregate, (g) sales of other assets of Borrowers
provided that (i) Borrowers provide Agent with at least ten (10) days prior
written notice of the proposed sale, (ii) the net cash proceeds from the sale
are immediately deposited into the Cash Management Account, (iii) the value of
the assets sold does not exceed $100,000.00 in the aggregate during any calendar
year, and (iv) the assets
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sold are not necessary to the continued operations of the Borrowers or any of
the Guarantors, and (h) the sale of the Pioneer Technology Center situated at
Mississauga, Canada.
"Permitted Indebtedness" means (a) Indebtedness of Borrowers
disclosed on Schedule 5.20 attached hereto, (b) Indebtedness arising by the
Intercompany Loans to the extent permitted by Section 7.13, (c) Indebtedness
arising from the sale of assets from one Borrower to another Borrower pursuant
to a Permitted Disposition, (d) Indebtedness, not secured by or subject to a
Lien, in respect of performance, completion, guarantee, surety and similar
bonds, banker's acceptances, bills of exchange, or letters of credit provided by
Borrowers in the ordinary course of business provided such Indebtedness does not
exceed $100,000.00 in the aggregate at any one time outstanding, and (e)
indemnities and guaranties permitted pursuant to Section 7.6.
"Permitted Investments" means (a) investments in Cash Equivalents,
(b) investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of and other disputes with, customers and suppliers arising in the
ordinary course of business, (e) Investments made as a result of receipt of
non-cash consideration of an asset sale that was made pursuant to a Permitted
Disposition, and (f) Hedge Agreements.
"Permitted Liens" means (a) Liens held by Agent for the benefit of
Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under operating leases (and any precautionary UCC Financing
Statements related thereto provided such UCC Financing Statements are limited to
the personal property which is the subject of the operating lease), (e) purchase
money Liens or the interests of lessors under Capital Leases to the extent that
such Liens or interests secure Permitted Purchase Money Indebtedness and so long
as such Lien attaches only to the asset purchased or acquired and the proceeds
thereof, (f) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet delinquent, or (ii) are
the subject of Permitted Protests, (g) Liens arising from deposits made in
connection with obtaining worker's compensation or other unemployment insurance,
(h) Liens or deposits to secure performance of bids, tenders, or leases incurred
in the ordinary course of business and not in connection with the borrowing of
money, (i) Liens granted as security for surety or appeal bonds in connection
with obtaining such bonds in the ordinary course of business, (j) Liens
resulting from any judgment or award that is not an Event of Default hereunder,
and (k) with respect to any Real Property, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof.
"Permitted Protest" means the right of the applicable Borrower to
protest any Lien (other than any such Lien that secures the Obligations), taxes
(other than payroll taxes
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or taxes that are the subject of a United States federal tax lien), or rental
payment, provided that (a) a reserve with respect to such obligation is
established on the Books in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by the applicable
Borrower, in good faith, and (c) Agent is satisfied that, while any such protest
is pending, there will be no impairment of the enforceability, validity, or
priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $10,000,000.00.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Pioneer Americas" means Pioneer Americas LLC, a Delaware limited
liability company.
"Plan of Reorganization" means the Debtors' Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code dated September 21, 2001,
filed with the United States Bankruptcy Court, Southern District of Texas,
Houston Division, Case No. 01-38259-H3-11, on behalf of Pioneer Companies, Inc,
Pioneer Corporation of America, Imperial West Chemical Co., Kemwater North
America Co., PCI Chemicals Canada Inc./PCI Chimie Canada Inc., Pioneer Americas,
Inc., Pioneer (East), Inc., Pioneer Water Technologies, Inc., Pioneer Licensing,
Inc., and KWT, Inc.
"PPSA" means the Personal Property Security Act as from time to time
in effect in each Province of Canada in which Collateral is located.
"Projections" means Borrowers' forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Borrowers' historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,
(b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive payments of
fees with respect thereto, the percentage obtained by dividing (i) such Lender's
Revolver Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,
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(c) with respect to all other matters (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) such Lender's Total Commitment, by (ii) the aggregate amount of
Total Commitments of all Lenders; provided, however, that, in each case, in the
event all Commitments have been terminated, Pro Rata Share shall be determined
according to the Commitments in effect immediately prior to such termination.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Borrower and the improvements thereto.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means Excess Availability and unrestricted
cash and Cash Equivalents in an amount of not less than $5,000,000.00.
"Required Lenders" means, at any time, (a) Agent, and (b) Lenders
whose Pro Rata Shares aggregate 51% of the Total Commitments, or if the
Commitments have been terminated irrevocably, 51% of the Obligations (other than
Bank Product Obligations) then outstanding.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities" in Regulation D of the
Board of Governors of the Federal Reserve System) of that Lender, but so long as
such Lender is not required or directed under applicable regulations to maintain
such reserves, the Reserve Percentage shall be zero.
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"Returns" means, collectively, (a) all reports, declarations,
estimates, returns, information statements, and similar documents relating to,
or required to be filed in respect of, any Taxes; and (b) any statements,
returns, reports, or similar documents required to be filed pursuant to Part III
of Subchapter A of Chapter 61 of the IRC or pursuant to any similar income,
excise, or other tax provision of federal, territorial, state, local, or foreign
law; and the term "Return" means any one of the foregoing Returns.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrowers to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Solvent" means, with respect to any Person on a particular date,
that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Spot Exchange Rate" shall mean, on any Business Day, the spot rate
at which Dollars are offered on such day by Bank of Montreal in ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇ for C$ at approximately 11:00 a.m. (Montreal, Quebec, Canada
time).
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock,
membership interests, or any other "equity
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security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Swing Lender" means Foothill or any other Lender that, at the
request of Borrowers and with the consent of Agent agrees, in such Lender's sole
discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" means (a) all present and future income, net income, gross
income, large corporations, capital, gross receipts, sales, goods and services,
use, ad valorem, franchise, business, profits, license, lease, service, service
use, withholding, employment, payroll, excise, severance, transfer, documentary,
mortgage, registration, stamp, occupation, environmental, premium, property,
windfall, profits, customs, and other taxes, duties, fees, assessments or
charges of any kind whatever, together with any interest, penalties and other
additions with respect thereto, imposed by any U.S., Canadian, or other foreign
federal, territorial, provincial, state, local or other foreign government; and
(b) any penalties, interest, or other additions to tax for the failure to
collect, withhold, or pay over any of the foregoing, or to accurately file any
Return; and the term "Tax" shall mean any one of the foregoing Taxes. When used
with reference to specified persons (for example and without limitation, "Taxes
of the Borrowers"), the terms "Taxes" and "Tax" shall include only amounts of,
or in respect of, Taxes for which such person is, or could become, liable in
whole or part (including, without limitation, any obligation in connection with
a duty to collect, withhold, or pay over any Tax, any obligation to contribute
to the payment of any Taxes determined on a consolidated, combined, or unitary
basis, any liability as a transferee, or any liability as a result of any
express or implied obligation to indemnify or pay the Tax obligations of another
person).
"Term Loan Agreement" means that certain Term Loan Agreement, dated
as of December 31, 2001 among Pioneer Americas, as borrower, each Guarantor
(therein defined) from time to time party thereto, the various lenders as are or
may from time to time become parties thereto, and ▇▇▇▇▇ Fargo Bank Minnesota,
National Association, as administrative agent.
"Term Loan Agreement Documents" means the Term Loan Agreement, all
promissory notes and guaranties issued in connection therewith, and all other
documents now or hereafter executed in connection with or as security for the
obligations owing under the Term Loan Agreement.
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"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Tranche A Indenture" means that certain Indenture dated December
31, 2001, among Pioneer Americas LLC, as Issuer, Pioneer Companies, Inc., PCI
Chemicals Canada Company, Imperial West Chemical Co., Kemwater North America
Co., Pioneer (East), Inc., Pioneer Water Technologies, Inc., Pioneer Licensing,
Inc., and KWT, Inc., as Guarantors, and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Trustee, relating to the issuance of up to $45,421,874.00 Senior
Secured Floating Rate Guaranteed Notes due 2006.
"Tranche A Documents" has the meaning set forth in the Tranche A
Indenture.
"Tranche B Indenture" means that certain Indenture dated December
31, 2001, among PCI Chemicals Canada Company, as Issuer, Pioneer Companies,
Inc., Pioneer Americas LLC, Imperial West Chemical Co., Kemwater North America
Co., Pioneer (East), Inc., Pioneer Water Technologies, Inc., Pioneer Licensing,
Inc., and KWT, Inc., as Guarantors, and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Trustee, relating to the issuance of up to $150,000,000.00 10%
Senior Secured Guaranteed Notes due 2008.
"Tranche B Documents" has the meaning set forth in the Tranche B
Indenture.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"U.S. Designated Account" means that certain DDA of Pioneer Americas
identified as the U.S. Designated Account on Schedule D-1.
"U.S. Eligible Accounts" means Eligible Accounts owing to Pioneer
Americas.
"U.S. Eligible Collateral" means U.S. Eligible Accounts and U.S.
Eligible Inventory.
"U.S. Eligible Finished Goods Inventory" means Eligible Finished
Goods Inventory owned by Pioneer Americas and located in the continental United
States at any of the locations specified in Schedule E-1.
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"U.S. Eligible Inventory" means U.S. Eligible Finished Goods
Inventory and U.S. Eligible Raw Materials Inventory.
"U.S. Eligible Raw Materials Inventory" means Eligible Raw Materials
Inventory owned by Pioneer Americas and located in the continental United States
at one of the locations specified in Schedule E-1.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
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2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender agrees (severally, not jointly or
jointly and severally) to make advances ("Advances") to Borrowers in Dollars in
an amount at any one time outstanding not to exceed such Lender's Pro Rata Share
of an amount equal to the lesser of (i) the Maximum Revolver Amount less the
Letter of Credit Usage, or (ii) the Borrowing Base less the Letter of Credit
Usage; provided, however, the aggregate amount of the Letter of Credit Usage
shall not exceed $10,000,000.00. For purposes of this Agreement, "Borrowing
Base," as of any date of determination, shall mean the result of:
(x) the lesser of
(i) 85% of the amount of
Eligible Accounts, less the amount,
if any, of the Dilution Reserve, and
(ii) an amount equal to Borrowers'
Collections with respect to Accounts
for the immediately preceding sixty
(60) day period (subject to
reasonable adjustments as may be
mutually acceptable to the Borrowers
and the Agent to reflect changes in
the market selling price for
chlorine and caustic soda), plus
(y) the lowest of
(i) $15,000,000.00,
(ii) the sum of (aa) 55% of
the lower of cost or market value of
Eligible Finished Goods Inventory,
plus (bb) 25% of the lower of cost
or market value of Eligible Raw
Materials Inventory, but in no event
to exceed (1) $5,000,000.00 in the
aggregate with respect to Canadian
Eligible Inventory and (2)
$10,000,000.00 in the aggregate
with respect to U.S. Eligible
Inventory,
(iii) 80% times the then
extant Net Liquidation Percentage
times the book
value of Borrowers' Inventory,
(iv) minus
(z) the sum of (i) the Bank Products
Reserve, and (ii) the aggregate amount of
reserves, if any, established by Agent under
Section 2.1(c).
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(b) Anything in this Section 2.1 to the contrary
notwithstanding, it is agreed that Lenders shall have no obligation hereunder:
(i) to make Advances or issue Letters of Credit in an aggregate amount at any
one time outstanding in excess of $30,000,000.00 until the conditions set forth
in Section 3.4 have been satisfied, (ii) to make Advances or issue Letters of
Credit to pay any of the indebtedness or obligations owing with respect to any
of the Disputed CRC Portfolio, unless immediately after giving effect to the
making of such Advance or the issuance of such Letter of Credit there is Excess
Availability of at least $10,000,000.00, (iii) to make Advances or issue Letters
of Credit in amounts in excess of $1,000,000.00 in the aggregate against
Off-Site Eligible Inventory, and (iv) to make Advances for the use of, or issue
Letters of Credit for the account of, PCI Chemicals in an aggregate amount in
excess of an amount equal to the lesser of (aa) $18,000,000.00 or (bb) an amount
equal to:
(1) the lesser of
(aaa) 85% of the amount of Canadian
Eligible Accounts, less the amount,
if any, of the Dilution Reserve, and
(bbb) an amount equal to PCI
Chemical's Collections with respect
to Accounts owing to PCI Chemicals
for the immediately preceding sixty
(60) day period (subject to
reasonable adjustments as may be
mutually acceptable to the Borrowers
and the Agent to reflect changes in
the market selling price for
chlorine and caustic soda), plus
(2) the lower of:
(aaa) the sum of 55% of the lower of
cost or market value of Canadian
Eligible Finished Goods Inventory,
plus 25% of the lower of cost or
market value of Canadian Eligible
Raw Materials Inventory, but in no
event to exceed $5,000,000.00,
(bbb) 80% times the then extant Net
Liquidation Percentage (calculated
with respect to PCI Chemical's
Inventory) times the book value of
PCI Chemical's Inventory,
(ccc) minus
(3) the sum of (aaa) the Bank Products
Reserve, and (bbb) the aggregate amount of reserves, if any,
established by Agent under Section 2.1(c), or
(c) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as
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Agent in its Permitted Discretion shall deem necessary or appropriate, against
the Borrowing Base, including reserves with respect to (i) sums that Borrowers
are required to pay (such as taxes, assessments, insurance premiums, or, in the
case of leased assets, rents or other amounts payable under such leases) and has
failed to pay under any Section of this Agreement or any other Loan Document,
and (ii) amounts owing by Borrowers to any Person to the extent secured by a
Lien on, or trust over, any of the Collateral (other than any existing Permitted
Lien set forth on Schedule P-1 which is specifically identified thereon as
entitled to have priority over the Agent's Liens), which Lien or trust, in the
Permitted Discretion of Agent likely would have a priority superior to the
Agent's Liens (such as Liens or trusts in favor of landlords, warehousemen,
carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for
ad valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral. In addition to the foregoing, Agent
shall have the right to have the Inventory reappraised by a qualified appraisal
company selected by Agent from time to time after the Closing Date for the
purpose of redetermining the Net Liquidation Percentage of the Eligible
Inventory portion of the Collateral and, as a result, redetermining the
Borrowing Base.
(d) The Lenders shall have no obligation to make additional
Advances hereunder to the extent such additional Advances would cause the
Revolver Usage to exceed the Maximum Revolver Amount.
(e) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2 INTENTIONALLY DELETED.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by
an irrevocable written request by an Authorized Person of each Borrower
delivered to Agent, which notice must be received by Agent, subject to the
provisions of Section 2.13 with respect to LIBOR Rate Loans, no later than 10:00
a.m. (California time) on the Business Day prior to the date that is the
requested Funding Date in the case of a request for an Advance specifying (i)
the amount of such Borrowing, (ii) whether the proceeds of the Advance are to be
used by Pioneer Americas or PCI Chemicals, (iii) whether it is to be a Base Rate
Loan or a LIBOR Rate Loan, (iv) in the case of LIBOR Loans, the Interest Period
to be applicable thereto, and (v) the requested Funding Date, which shall be a
Business Day; provided, however, that in the request for Swing Loans in an
amount of $5,000,000.00, or less such notice will be timely received if it is
received by Agent no later than 10:00 a.m. (California time) on the Business Day
that is the requested Funding Date specifying (aa) the amount of such Borrowing,
and (ii) the requested Funding Date, which shall be a Business Day. At Agent's
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice.
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(b) Promptly after receipt of a request for a Borrowing
pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i) to have
the terms of Section 2.3(c) apply to such requested Borrowing, or (ii) if the
Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the
terms of this Section 2.3(c) apply to a requested Borrowing as
described in Section 2.3(b), then promptly after receipt of a
request for a Borrowing pursuant to Section 2.3(a), Agent shall
notify the Lenders, not later than 1:00 p.m. (California time) on
the Business Day immediately preceding the Funding Date applicable
thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the
amount of such Lender's Pro Rata Share of the requested Borrowing
available to Agent in immediately available funds, to Agent's
Account, not later than 10:00 a.m. (California time) on the Funding
Date applicable thereto. After Agent's receipt of the proceeds of
such Advances upon satisfaction of the applicable conditions
precedent set forth in Section 3 hereof, Agent shall make the
proceeds thereof available to Borrowers on the applicable Funding
Date by transferring immediately available funds equal to such
proceeds received by Agent to (aa) the U.S. Designated Account if
the request for Advance has designated Pioneer Americas as the user
of the proceeds and (bb) to the Canadian Designated Account if the
request for Advance has designated PCI Chemicals as the user of the
proceeds of the Advance; provided, however, that, subject to the
provisions of Section 2.3(i), Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any Advance
if Agent shall have actual knowledge that (1) one or more of the
applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (2) the requested
Borrowing would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after
the Closing Date, at least one (1) Business Day prior to the date of
such Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrowers the amount
of that Lender's Pro Rata Share of the Borrowing, Agent may assume
that each Lender has made or will make such amount available to
Agent in immediately available funds on the Funding Date and Agent
may (but shall not be so required), in reliance upon such
assumption, make available to Borrowers on such date a corresponding
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amount. If and to the extent any Lender shall not have made its full
amount available to Agent in immediately available funds and Agent
in such circumstances has made available to Borrowers such amount,
that Lender shall on the Business Day following such Funding Date
make such amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute
such Lender's Advance on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to Agent on the
Business Day following the Funding Date, Agent will notify Borrowers
of such failure to fund and, upon demand by Agent, Borrowers shall
pay such amount to Agent for Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to
the Advances composing such Borrowing. The failure of any Lender to
make any Advance on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance on such
Funding Date, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender
on any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer to
the Defaulting Lender, Agent shall transfer any such payments to
each other non-Defaulting Lender member of the Lender Group ratably
in accordance with their Commitments (but only to the extent that
such Defaulting Lender's Advance was funded by the other members of
the Lender Group) or, if so directed by Borrowers and if no Default
or Event of Default had occurred and is continuing (and to the
extent such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrowers as if such
Defaulting Lender had made Advances to Borrowers. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend
to Borrowers for the account of such Defaulting Lender the amount of
all such payments received and retained by it for the account of
such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such
Defaulting Lender shall be deemed not to be a "Lender" and such
Lender's Commitment shall be deemed to be zero. This Section shall
remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or shall
have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Borrowers shall have waived such Defaulting
Lender's default in writing, or (z) the Defaulting Lender makes its
Pro Rata Share of the applicable Advance and pays to Agent all
amounts owing by Defaulting Lender in respect thereof. The operation
of this Section shall not be construed to increase or otherwise
affect the
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Commitment of any Lender, to relieve or excuse the performance by
such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by
Borrowers of their duties and obligations hereunder to Agent or to
the Lenders other than such Defaulting Lender. Any such failure to
fund by any Defaulting Lender shall constitute a material breach by
such Defaulting Lender of this Agreement and shall entitle Borrowers
at their option, upon written notice to Agent, to arrange for a
substitute Lender to assume the Commitment of such Defaulting
Lender, such substitute Lender to be acceptable to Agent. In
connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance Agreement in favor of the substitute
Lender (and agrees that it shall be deemed to have executed and
delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (other than Bank
Product Obligations) (including an assumption of its Pro Rata Share
of the Risk Participation Liability) without any premium or penalty
of any kind whatsoever; provided further, however, that any such
assumption of the Commitment of such Defaulting Lender shall not be
deemed to constitute a waiver of any of the Lender Groups' or
Borrowers' rights or remedies against any such Defaulting Lender
arising out of or in relation to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of
Swing Lender, as a Lender, to have the terms of this Section 2.3(d)
apply to a requested Borrowing as described in Section 2.3(b), Swing
Lender as a Lender shall make such Advance in the amount of such
Borrowing (any such Advance made solely by Swing Lender as a Lender
pursuant to this Section 2.3(d) being referred to as a "Swing Loan"
and such Advances being referred to collectively as "Swing Loans")
available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to Borrowers' Designated
Account. Each Swing Loan is an Advance hereunder and shall be
subject to all the terms and conditions applicable to other
Advances, except that no such Swing Loan shall be eligible for the
LIBOR Option and all payments on any Swing Loan shall be payable to
Swing Lender as a Lender solely for its own account (and for the
account of the holder of any participation interest with respect to
such Swing Loan). Subject to the provisions of Section 2.3(i), Agent
shall not request Swing Lender as a Lender to make, and Swing Lender
as a Lender shall not make, any Swing Loan if Agent has actual
knowledge that (i) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (ii) the requested Borrowing would
exceed the Availability on such Funding Date. Swing Lender as a
Lender shall not otherwise be required to determine
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whether the applicable conditions precedent set forth in Section 3
have been satisfied on the Funding Date applicable thereto prior to
making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's
Liens, shall constitute Advances and Obligations hereunder, and
shall bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and the
Lenders, from time to time in Agent's sole discretion, (1) after the
occurrence and during the continuance of a Default or an Event of
Default, or (2) at any time that any of the other applicable
conditions precedent set forth in Section 3 have not been satisfied,
to make Advances to Borrowers on behalf of the Lenders that Agent,
in its Permitted Discretion deems necessary or desirable (A) to
preserve or protect the Collateral, or any portion thereof, (B) to
enhance the likelihood of repayment of the Obligations (other than
the Bank Product Obligations), or (C) to pay any other amount
chargeable to Borrowers pursuant to the terms of this Agreement,
including Lender Group Expenses and the costs, fees, and expenses
described in Section 10 (any of the Advances described in this
Section 2.3(e) shall be referred to as "Agent Advances"). Each Agent
Advance is an Advance hereunder and shall be subject to all the
terms and conditions applicable to other Advances, except that no
such Agent Advance shall be eligible for the LIBOR Option and all
payments thereon shall be payable to Agent solely for its own
account (and for the account of the holder of any participation
interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand and
secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances and Obligations hereunder, and
shall bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans.
(f) SETTLEMENT. It is agreed that each Lender's funded portion
of the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with
the Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to
each outstanding Swing Loan, (2) for itself, with respect to each
Agent Advance, and (3) with respect to Collections received, as to
each by notifying the Lenders by telecopy,
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telephone, or other similar form of transmission, of such requested
Settlement, no later than 2:00 p.m. (California time) on the
Business Day immediately prior to the date of such requested
Settlement (the date of such requested Settlement being the
"Settlement Date"). Such notice of a Settlement Date shall include a
summary statement of the amount of outstanding Advances and Agent
Advances for the period since the prior Settlement Date. Subject to
the terms and conditions contained herein (including Section
2.3(c)(iii)): (y) if a Lender's balance of the Advances, Swing
Loans, and Agent Advances exceeds such Lender's Pro Rata Share of
the Advances, Swing Loans, and Agent Advances as of a Settlement
Date, then Agent shall, by no later than 12:00 p.m. (California
time) on the Settlement Date, transfer in immediately available
funds to the account of such Lender as such Lender may designate, an
amount such that each such Lender shall, upon receipt of such
amount, have as of the Settlement Date, its Pro Rata Share of the
Advances, Swing Loans, and Agent Advances, and (z) if a Lender's
balance of the Advances, Swing Loans, and Agent Advances is less
than such Lender's Pro Rata Share of the Advances and Agent Advances
as of a Settlement Date, such Lender shall no later than 12:00 p.m.
(California time) on the Settlement Date transfer in immediately
available funds to the Agent's Account, an amount such that each
such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing Loans,
and Agent Advances. Such amounts made available to Agent under
clause (z) of the immediately preceding sentence shall be applied
against the amounts of the applicable Swing Loan or Agent Advance
and, together with the portion of such Swing Loan or Agent Advance
representing Swing Lender's Pro Rata Share thereof, shall constitute
Advances of such Lenders. If any such amount is not made available
to Agent by any Lender on the Settlement Date applicable thereto to
the extent required by the terms hereof, Agent shall be entitled to
recover for its account such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing
Loans, and Agent Advances as of a Settlement Date, Agent shall, as
part of the relevant Settlement, apply to such balance the portion
of payments actually received in good funds by Agent with respect to
principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a
net amount is owed to any such Lender after such application, such
net amount shall be distributed by Agent to that Lender as part of
such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no
Agent Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that in accordance with the
terms of this
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Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as
of any Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to Swing
Lender's Pro Rata Share of the Advances other than to Swing Loans,
as provided for in the previous sentence, Swing Lender shall pay to
Agent for the accounts of the Lenders, and Agent shall pay to the
Lenders, to be applied to the outstanding Advances of such Lenders,
an amount such that each Lender shall, upon receipt of such amount,
have, as of such Settlement Date, its Pro Rata Share of the
Advances. During the period between Settlement Dates, Swing Lender
with respect to Swing Loans, Agent with respect to Agent Advances,
and each Lender (subject to the effect of letter agreements between
Agent and individual Lenders) with respect to the Advances other
than Swing Loans and Agent Advances, shall be entitled to interest
at the applicable rate or rates payable under this Agreement on the
daily amount of funds employed by Swing Lender, Agent, or the
Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than
Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender,
as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby
would be created, so long as (i) after giving effect to such Advances (including
a Swing Loan), the Revolver Usage does not exceed the Borrowing Base by more
than $4,000,000.00, (ii) after giving effect to such Advances the outstanding
Revolver Usage (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver
Amount, and (iii) at the time of the making of any such Advance (including a
Swing Loan), Agent does not believe, in good faith, that the Overadvance
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created by such Advance will be outstanding for more than 90 days. The foregoing
provisions are for the exclusive benefit of Agent, Swing Lender, and the Lenders
and are not intended to benefit Borrowers in any way. The Advances and Swing
Loans, as applicable, that are made pursuant to this Section 2.3(i) shall be
subject to the same terms and conditions as any other Advance or Swing Loan, as
applicable, except that they shall not be eligible for the LIBOR Option and the
rate of interest applicable thereto shall be the rate applicable to Advances
that are Base Rate Loans under Section 2.6(c) hereof without regard to the
presence or absence of a Default or Event of Default.
(i) In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such
excess, Agent shall notify Lenders as soon as practicable (and
prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses)
unless Agent determines that prior notice would result in
imminent harm to the Collateral or its value), and the Lenders
with Revolver Commitments thereupon shall, together with
Agent, jointly determine the terms of arrangements that shall
be implemented with Borrowers and intended to reduce, within a
reasonable time, the outstanding principal amount of the
Advances to Borrowers to an amount permitted by the preceding
paragraph. In the event Agent or any Lender disagrees over the
terms of reduction or repayment of any Overadvance, the terms
of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders.
(ii) Each Lender shall be obligated to settle with Agent
as provided in Section 2.3(f) for the amount of such Lender's
Pro Rata Share of any unintentional Overadvances by Agent
reported to such Lender, any intentional Overadvances made as
permitted under this Section 2.3(i), and any Overadvances
resulting from the charging to the Loan Account of interest,
fees, or Lender Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein,
all payments by Borrowers shall be made to Agent's
Account for the account of the Lender Group and shall be
made in Dollars in immediately available funds, no later
than 11:00 a.m. (California time) on the date specified
herein without defense, set-off, or counterclaim. Any
payment received by Agent later than 11:00 a.m.
(California time), shall be deemed to have been received
on the following Business Day and any applicable
interest or fee shall continue to accrue until such
following Business Day.
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(ii) Unless Agent receives notice from Borrowers
prior to the date on which any payment is due to the
Lenders that Borrowers will not make such payment in
full as and when required, Agent may assume that
Borrowers have made (or will make) such payment in full
to Agent on such date in immediately available funds and
Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such
Lender. If and to the extent Borrowers do not make such
payment in full to Agent on the date when due, each
Lender severally shall repay to Agent on demand such
amount distributed to such Lender, together with
interest thereon at the Defaulting Lender Rate for each
day from the date such amount is distributed to such
Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in
the Loan Documents (including letter agreements between
Agent and individual Lenders), aggregate principal and
interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of
the Obligations to which such payments relate held by
each Lender) and payments of fees and expenses (other
than fees or expenses that are for Agent's separate
account, after giving effect to any letter agreements
between Agent and individual Lenders) shall be
apportioned ratably among the Lenders having a Pro Rata
Share of the type of Commitment or Obligation to which a
particular fee relates. All payments shall be remitted
to Agent and all such payments (other than payments
received while no Default or Event of Default has
occurred and is continuing and which relate to the
payment of principal or interest of specific Obligations
or which relate to the payment of specific fees), and
all proceeds of Accounts or other Collateral received by
Agent, shall be applied as follows:
A. first, to pay any Lender Group Expenses
then due to Agent under the Loan Documents, until
paid in full,
B. second, to pay any Lender Group Expenses
then due to the Lenders under the Loan Documents,
on a ratable basis, until paid in full,
C. third, to pay any fees then due to Agent
(for its separate accounts, after giving effect to
any letter agreements between Agent and the
individual Lenders) under the Loan Documents until
paid in full,
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D. fourth, to pay any fees then due to any
or all of the Lenders (after giving effect to any
letter agreements between Agent and individual
Lenders) under the Loan Documents, on a ratable
basis, until paid in full,
E. fifth, to pay interest due in respect of
all Agent Advances, until paid in full,
F. sixth, ratably to pay interest due in
respect of the Advances (other than Agent
Advances), and the Swing Loans until paid in
full,
G. seventh, to pay the principal of all
Agent Advances until paid in full,
H. eighth, to pay the principal of all Swing
Loans until paid in full,
I. ninth, so long as no Event of Default has
occurred and is continuing, and at Agent's
election (which election Agent agrees will not be
made if an Overadvance would be created thereby),
to pay amounts then due and owing by Borrowers in
respect of Bank Products, until paid in full,
J. tenth, so long as no Event of Default has
occurred and is continuing, to pay the principal
of all Advances until paid in full,
K. eleventh, if an Event of Default has
occurred and is continuing, ratably (i) to pay
the principal of all Advances until paid in full,
and (ii) to Agent, to be held by Agent, for the
benefit of ▇▇▇▇▇ Fargo or its Affiliates, as
applicable, as cash collateral in an amount up to
the amount of the Bank Products Reserve
established prior to the occurrence of, and not
in contemplation of, the subject Event of Default
until Borrowers' obligations in respect of the
then extant Bank Products have been paid in full
or the cash collateral amount has been exhausted,
L. twelfth, if an Event of Default has
occurred and is continuing, to Agent, to be held
by Agent, for the ratable benefit of Issuing
Lender and Lenders, as cash collateral in an
amount up to 105% of the then extant Letter of
Credit Usage until paid in full,
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M. thirteenth, to pay any other Obligations
(including Bank Product Obligations) until paid
in full, and
N. fourteenth, to Borrowers (to be wired to
the Designated Account) or such other Person
entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each
Lender, pursuant to the applicable wire instructions
received from each Lender in writing, such funds as it
may be entitled to receive, subject to a Settlement
delay as provided in Section 2.3(h).
(iii) In each instance, so long as no Event of
Default has occurred and is continuing, Section 2.4(b)
shall not be deemed to apply to any payment by Borrowers
specified by Borrowers to be for the payment of specific
Obligations then due and payable (or prepayable) under
any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full"
means payment of all amounts owing under the Loan
Documents according to the terms thereof, including loan
fees, service fees, professional fees, interest (and
specifically including interest accrued after the
commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense
reimbursements, whether or not the same would be or is
allowed or disallowed in whole or in part in any
Insolvency Proceeding.
(v) In the event of a direct conflict between the
priority provisions of this Section 2.4 and other
provisions contained in any other Loan Document, it is
the intention of the parties hereto that such priority
provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in
concert with each other. In the event of any actual,
irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.4
shall control and govern.
(c) WITHHOLDING TAXES
(i) Each payment by the Borrowers under each Loan
Document shall be made without set-off or counterclaim
and free and clear of, and without deduction or
withholding for or on account of, any Tax, except to the
extent such deduction or withholding is required by any
Applicable Law, as modified by the administrative
practice of any relevant Governmental Authority, then in
effect. To the extent and each time that any Borrower is
so required to deduct or withhold Tax from any such
payment to any Lender, then such Borrower shall:
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A. promptly notify the Agent of such requirement,
B. promptly pay to the relevant Governmental
Authority when due the full amount required to be
deducted or withheld (including the full amount of Tax
required to be deducted or withheld from any additional
amount paid by such Borrower to such Lender under this
Section 2.4(c)),
C. promptly forward to the Agent and such Lender
an official receipt (or a certified copy), or other
documentation reasonably acceptable to the Agent and
such Lender, evidencing such payment to such
Governmental Authority, and
D. pay to such Lender, in addition to the payment
to which such Lender is otherwise entitled under such
Loan Document such additional amount as is necessary to
ensure that the net amount actually received by such
Lender (free and clear of any such Tax, whether assessed
against a Borrower or such Lender) will equal the full
amount such Lender would have received had no such
deduction or withholding been required.
(ii) If any Borrower fails to pay to the relevant Governmental
Authority when due any Tax that it was required to deduct or
withhold under this Section 2.4(c) in respect of any payment to or
for the benefit of any Lender under any Loan Document or fails to
promptly furnish the Agent and such Lender with the documentation
referred to in Section 2.4(c)(i)(C), the Borrowers shall forthwith
on demand fully indemnify such Lender on an after-Tax basis from and
against any Taxes (including interest and penalties), losses and
expenses which such Lender may suffer or incur as a result of such
failure.
(iii) Borrowers shall also indemnify each Lender, on an
after-Tax basis, for any additional Taxes on net income that such
Lender may be obliged to pay as a result of the receipt of
additional amounts under this Section 2.4(c).
(iv) Borrowers' obligations under this Section 2.4(c) shall
survive the termination of the Loan Documents and the payment of all
other amounts payable under the Loan Documents.
(v) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC (a "Foreign Lender") and such
Foreign Lender claims exemption from, or a reduction of, United
States federal withholding Tax under Sections 1441 or 1442 of the
IRC, such Foreign Lender agrees with and in favor of Agent and
Borrowers, to deliver to Agent and Borrowers:
A. if such Foreign Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception,
(I) a
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statement of the Lender, signed under penalty of perjury, that
it is not a (x) "bank" as described in Section 881(c)(3)(A) of
the IRC, (y) 10% shareholder (within the meaning of Section
881(c)(3)(B) of the IRC), or (z) controlled foreign
corporation described in Section 881(c)(3)(C) of the IRC, and
(II) a properly completed IRS Form W-8BEN, before the first
payment of any interest under the Loan Documents and at any
other time reasonably requested by Agent or Borrowers;
B. if such Foreign Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax
treaty, properly completed IRS Form W-8BEN before the first
payment of any interest under the Loan Documents and at any
other time reasonably requested by Agent or Borrowers;
C. if such Foreign Lender claims that interest paid
under the Loan Documents is exempt from United States
withholding tax because it is effectively connected with a
United States trade or business of such Foreign Lender, two
properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under the Loan
Document and at any other time reasonably requested by Agent
or Borrowers;
D. such other form or forms as may be required under the
IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding
tax.
Such Lender agrees promptly to notify Agent and Borrowers of any
change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(vi) If any Foreign Lender claims exemption from, or
reduction of, withholding tax under a United States tax treaty by
providing IRS Form W-8BEN and such Foreign Lender sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations of Borrowers to such Foreign Lender, such Foreign Lender
agrees to notify Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of Borrowers to such
Foreign Lender. To the extent of such percentage amount, Agent will
treat such Foreign Lender's IRS Form W-8BEN as no longer valid.
(vii) If any Foreign Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest
payment to such Foreign Lender an amount equivalent to the
applicable withholding tax after taking into account such reduction.
If the forms or other documentation required by Section 2.4(c)(v)
are not delivered to Agent, then Agent may withhold from any
interest payment to such Foreign Lender not providing such
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forms or other documentation an amount equivalent to the applicable
withholding tax.
(vii) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did
not properly withhold tax from amounts paid to or for the account of
any Foreign Lender (because the appropriate form was not delivered,
was not properly executed, or because such Foreign Lender failed to
notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for
any other reason) such Foreign Lender shall indemnify and hold Agent
harmless for all amounts paid, directly or indirectly, by Agent as
tax or otherwise, including penalties and interest, and including
any taxes imposed by any jurisdiction on the amounts payable to
Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the
Foreign Lenders under this subsection shall survive the payment of
all Obligations and the resignation or replacement of Agent.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to Sections 2.1 and 2.12 is greater than either the Dollar
or percentage limitations set forth in Sections 2.1 or 2.12, (an "Overadvance"),
Borrowers immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations in accordance with
the priorities set forth in Section 2.4(b). In addition, Borrowers hereby
promise to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to the Lender Group as and when due and payable
under the terms of this Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof as follows (i) if
the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum
rate equal to the sum of LIBOR Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate, (ii) if the relevant Obligation is an Advance
that is a Base Rate Loan, at a per annum rate equal to the sum of the Base Rate
plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate,
and (iii) otherwise, at a per annum rate equal to the sum of the Base Rate plus
the Applicable Margin, but in no event to exceed the Highest Lawful Rate.
The foregoing notwithstanding, at no time shall any portion of the
Obligations (other than Bank Product Obligations) bear interest on the Daily
Balance thereof at a per annum rate less than five percent (5%) per annum. To
the extent that interest accrued hereunder at the rate set forth herein would be
less than the foregoing minimum daily rate,
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the interest rate chargeable hereunder for such day automatically shall be
deemed increased to the minimum rate.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the
ratable benefit of the Lenders, subject to any letter agreement between Agent
and individual Lenders), a Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at
a rate equal to 1.75% per annum times the Daily Balance of the undrawn amount of
all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate
equal to 3 percentage points above the per annum rate
otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall
be increased to 3 percentage points above the per annum rate
otherwise applicable hereunder.
(d) PAYMENT. Interest, Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the first day of
each month at any time that Obligations or Commitments are outstanding.
Borrowers hereby authorize Agent, from time to time, without prior notice to
Borrowers, to charge such interest and fees, all Lender Group Expenses (as and
when incurred), the charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), the fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including any amounts due and
payable to ▇▇▇▇▇ Fargo or its Affiliates in respect of Bank Products up to the
amount of the then extant Bank Products Reserve) to Borrowers' Loan Account,
which amounts thereafter shall constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances hereunder. Any interest not
paid when due shall be compounded by being charged to Borrowers' Loan Account
and shall thereafter constitute Advances hereunder and shall accrue interest at
the rate then applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATIONS. All computations of interest shall be made
on the basis of a year of 360 days (unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a year
of 365 or 366 days, as the case may be) in the case of LIBOR Loans, and 365 or
366 days (as the case may be) in the case of Base Rate Loans that are based upon
the Base Rate, and all computations of fees shall be made on the basis of a year
of 360 days (unless such calculation would result in a usurious rate, in which
case interest shall be calculated on the basis of a year of 365 or 366 days, as
the case may be), in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Each
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determination by the Agent of an interest rate or fee hereunder shall, except
for manifest error, be final, conclusive and binding for all purposes, provided
that such determination shall be made in good faith in a manner generally
consistent with the Agent's standard practice. If the Agent and the Borrowers
determine that manifest error exists, said parties shall correct such error by
way of an adjustment to the next payment due hereunder. For the purpose of the
Interest Act (Canada) and disclosure thereunder, whenever any interest or any
fee to be paid hereunder or in connection herewith is to be calculated on the
basis of any period of time that is less than a calendar year, the yearly rate
of interest to which the rate used in such calculation is equivalent is the rate
so used multiplied by the actual number of days in the calendar year in which
the same is to be ascertained and divided by 360.
(f) INTENT TO LIMIT CHARGES TO HIGHEST LAWFUL RATE. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the Highest Lawful Rate.
Borrowers and the Lender Group, in executing and delivering this Agreement,
intend legally to agree upon the rate or rates of interest and manner of payment
stated within it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the Highest Lawful Rate, then, ipso facto, as of the date of this
Agreement, Borrowers are and shall be liable only for the payment of such
Highest Lawful Rate, and payment received from any Borrower in excess of the
Highest Lawful Rate, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess, and if the principal
owing has been paid in full, any remaining excess shall forthwith be paid to
Borrowers and the provisions of this Agreement and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder and thereunder.
For purposes of determining the Highest Lawful Rate allowed under Texas law, the
applicable rate ceiling shall be the weekly rate ceiling described and computed
in accordance with Chapter 303 of the Texas Finance Code, as amended from time
to time. Furthermore, the parties hereto specifically declare that the
provisions of Chapter 346 of the Texas Credit Code, as amended from time to
time, are not applicable to this Agreement of any of the other Loan Documents or
to the transactions contemplated hereby.
(g) INTEREST ACT (CANADA). For the purposes of the Interest
Act (Canada) and disclosure thereunder, whenever interest to be paid hereunder
or in connection herewith is to be calculated on the basis of a year of 360 days
or any other period of time that is less than a calendar year, the yearly rate
of interest to which the rate determined pursuant to such calculation is
equivalent is the rate so determined multiplied by the actual number of days in
the calendar year in which the same is to be ascertained and divided by either
360 or such other period of time, as the case may be. The rates of interest
under this Agreement are nominal rates, and not effective rates or yields. The
principal of deemed reinvestment of interest does not apply to any interest
calculation under this Agreement.
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(h) INTEREST LIMITATION. If any provision of this Agreement
would oblige the Borrowers to make any payment of interest or other amount
payable to Lenders in an amount or calculated at a rate which would be
prohibited by law or would result in a receipt by Lender of "interest" at a
"criminal rate" (as such terms are construed under the Criminal Code (Canada)),
then notwithstanding such provision, such amount or rate shall be deemed to have
been adjusted with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be so prohibited by law or so result in a
receipt by Lenders of "interest" at a "criminal rate", such adjustment to be
effected, to the extent necessary, as follows:
(i) first, by reducing the amount or rate of interest
required to be paid to Lenders; and
(ii) thereafter, by reducing any fees, commissions,
premiums and other amounts required to be paid to Lender which would
constitute interest for purposes of Section 347 of the Criminal Code
(Canada).
To the extent lawful, the interest and charges that would have been payable in
respect of any amounts owed to Lenders but were not payable as a result of the
operation of this section shall be cumulated and the interest and charges
payable to Lenders in respect of other amounts owed to Lender at that time or at
any time thereafter shall be increased (but not above the maximum lawful rate
therefor) until such cumulated amount, together with interest thereon at the
applicable rate to the date of repayment, shall have been received by Lenders.
2.7 CASH MANAGEMENT.
(a) Borrowers shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of the
banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"), and shall
request in writing and otherwise take such reasonable steps to ensure that all
of its Account Debtors forward payment of the amounts owed by them directly to
such Cash Management Bank, and (ii) deposit or cause to be deposited promptly,
and in any event no later than the first Business Day after the date of receipt
thereof, all Collections (including those sent directly by Account Debtors to a
Cash Management Bank) into a bank account in Agent's name (a "Cash Management
Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain
Cash Management Agreements with Agent and Borrowers, in form and substance
acceptable to Agent. Each such Cash Management Agreement shall provide, among
other things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, (iii) with respect to the Cash Management Bank
acting in the United States, it immediately will forward by daily sweep all
amounts in the
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applicable Cash Management Account to the Agent's Account, and (iv) with respect
to the Cash Management Bank acting in Canada, it will, until the occurrence of a
Default, forward by daily sweep all amounts in the applicable Cash Management
Account to PCI Chemical's operating account, and after the occurrence of a
Default, immediately deposit all such amounts in the applicable Cash Management
Account to the Agent's account.
(c) So long as no Default or Event of Default has occurred and
is continuing, Borrowers may amend Schedule 2.7(a) or (b) to add or replace a
Cash Management Account Bank or Cash Management Account; provided, however, that
(i) such prospective Cash Management Bank shall be satisfactory to Agent and
Agent shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and (ii) prior to
the time of the opening of such Cash Management Account, Borrowers and such
prospective Cash Management Bank shall have executed and delivered to Agent a
Cash Management Agreement. Borrowers shall close any of their Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of notice from
Agent that the creditworthiness of any Cash Management Bank is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agent that the operating performance,
funds transfer, or availability procedures or performance of the Cash Management
Bank with respect to Cash Management Accounts or Agent's liability under any
Cash Management Agreement with such Cash Management Bank is no longer acceptable
in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrowers are hereby deemed to
have granted a Lien to Agent.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment item by
Agent (whether from transfers to Agent by the Cash Management Banks pursuant to
the Cash Management Agreements or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day. From and after
the Closing Date, Agent shall be entitled to charge Borrowers for one (1)
Business Day of `clearance' or `float' at the rate applicable to Base Rate Loans
under Section 2.6 on all Collections that are received by Borrowers (regardless
of whether forwarded by the Cash Management Banks to Agent). This
across-the-board one (1) Business Day clearance or float charge on all
Collections is acknowledged by the parties to constitute an integral aspect of
the pricing of
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the financing of Borrowers and shall apply irrespective of whether or not there
are any outstanding monetary Obligations; the effect of such clearance or float
charge being the equivalent of charging one (1) Business Days of interest on
such Collections. The parties acknowledge and agree that the economic benefit of
the foregoing provisions of this Section 2.8 shall be for the exclusive benefit
of Agent.
2.9 DESIGNATED ACCOUNTS. Agent is authorized to make the Advances and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(d). Borrowers agree to establish and maintain the Designated
Accounts with the Designated Account Banks for the purpose of receiving the
proceeds of the Advances requested by Borrowers and made by Agent or the Lenders
hereunder. Unless otherwise agreed by Agent and Borrowers, any Advance or Agent
Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders
hereunder shall be made to the (a) Canadian Designated Account, if the proceeds
of the Advance are to be used by PCI Chemicals or for its benefit, or (b) the
U.S. Designated Account if the proceeds of the Advance are to be used by Pioneer
Americas or for its benefit.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which Borrowers will be charged with all Advances (including Agent Advances
and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrowers or for
Borrowers' account, the Letters of Credit issued by Issuing Lender for
Borrowers' account, and with all other payment Obligations hereunder or under
the other Loan Documents (except for Bank Product Obligations), including,
accrued interest, fees and expenses, and Lender Group Expenses. In accordance
with Section 2.8, the Loan Account will be credited with all payments received
by Agent from Borrowers or for Borrowers' account, including all amounts
received in the Agent's Account from any Cash Management Bank. Agent shall
render statements regarding the Loan Account to Borrowers, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within 30 days after
receipt thereof by Borrowers, Borrowers shall deliver to Agent written objection
thereto describing the error or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee in the amount equal to 0.375% per
annum times the result of (a) the Maximum Revolver Amount, less (b) the sum of
(i) the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus
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(ii) the average Daily Balance of the Letter of Credit Usage during the
immediately preceding month,
(b) FEE LETTER FEES. As and when due and payable under the
terms of the Fee Letter, Borrowers shall pay to Agent the fees set forth in the
Fee Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows,
(i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each
financial audit of a Borrower performed by personnel employed by Agent, (ii) if
implemented, a one time charge of $3,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems, (iii)
a fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for each
appraisal of the Collateral performed by personnel employed by Agent, and (iv)
the actual charges paid or incurred by Agent if it elects to employ the services
of one or more third Persons to perform financial audits of Borrowers, to
appraise the Collateral, or any portion thereof, or to assess a Borrower's
business valuation.
2.12 LETTERS OF CREDIT
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Borrowers shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Lender) to the Issuing Lender and Agent (reasonably in advance of the requested
date of issuance, amendment, renewal, or extension) a notice requesting the
issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking
to be amended, renewed, or extended, the date of issuance, amendment, renewal,
or extension, whether the L/C or L/C Undertaking is being utilized by Pioneer
Americas or PCI Chemicals, the date on which such L/C or L/C Undertaking is to
expire, the amount of such L/C or L/C Undertaking, the name and address of the
beneficiary thereof (or of the Underlying Letter of Credit, as applicable), and
such other information as shall be necessary to prepare, amend, renew, or extend
such L/C or L/C Undertaking. If requested by the Issuing Lender, Borrowers also
shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking. The Issuing
Lender shall have no obligation to issue a Letter of Credit if any of the
following would result after giving effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
less the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $10,000,000.00,
or
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(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the then extant amount of outstanding Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall have an expiry date no later
than 30 days prior to the Maturity Date and all such Letters of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Borrowers shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Borrowers prior to such time on such date, then
not later than 11:00 a.m., California time, on (i) the Business Day that
Borrowers receive such notice, if such notice is received prior to 10:00 a.m.,
California time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans under Section 2.6. To
the extent a L/C Disbursement is deemed to be an Advance hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance. Promptly following receipt by Agent of any payment
from Borrowers pursuant to this paragraph, Agent shall distribute such payment
to the Issuing Lender or, to the extent that Lenders have made payments pursuant
to Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender agrees to fund its Pro Rata Share of
any Advance deemed made pursuant to the foregoing subsection on the same terms
and conditions as if Borrowers had requested such Advance and Agent shall
promptly pay to Issuing Lender the amounts so received by it from the Lenders.
By the issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action on the part of the
Issuing Lender or the Lenders, the Issuing Lender shall be deemed to have
granted to each Lender, and each Lender shall be deemed to have purchased, a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share
of the Risk Participation Liability of such Letter of Credit, and each such
Lender agrees to pay to Agent, for the account of the Issuing Lender, such
Lender's Pro Rata Share of any payments made by the Issuing Lender under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of each L/C
Disbursement made by the Issuing Lender and not reimbursed by Borrowers on the
date due as provided in clause (a) of this Section, or of any reimbursement
payment required to be refunded to
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Borrowers for any reason. Each Lender acknowledges and agrees that its
obligation to deliver to Agent, for the account of the Issuing Lender, an amount
equal to its respective Pro Rata Share pursuant to this Section 2.12(b) shall be
absolute and unconditional and such remittance shall be made notwithstanding the
occurrence or continuation of an Event of Default or Default or the failure to
satisfy any condition set forth in Section 3 hereof. If any such Lender fails to
make available to Agent the amount of such Lender's Pro Rata Share of any
payments made by the Issuing Lender in respect of such Letter of Credit as
provided in this Section, Agent (for the account of the Issuing Lender) shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend,
and hold the Lender Group harmless from any loss, cost, expense, or liability,
and reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees to be bound
by the Underlying Issuer's regulations and interpretations of any Underlying
Letter of Credit or by Issuing Lender's interpretations of any L/C issued by
Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying
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Issuer is .825% per annum times the face amount of each Underlying Letter of
Credit, that such issuance charge may be changed from time to time, and that the
Underlying Issuer also imposes a schedule of charges for amendments, extensions,
drawings, and renewals.
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Borrowers, and Borrowers shall pay on demand such amounts as Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Loans hereunder. The determination by Agent of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate, Borrowers shall have the
option (the "LIBOR Option") to have interest on all or a portion of the Advances
be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof elect to
accelerate the maturity of all or any portion of the Obligations, or (iii)
termination of this Agreement pursuant to the terms hereof. On the last day of
each applicable Interest Period, unless Borrowers properly have exercised the
LIBOR Option with respect thereto, the interest rate applicable to such LIBOR
Rate Loan automatically shall convert to the rate of interest then applicable to
Base Rate Loans of the same type hereunder. At any time that an Event of Default
has occurred and is continuing, Borrowers no longer shall have the option to
request that Advances bear interest at the LIBOR Rate and Agent shall have the
right to
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convert the interest rate on all outstanding LIBOR Rate Loans to the rate then
applicable to Base Rate Loans hereunder.
(b) LIBOR Election.
(i) Borrowers may, at any time and from time to time, so
long as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 11:00 a.m.
(California time) at least 3 Business Days prior to the commencement
of the proposed Interest Period (the "LIBOR Deadline"). Notice of
Borrowers' election of the LIBOR Option for a permitted portion of
the Advances and an Interest Period pursuant to this Section shall
be made by delivery to Agent of a LIBOR Notice received by Agent
before the LIBOR Deadline, or by telephonic notice received by Agent
before the LIBOR Deadline (to be confirmed by delivery to Agent of a
LIBOR Notice received by Agent prior to 5:00 p.m. (California time)
on the same day). Promptly upon its receipt of each such LIBOR
Notice, Agent shall provide a copy thereof to each of the Lenders.
(ii) Each LIBOR Notice shall be irrevocable and binding
on Borrowers. In connection with each LIBOR Rate Loan, each Borrower
shall indemnify, defend, and hold Agent and the Lenders harmless
against any loss, cost, or expense incurred by Agent or any Lender
as a result of (a) the payment of any principal of any LIBOR Rate
Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the
conversion of any LIBOR Rate Loan other than on the last day of the
Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date
specified in any LIBOR Notice delivered pursuant hereto (such
losses, costs, and expenses, collectively, "Funding Losses").
Funding Losses shall, with respect to Agent or any Lender, be deemed
to equal the amount determined by Agent or such Lender to be the
excess, if any, of (i) the amount of interest that would have
accrued on the principal amount of such LIBOR Rate Loan had such
event not occurred, at the LIBOR Rate that would have been
applicable thereto, plus the Applicable Margin, for the period from
the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period
therefor), minus (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate which
Agent or such Lender would be offered were it to be offered, at the
commencement of such period, Dollar deposits of a comparable amount
and period in the London interbank market. A certificate of Agent or
a Lender delivered to Borrowers setting forth any amount or amounts
that Agent or such Lender is entitled to receive pursuant to this
Section shall be conclusive absent manifest error.
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(iii) Borrowers shall have not more than 5 LIBOR Rate
Loans in effect at any given time. Borrowers only may exercise the
LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and
integral multiples of $500,000 in excess thereof.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with clause (b) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with respect
to any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs due to changes
in applicable law occurring subsequent to the commencement of the
then applicable Interest Period, including changes in tax laws
(except changes of general applicability in corporate income tax
laws) and changes in the reserve requirements imposed by the Board
of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased
costs would increase the cost of funding loans bearing interest at
the LIBOR Rate. In any such event, the affected Lender shall give
Borrowers and Agent notice of such a determination and adjustment
and Agent promptly shall transmit the notice to each other Lender
and, upon its receipt of the notice from the affected Lender,
Borrowers may, by notice to such affected Lender (y) require such
Lender to furnish to Borrowers a statement setting forth the basis
for adjusting such LIBOR Rate and the method for determining the
amount of such adjustment, or (z) repay the LIBOR Rate Loans with
respect to which such adjustment is made (together with any amounts
due under clause (b)(ii) above).
(ii) In the event that any change in market conditions
or any law, regulation, treaty, or directive, or any change therein
or in the interpretation or application thereof, shall at any time
after the date hereof, in the reasonable opinion of any Lender, make
it unlawful or impractical for such Lender to fund or maintain LIBOR
Rate Loans or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender
shall give notice of such changed circumstances to Agent and
Borrowers and Agent promptly shall transmit the notice to each other
Lender
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and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be
deemed to be the last day of the Interest Period of such LIBOR Rate
Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base
Rate Loans, and (z) Borrowers shall not be entitled to elect the
LIBOR Option until such Lender determines that it would no longer be
unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the
contrary contained herein notwithstanding, neither Agent, nor any Lender, nor
any of their Participants, is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation as to which interest accrues at
the LIBOR Rate. The provisions of this Section shall apply as if each Lender or
its Participants had match funded any Obligation as to which interest is
accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender's or such
holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrowers and Agent thereof. Following receipt of such notice,
Borrowers agree to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
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2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each of Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement,
for the mutual benefit, directly and indirectly, of each of Borrowers and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each of Borrowers, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.15), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Persons composing Borrowers will make such payment with respect
to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Person composing Borrowers in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the
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generality of the foregoing, each of Borrowers assents to any other action or
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Person composing Borrowers to comply with any of
its respective Obligations, including, without limitation, any failure strictly
or diligently to assert any right or to pursue any remedy or to comply fully
with applicable laws or regulations thereunder, which might, but for the
provisions of this Section 2.15 afford grounds for terminating, discharging or
relieving any Person composing Borrowers, in whole or in part, from any of its
Obligations under this Section 2.15, it being the intention of each Person
composing Borrowers that, so long as any of the Obligations hereunder remain
unsatisfied, the Obligations of such Person composing Borrowers under this
Section 2.15 shall not be discharged except by performance and then only to the
extent of such performance. The Obligations of each Person composing Borrowers
under this Section 2.15 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Person composing Borrowers or any Agent or
Lender. The joint and several liability of the Persons composing Borrowers
hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
constitution or place of formation of any of the Persons composing Borrowers or
any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants to Agent
and Lenders that such Borrower is currently informed of the financial condition
of Borrowers and of all other circumstances which a diligent inquiry would
reveal and which bear upon the risk of nonpayment of the Obligations. Each
Person composing Borrowers further represents and warrants to Agent and Lenders
that such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Person composing Borrowers hereby covenants that such Borrower
will continue to keep informed of Borrowers' financial condition, the financial
condition of the Guarantors, if any, and of all other circumstances which bear
upon the risk of nonpayment or nonperformance of the Obligations.
(g) Each of the Persons composing Borrowers waives all rights and
defenses arising out of an election of remedies by the Agent or any Lender, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed the Agent's or such
Lender's rights of subrogation and reimbursement against such Borrower by the
operation of Section 580(d) of the California Code of Civil Procedure or
otherwise.
(h) Intentionally Deleted.
(i) The provisions of this Section 2.15 are made for the benefit of
the Agent, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Persons
composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to
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any other source or means of obtaining payment of any of the Obligations
hereunder or to elect any other remedy. The provisions of this Section 2.15
shall remain in effect until all of the Obligations shall have been paid in full
or otherwise fully satisfied. If at any time, any payment, or any part thereof,
made in respect of any of the Obligations, is rescinded or must otherwise be
restored or returned by any Agent or Lender upon the insolvency, bankruptcy or
reorganization of any of the Persons composing Borrowers, or otherwise, the
provisions of this Section 2.15 will forthwith be reinstated in effect, as
though such payment had not been made.
(j) Each of the Persons composing Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation against the
other Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent or Lender hereunder or under
any other Loan Documents are hereby expressly made subordinate and junior in
right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(k) Each of the Persons composing Borrowers hereby agrees that,
after the occurrence and during the continuance of any Default or Event of
Default, the payment of any amounts due with respect to the indebtedness owing
by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that
after the occurrence and during the continuance of any Default or Event of
Default, such Borrower will not demand, ▇▇▇ for or otherwise attempt to collect
any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Agent, and the Agent shall deliver
any such amounts to the Administrative Agent for application to the Obligations
in accordance with Section 2.4(b).
2.16 NOTELESS AGREEMENT. No promissory notes shall evidence the payment
obligations of any Advances of Borrowers to any Lender. Each Lender shall
maintain in accordance with its usual practice an account or accounts on its
books evidencing the obligations of Borrowers resulting from each Advance made
by such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender hereunder. The entries maintained in
said accounts shall be prima facie evidence of the existence and amounts of the
Advances made by each Lender and the payment obligations of
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Borrowers; provided, however, that the failure of a Lender to maintain such
accounts or any error therein shall not in any manner affect the obligation of
Borrowers to repay the Advances.
2.17 CURRENCY INDEMNITY. If, for the purposes of obtaining judgment in any
court in any jurisdiction with respect to this Agreement or any other Loan
Document, it becomes necessary to convert into the currency of such jurisdiction
(the "Judgment Currency") any amount due under this Agreement or under any other
Loan Document in any currency other than the Judgment Currency (the "Currency
Due"), then conversion shall be made at the rate of exchange prevailing on the
Business Day before the day on which judgment is given. For this purpose "rate
of exchange" means the rate at which Bank of Montreal is able, on the relevant
date, to purchase the Currency Due with the Judgment Currency in accordance with
its normal practice at its main branch in ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇. In the event
that there is a change in the rate of exchange prevailing between the Business
Day before the day on which the judgment is given and the date of receipt by the
Agent of the amount due, the Borrowers will, on the date of receipt by the
Agent, pay such additional amounts, if any, or be entitled to receive
reimbursement of such amount, if any as may be necessary to ensure that the
amount received by the Agent on such date is the amount in the Judgment Currency
which when converted at the rate of exchange prevailing on the date of receipt
by the Agent is the amount then due under this Agreement or such other Loan
Document in the Currency Due. If the amount of the Currency Due which the Agent
is so able to purchase is less than the amount of the Currency Due originally
due to it, the Borrowers shall indemnify and save the Agent and the Lenders
harmless from and against loss or damage arising as a result of such deficiency.
This indemnity shall constitute an obligation separate and independent from the
other obligations contained in this Agreement and the other Loan Document, shall
give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by the Agent from time to time and shall
continue in full force and effect notwithstanding any judgment or order for a
liquidated sum in respect of an amount due under this Agreement or any other
Loan or under any judgment or order.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before December 31,
2001;
(b) Agent shall have received all UCC-1 financing statements,
fixture filings, or PPSA financing statements or other equivalent forms of
registration required by Agent which are necessary to perfect Agent's Liens in
the Collateral, and Agent shall have received searches reflecting the filing of
all such financing statements and other equivalent forms;
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(c) Agent shall have received each of the following documents,
in form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:
(i) the Canadian Security Documents;
(ii) the Cash Management Agreements,
(iii) the Control Agreements,
(iv) the Disbursement Letter,
(v) the Fee Letter,
(vi) the Guaranty,
(vii) the Officers' Certificate,
(viii) the Pay-Off Letter, together with UCC termination
statements and other documentation evidencing the termination by
Existing Lender of its Liens in and to the properties and assets of
Borrower, including, without limitation a termination agreement
substantially in the form attached as Exhibit E-1 hereto,
(ix) the Intercompany Notes,
(x) the Intercreditor Agreement,
(xi) the Notice and Acknowledgment of No Oral Agreements, and
(xii) any and all other documents executed prior to or upon
the Closing Date by Borrowers, Guarantors and Lenders in connection
with this Agreement.
(d) Agent shall have received a certificate from the Secretary
of each Borrower attesting to the resolutions of such Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Borrower is a party and authorizing
specific officers of such Borrower to execute the same;
(e) Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with
respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the
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appropriate officer of the jurisdiction of organization of such Borrower, which
certificate shall indicate that such Borrower is in good standing in such
jurisdiction;
(g) Intentionally Deleted;
(h) Agent shall have received a certificate from the Secretary
of each Guarantor attesting to the resolutions of such Guarantor's Board of
Directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party and authorizing specific officers
of such Guarantor to execute the same;
(i) Agent shall have received copies of each Guarantor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Guarantor;
(j) Agent shall have received a certificate of status with
respect to each Guarantor, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Guarantor, which certificate shall indicate that such
Guarantor is in good standing in such jurisdiction;
(k) Agent shall have received certificates of status with
respect to each Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Guarantor) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be reasonably satisfactory to Agent;
(m) Intentionally deleted;
(n) Agent shall have received opinions of Borrowers' and
Guarantors' counsel in form and substance reasonably satisfactory to Agent;
(o) Agent shall have received satisfactory evidence (including
a certificate of the chief financial officer of each Borrower) that all Returns
required to be filed by Borrowers have been timely filed and all Taxes upon
Borrowers or their properties, assets, income, and franchises (including Real
Property Taxes and payroll Taxes) have been paid prior to delinquency, except
such Taxes that are the subject of a Permitted Protest;
(p) Borrowers shall have the Required Availability after
giving effect to the initial extensions of credit hereunder;
(q) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Borrowers' books and records and
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verification of Borrowers' representations and warranties to the Lender Group,
the results of which shall be reasonably satisfactory to Agent, and (ii) an
inspection of each of the locations where Inventory is located, the results of
which shall be reasonably satisfactory to Agent;
(r) Agent shall have received completed reference checks with
respect to Borrowers' senior management, the results of which shall be
reasonably satisfactory to Agent in its sole discretion;
(s) Agent shall have received an appraisal of the Liquidation
Percentage applicable to Borrowers' Inventory, the results of which shall be
satisfactory to Agent;
(t) Agent shall have received Borrowers' Closing Date Business
Plan that is satisfactory to Agent and that provides verification that the
Borrowers have reduced the amount of accounts payable set forth in financial
statements prepared prior to the Chapter 11 Bankruptcy Proceeding by at least
$12,000,000;
(u) Borrowers shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(v) Agent shall have received and approved executed copies of
each of the Indenture Documents, together with a certificate of the Secretary of
the applicable Borrower certifying each such document as being a true, correct,
and complete copy thereof and the same shall be in full force and effect;
(w) Borrowers shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers and Guarantors of this Agreement or
any other Loan Document or with the consummation of the transactions
contemplated hereby and thereby;
(x) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance reasonably satisfactory
to Agent;
(y) the Bankruptcy Courts shall have entered a final
non-appealable order, in form and substance acceptable to the Agent and Lenders,
confirming the Plan of Reorganization and authorizing and granting final
approval of the financing transaction contemplated by and between the Borrowers
and the Lenders and evidenced by this Agreement which order shall not be subject
to any pending appeal, stay, injunction, request for a stay or injunction or
request for reargument or reconsideration of any type;
(z) Agent shall have completed a Senior Sponsor Visit in
accordance with its customary procedures;
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(aa) Agent shall have received satisfactory evidence
(including a certificate of the chief financial officer of Parent) that all
amounts required to be included in the gross income of Parent pursuant to
Section 951 of the IRC, including amounts in connection with prior credit
arrangements where Borrowers (or the predecessors of Borrowers) were pledgors or
guarantors of all or any portion of an obligation of Parent (or the predecessors
of Parent), have in fact been properly reported on all Returns required to be
filed by Parent and all Taxes related thereto have been paid by Parent prior to
delinquency; and
(bb) The Indenture Documents shall have been duly and validly
executed by the parties thereto and the transaction contemplated thereby shall
have closed.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default).
(a) within thirty (30) days of the Closing Date, delivery to
Agent of certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Agent and its counsel;
(b) within thirty (30) days of the Closing Date, delivery to
Agent of certificates of status with respect to each Borrower issued by the
appropriate officer of the jurisdictions (other than the jurisdiction of
organization of such Borrower) in which its failure to be so duly qualified or
licensed would constitute a Material Adverse Change, which certificates shall
indicate that such Borrower is in good standing in such jurisdiction;
(c) within thirty (30) days of the Closing Date, delivery to
Agent of Collateral Access Agreements with respect to the locations specified in
Schedule 5.5 to the extent not specified in Schedule E-1;
(d) within ten (10) days of the Closing Date, delivery to
Agent of a blocked account agreement, in form, scope, and content acceptable to
Agent, executed by Bank of Montreal and Agent; and
(e) within ten (10) days of the Closing Date, delivery to
Agent of an itemization by Governmental Authority of all unpaid taxes owing by
each Borrower and each Guarantor, in form and scope acceptable to Agent.
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3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued andremain in force by any Governmental Authority against
any Borrower, Agent, any Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 EXTENSION OF CREDIT IN EXCESS OF $30,000,000.00. The obligation of the
Lender Group (or any member thereof) to make Advances or issue Letters of Credit
(or otherwise to extend credit provided for hereunder) in excess of
$30,000,000.00 in the aggregate is subject to Foothill's successful assignment
and delegation to one or more Assignees acceptable to Foothill (and Agent's
written consent thereof) of a ratable portion of all the Obligations, the
Commitment, and the other rights and obligations of Foothill as Lender hereunder
and under the other Loan Documents in a minimum amount of $20,000,000.00, all in
accordance with and subject to compliance with the terms and conditions set
forth in Article 14.
3.5 TERM. This Agreement shall become effective upon the execution and
delivery hereof by Borrowers, Agent, and the Lenders and shall continue in full
force and effect for a term ending on December 31, 2004 (the "Maturity Date").
The foregoing notwithstanding, the Lender Group, upon the election of the
Required Lenders, shall have the right to terminate its obligations under this
Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.6 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to any outstanding Letters of Credit and including all Bank
Products Obligations) immediately shall become due and payable without notice or
demand (including (a) either (i) providing cash collateral to be held by Agent
for the benefit of the Lenders in an amount equal to 105% of the then extant
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to the Issuing Lender, and (b) providing cash collateral to be held by
Agent for the benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect to the then
extant Bank Products Obligations). No termination of this Agreement, however,
shall relieve or discharge Borrowers of their duties, Obligations, or covenants
hereunder and the Agent's Liens in the
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Collateral shall remain in effect until all Obligations have been fully and
finally discharged and the Lender Group's obligations to provide additional
credit hereunder have been terminated. When this Agreement has been terminated
and all of the Obligations have been fully and finally discharged and the Lender
Group's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any UCC termination statements, lien releases, discharges of security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably necessary to release, as of record, the
Agent's Liens and all notices of security interests and liens previously filed
by Agent with respect to the Obligations.
3.7 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at any time
upon 90 days prior written notice by Borrowers to Agent, to terminate this
Agreement by paying to Agent, for the benefit of the Lender Group, in cash, the
Obligations (including (a) either (i) providing cash collateral to be held by
Agent for the benefit of the Lenders in an amount equal to 105% of the then
extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender, and (b) providing cash collateral to be held
by Agent for the benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect to the
then extant Bank Products Obligations), in full, together with the Applicable
Prepayment Premium (to be allocated based upon letter agreements between Agent
and individual Lenders). If Borrowers have sent a notice of termination pursuant
to the provisions of this Section, then the Commitments shall terminate and
Borrowers shall be obligated to repay the Obligations (including (a) either (i)
providing cash collateral to be held by Agent for the benefit of the Lenders in
an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender, and
(b) providing cash collateral to be held by Agent for the benefit of ▇▇▇▇▇ Fargo
or its Affiliates with respect to the then extant Bank Products Obligations), in
full, together with the Applicable Prepayment Premium, on the date set forth as
the date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations at any time prior
to the Maturity Date, for any other reason, including (a) termination upon the
election of the Required Lenders to terminate after the occurrence of an Event
of Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral
in any Insolvency Proceeding, or (iv) restructure, reorganization or compromise
of the Obligations by the confirmation of a plan of reorganization, or any other
plan of compromise, restructure, or arrangement in any Insolvency Proceeding,
then, in view of the impracticability and extreme difficulty of ascertaining the
actual amount of damages to the Lender Group or profits lost by the Lender Group
as a result of such early termination, and by mutual agreement of the parties as
to a reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon letter agreements between Agent and individual Lenders),
measured as of the date of such termination.
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4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Each Borrower hereby grants to Agent, for
the benefit of the Lender Group, a continuing security interest in all of its
right, title, and interest in all currently existing and hereafter acquired or
arising Collateral in order to secure prompt repayment of any and all of the
Obligations in accordance with the terms and conditions of the Loan Documents
and in order to secure prompt performance by Borrowers of each of their
covenants and duties under the Loan Documents. Borrowers authorize Agent and
Lenders to file one or more financing statements and amendments thereto that
contain the information required by Article 9 of the Code or by the applicable
provisions of the PPSA or other equivalent law of each applicable jurisdiction
without the signature of Borrowers where permitted by law. The Agent's Liens in
and to the Collateral shall attach to all Collateral without further act on the
part of Agent or Borrowers. Anything contained in this Agreement or any other
Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Borrowers have no authority, express or implied, to dispose of any
item or portion of the Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, the applicable Borrower, immediately upon the
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by the
applicable Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon the
request of Agent, Borrowers shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Agent may request in its Permitted Discretion, in form and
substance satisfactory to Agent, to perfect and continue perfected or better
perfect the Agent's Liens in the Collateral (whether now owned or hereafter
arising or acquired), and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents. To the maximum extent
permitted by applicable law, each Borrower authorizes Agent to execute any such
Additional Documents in the applicable Borrower's name and authorize Agent to
file such executed Additional Documents in any appropriate filing office.
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4.5 POWER OF ATTORNEY. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or ▇▇▇▇ of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
endorse such Borrower's name on any Collection item that may come into the
Lender Group's possession, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under such Borrower's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance to the extent such claims relate to the Collateral,
and (f) at any time that an Event of Default has occurred and is continuing,
settle and adjust disputes and claims respecting the Accounts, chattel paper, or
General Intangibles directly with Account Debtors, for amounts and upon terms
that Agent determines to be reasonable, and Agent may cause to be executed and
delivered any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group's obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrowers' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
4.7 CONTROL AGREEMENTS. Each Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless each of the applicable
Borrower, Agent, and the substitute securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any Securities Accounts or other Investment Property
shall be modified by Borrowers without the prior written consent of Agent. Upon
the occurrence and during the continuance of a Default or Event of Default,
Agent may, at the direction of the Required Lenders, notify any securities
intermediary to liquidate the applicable Securities Account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Agent's Account for application to the Obligations pursuant to Section 2.4.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
each Borrower makes the following representations and warranties to the Lender
Group which shall be true, correct, and complete, in all material respects, as
of the date hereof, and shall be true, correct, and complete, in all material
respects, as of the Closing Date, and at and as of
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the date of the making of each Advance (or other extension of credit) made
thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:
5.1 NO ENCUMBRANCES. Each Borrower has good and marketable title to its
Collateral, free and clear of Liens except for Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrowers' business, owed to Borrowers without defenses, disputes,
offsets, counterclaims, or rights of return or cancellation. As to each Account
that is identified by Borrowers as an Eligible Account in a borrowing base
report submitted to Agent, such Account is not excluded as ineligible by virtue
of one or more of the excluding criteria set forth in the definition of eligible
Accounts.
5.3 ELIGIBLE INVENTORY. All Eligible Inventory is of good and merchantable
quality, free from defects. As to each item of Inventory that is identified by
Borrowers as Eligible Inventory in a borrowing base report submitted to Agent,
such Inventory is not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definitions of Eligible Finished Goods
Inventory or Eligible Raw Materials Inventory.
5.4 EQUIPMENT. All of the Equipment is used or held for use in Borrowers'
business and is fit for such purposes.
5.5 LOCATION OF INVENTORY. The Inventory is not stored with a bailee,
warehouseman, or similar party and is located only at the locations identified
on Schedule 5.5 (other than Inventory in transit between locations specified in
Schedule 5.5).
5.6 INVENTORY RECORDS. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive office
of each Borrower is located at the address indicated in Schedule 5.7 and each
Borrower's FEIN is identified in Schedule 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Borrower, by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other
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than as described on Schedule 5.8(b), there are no subscriptions, options,
warrants, or calls relating to any shares of each Borrower's capital Stock,
including any right of conversion or exchange under any outstanding security or
other instrument. No Borrower is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital Stock or any security convertible into or exchangeable for any of its
capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of each Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization; (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by the applicable Borrower. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party have been duly authorized by all necessary action on the part of
such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party do not and will not (i) violate any provision of federal, state,
or local law or regulation applicable to any Borrower, the Governing Documents
of any Borrower, or any order, judgment, or decree of any court or other
Governmental Authority binding on any Borrower, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of any Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of any Borrower's interestholders or any approval or consent of any
Person under any material contractual obligation of any Borrower (except for
approvals and consents which have been obtained prior to the date of this
Agreement and are in full force and effect).
(c) Other than the filing of financing statements, the
execution, delivery, and performance by each Borrower of this Agreement and the
Loan Documents to which such Borrower is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other
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Person (other than approval of the Bankruptcy Courts through confirmation of the
Plan of Reorganization).
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens are validly created, perfected, and
first priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party do not and will not (i) violate any
provision of any (domestic or foreign) federal, state, province, county or local
law or regulation applicable to such Guarantor, the Governing Documents of such
Guarantor, or any order, judgment, or decree of any court or other Governmental
Authority binding on such Guarantor, (ii) conflict with, result in a breach of,
or constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of such Guarantor, (iii) result in or require
the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of such Guarantor, other than Permitted Liens, or (iv)
require any approval of such Guarantor's interestholders or any approval or
consent of any Person under any material contractual obligation of such
Guarantor (except for approvals and consents which have been obtained prior to
the date of this Agreement and are in full force and effect).
(h) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which such Guarantor is a party do not and will not
require any registration with, consent, or approval of, or notice to, or other
action with or by, any Governmental Authority or other Person (other than
approval of the Bankruptcy Courts through confirmation of the Plan of
Reorganization).
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened
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against Borrowers or any of their Subsidiaries, or any Guarantor, except for (a)
matters that are fully covered by insurance (subject to customary deductibles),
and (b) matters arising after the Closing Date that, if decided adversely to
Borrowers or any of their Subsidiaries, or any Guarantor reasonably could not be
expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements (other than the
financial statements as of June 30, 2001, prior to restatement) relating to
Borrowers and Guarantors that have been delivered by Borrowers and Guarantors to
the Lender Group have been prepared in accordance with GAAP (except, in the case
of unaudited financial statements, for the lack of footnotes and being subject
to year-end audit adjustments) and present fairly in all material respects,
Borrowers' and Guarantors', as applicable, financial condition as of the date
thereof and results of operations for the period then ended. There has not been
a Material Adverse Change with respect to Borrowers or Guarantors, as
applicable, since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) each Borrower and each Guarantor is Solvent.
(b) No transfer of property is being made by any Borrower or
any Guarantor and no obligation is being incurred by any Borrower or any
Guarantor in connection with the transactions contemplated by this Agreement or
the other Loan Documents with the intent to hinder, delay, or defraud either
present or future creditors of Borrowers or Guarantors.
5.13 EMPLOYEE BENEFITS. Except as set forth on Schedule 5.13, none of
Borrowers, any of their Subsidiaries, or any of their ERISA Affiliates maintains
or contributes to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been used
by Borrowers or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
violation, in any material respect, of applicable Environmental Law, (b) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been
designated or identified in any manner pursuant to any Environmental Law as a
Hazardous Materials disposal site for which Remedial Action is required, (c)
none of Borrowers have received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by Borrowers, and (d) none of Borrowers have received a summons,
citation, notice, or directive from the Environmental Protection Agency or any
other federal or state governmental agency concerning any action or omission by
any Borrower resulting in the releasing or disposing of Hazardous Materials into
the environment.
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5.15 BROKERAGE FEES. Borrowers have not utilized the services of any
broker or finder in connection with Borrowers' obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Borrowers in connection herewith.
5.16 INTELLECTUAL PROPERTY. Each Borrower owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of its business as currently conducted.. Attached
hereto as Schedule 5.16 is a true, correct, and complete listing of all material
patents, patent applications, trademarks, trademark applications, copyrights,
and copyright registrations as to which each Borrower is the owner or is an
exclusive licensee.
5.17 LEASES. Borrowers enjoy peaceful and undisturbed possession under all
leases material to the business of Borrowers and to which Borrowers are a party
or under which Borrowers are operating. All of such leases are valid and
subsisting and no material default by Borrowers exists under any of them.
5.18 DDAS. Set forth on Schedule 5.18 are all of the DDAs of each
Borrower, including, with respect to each depository (i) the name and address of
that depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrowers in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrowers in writing to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrowers' good faith best estimate of its future
performance for the periods covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of each Borrower outstanding on the Closing Date pursuant to
a confirmation order approving the Plan of Organization, and such Schedule
accurately reflects the aggregate principal amount of such Indebtedness and the
principal terms thereof.
5.21 TAXES. Each Borrower has filed or caused to be filed all Returns
which are required to be filed and has paid all Taxes shown to be due and
payable on such Returns or any assessments made against it or any of its
property and all other Taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority. Parent has included in its gross income
for federal income tax purposes and properly reported on all Returns required to
be filed by Parent all amounts that it was required to include pursuant to
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Section 951 of the IRC, including amounts in connection with prior credit
arrangements where Borrowers (or the predecessors of Borrowers) were pledgors or
guarantors of all or any portion of an obligation of Parent (or the predecessors
of Parent) and Parent has paid all Taxes related thereto prior to deficiency. No
Tax lien has been filed and to the knowledge of each Borrower, no claim is being
asserted, with respect to any Taxes of Parent or any Borrower.
5.22 INDENTURE DOCUMENTS. The Indenture Documents, true and complete
copies of which have been furnished to Lenders, have been duly authorized,
executed, and delivered by the Borrowers and the Guarantors and, to the best of
Borrowers' knowledge, all other parties thereto, have not been amended or
otherwise modified, are in full force and effect, and are binding upon and
enforceable against all parties thereto in accordance with their respective
terms. There exists no event of default under any Indenture Document by the
Borrowers or any of the Guarantors or, to the best of Borrowers' knowledge, any
other party thereto.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers shall, and shall cause each Guarantor to, do all of the
following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
--------------------------------------------------------------------------------
Daily (a) a sales journal, collection journal, and credit
register since the last such schedule and a
calculation of the Borrowing Base as of such date,
and
(b) notice of all returns, disputes, or claims.
--------------------------------------------------------------------------------
Weekly (c) Inventory reports specifying each Borrower's cost
and the wholesale market value of its Inventory, by
category, with additional detail showing additions to
and deletions from the Inventory.
--------------------------------------------------------------------------------
Monthly (not (d) a detailed calculation of the Borrowing Base
later than the (including detail regarding those Accounts that are
10th day of each not Eligible Accounts),
month)
(e) a detailed aging, by total, of the Accounts,
together with a
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reconciliation to the detailed calculation of the
Borrowing Base previously provided to Agent,
(f) a summary aging, by vendor, of Borrowers'
accounts payable and any book overdraft,
--------------------------------------------------------------------------------
Monthly (not (g) a calculation of Dilution for the prior month; and
later than the
15th day of each
month) (h) a list of the selling prices of chlorine and
caustic soda.
--------------------------------------------------------------------------------
Quarterly (i) a detailed list of each Borrower's customers,
(j) a report regarding each Borrower's accrued, but
unpaid, ad valorem taxes,
--------------------------------------------------------------------------------
Upon request by (k) copies of invoices in connection with the
Agent Accounts, credit memos, remittance advices, deposit
slips, shipping and delivery documents in connection
with the Accounts and, for Inventory acquired by
Borrowers, purchase orders and invoices, and
(l) such other reports as to the Collateral, or the
financial condition of Borrowers as Agent may
request.
--------------------------------------------------------------------------------
In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during Parent's fiscal
years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries operations during such period,
(ii) a certificate signed by the chief financial officer of
Parent and each Borrower to the effect that:
A. the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present in
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all material respects the financial condition of Parent and
its Subsidiaries,
B. the representations and warranties of Borrowers
contained in this Agreement and the other Loan Documents are
true and correct in all material respects on and as of the
date of such certificate, as though made on and as of such
date (except to the extent that such representations and
warranties relate solely to an earlier date), and
C. there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent
of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrowers
have taken, are taking, or propose to take with respect
thereto), and
(iii) for each month that is the date on which a financial
covenant in Section 7.20 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section
7.20, and
(b) as soon as available, but in any event within 90 days
after the end of each of Parent's fiscal years,
(i) financial statements of each Borrower for each such fiscal
year, audited by Deloitte & Touche or other independent certified
public accountants reasonably acceptable to Agent and certified,
without any qualifications, by such accountants to have been
prepared in accordance with GAAP (such audited financial statements
to include a balance sheet, income statement, and statement of cash
flow and, if prepared, such accountants' letter to management), and
(ii) a certificate of such accountants addressed to Agent and
the Lenders stating that such accountants do not have knowledge of
the existence of any Default or Event of Default under Section 7.20,
(c) as soon as available, but in any event within 30 days
prior to the start of each of Borrower's fiscal years,
(i) copies of each Borrower's Projections, in form and
substance (including as to scope and underlying assumptions)
satisfactory to Agent, in its sole discretion, for the forthcoming 3
years, year by year, and for the forthcoming fiscal year, month by
month, certified by the chief financial officer of each Borrower as
being such officer's good faith best estimate of the financial
performance of such Borrower during the period covered thereby,
(d) if and when filed by any Borrower or the Parent,
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(i) 10-Q quarterly reports, Form 10-K annual reports, and Form
8-K current reports,
(ii) any other filings made by any Borrower with the SEC,
(iii) copies of Borrowers' federal (U.S. and Canada) income
tax returns, and any amendments thereto, filed with the Internal
Revenue Service and the applicable Canadian agency, and
(iv) any other information that is provided by Parent to its
shareholders generally,
(e) if and when filed by any Borrower and as requested by
Agent, satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) any Borrower conducts business or is required to pay
any such excise tax, (ii) where any Borrower's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Borrower, or (iii) where any Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) as soon as a Borrower has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that Borrowers propose to take with respect
thereto,
(g) as and when delivered pursuant to the Tranche A Indenture,
a copy of the certificate (including the calculations and methods used in
determining the Minimum Quarterly Prepayment and/or the Liquidity Quarterly
Prepayment [as defined in the Tranche A Indenture]) of the chief financial
officer of Pioneer Americas set forth in Section 1101 (c) (iii) of the Tranche A
Indenture, and
(h) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Borrowers.
In addition to the financial statements referred to above, Borrowers
agree to deliver financial statements prepared on both a consolidated and
consolidating basis and that no Borrower, or any Subsidiary of a Borrower, will
have a fiscal year different from that of Parent. Borrowers agree that their
independent certified public accountants are authorized to communicate with
Agent and to release to Agent whatever financial information concerning
Borrowers that Agent reasonably may request, and Borrowers will be given an
opportunity to be present with respect to any such discussions. Each Borrower
waives the right to assert a confidential relationship, if any, it may have with
any accounting firm or service bureau in connection with any information
requested by Agent pursuant to or in accordance with this Agreement, and agree
that Agent may contact directly any such accounting firm or service bureau in
order to obtain such information.
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6.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial statements at the time when Borrowers provide their audited financial
statements to Agent and copies of all federal income tax returns as soon as the
same are available and in any event no later than 30 days after the same are
required to be filed by law.
6.5 RETURN. Cause returns and allowances as between Borrowers and their
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the applicable Borrower, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to any
Borrower, the applicable Borrower promptly shall determine the reason for such
return and, if the applicable Borrower accepts such return, issue a credit
memorandum (with a copy to be sent to Agent) in the appropriate amount to such
Account Debtor. If, at a time when an Event of Default has occurred and is
continuing, any Account Debtor returns any Inventory to any Borrower, the
applicable Borrower promptly shall determine the reason for such return and, if
Agent consents (which consent shall not be unreasonably withheld), issue a
credit memorandum (with a copy to be sent to Agent) in the appropriate amount to
such Account Debtor.
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its properties
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the provisions of all leases to which it is a party as lessee, so as
to prevent any loss or forfeiture thereof or thereunder.
6.7 TAXES. Cause all assessments and Taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers
or any of their assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or Tax shall be the subject of a Permitted Protest. Borrowers
will make timely payment or deposit of all Tax payments and withholding Taxes
required of them by Applicable Laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income Taxes, and
will, upon request, furnish Agent with proof satisfactory to Agent indicating
that the applicable Borrower has made such payments or deposits. Borrowers
shall, upon request of Agent, deliver satisfactory evidence of payment of
applicable excise Taxes in each jurisdictions in which any Borrower is required
to pay any such excise Tax. Borrowers shall withhold and collect all taxes
required to be withheld and collected by them and remit such Taxes to the
appropriate Governmental Authority before they are past due and otherwise in the
manner required by Applicable Law.
6.8 INSURANCE.
(a) At Borrowers' expense, maintain insurance respecting its
property and assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Borrowers also shall
maintain business interruption, public liability, and
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product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss payee
or additional insured, as appropriate, as the Agent's interest may appear. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 15 days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever.
(b) Borrowers shall give Agent prompt notice of any loss
covered by such insurance. Agent shall have the exclusive right to adjust any
losses payable under any such insurance policies in excess of $100,000 to the
extent such loss relates to any of the Collateral, without any liability to
Borrowers whatsoever in respect of such adjustments. Any monies received as
payment for any loss under any insurance policy mentioned above (other than
liability insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid over to Agent to be
applied at the option of the Required Lenders either to the prepayment of the
Obligations or shall be disbursed to Borrowers under staged payment terms
reasonably satisfactory to the Required Lenders for application to the cost of
repairs, replacements, or restorations. Any such repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items or property destroyed prior to
such damage or destruction.
(c) Borrowers shall not take out separate insurance concurrent
in form or contributing in the event of loss with that required to be maintained
under this Section 6.8, unless Agent is included thereon as named insured with
the loss payable to Agent under a lender's loss payable endorsement or its
equivalent as the Agent's interest may appear. Borrowers immediately shall
notify Agent whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and copies of such policies promptly shall be provided to Agent.
6.9 LOCATION OF INVENTORY. Keep the Inventory (other than Inventory in
transit between locations specified on Schedule 5.5) only at the locations
identified on Schedule 5.5; provided, however, that Borrowers may amend Schedule
5.5 so long as such amendment occurs by written notice to Agent not less than 30
days prior to the date on which the Inventory is moved to such new location, so
long as such new location is within the continental United States or Canada, and
so long as, at the time of such written notification, the applicable Borrower
provides any UCC-1 financing statements, fixture filings, PPSA financing
statements, or any other equivalent form of registration necessary to perfect
and continue perfected the Agent's Liens on such assets and also provides to
Agent a Collateral Access Agreement.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations,
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and orders the non-compliance with which, individually or in the aggregate,
would not result in and reasonably could not be expected to result in a Material
Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable under any
leases to which any Borrower is a party or by which any Borrower's properties
and assets are bound, unless such payments are the subject of a Permitted
Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Borrowers agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers, and each Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrowers' obtaining financing from the
Lender Group under this Agreement.
6.13 EXISTENCE. At all times preserve and keep in full force and effect
each Borrower's valid existence and good standing and any rights and franchises
material to Borrowers' businesses.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated by any Borrower
free of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material of any reportable quantity from or onto property owned or operated by
any Borrower and take any Remedial Actions required to ▇▇▇▇▇ said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Agent with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of any Borrower, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against any Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.16 INTENTIONALLY DELETED.
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6.17 OBLIGATION TO PAY. Each Borrower hereby unconditionally promises to
pay Agent, for the benefit of Lenders, in accordance with the terms and
conditions of this Loan Agreement including, without limitation, Section 2.3
hereof, the Obligations, and to pay the Obligations in full on the Maturity
Date.
6.18 INDENTURE DOCUMENTS. Borrowers shall perform and observe all the
terms and provisions of the Indenture Documents to be performed or observed by
them.
6.19 PARENT TAXES. Cause Parent, by obtaining an affirmative covenant of
Parent, to (i) file or cause to be filed all Returns which are required to be
filed and to pay all Taxes shown to be due and payable on such Returns or any
assessments made against it or any of its property and all other Taxes, fees or
other charges imposed on it or any of its property by any Governmental
Authority; (ii) include in Parent's gross income for United States federal
income tax purposes and properly report on all Returns required to be filed by
Parent all amounts that it is required to include pursuant to Section 951 of the
IRC, including amounts in connection with prior credit arrangements where
Borrowers (or the predecessors of Borrowers) were pledgors or guarantors of all
or any portion of an obligation of Parent (or the predecessors of Parent) and
pay all Taxes related thereto prior to deficiency; and (iii) include in the
gross income of Parent the "all earnings and profits amount," if any, required
to be included in the gross income of Parent pursuant to Section 367(b) of the
IRC and Section 1.367(b)-3 of the federal income tax regulations promulgated
under the IRC in connection with the reorganization of Parent and its
subsidiaries, including Borrowers and their predecessors, pursuant to the
Chapter 11 Bankruptcy Proceeding and pay all Taxes related thereto prior to
deficiency.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers will not, and will not permit any of the Guarantors, to
do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness comprising Permitted Indebtedness;
(c) Permitted Purchase Money Indebtedness; and
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, in Agent's
judgment, materially impair the prospects of
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repayment of the Obligations by Borrowers or materially impair Borrowers'
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended, (iii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions, that, taken as a whole, are materially more burdensome
or restrictive to the applicable Borrower, and (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must be include subordination terms and conditions that
are at least as favorable to the Lender Group as those that were applicable to
the refinanced, renewed, or extended Indebtedness.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization,
amalgamation, or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Except for Permitted Dispositions, convey, sell, lease,
license, assign, transfer, or otherwise dispose of, in one transaction or a
series of transactions, all or any substantial part of its assets.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of the assets of
any Borrower.
7.5 CHANGE NAME. Change any Borrower's name, FEIN, organizational
structure, jurisdiction of incorporation, organization, or formation, as
applicable, or identity, or add any new fictitious name; provided, however, that
a Borrower may change its name upon at least 30 days prior written notice by
Borrowers to Agent of such change and so long as, at the time of such written
notification, such Borrower provides any UCC-1 financing statements, fixture
filings, PPSA financing statements, or any other equivalent form of registration
necessary to perfect and continue perfected Agent's Liens.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except:
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(a) endorsements of instruments or items of payment for
deposit to the account of Borrowers or which are transmitted or turned over to
Agent;
(b) indemnifications existing on the date of this Agreement
issued in favor of title insurers; and
(c) guaranties and indemnifications (other than guaranties of
indebtedness) under the Borrowers' employee relocation assistance program
provided the aggregate amount of such indemnifications and guaranties together
with the loans and advances permitted by Section 7.14(a) do not exceed
$500,000.00 at any time.
7.7 NATURE OF BUSINESS. Make any change in the principal nature of
Borrowers' business.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted by
Section 7.1(d) and prepayments required to be made to the holders of the
indebtedness under the Indenture Documents pursuant to the terms of the
Indenture Documents, prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Borrower, other than the Obligations in accordance with this
Agreement; and
(b) Except in connection with a refinancing permitted by
Section 7.1(d), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Sections 7.1(b) or (c).
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory having a
value in excess of $100,000.00 in the aggregate on ▇▇▇▇ and hold, sale or
return, sale on approval, or other conditional terms of sale.
7.11 DISTRIBUTIONS. Make any distribution or declare or pay any dividends
(in cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of any Borrower's Stock, of any class, whether now or
hereafter outstanding except for dividends and distributions payable (a) by
Pioneer Americas to PCI Chemicals, and (b) by PCI Chemicals to the Parent
provided that the aggregate amount of such dividends and distributions together
with the Investments permitted to be made to the Parent by Pioneer Americas
pursuant to Section 7.13(b) do not exceed $500,000.00 in any calendar year
during the term of this Agreement.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting (other
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm
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or service bureau for the preparation or storage of Borrowers' accounting
records without said accounting firm or service bureau agreeing to provide Agent
information regarding the Collateral or Borrowers' financial condition.
7.13 INVESTMENTS. Directly or indirectly, make or acquire any Investment,
or incur any liabilities (including contingent obligations) for or in connection
with any Investment except:
(a) Permitted Investments; and
(b) loans and advances ("Intercompany Loans") from (i) Pioneer
Americas to Parent provided that the aggregate amount of such loans together
with the amount of distributions and dividends permitted to be made to the
Parent by PCI Chemicals pursuant to Section 7.11(b) does not exceed $500,000.00
in any calendar year during the term of this Agreement, (ii) Pioneer Americas to
Imperial West Chemical Co., provided the aggregate amount of such loans and
advances does not exceed $800,000.00 during any calendar year during the term of
this Agreement, and (iii) Pioneer Americas to the other Guarantors provided the
aggregate amount of such loans and advances does not exceed $100,000.00 in any
calendar year during the term of this Agreement; and further provided that the
Intercompany Loans are evidenced by a promissory note ("Intercompany Note") in
the form of promissory note attached hereto as Exhibit D-1, and the Intercompany
Notes are endorsed and delivered to Agent, for the benefit of the Lenders, to be
held as Collateral.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Borrower except for
transactions that are in the ordinary course of Borrowers' business, upon fair
and reasonable terms, that are fully disclosed to Agent, and that are no less
favorable to Borrowers than would be obtained in an arm's length transaction
with a non-Affiliate; provided, however, that the foregoing provisions do not
prohibit loans and advances under Borrowers' employee relocation assistance
program provided the aggregate amount of such loans and advances together with
the guaranties and indemnifications permitted by Section 7.6(c) do not exceed
$500,000.00 at any time.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 INTENTIONALLY DELETED.
7.17 USE OF PROCEEDS. Use more than $200,000.00 of the proceeds of the
Advances or the Letters of Credit in any calendar year for the acquisition of
new or used Equipment (whether by purchase or lease) unless (a) Borrowers have
provided Agent with prior written notice of such proposed purchase specifying
the type of Equipment being purchased, the purchase price, and the location
where the Equipment will be located and (b) immediately after giving effect to
the making of such Advance or the issuance of such Letter of Credit (i)
Borrowers are in compliance with the provisions of Section 7.20(b) and (ii)
there is Excess Availability of at least $10,000,000.00. Other than the purchase
of Equipment in accordance with and subject to the terms of this Section 7.17,
Borrowers will not use the
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proceeds of the Advances or the Letters of Credit for any other purpose other
than (a) on the Closing Date, (i) to repay in full the outstanding principal,
accrued interest, and accrued fees and expenses owing to Existing Lender, and
(ii) to pay transactional fees, costs, and expenses incurred in connection with
this Agreement, the other Loan Documents, and the transactions contemplated
hereby and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY WITH BAILEES.
Relocate its chief executive office to a new location from the location
specified in Schedule 5.7; provided, however, that Borrowers may amend Schedule
5.7 so long as such amendment occurs by written notice to Agent not less than 30
days prior to the date the chief executive office is to be relocated, so long as
such location is within the continental United States or Canada, and so long as,
at the time of such written notification, the applicable Borrower provides any
UCC-1 financing statements or fixture filings or PPSA financing statements or
any other equivalent form of registration necessary to perfect and continue
perfected the Agent's Liens and also provides to Agent a Collateral Access
Agreement with respect to such new location. The Inventory shall not at any time
now or hereafter be stored with a bailee, warehouseman, or similar party without
Agent's prior written consent.
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrowers agree to not transfer assets out of any Securities
Account; provided, however, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, Borrowers may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
7.20 FINANCIAL COVENANTS.
(a) Fail to maintain EBITDA, measured on the basis of its then
most recently ended four (4) fiscal quarters, of less than the required amount
set forth in the following table for the applicable period set forth opposite
thereto;
--------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------
$ 5,142,000.00 For the 3 month period
ending March 31, 2002
--------------------------------------------------------------------------------
For the 6 month period
$10,810,000.00 ending June 30, 2002
--------------------------------------------------------------------------------
For the 9 month period
$19,573,000.00 ending September 30, 2002
--------------------------------------------------------------------------------
For the 12 month period
$32,446,000.00 ending December 31, 2002
--------------------------------------------------------------------------------
$32,600,000.00 For the 12 month period
ending each fiscal quarter thereafter
--------------------------------------------------------------------------------
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(b) Make capital expenditures in any fiscal year in excess of
the amount set forth in the following table for the applicable period:
---------------------------------------------------------------------------
Fiscal Year 2002 Fiscal Year 2003 Fiscal Year 2004
and each Fiscal Year
thereafter
---------------------------------------------------------------------------
$20,000,000.00 $25,000,000.00 $25,000,000.00
---------------------------------------------------------------------------
7.21 AMENDMENTS. Borrowers will not amend, supplement, amend and restate,
or otherwise modify any of the Indenture Documents, without the prior written
consent of Agent.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable or when declared due and
payable, all or any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Law,
would have accrued on such amounts), fees and charges due the Lender Group,
reimbursement of Lender Group Expenses, or other amounts constituting
Obligations);
8.2 If any Borrower fails to perform, keep, or observe: (a) any term,
provision, condition, covenant, or agreement contained in Sections 6.2 or 6.3 of
this Agreement and such failure continues for a period of five (5) days after
the date of such failure; (b) any provision, condition, covenant or agreement
contained in Sections 6.1, 6.7, or 6.11 of this Agreement and such failure
continues for a period of fifteen (15) days after the date of such failure; or
(c) any other term, provision or condition of the Loan Documents;
8.3 If any material portion of the assets of any Borrower, or any of its
Subsidiaries, or any Guarantor is attached, seized, subjected to a writ or
distress warrant, levied upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by the Parent, any Borrower,
any of its Subsidiaries, or any Guarantor;
8.5 If an Insolvency Proceeding is commenced against any Borrower, any of
its Subsidiaries, the Parent, or any Guarantor, and any of the following events
occur: (a) the
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Parent, the applicable Borrower, the applicable Subsidiary or Guarantor consents
to the institution of the Insolvency Proceeding against it, (b) the petition
commencing the Insolvency Proceeding is not timely controverted, (c) the
petition commencing the Insolvency Proceeding is not dismissed within 45
calendar days of the date of the filing thereof; provided, however, that, during
the pendency of such period, Agent (including any successor agent) and each
other member of the Lender Group shall be relieved of their obligation to extend
credit hereunder, (d) an interim trustee is appointed to take possession of all
or any substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, any Borrower, any of its
Subsidiaries, the Parent, or Guarantor, or (e) an order for relief shall have
been entered therein;
8.6 If any Borrower, any of its Subsidiaries, or any Guarantor is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any asset of any Borrower, any of its Subsidiaries, or any Guarantor
by the United States, or any department, agency, or instrumentality thereof, or
by any state, county, municipal, or governmental agency, or if any taxes or
debts owing at any time hereafter to any one or more of such entities becomes a
Lien, whether ▇▇▇▇▇▇ or otherwise, upon any assets of any Borrower, any of its
Subsidiaries, or any Guarantor and the same is not paid on the payment date
thereof;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of the properties or assets of any Borrower, any of its
Subsidiaries, or any Guarantor;
8.9 If there is a default in any material agreement to which any
Borrowers, any of its Subsidiaries, or any Guarantor is a party and such default
(a) occurs at the final maturity of the obligations thereunder, or (b) results
in a right by the other party thereto, irrespective of whether exercised, to
accelerate the maturity of the applicable Borrower, Subsidiary's, or Guarantor's
obligations thereunder, to terminate such agreement, or to refuse to renew such
agreement pursuant to an automatic renewal right therein;
8.10 If any Borrower, any of its Subsidiaries or any Guarantor makes any
payment on account of Indebtedness that has been contractually subordinated in
right of payment to the payment of the Obligations, except to the extent such
payment is permitted by the terms of the subordination provisions applicable to
such Indebtedness;
8.11 If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or Record made to the Lender Group by
any Borrower, any of its Subsidiaries, or any officer, employee, agent, or
director of any Borrower or any of its Subsidiaries;
8.12 If the obligation of any Guarantor under its Guaranty is limited or
terminated by operation of law or by such Guarantor thereunder;
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8.13 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby;
8.14 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Borrower, or a proceeding shall be commenced by any
Borrower, or by any Governmental Authority having jurisdiction over any
Borrower, seeking to establish the invalidity or unenforceability thereof, or
any Borrower shall deny that any Borrower has any liability or obligation
purported to be created under any Loan Document;
8.15 Any event, circumstance, or condition occurs which constitutes an
Event of Default under any of the Indenture Documents or any of the Term Loan
Documents;
8.16 Either Borrower or any Guarantor defaults in the payment of any
monetary obligation under the CRC Contracts or with respect to any of the CRC
Portfolio, when due, or defaults in the performance or observance of any
material non-monetary obligation with respect to any of the Approved CRC
Portfolio.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the following on behalf of the Lender Group (and Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group), all of which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit the Loan Account with only the net amounts received by
Agent in payment of such disputed Accounts after deducting all Lender Group
Expenses incurred or expended in connection therewith;
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(e) Cause Borrowers to hold all returned Inventory in trust
for the Lender Group, segregate all returned Inventory from all other assets of
Borrowers or in Borrowers' possession and conspicuously label said returned
Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Borrower or
Guarantor, make such payments and do such acts as Agent considers necessary or
reasonable to protect its security interests in the Collateral. Each Borrower
agrees to assemble the Collateral if Agent so requires, and to make the
Collateral available to Agent at a place that Agent may designate which is
reasonably convenient to both parties. Each Borrower authorizes Agent to enter
the premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any Lien that in Agent's determination appears to conflict with the Agent's
Liens and to pay all expenses incurred in connection therewith and to charge
Borrowers' Loan Account therefor. With respect to any of Borrowers' owned or
leased premises, each Borrower hereby grants Agent a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of the Lender Group's rights or remedies provided herein, at law,
in equity, or otherwise;
(g) Without notice to any Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code or the PPSA, if
applicable), set off and apply to the Obligations any and all (i) balances and
deposits of any Borrower held by the Lender Group (including any amounts
received in the Cash Management Accounts), or (ii) Indebtedness at any time
owing to or for the credit or the account of any Borrower held by the Lender
Group;
(h) Hold, as cash collateral, any and all balances and
deposits of any Borrower held by the Lender Group, and any amounts received in
the Cash Management Accounts, to secure the full and final repayment of all of
the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Each Borrower hereby grants to Agent a license or other
right to use, without charge, such Borrower's labels, patents, copyrights, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and such
Borrower's rights under all licenses and all franchise agreements shall inure to
the Lender Group's benefit;
(j) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrowers' premises) as Agent
determines is commercially reasonable. It is not necessary that the Collateral
be present at any such sale;
(k) Agent shall give notice of the disposition of the
Collateral as follows:
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(i) Agent shall give Borrowers a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Collateral, the time on or after which the private sale or other
disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Borrowers as provided in Section 12, at least 10
days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the disposition of any
portion of the Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a
recognized market;
(l) Agent, on behalf of the Lender Group may credit bid and
purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Collateral or to operate same and,
to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan Documents and all
rights and remedies of a secured party under the Code (whether or not the Code
applies to the affected Collateral) and under applicable PPSA; and
(o) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrowers. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Agent to Borrowers (for the benefit of the applicable Borrower).
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
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Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Each Borrower hereby
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under the Code, Agent shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.
11.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence
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or willful misconduct of such Indemnified Person. This provision shall survive
the termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrowers or Agent, as applicable, may designate to each
other in accordance herewith), or telefacsimile to Borrowers in care of
Borrowers or to Agent, as the case may be, at its address set forth below:
If to Borrowers:
Pioneer Americas LLC
PCI Chemicals Canada Company
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, CFO
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: Weil, Gotshel & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
If to Agent: Foothill Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
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with copies to: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇, PC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
Agent and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code and/or the applicable PPSA, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days
after the deposit thereof in the mail. Each Borrower acknowledges and agrees
that notices sent by the Lender Group in connection with the exercise of
enforcement rights against Collateral under the provisions of the Code shall be
deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth
above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(A) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS.
(B) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF DALLAS,
STATE OF TEXAS, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP WAIVE,
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT
THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
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BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee), assign and
delegate to one or more assignees (each an "Assignee") all, or any ratable part
of all, of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Loan Documents, in a minimum amount
of $5,000,000; provided, however, that Borrowers and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Borrowers and Agent by such Lender and the
Assignee, (ii) such Lender and its Assignee have delivered to Borrowers and
Agent an Assignment and Acceptance in form and substance satisfactory to Agent,
and (iii) the assignor Lender or Assignee has paid to Agent for Agent's separate
account a processing fee in the amount of $5,000. Anything contained herein to
the contrary notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Borrowers) that it has received an executed Assignment
and Acceptance and payment of the above-referenced processing fee, (i) 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
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 11.3 hereof) and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, such
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Lender shall cease to be a party hereto and thereto), and such assignment shall
affect a novation between Borrowers and the Assignee.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such 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 or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) 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 decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions 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 (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely
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responsible for the performance of such obligations, (iii) Borrowers, Agent, and
the Lenders shall continue to deal solely and directly with the Originating
Lender in connection with the Originating Lender's rights and obligations under
this Agreement and the other Loan Documents, (iv) no Lender shall transfer or
grant any participating interest under which the Participant has the right to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment to, or
consent or waiver with respect to this Agreement or of any other Loan Document
would (A) extend the final maturity date of the Obligations hereunder in which
such Participant is participating, (B) reduce the interest rate applicable to
the Obligations hereunder in which such Participant is participating, (C)
release all or a material portion of the Collateral or guaranties (except to the
extent expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrowers or
Borrowers' business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder
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and thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by any Borrower is
required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrowers (on behalf of all Borrowers) and then any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all of the Lenders
affected thereby and Borrowers and acknowledged by Agent, do any of the
following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required
to take any action hereunder,
(e) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section
16.12,
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or any Guarantor from any obligation
for the payment of money, or
(j) change the definition of Borrowing Base or the definitions
of Eligible Accounts, Eligible Inventory, Maximum Revolver Amount, or change
Section 2.1(b); or
(k) amend any of the provisions of Section 16.
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and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent or Issuing Lender, affect the rights or
duties of Agent or Issuing Lender, as applicable, under this Agreement or any
other Loan Document. The foregoing notwithstanding, any amendment, modification,
waiver, consent, termination, or release of, or with respect to, any provision
of this Agreement or any other Loan Document that relates only to the
relationship of the Lender Group among themselves, and that does not affect the
rights or obligations of Borrowers, shall not require consent by or the
agreement of Borrowers.
15.2 REPLACEMENT OF HOLDOUT LENDER If any action to be taken by the Lender
Group or Agent hereunder requires the unanimous consent, authorization, or
agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "Replacement
Lender"), and the Holdout Lender shall have not right to refuse to be replaced
hereunder. Such notice to replace the Holdout Lender shall specify an effective
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.
Prior to the effective date of such replacement, the Holdout Lender
and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or, any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
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16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby designates
and appoints Foothill as its representative under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 16. The
provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, PPSA financing statements, amendments,
renewals, supplements, documents, instruments, proofs of claim, notices and
other written agreements with respect to the Loan Documents, (c) make Advances,
for itself or on behalf of Lenders as provided in the Loan Documents, (d)
exclusively receive, apply, and distribute the Collections as provided in the
Loan Documents, (e) open and maintain such bank accounts and cash management
accounts as Agent deems necessary and appropriate in accordance with the Loan
Documents for the foregoing purposes with respect to the Collateral and the
Collections, (f) perform, exercise, and enforce any and all other rights and
remedies of the Lender Group with respect to Borrowers, the Obligations, the
Collateral, the Collections, or otherwise related to any of same as provided in
the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent
may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent
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or attorney-in-fact that it selects as long as such selection was made without
gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrowers referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
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actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 16.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, 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.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders
for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
received by Agent to reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from Collections received by Agent, each
Lender hereby agrees that it is and shall be obligated to pay to or reimburse
Agent for the amount of such Lender's Pro Rata
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Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of Borrowers and without limiting
the obligation of Borrowers to do so), according to their Pro Rata Shares, from
and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an Advance or other
extension of credit hereunder. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender's ratable share of any costs
or out-of-pocket expenses (including attorneys fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Borrowers. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and
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duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 16 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement. If no successor Agent has accepted appointment as Agent by the
date which is 45 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11 INTENTIONALLY DELETED.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Borrowers certify to Agent that the sale or disposition is permitted under
Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry), (iii)
constituting property in which no Borrower owned any interest at the time the
security interest was granted or at any time thereafter, or (iv) constituting
property leased to a Borrower under a lease that has expired or is terminated in
a transaction permitted under this Agreement. Except as provided above, Agent
will not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or substantially all
of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders.
Upon request by Agent or Borrowers at any time, the Lenders will confirm in
writing Agent's authority to release any such Liens on particular types or items
of Collateral pursuant to this Section 16.12; provided,
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however, that (1) Agent shall not be required to execute any document necessary
to evidence such release on terms that, in Agent's opinion, would expose Agent
to liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge, affect, or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
Borrowers in respect of) all interests retained by Borrowers, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrowers or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata
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Shares; provided, however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the UCC can be perfected only by possession. Should any Lender obtain possession
of any such Collateral, such Lender shall notify Agent thereof, and, promptly
upon Agent's request therefor shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by Agent
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to this
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon the Books, as well as on representations of
Borrowers' personnel,
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(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
however, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Borrowers of any request by any court,
governmental or administrative agency, or pursuant to any subpoena or other
legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Borrowers the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrowers, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrowers a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent
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in its capacity as such, and not by or in favor of the Lenders, any and all
obligations on the part of Agent (if any) to make any credit available hereunder
shall constitute the several (and not joint) obligations of the respective
Lenders on a ratable basis, according to their respective Commitments, to make
an amount of such credit not to exceed, in principal amount, at any one time
outstanding, the amount of their respective Commitments. Nothing contained
herein shall confer upon any Lender any interest in, or subject any Lender to
any liability for, or in respect of, the business, assets, profits, losses, or
liabilities of any other Lender. Each Lender shall be solely responsible for
notifying its Participants of any matters relating to the Loan Documents to the
extent any such notice may be required, and no Lender shall have any obligation,
duty, or liability to any Participant of any other Lender. Except as provided in
Section 16.7, no member of the Lender Group shall have any liability for the
acts or any other member of the Lender Group. No Lender shall be responsible to
any Borrower or any other Person for any failure by any other Lender to fulfill
its obligations to make credit available hereunder, nor to advance for it or on
its behalf in connection with its Commitment, nor to take any other action on
its behalf hereunder or in connection with the financing contemplated herein.
16.19 LEGAL REPRESENTATION OF AGENT. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇, P.C. ("MHKH") only has represented and only shall represent
Foothill in its capacity as Agent and as a Lender. Each other Lender hereby
acknowledges that MHKH does not represent it in connection with any such
matters.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by Borrowers, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing in accordance with Section 15.1.
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17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Borrower or Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.8 INTEGRATION. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
PCI CHEMICALS CANADA COMPANY
a Nova Scotia unlimited liability company
By:
-------------------------------------
Title:
----------------------------------
PIONEER AMERICAS LLC
a Delaware limited liability company
By:
-------------------------------------
Title:
----------------------------------
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a Lender
By:
-------------------------------------
Title:
----------------------------------
SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT
SCHEDULE A-1
AGENT'S ACCOUNT
An account at a bank designated by Agent from time to time as the
account into which Borrowers shall make all payments to Agent for the benefit of
the Lender Group and into which the Lender Group shall make all payments to
Agent under this Agreement and the other Loan Documents; unless and until Agent
notifies Borrowers and the Lender Group to the contrary, Agent's Account shall
be that certain deposit account bearing account number 323-266193 and maintained
by Agent with ▇▇ ▇▇▇▇▇▇ Chase Bank, ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ABA #▇▇▇▇▇▇▇▇▇.
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SCHEDULE D-1
DESIGNATED ACCOUNT
Account number _________ of Borrowers maintained with Borrowers'
Designated Account Bank, or such other deposit account of Borrowers (located
within the United States) that has been designed as such, in writing, by
Borrowers to Agent.
"Designated Account Bank" means ____________, whose office is
located at _________, and whose ABA number is _____________.
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