1
EXHIBIT 10.14
NATIONSBANK
NATIONSBANK, N.A.
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
among
THE GNI GROUP, INC.,
GNI CHEMICALS CORPORATION,
DISPOSAL SYSTEMS, INC.
DISPOSAL SYSTEMS OF CORPUS CHRISTI, INC.
RESOURCE TRANSPORTATION SERVICES, INC.
AND
GULF NUCLEAR OF LOUISIANA, INC.
as Borrowers,
NATIONSBANK, N.A.,
as Agent and a Lender
(AND THE OTHER LENDERS, IF ANY, FROM TIME TO TIME PARTY HERETO),
as Lenders
Dated effective as of July 28, 1998
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TABLE OF CONTENTS
Page
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ARTICLE 1 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 2 - Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 2.1 Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 2.2 Manner of Borrowing Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . 39
Section 2.3 Repayment of Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.4 Revolving Credit Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.5 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.7 Extension of Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 3 - Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.1 Agreement to Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.2 Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.3 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.4 Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 3.5 Duties of L/C Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.6 Payment of Reimbursement Obligations . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.7 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.8 Indemnification, Exoneration . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 3.9 Supporting Letter of Credit; Cash Collateral . . . . . . . . . . . . . . . . . . . 48
ARTICLE 4 -[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 5 - General Loan Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.1 Procedure for Borrowing and Disbursement of Loans . . . . . . . . . . . . . . . . . 48
Section 5.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.3 Interest Rate Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.4 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.5 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.6 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.7 Loan Accounts; Statements of Account . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.8 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.9 Making of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 5.10 Settlement Among Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 5.11 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 5.12 Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 6 - Change of Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.1 Increased Cost and Reduced Return. . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.2 Limitation on Types of Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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Section 6.3 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.4 Treatment of Affected Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.5 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 6.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE 7 - Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.1 Conditions Precedent to Loans and Letters of Credit . . . . . . . . . . . . . . . . 65
Section 7.2 All Loans; Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE 8 - Representations and Warranties of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.2 Survival of Representations and Warranties, Etc. . . . . . . . . . . . . . . . . . 81
ARTICLE 9 - Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.1 Security Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.2 Continued Priority of Security Interest . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE 10 - Collateral Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.1 Collection of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.2 Verification and Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.3 Disputes, Returns and Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 10.4 Invoices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 10.5 Delivery of Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 10.6 Sales of Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 10.7 Ownership and Defense of Title . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 10.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 10.9 Location of Offices and Collateral. . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 10.10 Records Relating to Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 10.11 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 10.12 Information and Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 10.13 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 10.14 Real Estate and Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 10.15 Assignment of Claims Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 10.16 Voting Rights, Distributions, etc.,
in respect of Investment Property . . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE 11 - Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.1 Preservation of Corporate Existence and Similar Matters . . . . . . . . . . . . . . 91
Section 11.2 Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.3 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 11.4 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 11.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 11.6 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 11.7 Accounting Methods and Financial Records . . . . . . . . . . . . . . . . . . . . . 93
Section 11.8 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 11.9 Hazardous Waste and Substances;
Environmental Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
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ARTICLE 12 - Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 12.1 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 12.2 Accountants' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 12.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 12.4 Copies of Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 12.5 Notice of Litigation and Other Matters . . . . . . . . . . . . . . . . . . . . . . 96
Section 12.6 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 12.7 Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 12.8 Revisions or Updates to Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 12.9 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 12.10 Annual Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE 13 - Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 13.1 Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 13.2 Indebtedness for Money Borrowed . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 13.3 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 13.4 Investments; Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 13.5 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 13.6 Restricted Dividend Payments and Purchases, Etc. . . . . . . . . . . . . . . . . . 99
Section 13.7 Merger, Consolidation and Sale of Assets . . . . . . . . . . . . . . . . . . . . . 100
Section 13.8 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 13.9 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 13.10 Capitalized Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 13.11 Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 13.12 Real Estate Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 13.13 Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 13.14 Sales and Leasebacks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
ARTICLE 14 - Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 14.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 14.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 14.3 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 14.4 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 14.5 Miscellaneous Provisions Concerning Remedies. . . . . . . . . . . . . . . . . . . . 108
Section 14.6 Registration Rights; Private Sales; Etc. . . . . . . . . . . . . . . . . . . . . . 109
ARTICLE 15 - Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 15.1 Assignments and Participations. . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 15.2 Representation of Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
ARTICLE 16 - Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 16.1 Appointment, Powers, and Immunities. . . . . . . . . . . . . . . . . . . . . . . . 113
Section 16.2 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 16.3 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 16.4 Rights as Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
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Section 16.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 16.6 Non-Reliance on Agent and Other Lenders. . . . . . . . . . . . . . . . . . . . . . 115
Section 16.7 Resignation of Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
ARTICLE 17 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Section 17.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Section 17.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Section 17.3 Stamp and Other Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Section 17.4 Right of Set-Off; Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . 118
Section 17.5 Litigation; Waiver of Trial by Jury. . . . . . . . . . . . . . . . . . . . . . . . 119
Section 17.6 Consent to Advertising and Publicity . . . . . . . . . . . . . . . . . . . . . . . 120
Section 17.7 Reversal of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 17.8 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 17.9 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 17.10 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 17.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Section 17.12 Performance of Borrower's Duties . . . . . . . . . . . . . . . . . . . . . . . . . 122
Section 17.13 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Section 17.14 All Powers Coupled with Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 124
Section 17.15 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Section 17.16 Titles and Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Section 17.17 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Section 17.18 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Section 17.19 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Section 17.20 Reproduction of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Section 17.21 Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Section 17.22 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Section 17.23 Pro-Rata Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Section 17.24 Interest Limitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Section 17.25 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Section 17.26 Extension, Renewal and Replacement of
Existing Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Section 17.27 Amendment and Restatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
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EXHIBITS
Exhibit "A" Form of Revolving Credit Note
Exhibit "B" [RESERVED]
Exhibit "C" Form of Borrowing Base Certificate
Exhibit "D" Form of Assignment and Acceptance
Exhibit "E" Form of Settlement Report
Exhibit "F" Form of Notice of Borrowing, Conversion or Continuation
Exhibit "G" Form of Compliance Certificate
SCHEDULES
Schedule 1.1A Permitted Investments
Schedule 1.1B Permitted Liens
Schedule 8.1(a) Organization
Schedule 8.1(b) Capitalization
Schedule 8.1(d) Subsidiaries; Ownership of Stock
Schedule 8.1(f) Compliance with Laws
Schedule 8.1(h) Governmental Approvals
Schedule 8.1(i) Title to Properties
Schedule 8.1(j) Liens
Schedule 8.1(k) Indebtedness and Guaranties
Schedule 8.1(l) Litigation
Schedule 8.1(m) Tax Matters
Schedule 8.1(q) ERISA
Schedule 8.1(u) Location of Offices and Receivables
Schedule 8.1(v) Location of Inventory
Schedule 8.1(w) Equipment
Schedule 8.1(x) Real Estate
Schedule 8.1(y) Corporate and Fictitious Names
Schedule 8.1(bb) Employee Relations
Schedule 8.1(cc) Proprietary Rights
Schedule 8.1(dd) Trade Names
Schedule 8.1(ee) Investment Property
Schedule 11.8 Use of Proceeds
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement"),
dated effective as of July 28, 1998 is executed and entered into by and among
THE GNI GROUP, INC., a Delaware corporation ("GNI"), GNI CHEMICALS CORPORATION,
a Delaware corporation ("GNICC"), DISPOSAL SYSTEMS, INC., a Delaware
corporation ("DSI"), DISPOSAL SYSTEMS OF CORPUS CHRISTI, INC., a Delaware
corporation ("DSCCI"), RESOURCE TRANSPORTATION SERVICES, INC., a Delaware
corporation ("RTSI"), and GULF NUCLEAR OF LOUISIANA, INC., a Delaware
corporation ("GNLI" and, together with GNI, GNICC, DSI, DSCCI and RTSI,
jointly, severally and collectively, for all purposes of this agreement,
"Borrower"), each of the lending institutions which is a party hereto or any
permitted successor or assignee thereof permitted pursuant to Section 15.1
(individually, a "Lender" and collectively, the "Lenders"), the L/C Issuer (as
such term is defined herein) and NATIONSBANK, N.A., a national banking
association, as agent for itself and the other Lenders (in such capacity,
together with its successors and assigns in such capacity, "Agent").
RECITALS:
A. Borrower has requested that the Lenders extend the credit
facilities defined herein to Borrower for the purposes of (i) refinancing
Borrower's current credit facilities referred to below, (ii) for working
capital and other general corporate purposes and (iii) to finance acquisitions
as provided herein.
B. The credit facilities provided by this Agreement shall
refinance (but not extinguish) Borrower's existing Indebtedness under and
pursuant to that certain Credit Agreement dated June 30, 1993 (as amended to
date, the "Existing Credit Agreement"), among GNI, certain of its Subsidiaries
and NationsBank of Texas, N.A. (now NationsBank, N.A. as successor by merger to
NationsBank of Texas, N.A.) and such credit facilities are to be secured by and
succeed, as assignee, to the Liens created in favor of such prior lender in the
collateral securing such refinanced Indebtedness.
C. The Lenders have agreed to provide such loan facilities upon
and subject to the terms and conditions set forth in this Agreement and the
other Loan Documents (as defined below).
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
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ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, the
following terms have the following meanings:
"Account Debtor" means a Person who is obligated on a Receivable.
"Acquire" or "Acquisition", as applied to any Business Unit or
Investment, means the acquiring or acquisition of such Business Unit or
Investment by purchase, exchange, issuance of stock or other securities, or by
merger, reorganization or any other method.
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by Agent to be equal to the quotient
obtained by dividing (a) the Eurodollar Rate for such Eurodollar Loan for such
Interest Period by (b) one (1) minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Affected Loans" has the meaning set forth in Section 6.4 of this
Agreement
"Affected Type" has the meaning set forth in Section 6.4 of this
Agreement.
"Affiliate" means, with respect to any Person, (a) any partner,
officer, shareholder (if holding more than ten percent (10.0%) of the
outstanding Capital Stock of such Person), director, employee or managing agent
of such Person, (b) any Subsidiary of such Person and (c) any other Person
(other than a Subsidiary) that, (i) directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
such Person, (ii) directly or indirectly beneficially owns or holds ten percent
(10.0%) or more of any class of Voting Stock of such Person or any Subsidiary
of such Person, or (iii) ten percent (10.0%) or more of the Voting Stock of
which is directly or indirectly beneficially owned or held by such Person or a
Subsidiary of such Person. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of Voting Stock, by
contract or otherwise.
"Agency Account" means an account of Borrower maintained by it with a
Clearing Bank pursuant to an Agency Account Agreement.
"Agency Account Agreement" means any agreement (if required pursuant
to Section 10.1(a)) among Borrower, Agent and a Clearing Bank, in form and
substance satisfactory to Agent, which designates an Agency Account for the
deposit of checks and items constituting proceeds of Receivables or any other
Collateral, and establishes the terms for transferring balances therein to
Agent.
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"Agent" means NationsBank in its capacity as administrative agent for
the Credit Parties as provided by this Agreement.
"Agreement" means and includes this Agreement and all exhibits,
schedules, addenda and other attachments hereto, and any renewal, extension,
amendment, modification, restatement or supplement hereof.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Law" means, with respect to any Person, all provisions of
constitutions, statutes, rules, regulations and orders of any Governmental
Authority applicable to such Person or its property, including, without
limitation, all orders and decrees of all courts and arbitrators in proceedings
or actions to which such Person is a party and all Environmental Laws.
"Applicable Lending Office" means, for each Lender and for each Type
of Loan, the "Lending Office" of such Lender (or of an Affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or such
other office of such Lender (or an Affiliate of such Lender) as such Lender may
from time to time specify to Agent and Borrower by written notice in accordance
with the terms hereof as the office by which its Loans of such Type are to be
made and maintained.
"Applicable Margin" means the percentage margin over the Base Rate or
the Eurodollar Rate, as applicable, determined in accordance with Section 5.2.
"Applicable Rate" means, at any time, (i) the Base Rate plus the
Applicable Margin with respect to Base Rate Loans, and (ii) the Adjusted
Eurodollar Rate plus the Applicable Margin with respect to Eurodollar Loans, as
the case may be, in effect at any time pursuant to a Notice of Borrowing or
otherwise pursuant to the terms of this Agreement.
"Asset Disposition" means, with respect to any Person, the disposition
of any asset of such Person other than sales of Inventory in the ordinary
course of business.
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement in the form attached hereto as Exhibit "D" assigning all or a portion
of a Lender's interests, rights and obligations under this Agreement to an
Eligible Assignee pursuant to Section 15.1.
"Base Rate" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus one-half of one percent (0.5%)
or (b) the Prime Rate for such day. Any change in the Base Rate due to a
change in the Federal Funds Rate or the Prime Rate shall be effective on the
effective date of such change in the Federal Funds Rate or the Prime Rate;
provided that, changes, if any, in the Applicable Rate resulting from any
change in the Base Rate shall become effective as provided in Section 5.2(e).
"Base Rate Loan" means any Loan that bears interest at a rate based on
the Base Rate.
"Benefit Plan" means, with respect to any Person, an "employee pension
benefit plan" as defined in Section 3(2) of ERISA (other than a Multiemployer
Plan) in respect of which such Person
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or any Related Company is, or within the immediately preceding six (6) years
was, an "employer" as defined in Section 3(5) of ERISA, including, without
limitation, such plans as may be established after the Agreement Date.
"Benefitted Lender" has the meaning set forth in Section 17.4 of this
Agreement.
"Borrower" means each of the following, collectively, and jointly and
severally: (i) GNI (federal tax identification number ▇▇-▇▇▇▇▇▇▇), a Delaware
corporation, with its chief executive offices located in Houston, Texas, (ii)
GNICC (federal tax identification number ▇▇-▇▇▇▇▇▇▇), a Delaware corporation,
with its chief executive offices located in Houston, Texas, (iii) DSI (federal
tax identification number ▇▇-▇▇▇▇▇▇▇), a Delaware corporation, with its chief
executive offices located in Houston, Texas, (iv) DSCCI (federal tax
identification number ▇▇-▇▇▇▇▇▇▇), a Delaware corporation, with its chief
executive offices located in Houston, Texas, (v) RTSI (federal tax
identification number 76- 0246979), a Delaware corporation, with its chief
executive offices located in Houston, Texas, and (vi) GNLI (federal tax
identification number ▇▇-▇▇▇▇▇▇▇), a Delaware corporation, with its chief
executive offices located in Houston, Texas.
"Borrowing Base" means, at any time, an amount equal to the lesser of:
(a) the maximum principal amount of the Revolving Credit
Facility, minus the sum of
(i) the Letter of Credit Reserve, plus
(ii) the EQ Sublimit Reserve, plus
(iii) the Reserve, plus
(iv) the Environmental Compliance Reserves; or
(b) an amount equal to the sum of
(i) eighty five percent (85%) (or such lesser
percentage as Agent may determine pursuant to
Section 2.5) of the face value of Eligible
Receivables due and owing at such time, plus
(ii) the EQ Sublimit Allowance, minus
(iii) the sum of
(A) the Letter of Credit Reserve, plus
(B) the Reserve, plus
(C) the Environmental Compliance
Reserves.
"Borrowing Base Certificate" means a certificate, signed by an
authorized representative of Borrower, in substantially the form attached
hereto as Exhibit "C".
"Broker" means any "broker," as such term is defined in Chapter 8 (or
Article 8) of the UCC, and in any event shall include, but not be limited to,
any Person defined as a broker or dealer under the federal securities laws, but
without excluding a bank acting in that capacity.
"Business Day" means (a) any calendar day other than Saturday, Sunday
or other day on which banks in Dallas, Texas are authorized to close, and (b)
with respect to all Advances, payments, Conversions, Continuations, Interest
Periods and notices in connection with any Eurodollar Loan,
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any day which is a Business Day described in clause (a) above and which is also
a day on which dealings in Dollar deposits are carried out in the London
interbank Eurodollar market.
"Business Unit" means all or substantially all of the assets
constituting the business, or a division or operating unit thereof, of any
Person.
"Capital Expenditures" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets (other
than assets which constitute a Business Unit) which are not, in accordance with
GAAP, treated as expense items for such Person in the year made or incurred or
as a prepaid expense applicable to a future year or years.
"Capital Stock" means corporate stock and any and all shares,
partnership interests, membership interests, equity interests, rights,
securities or other equivalent evidences of ownership (however designated)
issued by any entity (whether a corporation, partnership, limited liability
company, limited partnership or other type of entity).
"Capitalized Lease" means a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Cash Collateral" means Collateral consisting of cash or Cash
Equivalents on which Agent, for the benefit of the Credit Parties, has a first
priority Lien.
"Cash Equivalents" means, with respect to any Person:
(a) marketable direct obligations issued or
unconditionally guaranteed by the U.S. or issued by any agency
thereof and backed by the full faith and credit of the U.S., in each
case maturing within one (1) year from the date of acquisition
thereof;
(b) commercial paper maturing no more than one (1) year
from the date issued and, at the time of acquisition thereof, having a
rating of at least A-1 from Standard & Poor's Corporation or at least
P-1 from ▇▇▇▇▇'▇ Investors Service, Inc.;
(c) certificates of deposit or bankers' acceptances
issued in Dollar denominations and maturing within one (1) year from
the date of issuance thereof issued by any commercial bank organized
under the laws of the U.S. or any state thereof or the District of
Columbia having combined capital and surplus of not less than
$100,000,000 and, unless issued by Agent or a Lender, not subject to
set-off or offset rights in favor of such bank arising from any
banking relationship with such bank; and
(d) repurchase agreements in form and substance and for
amounts satisfactory to Agent.
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"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of Borrower taken as a whole to any "person"
(as such term is used in Section 13(d) (3) of the Securities Exchange Act)
other than a Principal or a Permitted Transferee of a Principal, (ii) the
adoption of a plan relating to the liquidation or dissolution of GNI, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than the Principals and their Permitted Transferees, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Securities Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition), directly or indirectly, of more
than 50% of the Voting Stock of GNI (measured by voting power rather than
number of shares), (iv) the consummation of the first transaction (including,
without limitation, any merger or consolidation) the result of which is that
any "person" (as defined above) becomes the "beneficial owner" (as defined
above), directly or indirectly, of at least 40% of, as well as more, of the
Voting Stock of GNI (measured by voting power rather than number of shares)
than is at the time "beneficially owned" (as defined above) by the Principals
and their Permitted Transferees in the aggregate or (v) the first day on which
a majority of the members of the Board of Directors of GNI are not Continuing
Directors.
"Clearing Bank" means NationsBank and any other banking institution
with which an Agency Account has been established pursuant to an Agency Account
Agreement.
"Clearing Corporation" means any "clearing corporation," as such term
is defined in Chapter 8 (or Article 8) of the UCC, and in any event shall
include, but not be limited to, any (i) Person that is registered as a
"clearing agency" under the federal securities laws, (ii) federal reserve bank,
or (iii) other Person that provides clearance or settlement services with
respect to Financial Assets that would require it to register as a clearing
agency under the federal securities laws but for an exclusion or exemption from
the registration requirement, if its activities as a clearing corporation,
including promulgation of rules, are subject to regulation by a federal or
state Governmental Authority.
"Collateral" means and includes all of Borrower's right, title and
interest in and to each of the following, wherever located and whether now or
hereafter existing or now owned or hereafter acquired or arising:
(a) all Receivables;
(b) all Inventory;
(c) all Equipment;
(d) all Contract Rights;
(e) all General Intangibles;
(f) all Investment Property;
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(g) all Real Estate;
(h) all Permits;
(i) all goods and other property, whether or not
delivered,
(i) the sale or lease of which gives or purports
to give rise to any Receivable, including, but not limited to,
all merchandise returned or rejected by or repossessed from
customers, or
(ii) securing any Receivable,
including, without limitation, all rights as an unpaid vendor or
lienor (including, without limitation, stoppage in transit, replevin
and reclamation) with respect to such goods and other property;
(j) all mortgages, deeds to secure debt and deeds of
trust on real or personal property, guaranties, leases, security
agreements and other agreements and property which secure or relate to
any Receivable or other Collateral, or are acquired for the purpose of
securing and enforcing any item thereof;
(k) all documents of title, policies and certificates of
insurance, securities, chattel paper and other documents and
instruments evidencing or pertaining to any and all items of
Collateral;
(l) all files, correspondence, computer programs, tapes,
discs and related data processing software which contain information
identifying or pertaining to any of the Receivables or any Account
Debtor, or showing the amounts thereof or payments thereon or
otherwise necessary or helpful in the realization thereon or the
collection thereof;
(m) all deposit accounts and all cash deposited with any
Clearing Bank, Agent or any Lender or any Affiliate of Agent or any
Lender or which Agent, for the benefit of the Credit Parties, or any
Lender or such Affiliate is entitled to retain or otherwise possess as
collateral pursuant to the provisions of this Agreement or any of the
Security Documents or any agreement relating to any Letter of Credit;
(n) all Receivables Guaranties;
(o) all Receivables L/C's; and
(p) any and all products and proceeds of the foregoing
(including, but not limited to, any claim to any item referred to in
this definition, and any claim against any third party for loss of,
damage to or destruction of any or all of, the Collateral or for
proceeds payable under, or unearned premiums with respect to, policies
of insurance) in whatever form, including, but not limited to, cash,
negotiable instruments and other instruments for the payment of money,
chattel paper, security agreements and other documents.
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"Collateral Assignment of Liens" means, a Collateral Assignment of
Liens in form and substance satisfactory to Agent pursuant to which
NationsBank, as agent under the Existing Credit Agreement, assigns to Agent the
security interests, Liens and collateral provided for by the Existing Credit
Agreement, for the benefit of the Credit Parties, as such agreement may be
renewed, extended, continued, modified, amended or restated from time to time.
"Commitment" means, as to each Lender, the amount set forth opposite
such Lender's name on the signature pages hereof representing such Lender's
obligation, upon and subject to the terms and conditions of this Agreement
(including the applicable provisions of Section 14.2), to make Revolving Credit
Loans and to purchase participations in Letters of Credit or, from and after
the date hereof, in the Register representing such Lender's obligation to make
Revolving Credit Loans and to purchase participations in Letters of Credit.
"Commitment Percentage" means, as to any Lender, the percentage
obtained by dividing such Lender's Commitment by the Total Commitment.
"Compliance Certificate" means a certificate of Borrower's President
or a Financial Officer, in substantially the form of Exhibit "G", containing
the information required by Section 12.3 of this Agreement.
"Consolidated", when used in connection with any accounting term with
reference to a Person, means such accounting term determined with reference to
such Person and its Subsidiaries, as consolidated according to GAAP (and, in
the case of Net Income and Tangible Net Worth, after appropriate deductions for
any minority interests in any Subsidiaries).
"Consolidated Subsidiaries" means, as to a Person, the Subsidiaries of
such Person whose accounts are at the time in question, in accordance with GAAP
and, for purposes of this Agreement, with the consent of Agent (which consent
may be withheld in Agent's discretion conditioned upon, inter alia, the
execution and delivery of such Guaranties, Security Documents and other
documents required by Agent in its discretion), consolidated with those of such
Person.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste as may be
controlled or regulated by Applicable Law.
"Continue", "Continuation" and "Continued" mean the continuation
pursuant to Section 5.3(b) hereof of a Eurodollar Loan as a Eurodollar Loan
from one Interest Period to the next Interest Period.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of GNI who (i) was a member of such Board of
Directors on the Effective Date or (ii) was nominated for election or elected
to such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
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"Contract Rights" means any rights under contracts not yet earned by
performance and not evidenced by an instrument or chattel paper, whether now
existing or hereafter arising, to the extent that such rights may be lawfully
assigned.
"Convert", "Conversion" and "Converted" mean a conversion pursuant to
Section 5.3(c) or Article 6 of one Type of Loan into another Type of Loan.
"Copyright Security Agreement" means a Copyright Security Agreement
executed by any Loan Party in favor of Agent, for the benefit of the Credit
Parties, as such agreement may be amended, modified, restated or supplemented
from time to time.
"Copyrights" means and includes, with respect to any Person, all of
such Person's right, title and interest in and to the following, in each case
whether now existing or hereafter arising:
(a) all copyrights, rights and interests in copyrights,
works protectable by copyright, copyright registrations and copyright
applications;
(b) all renewals of any of the foregoing;
(c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing, including,
without limitation, damages or payments for past or future
infringements of any of the foregoing;
(d) the right to ▇▇▇ for past, present and future
infringements of any of the foregoing; and
(e) all rights corresponding to any of the foregoing
throughout the world.
"Cost of Acquisition" means, with respect to any Acquisition, as of
the date of such Acquisition, the sum of the following (without duplication):
(a) the value of the capital stock (or other ownership interests), warrants or
options to acquire capital stock (or other ownership interests) of Borrower or
any of its Subsidiaries to be transferred in connection therewith, (b) the
amount of any cash and the fair market value of all other property (excluding
property described in clause (a) and the unpaid principal amount of any
Indebtedness) given as consideration, (c) the amount (determined by using the
face amount or the amount payable at maturity, whichever is greater) of any
Indebtedness incurred (without duplication), assumed or acquired by Borrower or
any of its Subsidiaries in connection with such Acquisition, (d) all additional
purchase price amounts in the form of earnouts and other contingent obligations
that should be recorded on the financial statements of Borrower and its
Subsidiaries in accordance with GAAP, (e) all amounts paid in respect of
covenants not to compete or consulting agreements that should be capitalized on
financial statements of Borrower and its Subsidiaries in accordance with GAAP,
and (f) the aggregate fair market value of all other consideration given by
Borrower or any of its Subsidiaries in connection with such Acquisition.
"Credit Party" means each of Agent, L/C Issuer and the Lenders, and
"Credit Parties" means all of such Persons, collectively.
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"Current Assets" means, with respect to any Person, the aggregate
amount of assets of such Person which should properly be classified as current
assets in accordance with GAAP, after deducting adequate reserves in each case
where a reserve is appropriate in accordance with GAAP.
"Current Liabilities" means, with respect to any Person, the aggregate
amount of all Liabilities of such Person which should properly be classified as
current liabilities in accordance with GAAP.
"Default" means any of the events specified in Section 14.1 which with
the passage of time or giving of notice or both would constitute an Event of
Default.
"Default Margin" means two percent (2.00%).
"Disbursement Account" means one or more accounts maintained by and in
the name of Borrower with a Disbursing Bank for the purposes of disbursing
Revolving Credit Loan proceeds and amounts deposited to such account or
accounts.
"Disbursing Bank" means any commercial bank with which a Disbursement
Account is maintained after the Effective Date.
"DSI" has the meaning set forth in the first paragraph hereof.
"DSCCI" has the meaning set forth in the first paragraph hereof.
"Dollar" and "$" each means freely transferable U.S. dollars.
"EBITDA" means Net Income, plus, (a) for each fiscal quarter to the
extent deducted in the determination of Net Income, each of the following: (i)
interest expense; (ii) income or franchise taxes; and (iii) depreciation and
amortization expense, plus (b) for fiscal 1998, to the extent deducted in the
determination of Net Income, up to $1,237,000 of charges referred to in the
definition of EBITDA contained in the Summary Historical and Unaudited Pro
Forma Condensed Consolidated Financial Data in the Offering Memorandum.
"Effective Date" means the later of:
(a) the Agreement Date; or
(b) the first date on which all of the conditions set
forth in Article 7 shall have been fulfilled or waived in accordance
with the provisions of Section 17.10.
"Effective Interest Rate" means each rate of interest per annum on the
Revolving Credit Loans in effect from time to time pursuant to the provisions
of Sections 5.2(a) and (c).
"Eligible Assignee" means (i) a Lender, (ii) any Affiliate of a
Lender, and (iii) any other Person approved by Agent and, unless a Default or
Event of Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 15.1, Borrower, such approval, if required,
not to be unreasonably withheld or delayed by Borrower and such approval to be
deemed
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given by Borrower if no objection is received by the assigning Lender and Agent
from Borrower within two (2) Business Days after notice of such proposed
assignment has been provided by the assigning Lender to Borrower; provided,
however, that neither Borrower nor an Affiliate of Borrower shall qualify as an
Eligible Assignee.
"Eligible Equipment" means such of Borrower's Equipment as Agent may
determine in its sole discretion to be eligible for purposes of determining the
EQ Sublimit Allowance.
"Eligible Receivable" means a Receivable that consists of the unpaid
portion of the obligation stated on the invoice issued to an Account Debtor
with respect to Inventory sold and shipped to or services performed for such
Account Debtor in the ordinary course of Borrower's business, net of any
credits or rebates owed by Borrower to the Account Debtor and net of any
commissions payable by Borrower to third parties and that Agent, in its
absolute discretion determines to meet all of the following requirements:
(a) such Receivable is owned by Borrower and represents a
complete bona fide transaction which requires no further act under any
circumstances on the part of Borrower to make such Receivable payable
by the Account Debtor;
(b) such Receivable is not more than sixty (60) days past
due from the stated due date of the original invoice;
(c) not more than ninety (90) days have elapsed from the
date of the original invoice;
(d) the goods the sale of which gave rise to such
Receivable were shipped or delivered to the Account Debtor on an
absolute sale basis and not on a ▇▇▇▇ and hold sale basis, a
consignment sale basis, a guaranteed sale basis, a sale or return
basis or on the basis of any other similar understanding, and no
material part of such goods has been returned or rejected;
(e) such Receivable is not evidenced by chattel paper or
an instrument of any kind unless such chattel paper or instrument has
(i) been collaterally assigned to Agent, for the benefit of the Credit
Parties, pursuant to an assignment in form and substance satisfactory
to Agent and (ii) except as otherwise may be provided by Section 10.5,
is in the possession of Agent;
(f) the Account Debtor with respect to such Receivable is
not insolvent or the subject of any bankruptcy or insolvency
proceedings of any kind or of any other proceeding or action,
threatened or pending, which might, in Agent's sole judgment, have a
Material Adverse Effect on such Account Debtor, and is not, in the
reasonable discretion of Agent, deemed ineligible for credit or other
reasons;
(g) such Receivable is not owing by an Account Debtor
having twenty-five percent (25.0%) or more in face value of its then
existing aggregate total accounts owing to a Loan Party, in the
aggregate, which do not meet the requirements of clause (b) or clause
(c) above;
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(h) such Receivable is not owing by an Account Debtor
whose then existing accounts owing to Borrower exceed in face amount
twenty-five percent (25%) of Borrower's total Eligible Receivables;
(i) if such Receivable arises from the performance of
services, such services have been fully rendered and do not relate to
any warranty claim or obligation;
(j) such Receivable is not owing by an Account Debtor
that is located outside of the U.S.;
(k) such Receivable is a valid, legally enforceable
obligation of the Account Debtor with respect thereto and is not
subject to any present or contingent (and no facts exist which are the
basis for any future) offset, deduction or counterclaim, dispute or
other defense on the part of such Account Debtor;
(l) such Receivable is subject to the Security Interest,
which is perfected as to such Receivable in form and substance
satisfactory to Agent, and is subject to no other Lien whatsoever
other than a Permitted Lien;
(m) such Receivable is evidenced by an invoice or other
documentation in form acceptable to Agent;
(n) such Receivable is not subject to the Assignment of
Claims Act of 1940, as amended from time to time, or any Applicable
Law now or hereafter existing similar in effect thereto, or to any
other prohibition (under Applicable Law, by contract or otherwise)
against its assignment or requiring notice of or consent to such
assignment, unless all such required notices have been given, all such
required consents have been received and all other procedures have
been complied with such that such Receivable shall have been duly and
validly assigned to Agent, for the benefit of the Credit Parties;
(o) the goods giving rise to such Receivable were not, at
the time of the sale thereof, subject to any Lien, except the Security
Interest and Permitted Liens;
(p) Borrower is not in breach of any express or implied
representation or warranty with respect to the goods the sale of which
gave rise to such Receivable nor in breach of any representation or
warranty, covenant or other agreement contained in the Loan Documents
with respect to such Receivable;
(q) such Receivable does not arise out of any transaction
with any Subsidiary, Affiliate, creditor, tenant, lessor or supplier
of Borrower;
(r) Borrower is not the beneficiary of any letter of
credit, nor has any bond or other undertaking by a guarantor or surety
been obtained, supporting such Receivable and the Account Debtor's
obligations in respect thereof;
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(s) such Receivable does not arise out of finance or
similar charges by Borrower or other fees for the time value of money;
(t) the Account Debtor with respect to such Receivable is
not located in any state denying creditors access to its courts in the
absence of qualification to transact business in such state or the
filing of a Notice of Business Activities Report or other similar
filing, unless Borrower has either qualified as a foreign corporation
authorized to transact business in such state or has filed a Notice of
Business Activities Report or similar filing with the applicable
Governmental Authority for the then current year; and
(u) neither the Account Debtor with respect to such
Receivable, nor such Receivable, is determined by Agent in its
absolute discretion to be ineligible for any other reason.
"Entitlement Holder" means any Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary.
"Environmental Compliance Reserves" means reserves for the cost of
Remedial Action by Borrower determined by Agent from time to time in its
reasonable discretion based upon the reports delivered pursuant to Section
11.9(b) and such other advice, analysis and engineering studies as it deems
appropriate.
"Environmental Laws" means all federal, state, local and foreign laws
now or hereafter in effect relating to pollution or protection of the
environment, including laws relating to emissions, discharges, Releases or
threatened Releases of pollutants, Contaminants, chemicals or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport or handling of pollutants, Contaminants, chemicals
or industrial, toxic or hazardous substances or wastes, and any and all
regulations, notices or demand letters issued, entered, promulgated or approved
thereunder, including, but not limited to, the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 6901
et seq., as amended, the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq., as amended, the Clean Air Act, 46 U.S.C. Section 7401 et seq., as
amended, and state and federal lien and environmental cleanup programs.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a
Release or threatened Release of Contaminant into the environment.
"EQ Sublimit Allowance" means an amount, determined as of the time of
funding any EQ Sublimit Loan, equal to the lesser of (i) the sum of sixty five
percent (65%) of the Liquidation-in-Place Value of Eligible Equipment or (ii)
$7,000,000.
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"EQ Sublimit Loan" means each Revolving Credit Loan which is made as
an EQ Sublimit Loan pursuant to Section 2.6.
"EQ Sublimit Reserve" means, at any time, the aggregate unpaid balance
of all EQ Sublimit Loans at such time.
"Equipment" means and includes, with respect to a Person, all
equipment, including, without limitation, all machinery, apparatus, equipment,
drilling rigs and related equipment, piping, drill bits, engines, storage
tanks, injectors, reactors, separation equipment, motor vehicles, tractors,
trailers, rolling stock, fittings, fixtures and other tangible personal
property (other than Inventory) of every kind and description used in such
Person's business operations or owned by such Person or in which such Person
has an interest, and all parts, accessories and special tools and all increases
and accessions thereto and substitutions and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974 (as
amended), as in effect from time to time, any regulation promulgated thereunder
and any successor statute.
"Eurodollar Business Day" means a Business Day on which dealings in
Dollars are carried out in the London interbank Eurodollar market.
"Eurodollar Loans" means Loans that bear interest at rates based upon
the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two (2) Eurodollar Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period. If
for any reason such rate is not available, the term "Eurodollar Rate" shall
mean, for any Eurodollar Loan for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBOR Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two (2) Eurodollar Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBOR Page, the applicable rate shall be the arithmetic mean of
all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Event of Default" means any of the events specified in Section 14.1,
provided that any requirement for notice or lapse of time or any other
condition has been satisfied.
"Existing Credit Agreement" has the meaning set forth in the second
Recital herein.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day
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shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to Agent (in its individual capacity) on
such day on such transactions as determined by Agent.
"Financial Asset" means any financial asset, and in any event shall
include, but not be limited to, any (i) Security, (ii) obligation of a Person
or a share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment, and (iii) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Chapter 8 (or Article 8)
of the UCC.
"Financial Officer" means the chief financial officer, treasurer or
controller of Borrower.
"Financing Statements" means any and all UCC financing statements, as
requested by and in form and substance satisfactory to Agent, executed and
delivered by Borrower or any other Loan Party to Agent, naming Agent as secured
party and Borrower or such Loan Party as debtor, in connection with this
Agreement.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (i)
Operating Cash Flow minus income taxes actually paid during such period, to
(ii) the aggregate amount of Interest Expense (except for such Interest Expense
which has been paid in kind), principal amount of Money Borrowed (other than
the Revolving Loans) and preferred stock dividends (except preferred stock
dividends which have been paid in kind) paid during such period determined as
of the end of any fiscal quarter for the preceding four (4) completed fiscal
quarters.
"GAAP" means generally accepted accounting principles (existing as of
the Agreement Date as promulgated by opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
of the Financial Accounting Standards Board, including without limitation,
principles of purchase accounting) consistently applied and maintained
throughout the period indicated and, when used with reference to Borrower or
any other Loan Party, consistent with the prior financial practice of Borrower
or such Loan Party, as reflected on the financial statements referred to in
Section 8.1(o); provided, however, that, in the event that changes shall be
mandated by the Financial Accounting Standards Board or any similar accounting
authority of comparable standing, or shall be recommended by Borrower's or such
Loan Party's independent public accountants, such changes shall be included in
GAAP as applicable to Borrower and such Loan Party only from and after such
date as Borrower or such Loan Party, the Required Lenders and Agent shall have
amended this Agreement to the extent necessary to reflect any such changes in
the financial covenants set forth in Article 13.
"General Intangibles" means, with respect to any Person, all of such
Person's now owned or hereafter acquired general intangibles, chooses in
action, causes of action (whether arising in contract, tort or otherwise and
whether or not currently in litigation) and Permits, and all judgments in favor
of such Person and all other intangible personal property of every kind and
nature (other than Receivables), including, without limitation, all Proprietary
Rights, corporate or other business
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records, inventions, designs, blueprints, plans, specifications, goodwill,
computer software, customer lists, registrations, licenses, franchises, tax
refunds and tax refund claims, reversions or any rights thereto and any other
amounts payable to such Person from any Plan or other employee benefit plan,
rights and claims against carriers and shippers, rights and claims under
warranties, rights to indemnification, business interruption insurance and
proceeds thereof, property, liability, casualty or any similar type of
insurance and any proceeds thereof, and any letter of credit, Guaranty, claim,
security interest or other security held by or granted to such Person to secure
payment by an Account Debtor of any Receivable.
"GNI" has the meaning set forth in the first paragraph hereof.
"GNICC" has the meaning set forth in the first paragraph hereof.
"GNLI" has the meaning set forth in the first paragraph hereof.
"Government Acts" has the meaning set forth in Section 3.8(a)(ii) of
this Agreement.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses, Permits and exemptions of, registrations and filings with,
and reports to, any Governmental Authority, whether federal, state, local or
foreign national or provincial.
"Governmental Authority" means any nation or government, any federal,
state, county, municipal, parish, provincial or other political subdivision
thereof and any department, commission, board, court, agency or other
instrumentality or entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any
obligation of another Person shall mean and include:
(a) any guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business),
directly or indirectly, in any manner, of any part or all of such
obligation of such other Person; and
(b) any agreement, direct or indirect, contingent or
otherwise, and whether or not constituting a guaranty, the practical
effect of which is to assure the payment or performance (or payment of
damages in the event of nonperformance) of any part or all of such
obligation of such other Person whether by
(i) the purchase of securities or obligations,
(ii) the purchase, sale or lease (as lessee or
lessor) of property or the purchase or sale of services
primarily for the purpose of enabling the obligor with respect
to such obligation to make any payment or performance (or
payment of damages in the event of nonperformance) of or on
account of any part or all of such obligation, or to assure
the owner of such obligation against loss,
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(iii) the supplying of funds to or in any other
manner investing in the obligor with respect to such
obligation,
(iv) repayment of amounts drawn down by
beneficiaries of letters of credit, or
(v) the supplying of funds to or investing in a
Person on account of all or any part of such Person's
obligation under a Guaranty of any obligation or indemnifying
or holding harmless, in any way, such Person against any part
or all of such obligation.
"Guaranty Agreement" means any Guaranty Agreement executed by a
Guarantor in favor of Agent, for the benefit of the Credit Parties, as such
Guaranty Agreement may be amended, modified, restated or supplemented from time
to time.
"Indebtedness" of any Person means, without duplication, all
Liabilities of such Person, and to the extent not otherwise included in
Liabilities, the following:
(a) all obligations for Money Borrowed or for the
deferred purchase price of property or services;
(b) all obligations (including, during the noncancellable
term of any lease in the nature of a title retention agreement, all
future payment obligations under such lease discounted to their
present value in accordance with GAAP) secured by any Lien to which
any property or asset owned or held by such Person is subject, whether
or not the obligation secured thereby shall have been assumed by such
Person;
(c) all Indebtedness of other Persons which such Person
has Guaranteed, including, but not limited to, all obligations of such
Person consisting of recourse liability with respect to accounts
receivable sold or otherwise disposed of by such Person;
(d) all net obligations of such Person in respect of
Interest Rate Protection Agreements; and
(e) in the case of Borrower (without duplication) all
obligations under the Revolving Credit Loans and the Letter of Credit
Facility.
"Indemnified Party" has the meaning set forth in Section 17.13 of this
Agreement.
"Interest Coverage Ratio" means the ratio calculated pursuant to
Section 13.1(b).
"Interest Expense" means, for any period, the interest expense of
Borrower and its Subsidiaries for such period (including, without limitation,
interest on Debt and the interest portion of payments under Capital Lease
Obligations), determined on a consolidated basis in accordance with GAAP.
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"Interest Payment Date" means, with respect to Base Rate Loans, the
first day of each calendar month, and with respect to any Eurodollar Loan, the
last day of each corresponding Interest Period (and on the last day of the
third (3rd) month in the case of a six (6) month Interest Period), commencing
on September 1, 1998 and continuing thereafter until the Secured Obligations
have been irrevocably paid in full.
"Interest Period" means the period beginning on the day any Eurodollar
Loan is made and ending one (1), two (2), three (3) or six (6) months
thereafter (as Borrower may designate pursuant to a Notice of Borrowing);
provided, however:
(a) if any Interest Period would otherwise end on a day
which is not a Eurodollar Business Day, such Interest Period shall be
extended to the next succeeding Eurodollar Business Day, unless the
result of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period shall end
on the immediately preceding Eurodollar Business Day;
(b) any Interest Period with respect to a Eurodollar Loan
that begins on the last Eurodollar 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) shall end on
the last Eurodollar Business Day of a calendar month; and
(c) Borrower may not select any Interest Period which
ends after the date of a scheduled principal payment on the Loans
unless, after giving effect to such selection, the aggregate unpaid
principal amount of the Eurodollar Loans for which Interest Periods
end after such scheduled principal payment shall be equal to or less
than the principal amount to which the Loans are required to be
reduced after such scheduled principal payment is made.
"Interest Rate Protection Agreement" means an agreement between a
Person and any Lender, or any Affiliate of such Lender, now existing or
hereafter entered into, which provides for an interest rate 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,
any such or similar transactions, for the purpose of hedging such Person's
exposure to fluctuations in interest rates or currency valuations.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Inventory" means, with respect to a Person, all of such Person's
inventory and shall include, without limitation:
(a) all goods held or intended for sale or lease, or for
display or demonstration and other products intended for sale or
lease;
(b) all work-in-process;
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(c) all raw materials and other materials and supplies of
every nature and description used or which might be used in connection
with the manufacture, packing, shipping, advertising, selling, leasing
or furnishing of such goods or otherwise used or consumed in such
Person's business; and
(d) all documents evidencing and general intangibles
relating to any of the foregoing.
"Investment" means, with respect to any Person:
(a) the acquisition or ownership by such Person of any
share of Capital Stock, evidence of Indebtedness or other security
issued by any other Person;
(b) any loan, advance or extension of credit to, or
contribution to the capital of, any other Person, excluding advances
to employees in the ordinary course of business for business expenses;
(c) any Guaranty of the obligations of any other Person;
(d) any other investment (other than the Acquisition of a
Business Unit) in any other Person; and
(e) any commitment or option (where the consideration for
such option exceeds $100) to make any of the investments listed in
clauses (a) through (d) above.
"Investment Property" means any investment property, now owned or
hereafter acquired, and, in any event, shall include, without limitation, each
of the following: (a) any Security, whether certificated or uncertificated, (b)
any Security Entitlement, (c) any Securities Account, and (d) all proceeds of
any of the foregoing.
"IRS" means the Internal Revenue Service.
"Issuer" means any "issuer," as such term is defined in Chapter 8 (or
Article 8) of the UCC, and in any event shall include, but not be limited to,
any Person that, with respect to an obligation on or a defense to a Security,
(i) places or authorizes the placing of its name on a Security Certificate,
other than as authenticating trustee, registrar, transfer agent or the like, to
evidence a share, participation or other interest in its property or in an
enterprise, or to evidence its duty to perform an obligation represented by the
certificate, (ii) creates a share, participation or other interest in its
property or in an enterprise, or undertakes an obligation, that is an
Uncertificated Security; (iii) directly or indirectly creates a fractional
interest in its rights or property, if the fractional interest is represented
by a Security Certificate, or (iv) becomes responsible for, or in the place of,
another Issuer.
"L/C Issuer" means NationsBank and any Affiliate of NationsBank that
issues any Letter of Credit pursuant to this Agreement.
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"Lender" means, at any time, any financial institution party to this
Agreement at such time, including any Person becoming a party hereto pursuant
to the provisions of Article 15, and in each case its successors and assigns,
and "Lenders" means, at any time, all such Persons and their successors and
assigns.
"Letter of Credit" means any letter of credit issued by L/C Issuer for
the account of Borrower pursuant to Article 3 and any renewal, extension,
modification, amendment, restatement or replacement thereof; provided that the
WMC LC is not a Letter of Credit issued pursuant to Article 3.
"Letter of Credit Amount" means, with respect to any Letter of
Credit, the aggregate maximum amount at any time available for drawing under
such Letter of Credit.
"Letter of Credit Facility" means the facility provided under Article
3 of this Agreement for issuance of one or more Letters of Credit for the
account of Borrower in an aggregate face amount not to exceed Three Million
Dollars ($3,000,000) at any time.
"Letter of Credit Obligations" means, at any time, the sum of (a) the
Reimbursement Obligations of Borrower at such time in respect of Letters of
Credit, plus (b) the aggregate of all Letter of Credit Amounts outstanding at
such time, plus (c) the aggregate of Letter of Credit Amounts the issuance of
which has been authorized pursuant to Section 3.4(b) but that have not yet been
issued, in each case as determined by Agent; provided that the Letter of Credit
Obligations shall not include the WMC LC Obligations.
"Letter of Credit Reserve" means, at any time, the Letter of Credit
Obligations at such time, other than Letter of Credit Obligations that are
fully secured by Cash Collateral.
"Liabilities" means, with respect to any Person, all items (excluding
Capital Stock, additional paid-in capital, retained earnings and general
contingency items and deferred tax reserves) which in accordance with GAAP
would be included in determining total liabilities as shown on a balance sheet
of such Person as at the date for which Liabilities are to be determined.
"Licenses" means and includes, with respect to any Person, in each
case whether now existing or hereinafter arising, all of such Person's right,
title and interest in and to (a) any and all licensing agreements or similar
arrangements in and to any Patents, Copyrights or Trademarks; (b) all income,
royalties, damages, claims and payments now or hereafter due and/or payable
under and with respect thereto, including, without limitation, damages and
payments for past and future breaches thereof; and (c) all rights to ▇▇▇ for
past, present and future breaches thereof.
"Lien" as applied to the property of any Person means:
(a) any security interest, collateral assignment,
mortgage, deed to secure debt, deed of trust, lien, pledge, charge,
lease constituting a Capitalized Lease Obligation, conditional sale or
other title retention agreement, or other security interest, security
title or encumbrance of any kind in respect of any property of such
Person, or upon the income or profits therefrom;
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(b) any arrangement, express or implied, under which any
property of such Person is transferred, sequestered or otherwise
identified for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to the
payment of the general, unsecured creditors of such Person;
(c) any Indebtedness which is unpaid more than thirty
(30) days after the same shall have become due and payable and which
if unpaid might by law (including, but not limited to, bankruptcy and
insolvency laws), or otherwise, be given any priority whatsoever over
the claims of general unsecured creditors of such Person; and
(d) the filing of, or any agreement to give, any
financing statement under the UCC, or its equivalent, in any
jurisdiction, excluding informational or precautionary financing
statements relating to property leased by Borrower.
"Liquidation-in-Place Value" means, with respect to any Equipment, the
liquidation-in-place value thereof as of the Effective Date or any subsequent
date of determination by Agent pursuant to Section 2.6(c).
"Loan" means any Revolving Credit Loan, as well as all such loans
collectively, as the context requires, and in any case includes, without
limitation, any and all renewals, extensions, modifications or replacements
thereof.
"Loan Account" and "Loan Accounts" shall have the meanings ascribed
thereto in Section 5.7.
"Loan Documents" means collectively this Agreement, each Reimbursement
Agreement, the Notes, the Security Documents, the Collateral Assignment of
Receivables L/Cs, each Notice and Acknowledgment, the Postclosing Agreement and
each other instrument, agreement, certificate or document executed by Borrower
or any other Loan Party or any Affiliate of any Loan Party in connection with
this Agreement whether prior to, on or after the Effective Date and each other
instrument, agreement, certificate or document referred to herein or
contemplated hereby.
"Loan Party" means Borrower, each of its Subsidiaries that becomes a
party to a Loan Document and each other Person that at any time is a Guarantor
under this Agreement, respectively, and "Loan Parties" means all of such
Persons, collectively.
"Loan Year" means each annual period commencing on the Effective Date,
or any anniversary thereof, and ending on the day preceding the next successive
anniversary of such commencement date.
"Lockbox" means a U.S. post office box specified in, or pursuant to,
an Agency Account Agreement or a Lockbox Agreement.
"Lockbox Agreement" means any agreement established between Agent,
Borrower and a Clearing Bank concerning the establishment of a Lockbox for the
receipt and collection of checks and other items constituting proceeds of
Receivables.
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"Long Term Liabilities" means, with respect to any Person, the
aggregate amount of all Liabilities of such Person other than Current
Liabilities.
"Margin Stock" means margin stock as defined in Section 221.1(h) of
Regulation U.
"Material Adverse Effect" means, with respect to Borrower, a material
adverse effect upon Borrower's business, assets, liabilities, condition
(financial or otherwise), results of operations or business prospects, taken as
a whole, and in addition (i) with respect to Borrower, means a material adverse
effect upon Borrower's ability to perform its obligations hereunder or under
any other Loan Document to which it is a party or upon the enforceability of
such obligations against Borrower and (ii) with respect to any Guarantor, means
a material adverse effect upon such Guarantor's ability to perform its
obligations under a Guaranty, or under any other Loan Document to which such
Guarantor is a party or upon the enforceability of such obligations against
such Guarantor.
"Maximum Rate" shall have the meaning set forth in Section 5.2(f) of
this Agreement.
"Money Borrowed" means, as applied to Indebtedness:
(a) Indebtedness for money borrowed;
(b) Indebtedness, whether or not in any such case the
same was for money borrowed,
(i) represented by notes payable, and drafts
accepted, that represent extensions of credit,
(ii) constituting obligations evidenced by bonds,
debentures, notes or similar instruments, or
(iii) upon which interest charges are customarily
paid or that was issued or assumed as full or partial payment
for property (other than trade credit that is incurred in the
ordinary course of business);
(c) Indebtedness that constitutes a Capitalized Lease
Obligation, and
(d) Indebtedness that is such by virtue of clause (c) of
the definition thereof, but only to the extent that the obligations
Guaranteed are obligations that would constitute Indebtedness for
money borrowed.
"Mortgages" means and includes any and all of the mortgages, deeds of
trust, deeds to secure debt, assignments and other instruments executed and
delivered by Borrower to or for the benefit of Agent by which Agent, on behalf
of the Lenders, acquires a Lien on Borrower's Real Estate or a collateral
assignment of Borrower's interest under leases of Real Estate, and all
amendments, modifications and supplements thereto.
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"Multiemployer Plan" means, with respect to any Person, a
"multiemployer plan" as defined in Section 3(37) or Section 4001(a)(3) of ERISA
to which such Person or any Related Company is required to contribute or has
contributed within the immediately preceding six (6) years.
"NationsBank" means NationsBank, N.A., a national banking association
whose principal office is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, and each of its successors and assigns.
"Net Income" means, as applied to any Person, the net income (or net
loss) of such Person for the period in question after giving effect to
deduction of or provision for all operating expenses, all taxes and reserves
(including without limitation, reserves for deferred taxes) and all other
proper deductions, all determined in accordance with GAAP, provided that there
shall be excluded:
(a) the net income (or net loss) of any Person accrued
prior to the date it becomes a Subsidiary of, or is merged into or
Consolidated with, the Person whose Net Income is being determined or
a Consolidated Subsidiary of such Person;
(b) the net income (or net loss) of any Person in which
the Person whose Net Income is being determined or any Subsidiary of
such Person has an ownership interest, except, in the case of net
income, to the extent that any such income has actually been received
by such Person or such Subsidiary in the form of cash dividends or
similar distributions;
(c) any restoration of any contingency reserve, except to
the extent that provision for such reserve was made out of income
during such period;
(d) any net gains or losses on the sale or other
disposition, not in the ordinary course of business, of Investments,
Business Units and other capital assets, provided that there shall
also be excluded any related charges for taxes thereon;
(e) any net gain arising from the collection of the
proceeds of any insurance policy;
(f) any write-up of any asset; and
(g) any other extraordinary item (including, without
limitation, that portion of nonrecurring expenses directly incurred as
part of the Recapitalization not exceeding Ten Million Six Hundred
Fifty Thousand Dollars ($10,650,000) in the aggregate to the extent
deducted in determining Net Income).
"Net Outstandings" of any Lender means, at any time, the sum of (a)
all amounts paid by such Lender (other than pursuant to Section 16.5) to Agent
in respect of Revolving Credit Loans under this Agreement, minus (b) all
amounts paid by Agent to such Lender which are received by Agent and which,
pursuant to this Agreement, are paid over to such Lender for application in
reduction of the outstanding principal balance of the Revolving Credit Loans.
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"Net Proceeds" means proceeds received by any Loan Party from any
Asset Disposition (including, without limitation, payments under notes or other
debt securities received in connection with any Asset Disposition), net of: (a)
the transaction costs of such Asset Disposition; (b) any tax liability arising
from such Asset Disposition; and (c) amounts applied to repayment of
Indebtedness (other than the Secured Obligations) secured by a Lien on the
asset or property disposed of.
"Non-Ratable Loan" means a Revolving Credit Loan made by NationsBank
in accordance with the provisions of Section 5.10(b).
"Note" means any of the Revolving Credit Notes and "Notes" means more
than one such Note or all of such Notes, collectively, as the context may
indicate.
"Notice of Borrowing" means a Notice of Borrowing, Prepayment,
Conversion or Continuation, signed by Borrower's President or a Financial
Officer, in substantially the form attached hereto as Exhibit "F".
"Offering Memorandum" means the certain final Offering Memorandum
dated July 23, 1998 for GNI's offering of its Seventy-Five Million Dollars
($75,000,000) aggregate principal amount of 10 7/8% Senior Notes Due 2005.
"Operating Cash Flow" means, for any accounting period of Borrower, an
amount equal to the sum of Borrower's EBITDA, minus Unfunded Capital
Expenditures (excluding Capital Expenditures for which Borrower has incurred
Permitted Purchase Money Indebtedness (excluding the Loans)) for such period.
"Operating Lease" means any lease, excluding any lease constituting a
Capitalized Lease Obligation, of real or personal property.
"Other Taxes" shall have the meaning set forth in Section 6.6(b) of
this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Patent Security Agreement" means a Patent Security Agreement executed
by Borrower to Agent, for the benefit of the Credit Parties, as such agreement
may be amended, modified, restated or supplemented from time to time.
"Patents" means and includes, with respect to any Person, all of such
Person's right, title and interest in and to the following, in each case
whether now existing or hereafter arising:
(a) any and all patents and patent applications;
(b) all inventions and improvements described and claimed
therein;
(c) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof;
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(d) all income, royalties, damages, claims and payments
now or hereafter due and/or payable under and with respect thereto,
including, without limitation, damages and payments for past and
future infringements thereof;
(e) all rights to ▇▇▇ for past, present and future
infringements thereof; and
(f) all rights corresponding to any of the foregoing
throughout the world.
"Permits" means each permit issued by any Governmental Authority
maintained by Borrower, including, without limitation, any and all Governmental
Approvals for any aspect of Borrower's operations.
"Permitted Acquisitions" means any Acquisition of assets or Capital
Stock or other ownership interests by Borrower or any of its Subsidiaries that
complies with each of the following requirements:
(a) such Acquisition and all other Acquisitions
consummated or proposed to be consummated after the Effective Date
shall not involve an aggregate Cost of Acquisition paid or payable, in
whatever form (but exclusive of any trade payables incurred in the
ordinary course of business to the extent that the aggregate amount of
such trade payables assumed does not exceed the aggregate amount of
accounts receivable acquired in connection with such Acquisitions) in
excess of Four Million Dollars ($4,000,000) (unless such Acquisition
has been approved in writing by the Agent and the Required Lenders);
(b) both before and after giving effect to such
Acquisition and the Loans requested to be made in connection
therewith, no Default exists or will exist and Borrower shall have
represented and demonstrated to Agent pro forma compliance with the
financial covenants contained in Section 13.1 of this Agreement for
the most recent twelve-month period and as of the end of the most
recent fiscal quarter after giving effect to such Acquisition and, in
any event, such pro forma calculation shall demonstrate that the ratio
calculated in accordance with Section 13.1(a) shall be no greater than
5.0 to 1.0 after giving effect to such Acquisition;
(c) neither Borrower nor any of its Subsidiaries shall,
as a result of or in connection with any such Acquisition, assume or
incur any contingent liabilities (whether relating to environmental,
tax, litigation or other matters) that could reasonably be expected to
result in the existence or occurrence of a Material Adverse Effect;
(d) if such Acquisition involves an Acquisition of
capital stock or other ownership interests, such Acquisition shall
result in the acquired entity becoming a Wholly-Owned Subsidiary of
Borrower;
(e) if such Acquisition is effectuated pursuant to a
merger or consolidation, Borrower (if Borrower is a party thereto) or
a Subsidiary (if such Subsidiary is a party thereto and Borrower is
not a party thereto) shall be the Person surviving such merger or
consolidation or the Person surviving such merger or consolidation is
a Wholly Owned Subsidiary thereafter; and
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(f) such Acquisition shall have been approved by all
requisite corporate (or other applicable entity) action (including,
without limitation, shareholder or other owner action, if required) of
the entity to be acquired required by applicable law and shall not
have been disapproved or recommended for disapproval by the board of
directors or analogous governing body of such entity.
"Permitted Investments" means Investments of Borrower in:
(a) cash or Cash Equivalents;
(b) Receivables arising from sales of Inventory on credit
in the ordinary course of business;
(c) shares of Capital Stock, evidence of Indebtedness or
other security acquired by such Loan Party in consideration for or as
evidence of past due or restructured Receivables in an aggregate face
amount of such Receivables at any time not to exceed Fifty Thousand
Dollars ($50,000);
(d) Guaranties permitted pursuant to Section 13.3;
(e) those items described on Schedule 1.1A ("Permitted
Investments"); and
(f) other Investments, the net aggregate amount of which
does not at any time exceed Ten Thousand Dollars ($10,000)
individually or Twenty-Five Thousand Dollars ($25,000) in the
aggregate in any fiscal year of Borrower;
(g) Permitted Acquisitions;
(h) loans to employees made in the ordinary course of
business not in excess of One Hundred Thousand Dollars ($100,000) in
the aggregate at any time outstanding; and
(i) intercompany loans between or among Borrowers to the
extent permitted by Section 13.2.
"Permitted Liens" means:
(a) Liens securing taxes, assessments and other charges
or levies of a Governmental Authority (excluding any Environmental
Lien or any Lien imposed pursuant to any of the provisions of ERISA)
or the claims of materialmen, mechanics, carriers, warehousemen or
landlords for labor, materials, supplies or rentals incurred in the
ordinary course of business, but (i) in all cases only if payment
shall not at the time be required to be made in accordance with
Section 11.6, and (ii) in the case of warehousemen or landlords, only
if such Liens are junior to the Security Interest in any of the
Collateral;
(b) Liens consisting of deposits or pledges made in the
ordinary course of business in connection with, or to secure payment
of, obligations under workers' compensation,
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unemployment insurance, social security or similar legislation or
obligations under payment, bid, surety, appeal or performance bonds;
(c) Liens constituting encumbrances in the nature of
zoning restrictions, easements and rights or restrictions of record on
the use of Real Estate, which do not material detract from the value
of such property or impair the use thereof in the conduct of business;
(d) Purchase Money Liens securing Permitted Purchase
Money Indebtedness incurred for the purchase of Equipment after the
Agreement Date;
(e) Liens shown on Schedule 1.1B ("Permitted Liens"); and
(f) Liens of Agent, for the benefit of the Credit Parties
arising under this Agreement and the other Loan Documents.
"Permitted Purchase Money Indebtedness" means Purchase Money
Indebtedness of Borrower incurred after the Agreement Date:
(a) which is secured by a Purchase Money Lien which is a
Permitted Lien;
(b) the aggregate principal amount of which does not
exceed an amount equal to one hundred percent (100%) of the lesser of
(i) the cost (including the principal amount of
such Indebtedness, whether or not assumed) of the property
(excluding Inventory) subject to such Lien, and
(ii) the fair value of such property (excluding
Inventory) at the time of its acquisition, and
(c) which, when aggregated with the principal amount of
all other such Indebtedness and Capitalized Lease Obligations of
Borrower at the time outstanding, does not exceed One Million Dollars
($1,000,000).
For the purposes of this definition, the principal amount of any Purchase Money
Indebtedness consisting of Capitalized Leases shall be computed as a
Capitalized Lease Obligation.
"Permitted Transferee" means (a) with respect to 399 Venture Partners,
Inc. (i) Citicorp, any direct or indirect wholly owned subsidiary of Citicorp,
and any officer, director or employee of 399 Venture Partners, Inc., Citicorp
or any wholly owned subsidiary of Citicorp, (ii) any spouse or lineal
descendant (including by adoption and stepchildren) of the officers, directors
and employees referred to in clause (a)(i) above, (iii) any trust, corporation
or partnership 100% in interest of the beneficiaries, stockholders or partners
of which consists of one or more of the persons described in clause (a)(i) or
(ii) above; (b) with respect to any other Principal, (i) any spouse or lineal
descendant (including by adoption and stepchildren) of such officer or employee
and (ii) any trust, corporation or partnership 100% in interest of the
beneficiaries, stockholders or partners of which consists of such
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officer or employee, any of the persons described in clause (b)(i) above or any
combination thereof; or (c) with respect to GNI, any Wholly Owned Subsidiary.
"Person" means any individual, corporation, limited liability company,
joint venture, general or limited partnership, association, trust,
unincorporated organization or Governmental Authority, or other similar entity.
"Plan" means, with respect to any Person, any employee benefit plan
as defined in Section 3(3) of ERISA in respect of which such Person or any
Related Company is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA, including without limitation, a
Multiemployer Plan.
"Postclosing Agreement" means the certain Postclosing Agreement, dated
as of the Agreement Date, among Borrower, Agent and NationsBank, in its
capacity as the sole Lender on the Agreement Date, as such agreement may be
amended or supplemented from time to time hereafter.
"Prime Rate" means the per annum rate of interest established from
time to time by NationsBank as its "prime rate", which rate may not be the
lowest rate of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of Agent specified in or
determined in accordance with the provisions of Section 17.1.
"Principals" means 399 Venture Partners, Inc., ▇▇. ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.,
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and any other officer of
Borrower that acquires equity interests in GNI on or after the Effective Date.
"Pro Forma" means the pro forma balance sheet of Borrower as at the
Effective Date, immediately after giving effect to the Recapitalization and the
transactions contemplated by this Agreement.
"Projections" means the forecasted (a) balance sheets, (b) income
statements and (b) cash flow statements of Borrower for Borrower's 1999 through
2001 fiscal years, in form consistent with such forecasted financial statements
delivered to Agent on or prior to the Agreement Date, together with appropriate
supporting details and a statement of underlying assumptions.
"Proprietary Rights" means, with respect to any Person, all of such
Person's now owned and hereafter arising or acquired: Patents, Copyrights,
Trademarks, Permits and Licenses (and with respect to Borrower includes,
without limitation, Borrower's Proprietary Rights as set forth on Schedule
8.1(cc) hereto) and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations and
continuations-in-part of any of the foregoing, and all rights to ▇▇▇ for past,
present and future infringement of any of the foregoing.
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"Purchase Money Indebtedness" means:
(a) Indebtedness created to secure the payment of all or
any part of the purchase price of any property (excluding Inventory);
(b) any Indebtedness incurred at the time of or within
thirty (30) days prior to or after the acquisition of any property
(excluding Inventory) for the purpose of financing all or any part of
the purchase price thereof; and
(c) any renewals, extensions or refinancings thereof, but
not any increases in the principal amounts thereof outstanding at the
time of any such renewal, extension or refinancing.
"Purchase Money Lien" means any Lien securing Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to
the property (excluding Inventory) the purchase price of which was financed
through the incurrence of the Purchase Money Indebtedness secured by such Lien.
"Real Estate" means, with respect to a Person, all of such Person's
now or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds and future interests, together with all of
such Person's now or hereafter owned or leased interests in the improvements
and emblements thereon, the fixtures attached thereto and the easements
appurtenant thereto, including, without limitation the real property described
on Schedule 8.1(x).
"Recapitalization" means the Recapitalization of the Borrower
described in the Offering Memorandum.
"Receivables" means and includes:
(a) any and all rights to the payment of money or other
forms of consideration of any kind (whether classified under the UCC
as accounts, contract rights, chattel paper, general intangibles or
otherwise) including, but not limited to, accounts receivable, letters
of credit and the right to receive payment thereunder, chattel paper,
tax refunds, insurance proceeds, Contract Rights, notes, drafts,
instruments, documents, acceptances and all other debts, obligations
and liabilities in whatever form from any Person;
(b) all rights to payment under any and each Receivables
Guaranty, Receivables L/C and each other Guaranty, security and Lien
for payment of any Receivables listed in clause (a);
(c) all goods, whether now owned or hereafter acquired,
and whether sold, delivered, undelivered, in transit or returned,
which may be represented by, or the sale or lease of which may have
given rise to, any such right to payment or other debt, obligation or
liability; and
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(d) all proceeds of any of the foregoing.
"Receivables Guaranty" means a Guaranty or indemnity agreement issued
by a Person guaranteeing the prompt payment and performance of a Receivable, or
indemnifying against loss by reason of nonpayment thereof, together with and
including all rights of such Loan Party to payment thereunder and all proceeds
thereof.
"Receivables L/C" means a letter of credit issued by a Person as
support for payment and performance of any Receivable(s), together with and
including all rights to payment thereunder and all proceeds thereof.
"Register" has the meaning set forth in Section 15.1(b) of this
Agreement.
"Regulation U" means Regulation U as promulgated by the Board of
Governors of the Federal Reserve System (or any successor Governmental
Authority), as the same may be amended or supplemented from time to time.
"Reimbursement Agreement" means, with respect to a Letter of Credit,
such form of application therefor and form of reimbursement agreement therefor
(whether in a single document or several documents) as L/C Issuer may employ in
the ordinary course of business for its own account, with such modifications
thereto as may be agreed upon by L/C Issuer and Borrower, provided that such
application and agreement and any modifications thereto are not inconsistent
with the terms of this Agreement.
"Reimbursement Obligations" means the reimbursement or repayment
obligations of Borrower to the Credit Parties pursuant to Section 3.6 or
pursuant to a Reimbursement Agreement with respect to amounts that have been
drawn under Letters of Credit.
"Related Company" means, with respect to any Person, any (i)
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code) as any such
Person or any of its Subsidiaries, (ii) partnership or other trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Internal Revenue Code) with any such Person or any of its
Subsidiaries, or (iii) member of the same affiliated service group (within the
meaning of Section 414(m) of the Internal Revenue Code) as any such Person or
any of its Subsidiaries, any corporation described in clause (i) above or any
partnership, trade or business described in clause (ii) above.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including,
without limitation, the movement of Contaminants through or in the air, soil,
surface water or groundwater.
"Remedial Action" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment, (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or
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threaten to endanger public health or welfare or the indoor or outdoor
environment, or (iii) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA, but shall not include a Reportable Event as to which the provision for
thirty (30) days' notice to the PBGC is waived under applicable regulations.
"Required Lenders" means, at any time, any combination of Lenders
whose Commitment Percentages at such time aggregate in excess of fifty-one
percent (51%).
"Reserve" at any time means an amount from time to time established by
Agent in its discretion, pursuant to this Agreement (notice thereof having been
given to Borrower by Agent in the ordinary course of Agent's business, provided
that any failure or delay in Agent's giving of such notice shall not impair the
validity of such Reserve or give rise to any liability of Agent), as a reserve
in reduction of the Borrowing Base in respect of costs, expenses, liens, risks,
claims, contingencies or other potential factors which, in the event they
should occur, could adversely affect or otherwise reduce the anticipated amount
of timely collections in payment of Eligible Receivables or the anticipated
amount of proceeds which could be realized upon liquidation of any other
Collateral. The Reserve, if any from time to time, does not represent cash
funds.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against, in the case
of Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks with respect to (i) any category of liabilities which includes
deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (ii) any category of extensions of credit or other assets which
include Eurodollar Loans. The Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement.
"Restricted Dividend Payment" means any dividend, distribution or
payment on or with respect to any shares of a Person's Capital Stock (other
than dividends payable solely in shares or other evidence of ownership of its
Capital Stock), excluding, however, any such dividend, distribution or payment
to any Borrower by any Borrower or any Subsidiary of Borrower.
"Restricted Payment" means (a) any redemption or prepayment or other
retirement, prior to the stated maturity thereof or prior to the due date of
any regularly scheduled installment or amortization payment with respect
thereto, of any Indebtedness for Borrowed Money or of any Indebtedness that is
junior and subordinate to the Secured Obligations, (b) the payment by any
Person of the principal amount of or interest on any Indebtedness (other than
trade debt) owing to a shareholder, partner or equity holder of such Person or
to any Affiliate of any such shareholder, partner or equity holder and (c) the
payment of any management, consulting or similar fee by any Person to any
Affiliate of such Person.
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"Restricted Purchase" means any payment on account of the purchase,
redemption or other acquisition or retirement by a Person of any (a) shares of
such Person's Capital Stock (except shares acquired on the conversion thereof
into other shares of Capital Stock of such Person).
"Revolving Credit Availability" means, as of the date of any
determination thereof, (a) the Borrowing Base at such time, minus (b) the sum
of (i) the aggregate outstanding principal balance of all Revolving Credit
Loans as of such date plus (ii) the Letter of Credit Obligations.
"Revolving Credit Facility" means the facility provided by Article 2
of this Agreement for Revolving Credit Loans up to the maximum principal sum of
Twelve Million Dollars ($12,000,000).
"Revolving Credit Loans" means the Loans made to Borrower pursuant to
Section 2.1 (including any such Loans that are EQ Sublimit Loans), and each of
such Loans, respectively, as the context requires.
"Revolving Credit Note" means a Revolving Credit Note made by Borrower
payable to the order of a Lender evidencing the obligation of Borrower to pay
the aggregate unpaid principal amount of the Revolving Credit Loans made to it
by such Lender (and any promissory note or notes that may be issued from time
to time in substitution, renewal, extension, replacement or exchange therefor
whether payable to such Lender or to a different Lender in connection with a
Person becoming a Lender after the Effective Date or otherwise) substantially
in the form of Exhibit "A" hereto, with all blanks properly completed, either
as originally executed or as the same may from time to time be supplemented,
modified, amended, renewed, extended or refinanced.
"RTSI" has the meaning set forth in the first paragraph hereof.
"Schedule of Inventory" means a schedule delivered by Borrower to
Agent pursuant to the provisions of Section 10.12(b).
"Schedule of Receivables" means a schedule delivered by Borrower to
Agent pursuant to the provisions of Section 10.12(a).
"Secured Obligations" means, in each case whether now in existence or
hereafter arising:
(a) the principal of, and interest and premium, if any,
on, the Loans;
(b) the Reimbursement Obligations and all other
obligations owing to L/C Issuer or any other Credit Party arising in
connection with the issuance of any Letter of Credit;
(c) all obligations of any Loan Party under any Interest
Rate Protection Agreement;
(d) all indebtedness, liabilities, obligations, covenants
and duties of Borrower to the Credit Parties, or any of them, of every
kind, nature and description arising under or in respect of this
Agreement, the Notes or any of the other Loan Documents, whether
direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or
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unliquidated, and whether or not evidenced by any note, and whether or
not for the payment of money, including, without limitation, fees
required to be paid pursuant to Article 5 and fees and expenses
required to be paid or reimbursed pursuant to Section 17.2.
"Securities Account" means any account to which a Financial Asset is
or may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise the rights that comprise the Financial
Asset.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Securities Intermediary" means any (i) Clearing Corporation, or (ii)
Person, including a bank or Broker, that in the ordinary course of its business
maintains Securities Accounts for others and is acting in that capacity.
"Security" means any "security," as such term is defined in Chapter 8
(or Article 8) of the UCC and, in any event, shall include, but not be limited
to, any obligation of an Issuer or a share, participation or other interest in
an Issuer or in property or an enterprise of an Issuer: (i) which is
represented by a Security Certificate in bearer or registered form, or the
transfer of which may be registered upon books maintained for that purpose by
or on behalf of the Issuer; (ii) which is one of a class or series or by its
terms is divisible into a class or series of shares, participations, interests
or obligations; and (iii) which (a) is, or is of a type, dealt in or traded on
securities exchanges or securities markets or (b) is a medium for investment
and by its terms expressly provides that it is a security governed by Chapter 8
(or Article 8) of the UCC.
"Security Certificate" means any certificate representing a Security.
"Security Documents" means each of the following:
(a) the Financing Statements;
(b) the Mortgages;
(c) the Patent Security Agreements;
(d) the Trademark Security Agreements;
(e) the Copyright Security Agreements;
(f) the Guaranty Agreements;
(g) the Collateral Assignment of Liens; and
(h) each other writing executed and delivered by any Loan
Party or any other Person securing or Guaranteeing the Secured
Obligations.
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"Security Entitlement" means any of the rights and property interests
of an Entitlement Holder with respect to a Financial Asset.
"Security Interest" means the Liens of Agent, for the benefit of the
Credit Parties, on and in the Collateral effected by this Agreement or by any
of the Security Documents or pursuant to the terms hereof or thereof.
"Senior Funded Debt" means the sum of (i) the outstanding principal
amount of the Revolving Credit Loans plus (ii) the Letter of Credit Obligations
plus (iii) the Senior Notes.
"Senior Management of GNI" means ▇▇▇▇ ▇ ▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
III and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Senior Notes" means the 10 7/8% Senior Notes due 2005 of GNI and the
Guaranties thereof by each of the Subsidiaries of GNI, each issued pursuant to
the Offering Memorandum and the 10 7/8% Senior Notes due 2005 of GNI and the
Guaranties thereof by each of the Subsidiaries of GNI, each issued pursuant to
the Exchange Offer (as defined in the Offering Memorandum).
"Settlement Date" means each Business Day after the Effective Date
selected by Agent in its sole discretion subject to and in accordance with the
provisions of Section 5.10(b)(i) as of which a Settlement Report is delivered
by Agent and on which settlement is to be made among the Lenders in accordance
with the provisions of Section 5.10.
"Settlement Report" means each report, substantially in the form
attached hereto as Exhibit "E", prepared by Agent and delivered to each Lender
and setting forth, among other things, as of the Settlement Date indicated
thereon and as of the next preceding Settlement Date, the aggregate principal
balance of all Revolving Credit Loans outstanding, each Lender's Commitment
Percentage thereof, each Lender's Net Outstandings and all Non-Ratable Loans
made, and all payments of principal, interest and fees received by Agent from
Borrower during the period beginning on such next preceding Settlement Date and
ending on such Settlement Date.
"Solvent" means, as to Person, that on the Agreement Date and as of
the Effective Date (both before and after the Recapitalization and granting of
all security interests and liens contemplated hereby and the funding of the
initial Loan(s) under this Agreement) (a) the sum of such Person's debts is not
greater than all of such Person's property, at a fair valuation, (b) the sum of
such Person's debts is not greater than all of such Person's assets, at a fair
valuation, (c) such Person is generally paying its debts as they become due,
(d) such person is not engaged or about to engage in any business or any
transaction for which (i) its property is an unreasonably small capital or (ii)
the remaining assets of such Person are unreasonably small in relation to any
such business or transaction, (e) such Person does not intend to incur, and
does not believe that it will incur, debts that are or would be beyond its
ability to pay as such debts mature or become due, and (f) such Person does not
intend to hinder, delay or defraud any creditor of such Person. For this
purpose (i) "debts" includes anything included within the definition of "debt"
as used in Section 548 of the United States Bankruptcy Code or as defined or
used by Section 24.002 or Section 24.003 of the Texas Uniform Fraudulent
Transfer Act, and "assets" has the meaning defined or used by Section 24.002 of
the Texas Uniform Fraudulent Transfer Act. Contingent, unliquidated or
disputed obligations or liabilities (if any) are valued at the
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amount which, in light of all relevant facts and circumstances, is reasonably
expected to become absolute, liquidated or mature.
"Spot Rate" means, as of any date of determination with respect to the
conversion of an amount denominated in one currency (the "Original Currency")
to another currency (the "Other Currency"), the rate of exchange at which, in
accordance with customary banking procedures and at such time and in such
foreign exchange market as Agent shall determine consistent with such
procedures, Agent on such date could purchase such amount of the Original
Currency with such Other Currency.
"Subordinated Indebtedness" means any Indebtedness for Money Borrowed
which is subordinated in writing to the Secured Obligations in form and
substance satisfactory to Agent.
"Subsidiary" shall
(a) when used to determine the relationship of a Person
to another Person, mean a Person of which an aggregate of more than
fifty percent (50%) or more of the Capital Stock is owned of record or
beneficially by such other Person, or by one or more Subsidiaries of
such other Person, or by such other Person and one or more
Subsidiaries of such Person,
(i) if the holders of such Capital Stock (A) are
ordinarily, in the absence of contingencies, entitled to vote
for the election of a majority of the directors (or other
individuals performing similar functions) of such Person, even
though the right so to vote has been suspended by the
happening of such a contingency, or (B) are entitled, as such
holders, to vote for the election of a majority of the
directors (or individuals performing similar functions) of
such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or
(ii) in the case of Capital Stock which is not
issued by a corporation, if such ownership interests
constitute a majority voting interest, and
(b) when used with respect to a Plan, ERISA or a
provision of the Internal Revenue Code pertaining to employee benefit
plans, also mean any corporation, trade or business (whether or not
incorporated) which is under common control with Borrower and is
treated as a single employer with Borrower under Section 414(b) or (c)
of the Internal Revenue Code and the regulations thereunder.
"Supporting Letter of Credit" shall have the meaning set forth in
Section 3.9 of this Agreement.
"Taxes" shall have the meaning set forth in Section 6.6(a) of this
Agreement.
"Termination Date" means July 31, 2001, such earlier date as all
Secured Obligations shall have been irrevocably paid in full and the Revolving
Credit Facility shall have been terminated, or such later date as to which the
same may be extended pursuant to the provisions of Section 2.7.
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"Termination Event" means
(a) a Reportable Event, or
(b) the filing of a notice of intent to terminate a Plan
or the treatment of a Plan amendment as a termination under Section
4041 of ERISA, or
(c) the institution of proceedings to terminate a Plan by
the PBGC under Section 4042 of ERISA, or the appointment of a trustee
to administer any Plan.
"Total Commitment" means the sum of the Commitments.
"Trademark Security Agreement" means any Trademark Security Agreement
executed by Borrower in favor of Agent, for the benefit of the Credit Parties,
as the same may be amended, modified, restated or supplemented from time to
time.
"Trademarks" means and includes, with respect to any Person,, all of
such Person's right, title and interest in and to the following, in each case
whether now existing or hereafter arising:
(a) all trademarks (including service marks), trade names
and trade styles and the registrations and applications for
registration thereof and the goodwill of the business symbolized by
such trademarks;
(b) all licenses of the foregoing, whether as licensee or
licensor;
(c) all renewals of the foregoing;
(d) all income, royalties, damages and payments now or
hereafter due and/or payable with respect thereto, including, without
limitation, damages, claims and payments for past and future
infringements thereof;
(e) all rights to ▇▇▇ for past, present and future
infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and
(f) all rights corresponding to any of the foregoing
throughout the world.
"Type" means any type of Loan (i.e., Base Rate Loan or a Eurodollar
Loan).
"UCC" means (i) the Uniform Commercial Code as in effect from time to
time in the State of Texas, as amended from time to time, and (ii) the Uniform
Commercial Code as in effect from time to time in such other states as any
Collateral may be located, as and to the extent applicable.
"U.S." means the United States of America.
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"Uncertificated Security" means any "uncertificated security," as such
term is defined in Chapter 8 (or Article 8) of the UCC, and in any event shall
include, but not be limited to, any Security that is not represented by a
certificate.
"Unfunded Capital Expenditures" means Capital Expenditures which are
paid for by a Person other than with the proceeds of Indebtedness for Money
Borrowed (other than the Loans) incurred to finance such Capital Expenditures
and other than those represented by Capitalized Lease Obligations.
"Unfunded Vested Accrued Benefits" means with respect to any Plan at
any time, the amount (if any) by which
(a) the present value of all vested nonforfeitable
benefits under such Plan exceeds,
(b) the fair market value of all Plan assets allocable to
such benefits,
all determined as of the then most recent valuation date for such Plan.
"Voting Stock" means Capital Stock of a Person having ordinary voting
power for the election of a majority of the members of its board of directors
or other governing body (not including shares having such power only in the
event of a contingency).
"Wholly-Owned Subsidiary" when used to determine the relationship of a
Subsidiary to a Person, means a Subsidiary all of the issued and outstanding
Capital Stock (other than directors' qualifying shares) of which shall at the
time be owned by such Person or one or more of such Person's Wholly-Owned
Subsidiaries or by such Person and one or more of such Person's Wholly-Owned
Subsidiaries.
"WMC LC" means the One Million Five Hundred Thousand Dollars
($1,500,000) Auto-Renewable Standby Letter of Credit issued by NationsBank on
behalf of Borrower guaranteed by WMX Technologies, Inc.
"WMC LC Obligations" means the sum of (a) the Reimbursement
Obligations of Borrower at such time in respect of the WMC LC, plus (b) the
amount available to be drawn against the WMC LC at such time.
"Year 2000 Compliant" has the meaning set forth in Section 8.1(ff)
hereof.
"Year 2000 Problem" has the meaning set forth in Section 8.1(ff)
hereof.
Section 1.2 General. All terms of an accounting nature not
specifically defined herein shall have the meaning ascribed thereto by GAAP.
The terms accounts, chattel paper, contract rights, documents, equipment,
instruments, general intangibles and inventory, as and when used in this
Agreement or the Security Documents, shall have the meanings given those terms
in the UCC. Unless otherwise specified, a reference in this Agreement to a
particular section or subsection is a reference to that section or subsection
of this Agreement, and the words "hereof," "herein,"
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"hereunder" and words of similar import, when used in this Agreement, refer to
this Agreement as a whole and not to any particular provision, section or
subsection of this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include
the singular and plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, the feminine and the neuter. Words
denoting individuals include corporations, limited liability companies,
partnerships, joint ventures and other business entities and vice versa.
References to any legislation or statute or code, or to any provisions of any
legislation or statute or code, shall include any modification or reenactment
of, or any legislative, statutory or code provision substituted for, such
legislation, statute or code or provision thereof. References to any document
or agreement (including this Agreement) shall include references to such
document or agreement as amended, restated, novated, supplemented, modified or
replaced from time to time, so long as and to the extent that such amendment,
restatement, novation, supplement, modification or replacement is either not
prohibited by the terms of this Agreement or is consented to by the Required
Lenders and Agent. References to any Person include its successor or permitted
substitutes and assigns. Standards of "reasonableness," or requirements of
similar import, and the conduct of any Credit Party or any Loan Party in
connection with the Loan Documents shall be measured according to applicable
standards prescribed by the UCC.
Section 1.3 Exhibits and Schedules. All Exhibits and Schedules
attached hereto are incorporated fully herein by reference thereto.
ARTICLE 2
Revolving Credit Facility
Section 2.1 Revolving Credit Loans. Upon the terms and subject to
the conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees, severally, but not jointly, to make
Revolving Credit Loans to Borrower from time to time from the Effective Date to
but not including the Termination Date, as requested or deemed requested by
Borrower in accordance with the terms of Section 2.2, in amounts equal to such
Lender's Commitment Percentage of each such Loan requested or deemed requested
hereunder up to an aggregate amount at any one time outstanding equal to such
Lender's Commitment Percentage of the Borrowing Base provided, however, that the
aggregate principal amount of all outstanding Revolving Credit Loans (after
giving effect to the Loans requested) shall not exceed the Borrowing Base. It
is expressly understood and agreed that the Lenders may and at present intend to
use the Borrowing Base as a maximum ceiling on Revolving Credit Loans to
Borrower; provided, however, that it is agreed that should the Revolving Credit
Loans exceed the ceiling so determined or any other limitation set forth in this
Agreement, such Revolving Credit Loans shall nevertheless constitute Secured
Obligations and, as such, shall be entitled to all benefits thereof and security
therefor. The principal amount of any Revolving Credit Loan which is repaid
pursuant to Section 2.3(c) may be reborrowed by Borrower, subject to the terms
and conditions of this Agreement, in accordance with the terms of this Section
2.1. Agent's and each Lender's books and records reflecting the date and the
amount of each Revolving Credit Loan and each repayment of principal thereof
shall constitute prima facie evidence of the accuracy of the information
contained therein, subject to the provisions of Section 5.10.
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Section 2.2 Manner of Borrowing Revolving Credit Loans. Borrowings
under the Revolving Credit Facility shall be made as follows:
(a) Requests for Borrowing. A request for a borrowing
shall be made, or shall be deemed to be made, in the following manner:
(i) requests for a Revolving Credit Loan shall be
made in the manner prescribed by Article 5 (with respect to
the initial Revolving Credit Loan, Borrower shall give Agent
reasonable prior written notice of the occurrence of the
Effective Date, which notice shall be irrevocable);
(ii) whenever a check or other item is presented
to a Disbursing Bank for payment against a Disbursement
Account in an amount greater than the then available balance
in such account, such Disbursing Bank shall, and is hereby
irrevocably authorized by Borrower to, give Agent notice
thereof, which notice shall be deemed to be a request for a
Revolving Credit Loan on the date of such notice in an amount
equal to the excess of such check or other item over such
available balance;
(iii) unless payment is otherwise timely made, the
becoming due of any amount required to be paid under this
Agreement or any of the Notes as interest, or any scheduled
installment of principal, shall be deemed to be a request for
a Revolving Credit Loan on the due date in the amount required
to pay such interest or scheduled installment of principal;
(iv) unless payment is otherwise timely made, the
becoming due of any other Secured Obligation shall be deemed
to be a request for a Revolving Credit Loan on the due date in
the amount then so due, and such request shall be irrevocable;
and
(v) the receipt by Agent of notification from L/C
Issuer to the effect that a drawing has been made under a
Letter of Credit and that Borrower has failed to reimburse L/C
Issuer therefor in accordance with the terms of the Letter of
Credit, the Reimbursement Agreement and Article 3, shall be
deemed to be a request for a Revolving Credit Loan on the date
such notification is received in the amount of such drawing
which is so unreimbursed.
(b) Disbursement of Loans. Borrower hereby irrevocably
authorizes Agent to disburse the proceeds of each borrowing requested,
or deemed to be requested, pursuant to this Section 2.2 as follows:
(i) the proceeds of each borrowing requested
under Sections 2.2(a)(i) or (ii) shall be disbursed by Agent
in Dollars in immediately available funds, (A) in the case of
the initial borrowing under the Revolving Credit Facility, in
accordance with the terms of the certificate from Borrower to
Agent referred to in Section 7.1(a)(xi), and (B) in the case
of each subsequent borrowing, by wire transfer to a
Disbursement Account or, in the absence of a Disbursement
Account, by wire transfer to such other account as may be
agreed upon by Borrower and Agent from time to time;
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(ii) the proceeds of each borrowing deemed
requested under Section 2.2(a)(iii) or (iv) shall be disbursed
by Agent by way of direct payment of the relevant interest or
Secured Obligation, as the case may be; and
(iii) the proceeds of each borrowing deemed
requested under Section 2.2(a)(v) shall be disbursed by Agent
directly to L/C Issuer in payment of the Reimbursement
Obligations referenced therein.
Section 2.3 Repayment of Revolving Credit Loans. Borrower hereby
agrees to pay the Revolving Credit Loans as follows:
(a) Whether or not any Default or Event of Default has
occurred, the outstanding principal amount of all the Revolving Credit
Loans is due and payable, and shall be repaid by Borrower in full, on
the Termination Date;
(b) If at any time the aggregate outstanding unpaid
principal amount of the Revolving Credit Loans exceeds the Borrowing
Base in effect at such time, Borrower shall repay the Revolving Credit
Loans in an amount sufficient to reduce the aggregate unpaid principal
amount of such Revolving Credit Loans by an amount equal to such
excess, together with accrued and unpaid interest on the amount so
repaid to the date of repayment; and
(c) Borrower hereby instructs Agent to repay the
Revolving Credit Loans outstanding on any day in an amount equal to
the amount received by Agent on such day pursuant to Section 10.1(b).
Section 2.4 Revolving Credit Note. Each Lender's Revolving Credit
Loans and the obligation of Borrower to repay such Revolving Credit Loans shall
be evidenced by a Revolving Credit Note payable to the order of such Lender.
Each Revolving Credit Note shall be dated the Effective Date, or with respect to
any Lender which is a party to an Assignment and Acceptance the date of such
Assignment and Acceptance, and be duly and validly executed and delivered by
Borrower.
Section 2.5 Borrowing Base. At any time after the occurrence, and
during the continuance, of a Default or an Event of Default, the percentages
specified in this Agreement for determination of the Borrowing Base may be
adjusted from time to time based upon such considerations as Agent may deem
appropriate in its discretion. Percentages used from time to time in
calculating the Borrowing Base are for the sole purpose of determining the
maximum amount of Revolving Credit Loans that may be outstanding from time to
time under this Agreement, and shall not be evidentiary of or binding upon the
Credit Parties with respect to the market value or liquidation value of any
Collateral. Agent shall have the right at any time in its reasonable credit
judgment to establish a Reserve against Eligible Receivables in reduction of the
Borrowing Base in respect of costs, expenses, liens, risks, claims,
contingencies or other potential factors which, in the event they should occur,
could reasonably be expected to materially and adversely affect or otherwise
reduce the anticipated net amount of timely collections in payment of
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Eligible Receivables. Funding of Revolving Credit Loans hereunder shall at all
times remain subject to confirmation of existence of Eligible Receivables, and
the Borrowing Base, in Agent's discretion. Any request for a Revolving Credit
Loan which, if funded, would result in the unpaid balance of the Revolving
Credit Loans being in excess of the amount allowed by this Agreement may be
declined by Agent in its sole discretion without prior notice.
Section 2.6 Sublimit Loans.
a. Any Revolving Credit Loan requested by Borrower
pursuant to Section 2.1 may be designated by Borrower as an EQ
Sublimit Loan, provided, that the aggregate amount of Revolving Credit
Loans at any time outstanding as EQ Sublimit Loans may not at any time
exceed the EQ Sublimit Allowance. Any Revolving Credit Loan not so
designated shall not be an EQ Sublimit Loan, provided, that any Loan
made pursuant to clauses (ii), (iii), (iv) and (v) of Section 2.2(a)
shall be deemed to be an EQ Sublimit Loan to the extent such Loan
results in there being an unpaid balance of Revolving Credit Loans in
excess of the amount of the Borrowing Base determined as if the EQ
Sublimit Allowance was $0.
b. If at any time the aggregate outstanding unpaid
principal amount of all EQ Sublimit Loans exceeds the EQ Sublimit
Allowance, Borrower shall repay the EQ Sublimit Loans in an amount
sufficient to reduce the aggregate unpaid principal amount of EQ
Sublimit Loans by an amount equal to such excess, together with
accrued and unpaid interest on the amount so repaid to the date of
repayment, provided, that in Agent's sole discretion any such excess
may be amortized according to such amortization schedule as Agent may
determine in its discretion.
c. At any time on or after the first anniversary of the
Agreement Date and at least once during each subsequent twelve (12)
month period following such anniversary, Agent in its discretion may
cause to be prepared for Agent, at Borrower's cost and expense, an
updated appraisal of Eligible Equipment, prepared by a credentialed
appraiser and on such valuation basis as Agent may determine for
determination of the Liquidation-in-Place Value of such Eligible
Equipment as of the time of such appraisal.
Section 2.7 Extension of Revolving Credit Facility. Upon the
request of Borrower, the Lenders may, from time to time, in their sole
discretion agree to extend the Revolving Credit Facility for a period of up to
twelve months at a time with the effect that the Termination Date shall be
extended accordingly. Each such extension shall be requested by the delivery by
Borrower to the Loan Parties of a written notice to that effect, not less than
sixty (60) days prior to the date which otherwise would constitute the
Termination Date for the Revolving Credit Facility, and shall be effected upon
execution by the Loan Parties and the Credit Parties of an amendment to this
Agreement and such related agreements, in each case in form and substance
satisfactory to Agent, as Agent shall require in connection therewith.
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ARTICLE 3
Letter of Credit Facility
Section 3.1 Agreement to Issue. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, L/C Issuer agrees to issue for the account of Borrower
one or more Letters of Credit in accordance with this Article 3, from time to
time during the period commencing on the Effective Date and ending on the date
thirty-one (31) days prior to Termination Date.
Section 3.2 Amounts. L/C Issuer shall not have any obligation to
issue any Letter of Credit at any time:
(a) if, after giving effect to the issuance of the
requested Letter of Credit, (i) the aggregate Letter of Credit
Obligations of Borrower would exceed the maximum amount of the Letter
of Credit Facility then in effect or (ii) the aggregate principal
amount of the Revolving Credit Loans outstanding would exceed the
Borrowing Base (after reduction for such Letter of Credit); or
(b) which has a term longer than one (1) calendar year or
an expiration date after the last Business Day that is more than
thirty (30) days prior to the Termination Date.
Section 3.3 Conditions. The obligation of L/C Issuer to issue any
Letter of Credit is subject to the satisfaction of (i) the conditions precedent
contained in Article 7 and (ii) the following additional conditions precedent in
a manner satisfactory to Agent and L/C Issuer:
(a) Borrower shall have delivered to L/C Issuer and
Agent, at such times and in such manner as L/C Issuer or Agent may
prescribe, an application in form and substance satisfactory to L/C
Issuer and Agent for the issuance of the proposed Letter of Credit, a
Reimbursement Agreement and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed
Letter of Credit shall be satisfactory to L/C Issuer and Agent; and
(b) as of the date of issuance, no order of any court,
arbitrator or other Governmental Authority having jurisdiction or
authority over L/C Issuer shall purport by its terms to enjoin or
restrain banks generally from issuing letters of credit of the type
and in the amount of the proposed Letter of Credit, and no law, rule
or regulation applicable to banks generally and no request or
directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over banks generally shall
prohibit or request that L/C Issuer refrain from the issuance of
letters of credit generally or the issuance of such Letter of Credit.
(c) L/C Issuer shall have received from Agent
authorization to issue the requested Letter of Credit.
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Section 3.4 Issuance of Letters of Credit.
(a) Request for Issuance. Borrower shall give L/C Issuer
and Agent written notice of each request for the issuance of a Letter
of Credit no later than six (6) Business Days prior to the proposed
date of issuance of the Letter of Credit. Such notice shall be
irrevocable and shall specify the original face amount of the Letter
of Credit requested, the effective date (which date shall be a
Business Day) of issuance of such requested Letter of Credit, whether
such Letter of Credit may be drawn in a single or in multiple draws,
the date on which such requested Letter of Credit is to expire (which
date shall be a Business Day that is more than thirty (30) days prior
to the Termination Date), the purpose for which such Letter of Credit
is to be issued and the beneficiary of the requested Letter of Credit.
Borrower shall attach to such notice the form of the Letter of Credit
that Borrower requests to be issued.
(b) Responsibilities of Agent; Issuance. Agent shall
determine, as of the Business Day immediately preceding the requested
effective date of issuance of the Letter of Credit set forth in the
notice from Borrower pursuant to Section 3.4(a), the amount of the
unused portion of the Letter of Credit Facility and the Borrowing
Base. If (i) the form of the Letter of Credit delivered by Borrower
to Agent is acceptable to L/C Issuer and Agent in their sole,
reasonable discretion, (ii) the undrawn face amount of the requested
Letter of Credit is less than or equal to the lesser of (A) the amount
of the unused portion of the Letter of Credit Facility and (B) the
unused Borrowing Base, and (iii) Agent has received a certificate from
Borrower stating that the applicable conditions set forth in Article 7
have been satisfied, then L/C Issuer will cause the Letter of Credit
to be issued. NationsBank in its sole discretion may cause any
Affiliate of NationsBank to issue any requested Letter of Credit,
whereupon such Affiliate shall be L/C Issuer with respect to such
Letter of Credit and shall have all of the rights, benefits and
interests of L/C Issuer as are specified by the Loan Documents in
connection therewith. Each such Affiliate, if any, shall be a third
party beneficiary of the Loan Documents and shall be entitled to rely
upon all representations, warranties and covenants contained herein
and therein. The Loan Parties hereby authorize NationsBank and Agent
to deliver or otherwise disclose to L/C Issuer copies of any of the
Loan Documents and any other information from time to time in
NationsBank's or Agent's possession concerning any of the Loan Parties
or the transactions contemplated by the Loan Documents.
(c) Notice of Issuance. Promptly after the issuance of
any Letter of Credit, L/C Issuer shall give Agent written or facsimile
notice, or telephonic notice confirmed promptly thereafter in writing,
of the issuance of such Letter of Credit, and Agent shall give each
Lender written or facsimile notice, or telephonic notice confirmed
promptly thereafter in writing, of the issuance of such Letter of
Credit; provided that any failure or delay in giving or confirming any
such notice shall not impair the obligations of L/C Issuer, any Lender
or Borrowers with respect to any such Letter of Credit.
(d) No Extension or Amendment. No Letter of Credit shall
be extended or amended unless the requirements of this Section 3.4 are
met as though a new Letter of Credit were being requested and issued.
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Section 3.5 Duties of L/C Issuer. Any action taken or omitted to
be taken by L/C Issuer under or in connection with any Letter of Credit, if
taken or omitted in the absence of gross negligence or willful misconduct, shall
not result in any liability of L/C Issuer to any Lender or relieve any Lender of
its obligations hereunder to L/C Issuer. In determining whether to pay under
any Letter of Credit, L/C Issuer shall have no obligation to any Lender other
than to confirm that any documents required to be delivered under such Letter of
Credit in connection with such drawing have been presented and appear on their
face to comply with the requirements of such Letter of Credit.
Section 3.6 Payment of Reimbursement Obligations.
(a) Payment to Issuer. Notwithstanding any provisions to
the contrary in any Reimbursement Agreement, Borrower agrees to
reimburse L/C Issuer for any drawings (whether partial or full) under
each Letter of Credit issued by L/C Issuer and agrees to pay to L/C
Issuer the amount of all other Reimbursement Obligations and other
amounts payable to L/C Issuer under or in connection with such Letter
of Credit immediately when due, irrespective of any claim, set-off,
defense or other right which Borrower may have at any time against L/C
Issuer or any other Person.
(b) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of Borrower with respect to any Letter of
Credit (or any Reimbursement Obligation relating thereto) received by
L/C Issuer, or by Agent, and distributed by Agent to the Lenders on
account of their respective participations therein, is thereafter set
aside, avoided or recovered from L/C Issuer or Agent in connection
with any receivership, liquidation or bankruptcy proceeding, the
Lenders shall, upon demand by Agent pay to Agent, for the account of
Agent or L/C Issuer, their respective Commitment Percentages of such
amount set aside, avoided or recovered together with interest at the
rate required to be paid by L/C Issuer, or by Agent, upon the amount
required to be repaid by it.
Section 3.7 Participations.
(a) Purchase of Participations. Immediately upon
issuance by L/C Issuer of a Letter of Credit, each Lender shall be
deemed to have irrevocably and unconditionally purchased and received
without recourse or warranty, an undivided interest and participation
in such Letter of Credit, equal to such Lender's Commitment Percentage
of the face amount thereof (including, without limitation, all
obligations of Borrower with respect thereto).
(b) Sharing of Letter of Credit Payments. In the event
that L/C Issuer makes a payment under any Letter of Credit and L/C
Issuer shall not have been repaid such amount pursuant to Section 3.6,
then NationsBank may make such repayment to L/C Issuer and thereupon
be deemed to have made a Non-Ratable Loan in the amount of such
repayment, and notwithstanding the occurrence or continuance of a
Default or Event of Default at the time of such repayment, such
Non-Ratable Loan shall be subject to the provisions of Section 5.10(b)
and the absolute obligations of the Lenders to pay for their
respective participation interests therein.
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(c) Sharing of Reimbursement Obligation Payments.
Whenever L/C Issuer receives a payment from or on behalf of Borrower
on account of a Reimbursement Obligation as to which Agent has
previously received for the account of L/C Issuer payment from a
Lender pursuant to this Section 3.7, L/C Issuer shall promptly pay to
Agent, for the benefit of such Lender, such Lender's Commitment
Percentage of the amount of such payment from Borrower in Dollars.
Each such payment shall be made by L/C Issuer on the Business Day on
which L/C Issuer receives immediately available funds pursuant to the
immediately preceding sentence, if received prior to 11:00 a.m.
(Dallas, Texas time) on such Business Day and otherwise on the next
succeeding Business Day.
(d) Documentation. Upon the request of any Lender, Agent
shall furnish to such Lender copies of any Letter of Credit,
Reimbursement Agreement or application for any Letter of Credit and
such other documentation as may reasonably be requested by such
Lender.
(e) Obligations Irrevocable. The obligations of each
Lender to make payments to Agent with respect to any Letter of Credit
and their participations therein pursuant to the provisions of Section
5.10(b) hereof or otherwise and the obligations of Borrower to make
payments to L/C Issuer or to Agent, for the account of the Lenders,
shall be irrevocable, shall not be subject to any qualification or
exception whatsoever and shall be made in accordance with the terms
and conditions of this Agreement (assuming, in the case of the
obligations of the Lenders to make such payments, that the Letter of
Credit has been issued in accordance with Section 3.4), including,
without limitation, any of the following circumstances:
(i) Any lack of validity or enforceability of
this Agreement or any of the other Loan Documents;
(ii) The existence of any claim, set-off, defense
or other right which Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of
any Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender, Agent, L/C Issuer or
any other Person, whether in connection with this Agreement,
any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying
transactions between Borrower or any other Person and the
beneficiary named in any Letter of Credit);
(iii) Any draft, certificate or any other document
presented under the Letter of Credit upon which payment has
been made in good faith and according to its terms proving to
be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any
respect;
(iv) The surrender or impairment of any Collateral
or any other security for the Secured Obligations or the
performance or observance of any of the terms of any of the
Loan Documents;
(v) The occurrence of any Default or Event of
Default; or
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(vi) Agent's failure to deliver to the Lenders the
notice provided for in Section 3.4(c).
Section 3.8 Indemnification, Exoneration.
(a) Indemnification by Borrower. WITHOUT LIMITING
SECTION 17.13 AND IN ADDITION TO AMOUNTS PAYABLE AS ELSEWHERE PROVIDED
IN THIS ARTICLE 3, BORROWER JOINTLY AND SEVERALLY AGREES TO PROTECT,
INDEMNIFY, PAY AND SAVE EACH OF THE CREDIT PARTIES HARMLESS FROM AND
AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES, LOSSES,
COSTS, CHARGES AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES)
WHICH ANY CREDIT PARTY MAY INCUR OR BE SUBJECT TO AS A CONSEQUENCE,
DIRECTLY OR INDIRECTLY, OF ANY OF THE FOLLOWING: (I) THE ISSUANCE OF
ANY LETTER OF CREDIT, OTHER THAN AS A RESULT OF ITS GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT, AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION, OR (II) THE FAILURE OF L/C ISSUER TO HONOR A DRAWING
UNDER ANY LETTER OF CREDIT AS A RESULT OF ANY ACT OR OMISSION, WHETHER
RIGHTFUL OR WRONGFUL, OF ANY PRESENT OR FUTURE DE JURE OR DE FACTO
GOVERNMENTAL AUTHORITY (ALL SUCH ACTS OR OMISSIONS BEING HEREINAFTER
REFERRED TO COLLECTIVELY AS "GOVERNMENT ACTS").
(b) Assumption of Risk by Borrower. As among Borrower
and the Credit Parties, Borrower assumes all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance
and not in limitation of the foregoing, subject to the provisions of
the applications for the issuance of Letters of Credit, the Credit
Parties shall not be responsible for:
(i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any
Person in connection with the application for and issuance of
and presentation of drafts with respect to any of the Letters
of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or
forged;
(ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason;
(iii) the failure of the beneficiary of any Letter
of Credit to comply duly with conditions required in order to
draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in
cipher;
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(v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof;
(vii) the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such
Letter of Credit; or
(viii) any consequences arising from causes beyond
the control of any Credit Party, including, without
limitation, any Government Acts.
None of the foregoing shall affect, impair or prevent the vesting of
any rights or powers of any of any Credit Party under this Section
3.8.
(c) Exoneration. In furtherance and extension, and not
in limitation, of the specific provisions set forth above, any action
taken or omitted by the Credit Parties under or in connection with any
of the Letters of Credit or any related certificates, if taken or
omitted in good faith, shall not result in any liability of any Credit
Party to Borrower or relieve Borrower of any of its obligations
hereunder to any such Person.
(d) Indemnification by Lenders. WITHOUT LIMITING SECTION
16.5, THE LENDERS AGREE TO INDEMNIFY L/C ISSUER (TO THE EXTENT NOT
REIMBURSED UNDER SECTION 17.2 HEREOF, BUT WITHOUT LIMITING THE
OBLIGATIONS OF BORROWER UNDER SUCH SECTION) RATABLY IN ACCORDANCE WITH
THEIR RESPECTIVE COMMITMENTS, FOR ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES) OR DISBURSEMENTS OF ANY
KIND AND NATURE WHATSOEVER THAT MAY BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST L/C ISSUER (INCLUDING BY ANY LENDER) AS DESCRIBED IN
THIS SECTION 3.8 OR OTHERWISE IN ANY WAY RELATING TO OR ARISING OUT OF
ANY LETTER OF CREDIT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR ANY
ACTION TAKEN OR OMITTED BY L/C ISSUER UNDER ANY LETTER OF CREDIT OR
ANY LOAN DOCUMENT IN CONNECTION THEREWITH (INCLUDING ANY OF THE
FOREGOING ARISING FROM THE NEGLIGENCE OF L/C ISSUER); PROVIDED THAT NO
LENDER SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT THEY
ARISE FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO
BE INDEMNIFIED. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER
AGREES TO REIMBURSE L/C ISSUER PROMPTLY UPON DEMAND FOR ITS RATABLE
SHARE OF ANY COSTS OR EXPENSES PAYABLE BY BORROWER TO L/C ISSUER UNDER
SECTION 17.2, TO THE EXTENT THAT L/C ISSUER IS NOT PROMPTLY REIMBURSED
FOR SUCH COSTS AND EXPENSES BY BORROWER. THE AGREEMENTS CONTAINED IN
THIS SECTION SHALL SURVIVE PAYMENT IN FULL OF ALL SECURED OBLIGATIONS.
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Section 3.9 Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 3.2(c), any Letter of Credit is
outstanding on the Termination Date, then on or prior to such Termination Date,
or in any case upon the occurrence of an Event of Default, Borrower shall,
promptly on demand by Agent, deposit with Agent, for the ratable benefit of the
Credit Parties, with respect to each Letter of Credit then outstanding, as Agent
shall specify, either (a) a standby letter of credit (a "Supporting Letter of
Credit") in form and substance satisfactory to Agent, issued by an issuer
reasonably satisfactory to Agent in an amount equal to the greatest amount for
which such Letter of Credit may be drawn, under which Supporting Letter of
Credit Agent is entitled to draw amounts necessary to reimburse the Credit
Parties for payments made by the Credit Parties resulting from any drawing under
such Letter of Credit or under any reimbursement or guaranty agreement with
respect thereto, or (b) Cash Collateral in an amount necessary to reimburse the
Credit Parties for payments made by the Credit Parties resulting from any
drawing under such Letter of Credit or under any reimbursement or guaranty
agreement with respect thereto. Such Supporting Letter of Credit or Cash
Collateral shall be held by Agent for the benefit of the Credit Parties, as
security for, and to provide for the payment of, the Reimbursement Obligations.
In addition, Agent may at any time after the Termination Date apply any or all
of such Cash Collateral to the payment of any or all of the Secured Obligations
then due and payable. At Borrower's request, but subject to Agent's reasonable
approval, Agent shall invest any Cash Collateral consisting of cash or any
proceeds of Cash Collateral consisting of cash in Cash Equivalents, and any
commissions, expenses and penalties incurred by Agent in connection with any
investment and redemption of such Cash Collateral shall be Secured Obligations
hereunder secured by the Collateral, shall bear interest at the rates provided
herein for the Loans and shall be charged to Borrower's Loan Accounts, or, at
Agent's option, shall be paid out of the proceeds of any earnings received by
Agent from the investment of such Cash Collateral as provided herein or out of
such cash itself. Agent makes no representation or warranty as to, and shall
not be responsible for, the rate of return, if any, earned on any Cash
Collateral. Any earnings on Cash Collateral shall be held as additional Cash
Collateral on the terms set forth in this Section 3.9.
ARTICLE 4
[RESERVED]
ARTICLE 5
General Loan Provisions
Section 5.1 Procedure for Borrowing and Disbursement of Loans.
(a) In order to receive any Loan, Borrower shall notify
Agent of a request for a Loan by means of a Notice of Borrowing or
other notice on behalf of Borrower acceptable to Agent, therein
designating the amount of the Loan requested (and if such Loan is
requested as an EQ Sublimit Loan, a designation so requesting) and the
date on which funding is
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requested. Each request for a Loan shall be delivered to Agent not
later than 11:00 a.m. (Dallas, Texas time) (i) in the case of a Base
Rate Loan on the Business Day on which funding of such Loan is
requested and (ii) in the case of a Eurodollar Loan, at least two (2)
Eurodollar Business Days prior to the Business Day on which funding of
such Loan is requested. Such notice may be made in any manner
prescribed by Section 17.1, provided that for this purpose each Loan
Party irrevocably authorizes Agent to rely upon any Person whom Agent
believes to be an authorized officer of Borrower and for purposes of
this Agreement any such officer shall be deemed to be authorized to
request any such Loan on behalf of Borrower. Any such notice shall be
irrevocable upon receipt by Agent. Without limiting the other terms
and conditions of this Agreement, at the time of each borrowing
hereunder, Borrower must be current in the delivery of all Compliance
Certificates and Borrowing Base Certificates required to be delivered
to Agent and the Lenders pursuant to this Agreement.
(b) Unless Agent has elected periodic settlements
pursuant to Section 5.10, Agent shall promptly notify the Lenders of
any Notice of Borrowing given or deemed given pursuant to this
Agreement by 12:00 noon (Dallas, Texas time) on the proposed borrowing
date. Not later than 1:00 p.m. (Dallas, Texas time) on the proposed
borrowing date, each Lender will make available to Agent, for the
account of Borrower, at Agent's Principal Office in funds immediately
available to Agent, an amount equal to such Lender's Commitment
Percentage of the Revolving Credit Loans to be made on such date.
Section 5.2 Interest.
(a) Subject to the provisions of Section 5.2(c), Borrower
agrees to pay interest on the unpaid principal amount of the Loans,
for each day from the day each such Loan was made until such Loan is
due (whether upon demand, at maturity, by reason of acceleration or
otherwise) at a rate per annum equal to the lesser of the Applicable
Rate or the Maximum Rate. Interest shall be payable monthly in
arrears as it accrues on each Interest Payment Date.
(b) Prior to receipt of the Compliance Certificate to be
delivered with Borrower's financial statements for its fiscal quarter
ending September 30, 1998, the Applicable Margin shall be (i) one
percent (1.00%) for Base Rate Loans other than EQ Sublimit Loans, (ii)
one and one-half percent (1.50%) for Base Rate Loans that are EQ
Sublimit Loans, (iii) two and three-quarters percent (2.75%) for
Eurodollar Loans other than EQ Sublimit Loans and (iv) three and
one-quarter percent (3.25%) for Eurodollar Loans that are EQ Sublimit
Loans; thereafter the Applicable Margin shall be determined in
accordance with the following table (with step downs based on
Borrower's Interest Coverage Ratio determined as provided in Section
13.1(b) commencing on and after receipt of the Compliance Certificate
to be delivered with Borrower's financial statements for its fiscal
quarter ending September 30, 1998 as set forth in such table and
effective as provided herein below):
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========================================================================================================================
Base Rate Loans Base Rate Loans Eurodollar Rate Loans Eurodollar Rate Loans
other than that are other than that are
Interest Coverage Ratio EQ Sublimit Loans EQ Sublimit Loans EQ Sublimit Loans EQ Sublimit Loans
========================================================================================================================
Less than or equal to 1.50 1.00% 1.50% 2.75% 3.25%
------------------------------------------------------------------------------------------------------------------------
Greater than 1.50 but less
than or equal to 2.00 0.75% 1.25% 2.50% 3.00%
------------------------------------------------------------------------------------------------------------------------
Greater than 2.00 0.50% 1.00% 2.25% 2.75%
========================================================================================================================
Upon delivery of the Compliance Certificate pursuant to Subsection
12.3 in connection with the financial statements of Borrower required
to be delivered pursuant to Subsection 12.1 for the fiscal quarter
ending September 30, 1998, the Applicable Margin shall automatically
be adjusted in accordance with the Interest Coverage Ratio as set
forth above, such automatic adjustment to take effect retroactively as
of the first day of the fiscal quarter for which such Compliance
Certificate is delivered (the "Adjustment Date"). If Borrower fails
to deliver such Compliance Certificate with respect to any fiscal
quarter within the period of time required by Subsection 12.3, then:
(i) the Applicable Margin for Base Rate Loans other than EQ Sublimit
Loans shall automatically be adjusted to one percent (1.00%) per
annum, (ii) the Applicable Margin for Base Rate Loans that are EQ
Sublimit Loans shall automatically be adjusted to one and one-half
percent (1.50%) per annum, (iii) the Applicable Margin for Eurodollar
Rate Loans other than EQ Sublimit Loans (for Interest Periods
commencing after the applicable Adjustment Date) shall automatically
be adjusted to two and three-quarters percent (2.75%) per annum and
(iv) the Applicable Margin for Eurodollar Rate Loans that are EQ
Sublimit Loans (for Interest Periods commencing after the applicable
Adjustment Date) shall automatically be adjusted to three and
one-quarter percent (3.25%) per annum. Each automatic adjustment, if
any, provided for above shall remain in effect until subsequently
adjusted in accordance with the foregoing.
(c) If Borrower shall fail to pay when due (whether upon
demand, at maturity, by reason of acceleration or otherwise) all or
any portion of the principal amount of any Loan or if there shall
occur any other Event of Default, at Agent's election the balance of
the Loans shall no longer bear interest in accordance with the terms
of Section 5.2(a), but shall bear interest for each day from the date
of such failure to pay or other Event of Default, as the case may be,
until such failure to pay or other Event of Default shall have been
cured or waived in compliance with the terms of this Agreement, at a
rate per annum equal to the lesser of (i) the sum of (1) the Default
Margin and (2) the Applicable Rate, or (ii) the Maximum Rate, payable
on demand. The interest rate provided for in the preceding sentence
shall, to the extent permitted by Applicable Law, apply to and accrue
on the amount of any judgment entered with respect to any Secured
Obligation and shall continue to accrue at such rate during any
proceeding described in Section 14.1(g) or Section 14.1(h).
(d) Borrower agrees, to the extent permitted by
Applicable Law, to pay interest on the unpaid principal amount of any
Secured Obligation that is due and payable other than the Loans in
accordance with Sections 5.2(a) or Section 5.2(c), as applicable, as
if such Secured Obligation were a Loan.
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(e) The interest rates provided for in Section 5.2(a),
Section 5.2(b), Section 5.2(c) and Section 5.2(d) shall be computed on
the basis of a year of 360 days and the actual number of days elapsed
and, with respect to any Base Rate Loan, shall be adjusted
automatically as of the first day of the calendar month next following
the calendar month of the effective date of each change in the Base
Rate.
(f) It is not intended by the Lenders, and nothing
contained in this Agreement or the Notes shall be deemed, to establish
or require the payment of a rate of interest in excess of the maximum
rate permitted by Applicable Law (the "Maximum Rate"). If, in any
month, the Effective Interest Rate, absent such limitation, would have
exceeded the Maximum Rate, then the Effective Interest Rate for that
month shall be the Maximum Rate, and, if in future months, the
Effective Interest Rate would otherwise be less than the Maximum Rate,
then the Effective Interest Rate shall remain at the Maximum Rate
until such time as the amount of interest paid hereunder equals the
amount of interest which would have been paid if the same had not been
limited by the Maximum Rate. In the event, upon payment in full of
the Secured Obligations, the total amount of interest paid or accrued
under the terms of this Agreement is less than the total amount of
interest which would have been paid or accrued if the Effective
Interest Rate had at all times been in effect, then Borrower shall, to
the extent permitted by Applicable Law, pay to the Lenders an amount
equal to the excess, if any, of (i) the lesser of (A) the amount of
interest which would have been charged if the Maximum Rate had, at all
times, been in effect and (B) the amount of interest which would have
accrued had the Effective Interest Rate, at all times, been in effect,
and (ii) the amount of interest actually paid or accrued under this
Agreement. In the event the Lenders receive, collect or apply as
interest any sum in excess of the Maximum Rate, such excess amount
shall be applied to the reduction of the principal balance of the
Secured Obligations, and if no such principal is then outstanding,
such excess or part thereof remaining, shall be paid to Borrower.
Section 5.3 Interest Rate Option. Subject to the provisions
hereof, Borrower shall have the option to have designated portions of the Loans
bear interest at an Applicable Rate determined according to the Base Rate or the
Adjusted Eurodollar Rate; provided, however, that any portion of the Loans
designated to bear interest at an Applicable Rate determined according to the
Adjusted Eurodollar Rate for any particular Interest Period shall not be for
less than Two Hundred Thousand Dollars ($200,000) of unpaid principal or
integral multiples of One Hundred Thousand Dollars ($100,000) in excess thereof,
and no more than six (6) Interest Periods shall be allowed to exist at any one
time. Any such option shall be exercised in the manner provided below:
(a) At Time of Borrowing. Contemporaneously with each
request for a Loan, Borrower shall give Agent a Notice of Borrowing
indicating the interest rate option selected with respect to the
principal balance of such Loan. If the required Notice of Borrowing
shall not have been timely received by Agent, Borrower shall be deemed
to have designated the Base Rate and to have given Agent notice of
such designation. Notwithstanding the foregoing, any request for a
Revolving Credit Loan made pursuant to clauses (ii), (iii), (iv) or
(v) of Section 2.2(a) shall be deemed to be a request for a Base Rate
Loan.
(b) At Expiration of Interest Periods. Not less than two
(2) Eurodollar Business Days prior to the termination of any Interest
Period for any Eurodollar Loan, Borrower shall
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give Agent a Notice of Borrowing indicating the interest rate option
to be applicable to such Eurodollar Loan upon the expiration of such
Interest Period if Borrower elects to have such Loan Continued as a
Eurodollar Loan. If the required Notice of Borrowing shall not have
been timely received by Agent prior to the expiration of such Interest
Period, Borrower shall be deemed to have selected a rate based upon
the Base Rate to be applicable to such Eurodollar Loan upon the
expiration of such Interest Period and to have given Agent notice of
such selection.
(c) Conversion From Base Rate. Subject to the other
provisions of this Agreement, during any period in which any Base Rate
Loan is in existence, Borrower shall have the right, on any Eurodollar
Business Day, to Convert all or a portion thereof to a Eurodollar Loan
by giving Agent a Notice of Borrowing of such Conversion not less than
two (2) Eurodollar Business Days prior to the date of such Conversion.
Agent, at its option, may accept telephonic instructions as a Notice of
Borrowing (provided that without limiting the validity of any such notice by
telephonic instruction, Borrower agrees that any such telephonic request shall
promptly be confirmed to Agent by Borrower delivering a written Notice of
Borrowing to Agent) and Agent hereby is authorized and directed, at Agent's
option, to honor any or all such telephonic or other oral notices from any
Person whom Agent believes to be an authorized officer of Borrower, and for
purposes of this Agreement, any such officer shall be deemed to be authorized
to make any such notice on behalf of Borrower. Borrower agrees to indemnify
and hold Agent and the Lenders harmless from any loss or liability incurred by
any of them in connection with honoring any telephonic or other oral notices.
All written Notices of Borrowing are effective only upon receipt by Agent.
Each Notice of Borrowing, whether written or oral, shall be irrevocable and
binding upon Borrower.
Section 5.4 Certain Fees.
(a) Closing Fee. Subject to the provisions of Section
17.24, on the Agreement Date, as additional consideration for the
extensions of credit provided for hereunder, Borrower shall pay to
Agent, for the ratable benefit of the Lenders, the unpaid portion of a
closing fee in the amount of One Hundred Twenty Thousand Dollars
($120,000), Forty Thousand Dollars ($40,000) of which has been paid
prior to the Agreement Date. The closing fee provided for herein
shall compensate the Lenders for the internal costs associated with
the origination, structuring, processing, approving and closing of the
transactions contemplated by this Agreement, including, but not
limited to, administrative, general overhead and lost opportunity
costs, but not including any out-of-pocket expenses for which Borrower
has agreed to reimburse Agent or any Lender, including, without
limitation, Agent's or any Lender's out-of-pocket expenses incurred in
connection with its due diligence examination of Borrower and the
closing of the transactions contemplated by this Agreement. Subject
to the provisions of Section 17.24, the closing fee shall be fully
earned on the Agreement Date and shall not be subject to refund or
rebate.
(b) Commitment Fee. Subject to the provisions of Section
17.24, in connection with and as consideration for the holding
available for the use of Borrower hereunder the full amount of the
Revolving Credit Facility, Borrower will pay a fee to Agent, for the
ratable
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benefit of the Lenders for each day from the Effective Date until the
Termination Date, in an amount equal to the sum of (i) one-half of one
percent (0.50%) per annum of the amount by which $7,000,000 exceeds
the aggregate unpaid balance for such day of all EQ Sublimit Loans,
plus three-eighths of one percent (.375 %) per annum of the amount by
which $5,000,000 exceeds the aggregate unpaid balance for such day of
all Revolving Credit Loans other than EQ Sublimit Loans. Such fee
shall be payable monthly in arrears on each Interest Payment Date and
on the date of any permanent reduction in the Revolving Credit
Facility and shall be fully earned when due and payable and shall not
be subject to refund or rebate. Such fee is not, and shall not be
deemed to be, interest or a charge for the use, forbearance or
detention of money.
(c) Letter of Credit Fees.
(i) Borrower agrees to pay to Agent for the
ratable benefit of the Lenders Letter of Credit fees equal to
the Applicable Margin for Eurodollar Loans per annum based on
the average daily aggregate Letter of Credit Amount of all
Letters of Credit from time to time outstanding during the
term of this Agreement. Such fees shall be payable to Agent,
for the ratable benefit of the Lenders in accordance with
their respective Commitment Percentages, quarterly in arrears
on each Interest Payment Date and shall be calculated
according to the average daily Letter of Credit Amount
outstanding based on a year of 360 days and for the actual
number of days elapsed.
(ii) Borrower agrees to pay to Agent, for the
account of L/C Issuer, the standard fees and charges of L/C
Issuer for issuing, administering, amending, renewing, paying
and canceling Letters of Credit, as and when assessed.
Section 5.5 Manner of Payment.
(a) Except as otherwise expressly provided in Section
10.1(b), each payment (including prepayments) by Borrower on account
of the principal of or interest on the Loans or of any other amounts
payable under this Agreement, any Note or any other Loan Document
shall be made not later than 12:00 noon (Dallas, Texas time) on the
date specified for payment under this Agreement to Agent, for the
account of the Lenders, at Agent's Principal Office, in Dollars, in
immediately available funds and shall be made without any set-off,
counterclaim or deduction whatsoever. Any payment received after such
time but before 1:00 p.m. (Dallas, Texas time) on such day shall be
deemed a payment on such date for the purposes of Section 14.1, but
for all other purposes shall be deemed to have been made on the next
succeeding Business Day. All checks delivered to Agent in payment of
the Secured Obligations shall be subject to Agent's right to assess
interest for a deemed clearance period on the amount thereof for one
(1) Business Day after Agent's receipt thereof, which shall accrue and
be payable on each monthly Interest Payment Date.
(b) Borrower hereby irrevocably authorizes each Lender
and each Affiliate of such Lender and each participant herein to
charge any account of Borrower maintained with such Lender or such
Affiliate or participant with such amounts as may be necessary from
time to
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time to pay any Secured Obligations (whether or not owed to such
Lender, Affiliate or participant) which are not paid when due.
Section 5.6 General. If any payment under this Agreement or any
Note shall be specified to be made upon a day which is not a Business Day, it
shall be made on the next succeeding day which is a Business Day and such
extension of time shall in such case be included in computing interest and fees,
if any, as applicable, in accordance with such payment.
Section 5.7 Loan Accounts; Statements of Account.
(a) Each Lender shall open and maintain on its books a
loan account in Borrower's name (each, a "Loan Account" and
collectively, the "Loan Accounts"). Each such Loan Account shall show
as debits thereto each Loan made under this Agreement by such Lender
to Borrower and as credits thereto all payments received by such
Lender and applied to principal of such Loan, so that the balance of
the Loan Account at all times reflects the principal amount due such
Lender from Borrower.
(b) Agent shall maintain on its books a control account
for Borrower in which shall be recorded (i) the amount of each
disbursement made hereunder, (ii) the amount of any principal or
interest due or to become due from Borrower hereunder, and (iii) the
amount of any sum received by Agent hereunder from Borrower and each
Lender's ratable share therein.
(c) The entries made in the accounts pursuant to
subsections (a) and (b) shall be prima facie evidence, in the absence
of manifest error, of the existence and amounts of the obligations of
Borrower therein recorded and in case of discrepancy between such
accounts, in the absence of manifest error, the accounts maintained
pursuant to subsection (b) shall be controlling.
(d) Agent will account separately to Borrower monthly
with a statement of Loans, charges and payments made to and by
Borrower pursuant to this Agreement, and such accounts rendered by
Agent shall be deemed final, binding and conclusive, save for manifest
error, unless Agent is notified by Borrower in writing to the contrary
within thirty (30) days of the date the account to Borrower was so
rendered. Such notice by Borrower shall be deemed an objection to
only those items specifically objected to therein. Failure of Agent
to render such account shall in no way affect the rights of Agent or
of the Lenders hereunder.
Section 5.8 Termination of Agreement. Subject to the provisions
of Section 5.12, Borrower shall have the right, at any time, to terminate this
Agreement upon not less than fifteen (15) Business Days' prior written notice of
its intention to terminate this Agreement, which notice shall specify the
effective date of such termination. Upon receipt of such notice, Agent shall
promptly notify each Lender thereof. On the date specified in such notice, such
termination shall be effected, provided, that Borrower shall, on or prior to
such date, pay to Agent, for the account of the Lenders, in same day funds, an
amount equal to all Secured Obligations then outstanding, including, without
limitation, all (i) accrued interest thereon, (ii) all accrued fees provided for
hereunder, and (iii) any amounts payable to the Lenders pursuant to Sections
5.12, 17.2, 17.3 and 17.13, and, in addition thereto, shall deliver to Agent, in
respect of each outstanding Letter of Credit, either the Supporting
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Letter of Credit or the Cash Collateral as provided in Section 3.9. Following
the date specified in a notice of termination as provided for in this Section
5.8 and upon payment in full of the amounts specified in this Section 5.8, this
Agreement shall be terminated and the Credit Parties and Borrower shall have no
further obligations to any other party hereto except for the obligations to
Agent and the Lenders pursuant to Sections 3.8 and 17.13 hereof.
Section 5.9 Making of Loans.
(a) Nature of Obligations of Lenders to Make Loans. The
obligations of the Lenders under this Agreement to make the Loans are
several and are not joint or joint and several.
(b) Assumption by Agent. Subject to the provisions of
Section 5.10 and notwithstanding the occurrence or continuance of a
Default or Event of Default or other failure of any condition to the
making of Revolving Credit Loans hereunder subsequent to the Revolving
Credit Loans to be made on the Effective Date, unless Agent shall have
received notice from a Lender in accordance with the provisions of
Section 5.9(c) prior to a proposed borrowing date that such Lender
will not make available to Agent such Lender's ratable portion of the
amount to be borrowed on such date, Agent may assume that such Lender
will make such portion available to Agent in accordance with Section
2.2(a), and Agent may, in reliance upon such assumption, make
available to Borrower on such date a corresponding amount. If and to
the extent such Lender shall not make such ratable portion available
to Agent, such Lender and Borrower severally agree to repay to Agent
forthwith on demand such corresponding amount, together with interest
thereon for each day from the date such amount is made available to
Borrower until the date such amount is repaid to Agent at the
Effective Interest Rate or, if lower, subject to Section 5.2(f), the
Maximum Rate. If such Lender shall repay to Agent such corresponding
amount, the amount so repaid shall constitute such Lender's Commitment
Percentage of the Loan made on such borrowing date for purposes of
this Agreement. The failure of any Lender to make its Commitment
Percentage of any Loan available shall not (without regard to whether
Borrower shall have returned the amount thereof to Agent in accordance
with this Section 5.9) relieve it or any other Lender of its
obligation, if any, hereunder to make its Commitment Percentage of
such Loan available on such borrowing date, but no Lender shall be
responsible for the failure of any other Lender to make its Commitment
Percentage of such Loan available on the borrowing date.
(c) Delegation of Authority to Agent. Without limiting
the generality of Section 16.1, each Lender expressly authorizes Agent
to determine on behalf of such Lender (i) any reduction or increase of
advance rates applicable to the Borrowing Base, so long as such
advance rates do not at any time exceed the rates set forth in the
Borrowing Base definition, (ii) the creation or elimination of any
amount of the reserve (including the Reserve or the Environmental
Compliance Reserve but excluding the Letter of Credit Reserve) against
the Revolving Credit Facility and the Borrowing Base, (iii) whether or
not Inventory or Receivables shall be deemed to constitute Eligible
Inventory or Eligible Receivables and whether Equipment shall be
deemed to constitute Eligible Equipment. Unless and until Agent shall
have received written notice from the Required Lenders as to the
existence of a Default, an Event of Default or some other circumstance
which would relieve the Lenders of their
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respective obligations to make Loans hereunder, which notice shall be
in writing and shall be signed by the Required Lenders and shall
expressly state that the Required Lenders do not intend to make
available to Agent such Lenders' ratable share of Loans made after the
effective date of such notice, Agent shall be entitled to continue to
make the assumptions described in Section 5.9(b). After receipt of
the notice described in the preceding sentence, which shall become
effective on the third (3rd) Business Day after receipt of such notice
by Agent unless otherwise agreed by Agent, Agent shall be entitled to
make the assumptions described in Section 5.9(b) as to any Loans as to
which it has not received a written notice to the contrary prior to
11:00 a.m. (Dallas, Texas time) on the Business Day next preceding
the day on which the Loan is to be made. Agent shall not be required
to make any Loan as to which it shall have received notice by a Lender
of such Lender's intention not to make its ratable portion of such
Loan available to Agent. Any withdrawal of authorization under this
Section 5.9(c) shall not affect the validity of any Loans made prior
to the effectiveness thereof.
Section 5.10 Settlement Among Lenders.
(a) Revolving Credit Loans. It is agreed that each
Lender's Net Outstandings are intended by the Lenders to be equal at
all times to such Lender's Commitment Percentage of the aggregate
principal amount of all Revolving Credit Loans outstanding.
Notwithstanding such agreement, the several and not joint obligation
of each Lender to fund Revolving Credit Loans made in accordance with
the terms of this Agreement ratably in accordance with such Lender's
Commitment Percentage and each Lender's right to receive its ratable
share of principal payments on Revolving Credit Loans in accordance
with its Commitment Percentage, the Lenders agree that in order to
facilitate the administration of this Agreement and the Loan Documents
that settlement among them may take place on a periodic basis in
accordance with the provisions of this Section 5.10.
(b) Settlement Procedures as to Revolving Credit Loans.
To the extent and in the manner hereinafter provided in this Section
5.10, settlement among the Lenders as to Revolving Credit Loans may
occur periodically on Settlement Dates determined from time to time by
Agent, which may occur before or after the occurrence or during the
continuance of a Default or Event of Default and whether or not all of
the conditions set forth in Section 7.2 have been met. On each
Settlement Date payments shall be made by or to the Lenders in the
manner provided in this Section 5.10 in accordance with the Settlement
Report delivered by Agent pursuant to the provisions of this Section
5.10 in respect of such Settlement Date so that as of each Settlement
Date, and after giving effect to the transactions to take place on
such Settlement Date, each Lender's Net Outstandings shall equal such
Lender's Commitment Percentage of the Revolving Credit Loans
outstanding.
(i) Selection of Settlement Dates. If Agent
elects, in its discretion, but subject to the consent of
NationsBank, to settle accounts among the Lenders with respect
to principal amounts of Revolving Credit Loans less frequently
than each Business Day, then Agent shall designate periodic
Settlement Dates which may occur on any Business Day after the
Effective Date; provided, however, that Agent shall designate
as a Settlement Date any Business Day which is an Interest
Payment Date;
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and provided further, that a Settlement Date shall occur at
least once during each seven day period. Agent shall
designate a Settlement Date by delivering to each Lender a
Settlement Report not later than 12:00 noon (Dallas, Texas
time) on the proposed Settlement Date, which Settlement Report
will be substantially in the form of Exhibit "E" hereto and
shall be with respect to the period beginning on the next
preceding Settlement Date and ending on such designated
Settlement Date.
(ii) Non-Ratable Loans and Payments. Between
Settlement Dates, Agent shall request and NationsBank may (but
shall not be obligated to) advance to Borrower out of
NationsBank's own funds, the entire principal amount of any
Revolving Credit Loan requested or deemed requested pursuant
to Section 2.2(a) (any such Revolving Credit Loan being
referred to as a "Non-Ratable Loan"). The making of each
Non-Ratable Loan by NationsBank shall be deemed to be a
purchase by NationsBank of a 100% participation in each other
Lender's Commitment Percentage of the amount of such
Non-Ratable Loan. All payments of principal, interest and any
other amount with respect to such Non-Ratable Loan shall be
payable to and received by Agent for the account of
NationsBank. Upon demand by NationsBank, with notice thereof
to Agent, each other Lender shall pay to NationsBank, as the
repurchase of such participation, an amount equal to one
hundred percent (100%) of such Lender's Commitment Percentage
of the principal amount of such Non-Ratable Loan. Any
payments received by Agent between Settlement Dates which in
accordance with the terms of this Agreement are to be applied
to the reduction of the outstanding principal balance of
Revolving Credit Loans, shall be paid over to and retained by
NationsBank for such application, and such payment to and
retention by NationsBank shall be deemed, to the extent of
each other Lender's Commitment Percentage of such payment, to
be a purchase by each such other Lender of a participation in
the Revolving Credit Loans (including the repurchase of
participations in Non-Ratable Loans) held by NationsBank.
Upon demand by another Lender, with notice thereof to Agent,
NationsBank shall pay to Agent, for the account of such other
Lender, as a repurchase of such participation, an amount equal
to such other Lender's Commitment Percentage of any such
amounts (after application thereof to the repurchase of any
participations of NationsBank in such other Lender's
Commitment Percentage of any Non-Ratable Loans) paid only to
NationsBank by Agent.
(iii) Net Decrease in Outstandings. If on any
Settlement Date the increase, if any, in the amount of any
Lender's Net Outstandings which is required to comply with the
first sentence of Section 5.10(a) is less than such Lender's
Commitment Percentage of amounts received by Agent but paid
only to NationsBank since the next preceding Settlement Date,
such Lender and Agent, in their respective records, shall
apply such Lender's Commitment Percentage of such amounts to
the increase in such Lender's Net Outstandings, and
NationsBank shall pay to Agent, for the account of such
Lender, the excess allocable to such Lender.
(iv) Net Increase in Outstandings. If on any
Settlement Date the increase, if any, in the amount of any
Lender's Net Outstandings which is required to comply
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with the first sentence of Section 5.10(a) exceeds such
Lender's Commitment Percentage of amounts received by Agent
but paid only to NationsBank since the next preceding
Settlement Date, such Lender and Agent, in their respective
records, shall apply such Lender's Commitment Percentage of
such amounts to the increase in such Lender's Net
Outstandings, and such Lender shall pay to Agent, for the
account of NationsBank, any excess.
(v) No Change in Outstandings. If a Settlement
Report indicates that no Revolving Credit Loans have been made
during the period since the next preceding Settlement Date,
then such Lender's Commitment Percentage of any amounts
received by Agent but paid only to NationsBank shall be paid
by NationsBank to Agent, for the account of such Lender. If a
Settlement Report indicates that the increase in the amount
of a Lender's Net Outstandings which is required to comply
with the first sentence of Section 5.10(a) is exactly equal to
such Lender's Commitment Percentage of amounts received by
Agent but paid only to NationsBank since the next preceding
Settlement Date, such Lender and Agent, in their respective
records, shall apply such Lender's Commitment Percentage of
such amounts to the increase in such Lender's Net
Outstandings.
(vi) Return of Payments. If any amounts received
by NationsBank in respect of the Secured Obligations are later
required to be returned or repaid by NationsBank to Borrower
or any other obligor or their respective representatives or
successors in interest, whether by court order, settlement or
otherwise, in excess of NationsBank's Commitment Percentage
of all such amounts required to be returned by all Lenders,
each other Lender shall, upon demand by NationsBank with
notice to Agent, pay to Agent for the account of NationsBank,
an amount equal to the excess of such Lender's Commitment
Percentage of all such amounts required to be returned by all
Lenders over the amount, if any, returned directly by such
Lender.
(vii) Payments to Agent, Lenders.
(A) Payment by any Lender to Agent shall
be made not later than 1:00 p.m. (Dallas, Texas time)
on the Business Day such payment is due, provided
that if such payment is due on demand by another
Lender, such demand is made on the paying Lender not
later than 10:00 a.m. (Dallas, Texas time) on such
Business Day. Payment by Agent to any Lender shall
be made by wire transfer, promptly following Agent's
receipt of funds for the account of such Lender and
in the type of funds received by Agent, provided that
if Agent receives such funds at or prior to 1:00 p.m.
(Dallas, Texas time), Agent shall pay such funds to
such Lender by 2:00 p.m. (Dallas, Texas time) on
such Business Day. If a demand for payment is made
after the applicable time set forth above, the
payment due shall be made by 2:00 p.m. (Dallas, Texas
time) on the first Business Day following the date of
such demand.
(B) If a Lender shall, at any time, fail
to make any payment to Agent required hereunder,
Agent may, but shall not be required to, retain
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payments that would otherwise be made to such Lender
hereunder and apply such payments to such Lender's
defaulted obligations hereunder, at such time, and in
such order, as Agent may elect in its sole
discretion.
(C) With respect to the payment of any
funds under this Section 5.10(b), whether from Agent
to a Lender or from a Lender to Agent, the party
failing to make full payment when due pursuant to the
terms hereof shall, upon demand by the other party,
pay such amount together with interest on such amount
at the Federal Funds Rate.
(c) Settlement of Other Secured Obligations. All other
amounts received by Agent on account of, or applied by Agent to the
payment of, any Secured Obligation owed to the Lenders (including,
without limitation, fees payable to the Lenders pursuant to Sections
5.4 and proceeds from the sale of, or other realization upon, all or
any part of the Collateral following an Event of Default) that are
received by Agent on or prior to 1:00 p.m. (Dallas, Texas time) on a
Business Day will be paid by Agent to each Lender on the same Business
Day, and any such amounts that are received by Agent after 1:00 p.m.
(Dallas, Texas time) will be paid by Agent to each Lender on the
following Business Day. Unless otherwise stated herein, Agent shall
distribute fees payable to the Lenders pursuant to Sections 5.4(a) and
(b) ratably to the Lenders based on each Lender's Commitment
Percentage and shall distribute proceeds from the sale of, or other
realization upon, all or any part of the Collateral following an Event
of Default ratably to the Lenders based on the amount of the Secured
Obligations then owing to each Lender.
Section 5.11 Mandatory Prepayments.
(a) Prepayments from Asset Dispositions. Immediately
upon receipt by Borrower or any of its Subsidiaries of the Net
Proceeds of any Asset Disposition, Borrower shall apply such Net
Proceeds in prepayment of the Loans as provided in Section 5.11(c);
provided, however, that Borrower shall not be required to make such
prepayment to the extent that the Net Proceeds from Asset Dispositions
during any fiscal year of Borrower do not exceed, in the aggregate,
Twenty-Five Thousand Dollars ($25,000). Concurrently with the making
of any such payment, Borrower shall deliver to Agent a certificate of
Borrower's Financial Officer demonstrating the calculations of the
amount required to be paid. Notwithstanding the foregoing, to the
extent that the gross proceeds from Asset Dispositions during any
fiscal year of Borrower do not exceed, in the aggregate, One Hundred
Thousand Dollars ($100,000), if Borrower reasonably expects such
proceeds to be reinvested within six (6) months in productive assets
of a kind then used or useable in the business of Borrower and that
are not subject to any Lien other than in favor of Agent, for the
benefit of the Lenders, then (i) to the extent such proceeds do not
exceed the balance from time to time of the Revolving Credit Loans,
such proceeds shall be applied to the repayment of the outstanding
balance of the Revolving Credit Loans and Agent shall, until such time
as the reinvestment of such proceeds, establish a reserve against the
Borrowing Base in the amount of the proceeds so applied and (ii) to
the extent such proceeds exceed the balance from time to time of the
Revolving Credit Loans, Borrower shall deposit such proceeds with
Agent to be held as Cash Collateral in which Agent, for the ratable
benefit of the Lenders, shall have a first
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priority security interest. Upon Borrower's reinvestment of such
proceeds as described above, Agent shall release its security interest
in such Cash Collateral in respect of the reinvested funds and shall
eliminate the reserve against the Borrowing Base. To the extent that
Borrower fails to reinvest such proceeds within six (6) months as
provided above, Borrower authorizes and directs Agent to eliminate
such reserve, to apply the amount of the Cash Collateral in respect of
the unreinvested amount to the prepayment of the Loans as provided in
Section 5.11(c), to make Revolving Credit Loans in an amount equal to
the reserved amount that is not reinvested and to apply the proceeds
of such Revolving Credit Loans in prepayment of the Loans as provided
in Section 5.11(c).
(b) Prepayments from Equity Offerings/Capital
Contribution. In the event that at any time after the Effective Date,
Borrower issues Capital Stock or other securities or receives an
additional capital contribution in respect of existing Capital Stock
or other securities, no later than the third Business Day following
the date of receipt of the proceeds from such issuance, Borrower shall
apply such proceeds, net of underwriting discounts and commissions and
other reasonable costs associated therewith, in prepayment of the
Loans as provided in Section 5.11(c).
(c) Application of Proceeds of Prepayments. All
prepayments pursuant to this Section 5.11 shall be accompanied by an
appropriate Notice of Borrowing and, except as provided otherwise by
clause (a), shall be applied first to the outstanding Revolving Credit
Loans, in Agent's discretion, to the extent thereof, with any excess
to be deposited with Agent to be held as Cash Collateral for the
Secured Obligations and applied by Agent from time to time to
outstanding Revolving Credit Loans promptly upon the making of such
Revolving Credit Loans or, after the Termination Date, to any of the
Secured Obligations in such manner as Agent shall determine in its
sole discretion.
Section 5.12 Termination Fee. Subject to the provisions of
Section 17.24, if Borrower prepays the Loans in whole and terminates this
Agreement prior to July 31, 2001, for any reason other than a Change of Control
or refinancing of the Loans with NationsBank or any of its Affiliates, Borrower
shall pay to Agent, for the ratable benefit of the Lenders, on the date of such
prepayment, as liquidated damages and compensation for the costs of making funds
available to Borrower under this Agreement, and not as a penalty, One Hundred
Twenty Thousand Dollars ($120,000).
ARTICLE 6
Change of Circumstances
Section 6.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any
Applicable Law or any change in any Applicable Law or any change in
the interpretation or administration thereof by any Governmental
Authority (including, without limitation, any central bank or
comparable agency) charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force
of law) of any such Governmental Authority:
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(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty or other charge with respect
to any Eurodollar Loans, its Notes, or its obligation to make
Eurodollar Loans, or change the basis of taxation of any
amounts payable to such Lender (or its Applicable Lending
Office) under this Agreement or its Note in respect of any
Eurodollar Loans (other than taxes imposed on the overall net
income of such Lender by the jurisdiction in which such Lender
has its principal office or such Applicable Lending Office);
(ii) shall impose, modify or deem applicable any
reserve, special deposit, assessment, compulsory loan or
similar requirement (other than the Reserve Requirement
utilized in the determination of the Adjusted Eurodollar Rate)
relating to any extensions of credit or other assets of, or
any deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the
Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its
Applicable Lending Office) or on the London interbank market
any other condition affecting this Agreement or its Notes or
any of such extensions of credit or liabilities or
commitments;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Applicable Lending Office) of making, Converting into,
Continuing or maintaining any Eurodollar Loans or to reduce any sum
received or receivable by such Lender (or its Applicable Lending
Office) under this Agreement or its Notes with respect to any
Eurodollar Loans, then Borrower shall pay to such Lender on demand
such amount or amounts as will compensate such Lender for such
increased cost or reduction. If any Lender requests compensation by
Borrower under this Section 6.1(a), Borrower may, by notice to such
Lender (with a copy to Agent), suspend the obligation of such Lender
to make or Continue Loans of the Type with respect to which such
compensation is requested, or to Convert Loans of any other Type into
Loans of such Type, until the event or condition giving rise to such
request ceases to be in effect (in which case the provisions of
Section 6.4 shall be applicable); provided that such suspension shall
not affect the right of such Lender to receive the compensation so
requested.
(b) If, after the date hereof, any Lender shall have
determined that the adoption of any Applicable Law, rule or regulation
regarding capital adequacy or any change therein or in the
interpretation or administration thereof by any Governmental Authority
(including, without limitation, any central bank or comparable agency)
charged with the interpretation or administration thereof, or any
request or directive regarding capital adequacy (whether or not having
the force of law) of any such Governmental Authority has or would have
the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of
such Lender's obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such adoption,
change, request or directive (taking into consideration its policies
with respect to capital adequacy), then, from time to time upon
demand, Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
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(c) Each Lender shall promptly notify Borrower and Agent
of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender to compensation pursuant to
this Section and will designate a different Applicable Lending Office
if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of such Lender, be
otherwise disadvantageous to it. Any Lender claiming compensation
under this Section shall furnish to Borrower and Agent a statement
setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error.
In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
Section 6.2 Limitation on Types of Loans. If on or prior to the
first day of any Interest Period for any Eurodollar Loan:
(a) Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the London
interbank Eurodollar market, adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate for such Interest Period;
or
(b) the Required Lenders determine (which determination
shall be conclusive) and notify Agent that the Adjusted Eurodollar
Rate will not adequately and fairly reflect the cost to the Lenders of
funding Eurodollar Loans for such Interest Period;
then Agent shall give Borrower prompt notice thereof specifying the relevant
Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
Section 6.3 Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain or fund Eurodollar Loans hereunder,
then such Lender shall promptly notify Borrower thereof and such Lender's
obligation to make or Continue Eurodollar Loans, and to Convert other Types of
Loans into Eurodollar Loans, shall be suspended until such time as such Lender
may again make, maintain and fund Eurodollar Loans (in which case the provisions
of Section 6.4 shall be applicable).
Section 6.4 Treatment of Affected Loans. If the obligation of
any Lender to make Loans of a particular Type, or to Continue or Convert Loans
of any other Type into Loans of a particular Type, shall be suspended pursuant
to Section 6.1 or 6.3 hereof (Loans of such Type being herein called "Affected
Loans" and such Type being herein called the "Affected Type"), such Lender's
Affected Loans shall be automatically Converted into Base Rate Loans on the last
day(s) of the then current Interest Period(s) for the Affected Loans (or, in the
case of a Conversion required by Section 6.3 hereof, on such earlier date as
such Lender may specify to Borrower with a copy to Agent) and, unless and until
such Lender gives notice as provided below that the circumstances specified in
Section 6.1 or Section 6.3 hereof that gave rise to such Conversion no longer
exist:
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(a) to the extent that such Lender's Affected Loans have
been so Converted, all payments and prepayments of principal that
would otherwise be applied to such Lender's Affected Loans shall be
applied instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued
by such Lender as Loans of the Affected Type shall be made or
Continued instead as Base Rate Loans, and all Loans of such Lender
that would otherwise be Converted into Loans of the Affected Type
shall be Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives notice to Borrower (with a copy to Agent) that the
circumstances specified in Section 6.1 or Section 6.3 hereof that gave rise to
the Conversion of such Lender's Affected Loans pursuant to this Section 6.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types and Interest Periods) in accordance with their respective Commitments.
Section 6.5 Compensation. Upon the request of any Lender (with a
copy to Agent), Borrower shall pay to such Lender such amount or amounts as
shall be sufficient (in the reasonable opinion of such Lender) to compensate it
for any loss, cost or expense (including loss of anticipated profits) incurred
by it as a result of:
(a) any payment, prepayment or Conversion of a Eurodollar
Loan for any reason (including, without limitation, the acceleration
of the Loans pursuant to Section 14.2) on a date other than the last
day of the Interest Period for such Loan; or
(b) any failure by Borrower for any reason (including,
without limitation, the failure of any condition precedent specified
in Article 7 to be satisfied) to borrow, Convert, Continue or prepay a
Eurodollar Loan on the date for such borrowing, Conversion,
Continuation or prepayment specified in the relevant Notice of
Borrowing under this Agreement.
Section 6.6 Taxes.
(a) Any and all payments by Borrower to or for the
account of any Credit Party hereunder or under any other Loan Document
shall be made free and clear of, and without deduction for, any and
all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Credit Party, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under
the laws of which any such Lender (or its Applicable Lending Office),
L/C Issuer or Agent, as the case may be, is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable under
this Agreement or any other Loan Document to
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any Credit Party, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 6.6) such
Credit Party receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make
such deductions, (iii) Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
Applicable Law, and (iv) Borrower shall furnish to Agent, at its
address referred to in Section 17.1, the original or a certified copy
of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any
payment made under this Agreement or any other Loan Document or from
the execution or delivery of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as
"Other Taxes").
(c) BORROWER AGREES TO INDEMNIFY EACH CREDIT PARTY FOR
THE FULL AMOUNT OF TAXES AND OTHER TAXES (INCLUDING, WITHOUT
LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED OR ASSERTED BY ANY
JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION 6.6) PAID BY SUCH
CREDIT PARTY (AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING
PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT
THERETO.
(d) Each Lender organized under the laws of a
jurisdiction outside the U.S., on or prior to the date of its
execution and delivery of this Agreement in the case of each Lender
listed on the signature pages hereof and on or prior to the date on
which it becomes a Lender in the case of each other Lender, and from
time to time thereafter if requested in writing by Borrower or Agent
(but only so long as such Lender remains lawfully able to do so),
shall provide Borrower and Agent with (i) IRS Form 1001 or 4224, as
appropriate, or any successor form prescribed by the IRS, certifying
that such Lender is entitled to benefits under an income tax treaty to
which the U.S. is a party which reduces the rate of withholding tax on
payments of interest or certifying that the income receivable pursuant
to this Agreement is effectively connected with the conduct of a trade
or business in the U.S., (ii) IRS Form W-8 or W-9, as appropriate, or
any successor form prescribed by the IRS, and (iii) any other form or
certificate required by any taxing authority (including any
certificate required by Sections 871(h) and 881(c) of the Internal
Revenue Code), certifying that such Lender is entitled to an exemption
from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Documents.
(e) For any period with respect to which a Lender has
failed to provide Borrower and Agent with the appropriate form
pursuant to Section 6.6(d) (unless such failure is due to a change in
treaty, law or regulation occurring subsequent to the date on which a
form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 6.6(c) with respect to Taxes
or Other Taxes imposed by the U.S.; provided, however, that should a
Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, become subject to Taxes or Other Taxes because of its
failure to deliver
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a form required hereunder, Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such
Taxes or Other Taxes.
(f) If Borrower is required to pay additional amounts to
or for the account of any Lender pursuant to this Section 6.6, then
such Lender will agree to use reasonable efforts to change the
jurisdiction of its Applicable Lending Office or take other reasonable
steps, if available, so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of
such Lender, is not otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment
of Taxes or Other Taxes, Borrower shall furnish to Agent the original
or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this Section 6.6 shall survive the termination
of the Commitments and the payment in full of the Notes.
ARTICLE 7
Conditions Precedent
Section 7.1 Conditions Precedent to Loans and Letters of Credit.
Notwithstanding any other provision of this Agreement, no Loan will be made ,
and no Letter of Credit shall be issued, until the fulfillment of each of the
following conditions, and with respect to any reports, appraisals, reviews or
similar items, Agent's and each Lender's satisfaction with the contents thereof,
prior to or contemporaneously with the making of such Loan or issuance of such
Letter of Credit.
(a) Closing Documents. Agent shall have received each of
the following documents, all of which shall be satisfactory in form
and substance to Agent and to the Lenders:
(i) certified copies of the certificate of
incorporation and bylaws of each Loan Party as in effect on
the Effective Date;
(ii) certificates of incumbency and specimen
signatures with respect to each of the officers of each Loan
Party authorized to execute and deliver this Agreement and the
other Loan Documents on behalf of such Loan Party and each
other Person executing any document, certificate or instrument
to be delivered in connection with this Agreement and the
other Loan Documents and, in the case of each Borrower, to
request borrowings under this Agreement;
(iii) a certificate evidencing the good standing of
each Loan Party in the jurisdiction of its incorporation or
organization and in each other jurisdiction in which it is
required to be qualified as a foreign business entity to
transact its business as presently conducted;
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(iv) certified copies of all action taken by each
Loan Party to authorize the execution, delivery and
performance of this Agreement, the other Loan Documents and
the borrowings under this Agreement;
(v) copies of all financial statements referred
to in Section 8.1(o) and meeting the requirements thereof;
(vi) certificates or binders of insurance relating
to each of the policies of insurance covering any of the
Collateral together with loss payable clauses which comply
with the terms of Section 10.8;
(vii) a certificate of the president or a Financial
Officer of each of the Loan Parties stating that, to the best
of his/her knowledge and based on an examination sufficient to
enable him/her to make an informed statement,
(A) all of the representations and
warranties made or deemed to be made under this
Agreement are true and correct as of the Effective
Date, after giving effect to the Revolving Credit
Loans to be made at such time and the application of
the proceeds thereof,
(B) no Default or Event of Default
exists, and
(C) as to such other factual matters as
may be reasonably requested by Agent;
(viii) a Borrowing Base Certificate and a Schedule
of Receivables, prepared as of June 30, 1998;
(ix) landlord's or mortgagee's waiver and consent
agreements duly executed on behalf of each landlord or
mortgagee, as the case may be, of Real Estate and any other
real property on which any Collateral is located (provided,
that Agent in its sole discretion may defer or waive
requirement for any such waiver or consent and establish a
Reserve with respect to all Collateral at any time located at
any such location or exclude any or all of such Collateral
from calculation of the Borrowing Base);
(x) each Agency Account Agreement duly executed
by the Loan Party and the Clearing Bank party thereto;
(xi) a certificate from Borrower to Agent
requesting the initial Loans and specifying the method of
disbursement pursuant to Section 11.8;
(xii) a Revolving Credit Note payable to the order
of each Lender, duly executed and delivered by Borrower,
complying with the requirements of Section 2.4;
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(xiii) each of the Security Documents to be executed
by any of the Loan Parties, together with:
(A) the Financing Statements, duly
executed by each Person a party thereto as required
by this Agreement and the Security Documents, and
acknowledgment copies evidencing the filing of such
Financing Statements in each jurisdiction where such
filing may be necessary or appropriate to perfect the
Security Interest;
(B) evidence of the filing, recording,
or acknowledgment of the Patent Security Agreements,
the Trademark Security Agreements and the Copyright
Security Agreements, where the same may be necessary
or appropriate to perfect the Security Interest; and
(C) a stock transfer power, duly
executed by GNI in blank, and stock certificates
representing one hundred percent (100%) of the issued
and outstanding Capital Stock of GNICC, DSI, RTSI,
DSCCI and GNLI;
(xiv) With respect to all Real Estate, a Mortgage
(or amendments to any deed of trust or mortgage previously
delivered under the Existing Credit Agreement) duly executed
and delivered by Borrower and in proper form for recording in
the appropriate jurisdiction and, if requested by Agent, a
mortgagee's policy of title insurance (or endorsement with
respect to any mortgagee's policy of title insurance
previously delivered under the Existing Credit Agreement),
boundary survey, appraisal and/or environmental reports, all
in form and substance satisfactory to Agent;
(xv) an appraisal of all Equipment prepared by a
credentialed appraiser satisfactory to Agent, establishing
values at levels satisfactory to Agent, in form, and based on
valuations methods, satisfactory to Agent;
(xvi) counterparts of each of the other Security
Documents and other Loan Documents required by Agent, duly
executed by the parties thereto, together with evidence
satisfactory to Agent of the due authorization and binding
effect of each such Loan Document on such party, together with
the items specified in clauses (i) through (iv) with respect
to each party thereto;
(xvii) signed opinions of counsel for the Loan
Parties, opining as to such matters in connection with the
transactions contemplated by this Agreement as Agent or its
special counsel may reasonably request, in each case in form
and substance satisfactory to Agent;
(xviii) such other documents and instruments as Agent
or any Lender may reasonably request; and
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(xix) true and complete copies of the fully
executed Agreement and Plan of Merger dated February 12, 1998,
between GNI and Green One Acquisition Corporation, as amended
to date, together with counterparts of all documentation
evidencing the definitive agreements between the current
shareholders of GNI and 399 Venture Partners, Inc., together
with evidence of all necessary Governmental Approvals required
for the Recapitalization.
(b) Assignment of Collateral. Agent shall have received
the Collateral Assignment of Liens and the assignments of and
amendments to financing statements, mortgages, deeds of trust and
other documents and agreements contemplated thereby.
(c) Security Interests. Agent shall have received
satisfactory evidence that Agent (for the benefit of the Credit
Parties) has a valid, exclusive and perfected first priority security
interest, lien, collateral assignment and pledge as of such date in
all of the Collateral (provided, that Agent in its sole discretion may
defer recordation of any Mortgage as provided by Section 10.14(b).
(d) Release of Security Interests. Agent shall have
received evidence satisfactory to it of the release and termination of
all Liens other than Permitted Liens.
(e) Revolving Credit Availability. Agent shall be
provided with evidence satisfactory to it confirmed by a certificate
of a Financial Officer that as of the Effective Date the Revolving
Credit Availability, after giving effect to the reasonably expected
amount of the Letter of Credit Reserve in effect 60 days after the
Effective Date, is not less than Three Million Dollars ($3,000,000).
(f) Fees. Borrowers shall have paid all of the fees and
expenses payable on the Agreement Date.
(g) No Injunctions, Etc. No action, proceeding,
investigation, regulation or legislation shall have been instituted,
threatened or proposed by or before any Governmental Authority to
enjoin, restrain or prohibit, or to obtain damages in respect of, or
which is related to or arises out of this Agreement or the
consummation of the transactions contemplated by this Agreement or
which, in Agent's or the Lenders' reasonable discretion, could have a
Material Adverse Effect or would make it inadvisable to consummate the
transactions contemplated by this Agreement.
(h) Material Adverse Change. As of the Effective Date,
no Material Adverse Effect shall have occurred.
(i) Completion of Due Diligence. Agent shall have
completed its due diligence review with respect to Borrower in scope
and determination satisfactory to Agent in its sole discretion,
including a field exam to determine loan/collateral availability and
the initial Borrowing Base and review, satisfactory to Agent and its
counsel, of all information they may request regarding litigation,
taxes, accounting, labor, insurance, regulatory compliance,
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Permits, real estate leases, legal contracts, debt agreements, stock
ownership and contingent liabilities of Borrower.
(j) Compliance With Financial Obligations. Borrower
shall be in compliance with all of their respective existing financial
obligations.
(k) Projections; Pro Forma. Agent shall receive and
approve the projected financial statements of Borrower for its 1999
through 2001 fiscal years, including a detail of expected capital
expenditures and Agent shall have received and approved the Pro Forma.
(l) Consummation of Recapitalization. The Seventy-Five
Million Dollar ($75,000,000) 10 7/8% Senior Notes Due 2005 referred to
in the Offering Memorandum shall have been placed, Borrower shall have
received the proceeds thereof in an amount not less than $75,000,000
(less reasonable expenses and initial purchaser discount associated
with placing the Senior Notes) and the Recapitalization, including
receipt by Borrower of Twenty-Two Million Five Hundred Thousand
Dollars ($22,500,000) in common and preferred equity (inclusive of
management rollover equity), shall be completed concurrently with
funding of the initial Loan.
Section 7.2 All Loans; Letters of Credit. At the time of making
of each Loan, including the initial Loans and all subsequent Loans, and the
issuance of each Letter of Credit:
(a) all of the representations and warranties made or
deemed to be made under this Agreement shall be true and correct at
such time both with and without giving effect to the Loan to be made
at such time and the application of the proceeds thereof;
(b) the corporate actions of Borrower referred to in
Section 7.1(a)(iv) shall remain in full force and effect and the
incumbency of officers shall be as stated in the certificates of
incumbency delivered pursuant to Section 7.1(a)(ii) or as subsequently
modified and reflected in a certificate of incumbency delivered to
Agent; and
(c) each request or deemed request for any borrowing or
the issuance of any Letter of Credit hereunder shall be deemed to be a
certification by Borrower to the Credit Parties as to the matters set
forth in Sections 7.2(a) and (b) and Agent may, without waiving either
condition, consider the conditions specified in Sections 7.2(a) and
(b) fulfilled and a representation by Borrower to such effect made, if
no written notice to the contrary is received by Agent prior to the
making of the Loan, or the issuance of the Letter of Credit then
requested.
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ARTICLE 8
Representations and Warranties of Borrower
Section 8.1 Representations and Warranties. Borrower represents
and warrants to each of the Credit Parties as follows:
(a) Organization; Power; Qualification. Each of the Loan
Parties is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, having
the power and authority to own its properties and to carry on its
business as now being and hereafter proposed to be conducted and is
duly qualified and authorized to do business in each jurisdiction in
which the character of its properties or the nature of its business
requires such qualification or authorization. The jurisdictions in
which each of the Loan Parties is qualified to do business as a
foreign business enterprise are listed on Schedule 8.1(a).
(b) Capitalization. The outstanding Capital Stock of
Borrower has been duly and validly issued and is fully paid and
nonassessable, and the number and owners of such shares of Capital
Stock of Borrower are set forth on Schedule 8.1(b). The issuance and
sale of Borrower's Capital Stock have been registered or qualified
under applicable federal and state securities laws or are exempt
therefrom.
(c) Recapitalization. Borrower has delivered to Agent a
complete and correct copy of all documents evidencing or relating to
the Recapitalization and the contractual rights and obligations among
Borrower and Green I Acquisition Corp., and each of the
representations and warranties given by Borrower therein is true and
correct in all material respects.
(d) Subsidiaries. Schedule 8.1(d) correctly sets forth
the name of Borrower and of each Subsidiary of Borrower, its
jurisdiction of incorporation, the name of its immediate parent or
parents, and the percentage of its issued and outstanding Capital
Stock owned by Borrower or any other Subsidiary of Borrower and
indicating whether such Subsidiary is a Consolidated Subsidiary.
Except as set forth on Schedule 8.1(d),
(i) no Subsidiary of Borrower has issued any
securities convertible into shares of such Subsidiary's
Capital Stock or any options, warrants or other rights to
acquire any shares or securities convertible into such Capital
Stock,
(ii) the outstanding Capital Stock and other
securities of each Subsidiary of Borrower are owned by
Borrower or a Wholly-Owned Subsidiary of Borrower, or by
Borrower and one or more of its Wholly-Owned Subsidiaries,
free and clear of all Liens, warrants, options and rights of
others of any kind whatsoever, and
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(iii) Borrower has no other Subsidiaries.
The outstanding Capital Stock of each Subsidiary of Borrower has been duly and
validly issued and is fully paid and nonassessable by the issuer, and the
number and owners of the shares of such Capital Stock are set forth on Schedule
8.1(d).
(e) Authorization of Agreement, Notes, Loan Documents and
Borrowing. Borrower has the right and power, and has taken all
necessary action to authorize it, to execute, deliver and perform this
Agreement and each of the other Loan Documents in accordance with
their respective terms. This Agreement and each of the other Loan
Documents have been duly executed and delivered by the duly authorized
officers of Borrower and each is, or each when executed and delivered
in accordance with this Agreement will be, a legal, valid and binding
obligation of Borrower, enforceable in accordance with its terms.
(f) Compliance of Agreement, Notes, Loan Documents and
Borrowing with Laws, Etc. Except as set forth on Schedule 8.1(f), the
execution, delivery and performance of this Agreement and each of the
other Loan Documents in accordance with their respective terms, the
borrowings hereunder and consummation of the Recapitalization do not
and will not, by the passage of time, the giving of notice or
otherwise,
(i) require any Governmental Approval or violate
any Applicable Law relating to any Loan Party or of any of its
Subsidiaries,
(ii) conflict with, result in a breach of or
constitute a default under the articles or certificate of
incorporation or bylaws, or other constituent documents, of
any Loan Party or of any of its Subsidiaries,
(iii) conflict with, result in a breach of or
constitute a default under any material provisions of any
indenture, agreement or other instrument to which any Loan
Party or of any of its Subsidiaries is a party or by which any
Loan Party or any of its Subsidiaries or its respective
property may be bound or any Governmental Approval relating to
any Loan Party or any of its Subsidiaries, or
(iv) result in or require the creation or
imposition of any Lien upon or with respect to any property
now owned or hereafter acquired by any Loan Party or of any of
its Subsidiaries other than the Security Interest.
(g) Business. Borrower is engaged principally in the
business described in the Offering Memorandum.
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(h) Compliance with Law; Governmental Approvals; Permits.
(i) Except as set forth in Schedule 8.1(h) or in
the "Risk Factors" portion of the Offering Memorandum, each
Loan Party and each of its Subsidiaries:
(A) has all Governmental Approvals and
Permits, including permits relating to federal, state
and local Environmental Laws, ordinances and
regulations, required by any Applicable Law for it to
conduct its business, each of which is in full force
and effect, is final and not subject to review on
appeal and is not the subject of any pending or, to
the knowledge of any Loan Party, threatened attack by
direct or collateral proceeding, and
(B) is in compliance with each
Governmental Approval and Permit applicable to it and
in compliance with all other Applicable Laws relating
to it, including, without being limited to, all
Environmental Laws and all occupational health and
safety laws applicable to any Loan Party or of any of
its Subsidiaries or their respective properties,
except for instances of noncompliance which would not, singly or in
the aggregate, cause a Default or Event of Default or have a Material
Adverse Effect and in respect of which reserves have been established
in accordance with GAAP.
(ii) Without limiting the generality of the above,
except as set forth on said Schedule 8.1(h), with respect to
matters which could not reasonably be expected to have, singly
or in the aggregate, a Material Adverse Effect:
(A) the operations of each Loan Party
and its Subsidiaries comply in all material respects
with all applicable environmental, health and safety
requirements of Applicable Law;
(B) Each Loan Party and its Subsidiaries
has obtained all environmental, health and safety
Permits necessary for its operation, and all such
Permits are in good standing and such Loan Party and
its Subsidiaries is in compliance in all material
respects with all terms and conditions of such
Permits;
(C) no Loan Party or of any of its
Subsidiaries, nor any of its present or past property
or operations, is subject to any order from or
agreement with any public authority or private party
respecting (1) any environmental, health or safety
requirements of Applicable Law, (2) any Remedial
Action, or (3) any liabilities and costs arising from
the Release or threatened Release of a Contaminant
into the environment;
(D) none of the operations of any Loan
Party or of any of its Subsidiaries is subject to any
judicial or administrative proceeding alleging a
violation of any environmental, health or safety
requirement of Applicable Law;
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(E) none of the present or past
operations of any Loan Party or of any of its
Subsidiaries is the subject of any investigation by
any public authority evaluating whether any Remedial
Action is needed to respond to a Release or
threatened Release of a Contaminant into the
environment;
(F) no Loan Party or of any of its
Subsidiaries has filed any notice under any
requirement of Applicable Law reporting a Release of
a Contaminant into the environment;
(G) no Loan Party or of any of its
Subsidiaries has entered into any negotiations or
agreements with any Person (including, without
limitation, any prior owner of Real Estate or other
property of any Loan Party or any of its
Subsidiaries) relating to any Remedial Action or
environmental related claim;
(H) no Loan Party or of any of its
Subsidiaries has received any notice or claim to the
effect that it is or may be liable to any Person as a
result of the Release or threatened Release of a
Contaminant into the environment;
(I) no Loan Party or of any of its
Subsidiaries has any material contingent liability in
connection with any Release or threatened Release of
any Contaminant into the environment;
(J) no Environmental Lien has attached
to any of the Real Estate or other property of any
Loan Party or of any of its Subsidiaries;
(K) the presence and condition of all
asbestos-containing material which is on or part of
any Real Estate of any Loan Party or its Subsidiaries
(excluding any raw materials used in the manufacture
of products or products themselves) do not violate in
any material respect any currently applicable
requirement of Applicable Law; and
(L) no Loan Party or any of its
Subsidiaries manufactures, distributes or sells, and
has never manufactured, distributed or sold, products
which contain asbestos containing material.
(iii) Each Loan Party has notified Agent of the
receipt by it or by any of its Subsidiaries of any notice of a
material violation of any Environmental Laws and occupational
health and safety laws applicable to such Loan Party, any of
its Subsidiaries or any of their respective properties.
(i) Title to Properties. Except as set forth in Schedule
8.1(i), Borrower and each of its Subsidiaries has valid and legal
title to or leasehold interest in all personal property, Real Estate
owned and other assets used in its business.
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(j) Liens. Except as set forth in Schedule 8.1(j), none
of the properties and assets of any Loan Party or any Subsidiary of
such Loan Party is subject to any Lien, except Permitted Liens. Other
than the Financing Statements and financing statements filed under the
Existing Credit Agreement, no financing statement under the UCC of any
State or other instrument evidencing a Lien which names any Loan
Party, or any Subsidiary of such Loan Party, as debtor has been filed
(and has not been terminated) in any State or other jurisdiction, and
no Loan Party nor any Subsidiary of such Loan Party has signed any
such financing statement or other instrument or any security agreement
authorizing any secured party thereunder to file any such financing
statement or instrument, except to perfect those Liens listed on
Schedule 8.1(j).
(k) Indebtedness and Guaranties. Schedule 8.1(k) is a
complete and correct listing of all (i) Indebtedness for Money
Borrowed, and (ii) Guaranties of each Loan Party and its Subsidiaries.
Each Loan Party and its Subsidiaries has performed and is in
compliance with all of the terms of such Indebtedness and Guaranties
and all instruments and agreements relating thereto, and no default or
event of default, or event or condition which with notice or lapse of
time or both would constitute such a default or event of default,
exists with respect to any such Indebtedness or Guaranty.
(l) Litigation. Except as set forth on Schedule 8.1(l),
there are no actions, suits or proceedings pending (nor, to the
knowledge of any Loan Party, are there any actions, suits or
proceedings threatened, or any reasonable basis therefor) against or
in any other way relating to or affecting any Loan Party or any of its
Subsidiaries or any of their respective properties in any court or
before any arbitrator of any kind or before or by any Governmental
Authority, except actions, suits or proceedings of the character
normally incident to the kind of business conducted by any such Loan
Party or any of its Subsidiaries which, if adversely determined, would
not singly or in the aggregate have a Material Adverse Effect, and
there are no strikes or walkouts in progress, pending or contemplated
relating to any labor contracts to which any Loan Party or any of its
Subsidiaries is a party, relating to any labor contracts being
negotiated, or otherwise.
(m) Tax Returns and Payments. Except as set forth on
Schedule 8.1(m), all U.S. federal, state and local as well as foreign
national, provincial and local and other tax returns of each Loan
Party and each of its Subsidiaries required by Applicable Law to be
filed have been duly filed, and all U.S. federal, state and local and
foreign national, provincial and local and other taxes, assessments
and other governmental charges or levies upon each Loan Party and each
of its Subsidiaries and each Loan Party's and any of its Subsidiaries'
property, income, profits and assets which are due and payable have
been paid, except any such nonpayment which is at the time permitted
under Section 11.6. The charges, accruals and reserves on the books
of each Loan Party and each of its Subsidiaries in respect of U.S.
federal, state and local and foreign national, provincial and local
taxes for all fiscal years and portions thereof since the organization
of such Loan Party or any such Subsidiary are in the judgment of
Borrower adequate, and Borrower knows of no reason to anticipate any
additional assessments for any of such years which, singly or in the
aggregate, might have a Material Adverse Effect on any Loan Party or
any such Subsidiary.
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(n) Burdensome Provisions. No Loan Party nor any of its
Subsidiaries is a party to any indenture, agreement, lease or other
instrument, or subject to any charter or corporate restriction,
Governmental Approval or Applicable Law compliance with the terms of
which might have a Material Adverse Effect.
(o) Financial Statements.
(i) Borrower has delivered to Agent the audited
financial statements for Borrower and its Consolidated
Subsidiaries as of, and for each of the twelve month periods
ending, respectively, June 30, 1997 and June 30, 1998, and for
each of the years in the three-year period ended June 30,
1998. All such financial statements have been prepared in
accordance with GAAP, and present fairly, the financial
condition of, respectively, Borrower and its Consolidated
Subsidiaries, as of the respective dates indicated therein and
the results of operations for the respective periods indicated
therein. Neither Borrower nor any of the Consolidated
Subsidiaries has any material contingent liabilities,
liabilities for taxes, unusual forward or long-term
commitments, or unrealized or anticipated losses from any
unfavorable commitments except as referred to or reflected in
such financial statements.
(ii) Borrower has furnished to Agent and the
Lenders copies of the Projections. The Projections have been
be prepared by Borrower based upon reasonable assumptions as
to the operations of the business of and Borrower and its
Subsidiaries and represent as of the respective dates thereof
the good faith opinion of Borrower and its senior management
concerning the most probable course of business of Borrower
and its Subsidiaries.
(iii) Except as disclosed or reflected in the
financial statements described in clauses (i) above, Borrower
and the Consolidated Subsidiaries do not have any material
liabilities, contingent or otherwise, and there were no
material unrealized or anticipated losses of Borrower or any
of the Consolidated Subsidiaries.
(iv) Borrower has furnished to Agent and the
Lenders copies of the Pro Forma. The Pro Forma is complete
and correct and presents fairly, on a pro forma basis, the
financial position of Borrower as at the Effective Date.
(p) Adverse Change. Since the date of the last financial
statements of Borrower and the Consolidated Subsidiaries delivered to
Agent as described in Section 8.1(o)(i).
(i) no material adverse change has occurred in
the business, assets, liabilities, financial condition,
results of operations or business prospects of Borrower, and
(ii) no event has occurred or failed to occur
which has had, or may have, singly or in the aggregate, a
Material Adverse Effect.
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(q) ERISA. Except as described in Schedule 8.1(q):
(i) Neither Borrower nor any Related Company
maintains or contributes to any Benefit Plan other than those
listed on Schedule 8.1(q).
(ii) Except in compliance with Applicable Law, no
Benefit Plan has been terminated or partially terminated, and
no Multiemployer Plan is insolvent or in reorganization, nor
have any proceedings been instituted to terminate any Benefit
Plan or to reorganize any Multiemployer Plan.
(iii) Neither Borrower nor any Related Company has
withdrawn from any Benefit Plan or Multiemployer Plan, nor has
a condition occurred which if continued would result in a
withdrawal.
(iv) Neither Borrower nor any Related Company has
incurred any withdrawal liability, including contingent
withdrawal liability, to any Multiemployer Plan pursuant to
Title IV of ERISA.
(v) Neither Borrower nor any Related Company has
incurred any liability to the PBGC other than for required
insurance premiums which have been paid when due.
(vi) No Reportable Event has occurred with respect
to a Plan.
(vii) No Benefit Plan has an "accumulated funding
deficiency" (whether or not waived) as defined in Section 302
of ERISA or in Section 412 of the Internal Revenue Code.
(viii) Each Plan is in substantial compliance with
ERISA, and neither Borrower nor any Related Company has
received any communication from a Governmental Authority
asserting that a Plan is not in compliance with ERISA.
(ix) Each Plan which is intended to be a qualified
Plan has been determined by the IRS to be qualified under
Section 401(a) of the Internal Revenue Code as currently in
effect or will be submitted to the IRS for such determination
prior to the end of the remedial amendment period under
Section 401(b) of the Internal Revenue Code and the
regulations promulgated thereunder and neither Borrower nor
any Related Company knows or has reason to know why each such
Plan should not continue to be so qualified, and each trust
related to such Plan that has been submitted to the IRS for
determination of exempt status has been determined to be
exempt from federal income tax under Section 501(a) of the
Internal Revenue Code or will be submitted to the IRS for a
determination of exempt status.
(x) Except as provided on Schedule 8.1(q),
neither Borrower nor any Related Company maintains or
contributes to any employee welfare benefit plan
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within the meaning of Section 3(l) of ERISA which provides
benefits to employees after termination of employment other
than as required by Section 601 of ERISA.
(xi) Schedule B to the most recent annual report
filed with the IRS with respect to each Benefit Plan is
complete and accurate. Since the date of each such Schedule
B, there has been no adverse change in funding status or
financial condition of the Benefit Plan relating to such
Schedule B.
(xii) Neither Borrower nor any Related Company has
failed to make a required installment under Subsection (m) of
Section 412 of the Internal Revenue Code or any other payment
required under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other payment.
(xiii) Neither Borrower nor any Related Company is
required to provide security to a Benefit Plan under Section
401(a)(29) of the Internal Revenue Code due to a Benefit Plan
amendment that results in an increase in current liability for
the plan year.
(xiv) Neither Borrower, nor any Related Company,
nor any other "party-in-interest" or "disqualified person" has
engaged in a nonexempt "prohibited transaction," as such terms
are defined in Section 4975 of the Internal Revenue Code and
Section 406 of ERISA, in connection with any Plan or has taken
or failed to take any action which would constitute or result
in a Termination Event.
(xv) Neither Borrower nor any Related Company has
failed to comply with the health care continuation coverage
requirements of Section 4980B of the Internal Revenue Code in
respect of employees and former employees of such Borrower or
such Related Company and their dependents and beneficiaries
which alone or in the aggregate would subject Borrower or such
Related Company to any material liability.
(xvi) Neither Borrower nor any Related Company has
(i) failed to make a required contribution or payment to a
Multiemployer Plan or (ii) made a complete or partial
withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan. Except as provided on Schedule 8.1(q), to
the best knowledge of Borrower after due inquiry, neither
Borrower nor any Related Company shall have any obligation to
(A) make contributions to any Multiemployer Plan on or after
the Effective Date, or (B) pay withdrawal liability to any
Multiemployer Plan in an amount in excess of a "de minimis
amount" as such term is defined in Section 4209 of ERISA.
(r) Absence of Defaults. No Loan Party nor any of its
Subsidiaries is in default under its articles or certificate of
incorporation or bylaws and no event has occurred, which has not been
remedied, cured or waived,
(i) which constitutes a Default or an Event of
Default, or
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(ii) which constitutes, or which with the passage
of time or giving of notice or both would constitute, a
default or event of default by any Loan Party or any of its
Subsidiaries under any material agreement (other than this
Agreement) or judgment, decree or order to any Loan Party or
any of its Subsidiaries is a party or by which any Loan Party
or any of its Subsidiaries or any of its respective
Subsidiaries' properties may be bound or which would require
any Loan Party or any of its Subsidiaries to make any payment
under any such agreement prior to the scheduled maturity date
therefor, except, in the case only of any such agreement, for
alleged defaults which are being contested in good faith by
appropriate proceedings and with respect to which reserves in
respect of such Loan Party's or such Subsidiary's reasonably
anticipated liability have been established on its books.
(s) Accuracy and Completeness of Information.
(i) All written information, reports and other
papers and data produced by or on behalf of any Loan Party and
furnished to any Credit Party (including, without limitation,
the Offering Memorandum) were, at the time the same were so
furnished, complete and correct in all material respects, to
the extent necessary to give the recipient a true and accurate
knowledge of the subject matter. No fact is known to any Loan
Party which has had, or may in the future have (so far as any
such Person can foresee), a Material Adverse Effect which has
not been set forth in the financial statements or disclosure
delivered prior to the Effective Date, in each case referred
to in Section 8.1(o), or in such written information, reports
or other papers or data or otherwise disclosed in writing to
Agent and the Lenders prior to the Agreement Date. No
document furnished or written statement made to any Credit
Party by any Loan Party in connection with the negotiation,
preparation or execution of this Agreement or any of the Loan
Documents (including, without limitation, the Offering
Memorandum) contains or will contain any untrue statement of a
fact material to the creditworthiness of any Loan Party or
omits or will omit to state a material fact necessary in order
to make the statements contained therein not misleading.
(ii) No Loan Party has reason to believe that any
document furnished or written statement made to any Credit
Party by any Person other than such Loan Party in connection
with the negotiation, preparation or execution of this
Agreement or any of the Loan Documents contained any incorrect
statement of a material fact or omitted to state a material
fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not
misleading.
(t) Solvency. In each case after giving effect to the
Indebtedness represented by the Loans outstanding and to be incurred,
the Recapitalization and the transactions contemplated by this
Agreement, Borrower and each of the other Loan Parties is Solvent.
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(u) Receivables.
(i) Status.
(A) Each Receivable reflected in the
computations included in any Borrowing Base
Certificate meets the criteria enumerated in clauses
(a) through (t) of the definition of Eligible
Receivables, except as disclosed in such Borrowing
Base Certificate or as disclosed in a timely manner
in a subsequent Borrowing Base Certificate or
otherwise in writing to Agent.
(B) Borrower has no knowledge of any
fact or circumstance not disclosed to Agent in a
Borrowing Base Certificate or otherwise in writing
which would impair the validity or collectibility of
any Receivable of Five Thousand Dollars ($5,000) or
more or of Receivables which (regardless of the
individual amount thereof) aggregate Fifty Thousand
Dollars ($50,000) or more.
(ii) Chief Executive Office; Tax Identification
Number. The Federal tax identification number of each Loan
Party is as specified for such Loan Party in Article 1. The
chief executive office of each Loan Party and the books and
records relating to its Receivables are located at the address
or addresses set forth on Schedule 8.1(u). No Loan Party has
maintained its chief executive office or books and records
relating to any of its Receivables at any other address at any
time during the five years immediately preceding the Agreement
Date except as disclosed on Schedule 8.1(u).
(v) Inventory. All Inventory included within the
Collateral is located on the premises set forth on Schedule 8.1(v) or
is Inventory in transit to one of such locations, except as otherwise
disclosed in writing to Agent. During the previous twelve (12)
months, no such Inventory has been located at premises other than
those set forth on Schedule 8.1(v).
(w) Equipment. All Equipment included within the
Collateral is in good order and repair in all material respects and is
located on the premises set forth on Schedule 8.1(w) and has been so
located at all times during the previous twelve (12) months.
(x) Real Property. Borrower owns no Real Estate and
leases no Real Estate other than that described on Schedule 8.1(x) and
other than Real Estate acquired or leased after the Effective Date for
which Borrower has complied with the requirements of Section 10.14.
(y) Corporate and Fictitious Names. Except as otherwise
disclosed on Schedule 8.1(y), during the five (5) year period
preceding the Agreement Date, no Loan Party nor any predecessor
thereof has been known as or used any corporate or fictitious name
other than its corporate name on the Effective Date as provided for
such Loan Party in Article 1.
(z) Federal Reserve Regulations. No Loan Party nor any
of its Subsidiaries is engaged and none will engage, principally or as
one of its important activities, in the business
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of extending credit for the purpose of "purchasing" or "carrying" any
"margin stock" (as each of the quoted terms is defined or used in
Regulation U of the Board of Governors of the Federal Reserve System).
No part of the proceeds of any of the Loans will be used for so
purchasing or carrying margin stock or, in any event, for any purpose
which violates, or which would be inconsistent with, the provisions of
Regulation T, U or X of such Board of Governors. If requested by
Agent or any Lender, any such Loan Party will furnish to Agent and the
Lenders a statement or statements in conformity with the requirements
of said Regulation T, U or X to the foregoing effect.
(aa) Investment Company Act. No Loan Party nor any of its
Subsidiaries is an "investment company" or a company "controlled" by
an "investment company" (as each of the quoted terms is defined or
used in the Investment Company Act of 1940, as amended).
(bb) Employee Relations. Each Loan Party and each of its
Subsidiaries has a stable work force in place and is not, except as
set forth on Schedule 8.1(bb), party to any collective bargaining
agreement nor has any labor union been recognized as the
representative of any Loan Party's or any of its Subsidiaries'
employees, and no Loan Party knows of any pending, threatened or
contemplated strikes, work stoppage or other labor disputes involving
any Loan Party's or any of its Subsidiaries' employees.
(cc) Proprietary Rights. Schedule 8.1(cc) sets forth a
correct and complete list of all of the Proprietary Rights included
within the Collateral. None of such Proprietary Rights is subject to
any licensing agreement or similar arrangement except as set forth on
Schedule 8.1(cc) or as entered into in the sale or distribution of
Inventory in the ordinary course of business. To the best of
Borrower's knowledge, none of such Proprietary Rights infringes on or
conflicts with any other Person's property, and no other Person's
property infringes on or conflicts with such Proprietary Rights. The
Proprietary Rights described on Schedule 8.1(cc) constitute all of the
property of such type necessary to the current and anticipated future
conduct of business of Borrower.
(dd) Trade Names. All trade names or styles under which
Borrower sells Inventory or Equipment or creates Receivables, or to
which instruments in payment of Receivables are made payable, are
listed on Schedule 8.1(dd).
(ee) Investment Property. All of Borrower's Investment
Property is set forth on Schedule 8.1(ee). Borrower is the legal and
beneficial owner of all such Investment Property, free and clear of
any Lien (other than Permitted Liens), and Borrower has not sold,
granted any option with respect to, assigned or transferred or
otherwise disposed of any of its rights or interest therein.
(ff) Year 2000 Compliance. Borrower has (i) undertaken a
detailed review and assessment of all areas within the business and
operations of it and its Subsidiaries that could be adversely affected
by the "Year 2000 Problem" (that is, the risk that computer
applications used by Borrower or its Subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii)
developed a detailed plan and timeline for addressing the Year 2000
Problem on a timely
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basis, and (iii) to date, implemented that plan in accordance with
that timetable. Borrower reasonably anticipates that all computer
applications that are material to the business and operations of it
and its Subsidiaries will on a timely basis be able to perform
properly date-sensitive functions for all dates before and after
January 1, 2000 (that is, be "Year 2000 Compliant"). Borrower is
currently making inquiry of each of the key suppliers, vendors and
customers of it and its Subsidiaries as to whether such Persons will
on a timely basis be Year 2000 Compliant in all material respects and,
on the basis of that inquiry, believes that all such Persons will be
so compliant. For purposes hereof, "key suppliers, vendors and
customers" refers to those suppliers, vendors and customers of
Borrower and its Subsidiaries the business failure of which would with
reasonable probability be expected to have a Material Adverse Effect.
Section 8.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article 8 and all statements
contained in any certificate, financial statement, or other instrument,
delivered by or on behalf of any Loan Party pursuant to or in connection with
this Agreement or any of the other Loan Documents (including, but not limited
to, any such representation, warranty or statement made in or in connection with
any amendment thereto) shall constitute representations and warranties made
under this Agreement. All representations and warranties made under this
Agreement shall be made or deemed to be made at and as of the Agreement Date, at
and as of the Effective Date and at and as of the date of each Loan, except that
representations and warranties which, by their terms are applicable only to one
such date shall be deemed to be made only at and as of such date. All
representations and warranties made or deemed to be made under this Agreement
shall survive and not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Credit Parties or any borrowing
hereunder.
ARTICLE 9
Security Interest
Section 9.1 Security Interest.
(a) To secure the payment, observance and performance of
the Secured Obligations, Borrower hereby mortgages, pledges and
assigns all of its right, title and interest in the Collateral to
Agent, for the benefit of itself as Agent and the other Credit
Parties, and grants to Agent, for the benefit of itself as Agent and
the other Credit Parties, a continuing security interest and
collateral assignment in, and a continuing Lien upon, all of the
Collateral.
(b) As additional security for all of the Secured
Obligations, Borrower grants to Agent, for the benefit of itself as
Agent and the other Credit Parties, a security interest and collateral
assignment in, and assigns to Agent, for the benefit of itself as
Agent and the other Credit Parties, all of Borrower's right, title and
interest in and to, any deposits or other sums at any time credited by
or due from each Credit Party and each Affiliate of any Credit Party
to Borrower, or credited by or due from any participant of any Credit
Party to Borrower, with the same rights therein as if the deposits or
other sums were credited by or due from such Credit Party. Borrower
hereby authorizes each Credit
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Party and each Affiliate of such Credit Party and each participant to
pay or deliver to Agent, for the account of the Credit Parties,
without any necessity on Agent's or any Credit Party part to resort to
other security or sources of reimbursement for the Secured
Obligations, at any time during the continuation of any Event of
Default or in the event that Agent, on behalf of the Credit Parties,
should make demand for payment hereunder and without further notice to
Borrower (such notice being expressly waived), any of the aforesaid
deposits (general or special, time or demand, provisional or final) or
other sums for application to any Secured Obligation, irrespective of
whether any demand has been made or whether such Secured Obligation is
mature, and the rights given the Credit Parties, their Affiliates and
participants hereunder are cumulative with such Person's other rights
and remedies, including other rights of set-off. Agent will promptly
notify Borrower of its receipt of any such funds for application to
the Secured Obligations, but failure to do so will not affect the
validity or enforceability thereof. Agent may give notice of the
above grant of a security interest in and assignment of the aforesaid
deposits and other sums, and authorization, to, and make any suitable
arrangements with, any Credit Party, any such Affiliate of any Credit
Party or participant for effectuation thereof, and Borrower hereby
irrevocably appoints Agent as its attorney to collect any and all such
deposits or other sums to the extent any such payment is not made to
Agent or any Credit Party by such Credit Party, Affiliate or
participant.
Section 9.2 Continued Priority of Security Interest.
(a) The Security Interest granted by Borrower shall at
all times be valid, perfected and enforceable against Borrower and all
third parties in accordance with the terms of this Agreement, as
security for the Secured Obligations, and the Collateral shall not at
any time be subject to any Liens that are prior to, on a parity with
or junior to the Security Interest, other than Permitted Liens.
(b) Borrower shall, at its sole cost and expense, take
all action that may be necessary or desirable, or that Agent may
reasonably request, so as at all times to maintain the validity,
perfection, enforceability and rank of the Security Interest in the
Collateral in conformity with the requirements of Section 9.2(a), or
to enable Agent and the other Credit Parties to exercise or enforce
their rights hereunder, including, but not limited to:
(i) paying all taxes, assessments and other
claims lawfully levied or assessed on any of the Collateral,
except to the extent that such taxes, assessments and other
claims constitute Permitted Liens;
(ii) using its best efforts to obtain, at any time
after the Agreement Date, landlords', bailee's, mortgagees'
and mechanic's and materialmen's releases, subordinations or
waivers;
(iii) delivering to Agent, for the benefit of the
Credit Parties, endorsed or accompanied by such instruments of
assignment as Agent may specify, and stamping or marking, in
such manner as Agent may specify, any and all chattel paper,
instruments, letters and advices of guaranty and documents
evidencing or forming a part of the Collateral; and
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(iv) executing and delivering any additional
Security Documents, notices and assignments in each case in
form and substance satisfactory to Agent relating to the
creation, validity, perfection, maintenance or continuation of
the Security Interest under the UCC or other Applicable Law.
(c) Agent is hereby irrevocably authorized to file one or
more financing or continuation statements or amendments thereto
without the signature of or in the name of Borrower for any purpose
described in Section 9.2(b). A carbon, photographic, xerographic or
other reproduction of this Agreement or of any of the Security
Documents filed in connection with this Agreement is sufficient as a
financing statement.
(d) Borrower shall ▇▇▇▇ its books and records as directed
by Agent and as may be necessary or appropriate to evidence, protect
and perfect the Security Interest and shall cause its financial
statements to reflect the Security Interest.
(e) On or after the Termination Date and upon full and
final, indefeasible payment of all of the Secured Obligations and
termination of all of the obligations of Agent, L/C Issuer and any
Lender under this Agreement and all other Loan Documents, Agent shall,
upon the written request of and at the sole expense of Borrower,
execute such releases and terminations of the Security Interest as
Borrower may reasonably request.
ARTICLE 10
Collateral Covenants
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner provided in Section 17.10:
Section 10.1 Collection of Receivables.
(a) At the request of Agent, Borrower will cause all
monies, checks, notes, drafts and other payments relating to or
constituting proceeds of trade accounts receivable to be forwarded to
a Lockbox for deposit in an Agency Account in accordance with the
procedures set out in the corresponding Agency Account Agreement.
Borrower will promptly cause all monies, checks, notes, drafts and
other payments relating to or constituting proceeds of other
Receivables, of any other Collateral and of any trade accounts
receivable that are not forwarded to a Lockbox, to be transferred to
or deposited in an Agency Account. In particular, Borrower will:
(i) advise each Account Debtor on trade accounts
receivable to address all remittances with respect to amounts
payable on account thereof to a specified Lockbox;
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(ii) advise each other Account Debtor that makes
payment to Borrower by wire transfer, automated clearinghouse
transfer or similar means to make payment directly to an
Agency Account; and
(iii) stamp or otherwise ▇▇▇▇ all invoices relating
to trade accounts receivable with a legend satisfactory to
Agent indicating that payment is to be made to Borrower via a
specified Lockbox.
(b) Borrower and Agent shall cause all collected balances
in each Agency Account to be transmitted daily by wire transfer,
depository transfer check or other means in accordance with the
procedures set forth in the corresponding Agency Account Agreement, to
Agent at its Principal Office:
(i) for application, on account of the Secured
Obligations, as provided in Section 2.3(c), Section 14.2, and
Section 14.3, such credits to be entered as of the Business
Day they are received if they are received prior to 1:30 p.m.
(Dallas, Texas time) and to be conditioned upon final payment
in cash or solvent credits of the items giving rise to them;
and
(ii) with respect to the balance, so long as no
Default or Event of Default has occurred and is continuing,
for transfer by wire transfer or depository transfer check to
a Disbursement Account.
(c) Any monies, checks, notes, drafts or other payments
referred to in subsection (a) of this Section 10.1 which,
notwithstanding the terms of such subsection, are received by or on
behalf of Borrower will be held in trust for Agent and will be
delivered to Agent or a Clearing Bank, as promptly as possible, in the
exact form received, together with any necessary endorsements for
application by Agent directly to the Secured Obligations or, if
applicable, for deposit in the Agency Account maintained with a
Clearing Bank and processing in accordance with the terms of this
Agreement and the corresponding Agency Account Agreement.
Section 10.2 Verification and Notification. Agent shall have the
right at any time and from time to time,
(a) in the name of Agent, the Lenders or in the name of
Borrower, to verify the validity, amount or any other matter relating
to any Receivables by mail, telephone, telegraph or otherwise,
(b) to review, audit and make extracts from all records
and files related to any of the Receivables, and
(c) to notify the Account Debtors or obligors under any
Receivables of the assignment of such Receivables to Agent, for the
benefit of the Credit Parties.
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Section 10.3 Disputes, Returns and Adjustments.
(a) In the event any amounts due and owing under any
Receivable for an amount in excess of Fifty Thousand Dollars ($50,000)
are in dispute between the Account Debtor and Borrower, Borrower shall
provide Agent with prompt written notice thereof.
(b) Borrower shall notify Agent promptly of all returns
and credits in excess of Twenty-Five Thousand Dollars ($25,000) in
respect of any Receivable, which notice shall specify the Receivable
affected.
(c) Borrower may, in the ordinary course of business and
consistent with past business practices, unless a Default or an Event
of Default has occurred and is continuing, grant any extension of time
for payment of any Receivable or compromise, compound or settle the
same for less than the full amount thereof, or release wholly or
partly any Person liable for the payment thereof, or allow any credit
or discount whatsoever therein; provided that (i) no such action
results in the reduction of more than Ten Thousand Dollars ($10,000)
in the amount payable with respect to any Receivable or of more than
Fifty Thousand Dollars ($50,000) with respect to all Receivables in
any fiscal year of Borrower (in each case, excluding the allowance of
credits or discounts generally available to Account Debtors in the
ordinary course of Borrower's business and appropriate adjustments to
the accounts of Account Debtors in the ordinary course of business),
and (ii) Agent is promptly notified of the amount of such adjustments
and the Receivable(s) affected thereby.
Section 10.4 Invoices.
(a) Borrower will not use any invoices other than
invoices in the form delivered to Agent prior to the Agreement Date
without giving Agent thirty (30) days' prior written notice of the
intended use of a different form of invoice together with a copy of
such different form.
(b) Upon the request of Agent, Borrower shall deliver to
Agent, at Borrower's expense, copies of customers' invoices or the
equivalent, original shipping and delivery receipts or other proof of
delivery, customers' statements, customer address lists, the original
copy of all documents, including, without limitation, repayment
histories and present status reports, relating to Receivables and such
other documents and information relating to the Receivables as Agent
shall specify.
Section 10.5 Delivery of Instruments. In the event any Receivable
is at any time evidenced by a promissory note, trade acceptance or any other
instrument for the payment of money, Borrower will immediately thereafter
deliver such instrument to Agent, appropriately endorsed to Agent, for the
benefit of the Credit Parties.
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Section 10.6 Sales of Inventory. All sales of Inventory will be
made in compliance with all requirements of Applicable Law.
Section 10.7 Ownership and Defense of Title.
(a) Except for Permitted Liens, Borrower shall at all
times be the sole owner of each and every item of Collateral and shall
not create any Lien on, or sell, lease, exchange, assign, transfer,
pledge, hypothecate, grant a security interest or security title in,
grant a license in or otherwise dispose of, any of the Collateral or
any interest therein, except for sales of Inventory in the ordinary
course of business, for cash or on open account or on terms of payment
ordinarily extended to its customers, and except for dispositions that
are otherwise expressly permitted under this Agreement. The inclusion
of "proceeds" of the Collateral under the Security Interest shall not
be deemed a consent by Agent or the Lenders to any other sale or other
disposition of any part or all of the Collateral.
(b) Borrower shall defend its title or leasehold interest
in and to, and the Security Interest in, the Collateral against the
claims and demands of all Persons other than the Credit Parties.
Section 10.8 Insurance.
(a) Borrower shall at all times maintain insurance on the
Inventory and Equipment against loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as Agent
shall reasonably specify, in amounts not to exceed those obtainable at
commercially reasonable rates and under policies issued by insurers
acceptable to Agent in the exercise of its reasonable judgment. All
premiums on such insurance shall be paid by Borrower and copies of the
policies delivered to Agent. Borrower will not use or permit the
Inventory or Equipment to be used in violation of Applicable Law or in
any manner which might render inapplicable any insurance coverage.
(b) All insurance policies required under Section 10.8(a)
shall name Agent, for the benefit of the Lenders, as an additional
insured and shall contain loss payable clauses in the form submitted
to Borrower by Agent, or otherwise in form and substance satisfactory
to the Required Lenders, naming Agent, for the benefit of the Lenders,
as loss payee, as its interests may appear, and providing that:
(i) all proceeds thereunder shall be payable to
Agent, for the benefit of the Lenders;
(ii) no such insurance shall be affected by any
act or neglect of the insured or owner of the property
described in such policy; and
(iii) such policy and loss payable clauses may be
canceled, amended or terminated only upon at least ten (10)
days' prior written notice given to Agent.
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(c) Any proceeds of insurance referred to in this Section
10.8 which are paid to Agent, for the account of the Lenders, shall
be, at the option of the Required Lenders in their sole discretion,
either (i) applied to replace the damaged or destroyed property, or
(ii) applied to the payment or prepayment of the Secured Obligations.
Section 10.9 Location of Offices and Collateral.
(a) Borrower will not change the location of its chief
executive office or the place where it keeps its books and records
relating to the Collateral or change its name, its identity or
corporate structure without giving Agent sixty (60) days' prior
written notice thereof.
(b) All Inventory, other than Inventory in transit, will
at all times be kept by Borrower at the locations set forth in
Schedule 8.1(v), and shall not, without the prior written consent of
Agent, be removed therefrom except pursuant to sales of Inventory
permitted under Section 10.7(a).
(c) If any Inventory is in the possession or control of
any of Borrower's agents or processors, Borrower shall notify such
agents or processors of the Security Interest (and shall promptly
provide copies of any such notice to Agent and the Lenders) and, upon
the occurrence of an Event of Default, shall instruct them (and cause
them to acknowledge such instruction) to hold all such Inventory for
the account of the Lenders, subject to the instructions of Agent.
Section 10.10 Records Relating to Collateral.
(a) Borrower will at all times:
(i) keep complete and accurate records of
Inventory on a basis consistent with past practices of
Borrower so as to permit comparison of Inventory records
relating to different time periods, itemizing and describing
the kind, type and quantity of Inventory and Borrower's cost
therefor and a current price list for such Inventory; and
(ii) keep complete and accurate records of all
other Collateral.
(b) Borrower will prepare a physical listing of all
Inventory, wherever located, at least annually.
Section 10.11 Inspection. Agent and each Lender (by any of their
officers, employees or agents) shall have the right, to the extent that the
exercise of such right shall be within the control of Borrower, at any time or
times to:
(a) visit the properties of Borrower and its
Subsidiaries, inspect the Collateral and the other assets of Borrower
and its Subsidiaries and inspect and make extracts from the books and
records of Borrower and its Subsidiaries, including, but not limited
to, management letters prepared by independent accountants, all during
customary business hours at such premises;
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(b) discuss Borrower's and its Subsidiaries' business,
assets, liabilities, financial condition, results of operations and
business prospects, insofar as the same are reasonably related to the
rights of Agent or the Lenders hereunder or under any of the other
Loan Documents, with Borrower's and its Subsidiaries' principal
officers, independent accountants and any other Person (except that
any such discussion with any third parties shall be conducted only in
accordance with Agent's or such Lender's standard operating procedures
relating to the maintenance of the confidentiality of confidential
information of borrowers);
(c) verify the amount, quantity, value and condition of,
or any other matter relating to, any of the Collateral and in this
connection to review, audit and make extracts from all records and
files related to any of the Collateral.
Borrower will deliver to Agent, for the benefit of the Lenders, any instrument
necessary for it to obtain records from any service bureau maintaining records
on behalf of Borrower.
Section 10.12 Information and Reports.
(a) Schedule of Receivables and Payables. Borrower shall
deliver to Agent, on or before the Effective Date and not later than
the 20th day of each calendar month thereafter, a Schedule of
Receivables which
(i) shall be as of the last Business Day of the
immediately preceding month,
(ii) shall be reconciled to the Borrowing Base
Certificate as of such last Business Day,
(iii) shall set forth a detailed aged trial balance
of all its then existing Receivables, specifying the names,
addresses and balance due for each Account Debtor obligated on
a Receivable so listed, and
(iv) shall set forth a detailed aging trial
balance of all of its then existing accounts payable,
specifying the names, addresses and balance due for each such
account payable.
(b) Schedule of Inventory. Borrower shall deliver to
Agent, on or before the Effective Date and not later than the 20th day
of each calendar month thereafter, a Schedule of Inventory as of the
last Business Day of the immediately preceding month of Borrower,
itemizing and describing the kind, type and quantity of Inventory,
Borrower's cost thereof and the location thereof.
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(c) Borrowing Base Certificate. Borrower shall deliver
to Agent on each Business Day after the Effective Date a Borrowing
Base Certificate prepared as of the close of business on the previous
Business Day.
(d) Notice of Diminution of Value. Borrower shall give
prompt notice to Agent of any matter or event which has resulted in,
or may result in, the diminution in excess of Twenty-Five Thousand
Dollars ($25,000) in the value of any of the Collateral, except for
any such diminution in the value of any Receivables or Inventory in
the ordinary course of business which has been appropriately reserved
against, as reflected in financial statements previously delivered to
Agent and the Lenders pursuant to Article 12.
(e) Additional Information. Agent may in its discretion
from time to time request that Borrower deliver the schedules and
certificates described in Sections 10.12(a), (b) and (c) more or less
often and on different schedules than specified in such Sections and
Borrower will comply with such requests. Borrower will also furnish
to Agent and each Lender such other information with respect to the
Collateral as Agent or such Lender may from time to time reasonably
request.
Section 10.13 Power of Attorney. Borrower hereby appoints Agent as
its attorney, with power to
(a) endorse the name of Borrower on any checks, notes,
acceptances, money orders, drafts or other forms of payment or
security that may come into Agent's or any Lender's possession, and
(b) sign the name of Borrower on any invoice or ▇▇▇▇ of
lading relating to any Receivable, Inventory or other Collateral, on
any drafts against customers related to letters of credit, on
schedules and assignments of Receivables furnished to Agent or any
Lender by Borrower, on notices of assignment, financing statements and
other public records relating to the perfection or priority of the
Security Interest, verifications of account and notices to or from
customers.
Section 10.14 Real Estate and Leases.
(a) Promptly upon acquisition of any interest (including
a leasehold interest) in any Real Estate, Borrower shall notify Agent
thereof and, at Agent's request, as soon as reasonably possible
thereafter deliver to Agent, for the benefit of the Credit Parties,
each of the following items: a Mortgage, a mortgagee's policy of
title insurance, boundary survey, appraisal and/or environmental
reports, all in form and substance satisfactory to Agent.
(b) Agent may record, or defer recordation, of any
Mortgage (whether delivered pursuant to Section 7.1 or this Section
10.14) as Agent may determine in its sole discretion. In the event
Agent defers recordation of any Mortgage, Agent may thereafter record
same at any time in its sole discretion.
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(c) Promptly upon Borrower's entry into any lease (as
lessee) of Real Estate, at Agent's request Borrower shall collaterally
assign to Agent, for the benefit of itself and the Lenders, Borrower's
interest in such lease, in form and substance satisfactory to Agent.
Borrower shall also deliver to Agent an executed landlord's waiver and
consent with respect to such lease in form and substance satisfactory
to Agent.
Section 10.15 Assignment of Claims Act. Upon the request of Agent,
Borrower shall execute any documents or instruments and shall take such steps or
actions reasonably required by Agent so that all monies due or to become due
under any contract with the U.S., the District of Columbia or any state, county,
municipality or other domestic or foreign Governmental Authority, will be
assigned to Agent, for the benefit of itself and the Lenders, and notice given
thereof in accordance with the requirements of the Assignment of Claims Act of
1940, as amended, or any other laws, rules or regulations relating to the
assignment of any such contract and monies due to or to become due.
Section 10.16 Voting Rights, Distributions, etc., in respect of
Investment Property.
(a) So long as no Event of Default shall have occurred
and be continuing (i) Borrower shall be entitled to exercise any and
all voting and other consensual rights (including, without limitation,
the right to give consents, waivers and notifications in respect of
any Security) pertaining to its Investment Property or any part
thereof; provided, however, that without the prior written consent of
Agent and Required Lenders, no vote shall be cast or consent, waiver
or ratification given or action taken which would (A) be inconsistent
with or violate any provision of this Agreement or any other Loan
Document or (B) amend, modify or waive any material term, provision or
condition of the certificate of incorporation, bylaws, certificate of
formation or other charter document or other agreement relating to,
evidencing, providing for the issuance of or securing any such
Investment Property, and (ii) Borrower shall be entitled to receive
and retain any and all dividends and interest paid in respect of any
of such Investment Property (unless otherwise required by this
Agreement).
(b) Upon the occurrence and during the continuance of a
Default or an Event of Default, (i) Agent may, without notice to any
Loan Party, transfer or register in the name of Agent or any of its
nominees, for the ratable benefit of the Credit Parties, any or all of
the Collateral consisting of Investment Property, the proceeds thereof
(in cash or otherwise) and all liens, security, rights, remedies and
claims of Borrower with respect thereto (as used in this Section
collectively, the "Pledged Collateral") held by Agent hereunder, and
Agent or its nominee may thereafter, after delivery of notice
Borrower, exercise all voting and corporate rights at any meeting of
any corporation, partnership or other business entity issuing any of
the Pledged Collateral and any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to
any of the Pledged Collateral as if it were the absolute owner
thereof, including, without limitation, the right to exchange at its
discretion any and all of the Pledged Collateral upon the merger,
consolidation, reorganization, recapitalization or other readjustment
of any corporation, partnership or other business entity issuing any
of such Pledged Collateral or upon the exercise by any such issuer or
Agent of any right, privilege or option pertaining to any of the
Pledged Collateral, and in connection therewith, to deposit and
deliver any and all of the Pledged Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon
such terms and
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conditions as it may determine, all without liability except to
account for property actually received by it, but Agent shall have no
duty to exercise any of the aforesaid rights, privileges or options,
and Agent shall not be responsible for any failure to do so or delay
in so doing, (ii) after Agent's giving of the notice specified in this
Section 10.16(b)(i), all rights of Borrower to exercise the voting
and other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 10.16(a)(i) and to receive the dividends,
interest and other distributions which it would otherwise be
authorized to receive and retain pursuant to Section 10.16(a)(ii)
shall be suspended until such Event of Default shall no longer exist,
and all such rights shall, until such Event of Default shall no longer
exist, thereupon become vested in Agent which shall thereupon have the
sole right to exercise such voting and other consensual rights and to
receive and hold as Pledged Collateral such dividends, interest and
other distributions, (iii) all dividends, interest and other
distributions which are received by Borrower or any other Loan Party
contrary to the provisions of this Section 10.16(b) shall be received
in trust for the benefit of Agent, shall be segregated from other
funds of Borrower or such Loan Party and shall be forthwith paid over
to Agent as Collateral in the same form as so received (with any
necessary endorsement), and (iv) Borrower shall execute and deliver
(or cause to be executed and delivered) to Agent all such proxies and
other instruments as Agent may reasonably request for the purpose of
enabling Agent to exercise the voting and other rights which it is
entitled to exercise pursuant to this Section 10.16(b) and to receive
the dividends, interest and other distributions which it is entitled
to receive and retain pursuant to this Section 10.16(b). The
foregoing shall not in any way limit Agent's power and authority
granted pursuant to Section 10.13.
ARTICLE 11
Affirmative Covenants
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner provided for in Section 17.10, Borrower will,
and will cause each of its Subsidiaries to keep the following covenants.
Section 11.1 Preservation of Corporate Existence and Similar
Matters. Borrower will, and will cause each of its Subsidiaries to, preserve
and maintain its corporate existence, rights, franchises, licenses and
privileges in the jurisdiction of its incorporation and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization and where the failure so
to be qualified or authorized could reasonably be expected to result in a
Material Adverse Effect.
Section 11.2 Compliance with Applicable Law. Borrower will, and
will cause each of its Subsidiaries to, comply with all Applicable Law relating
to Borrower or each such Subsidiary except to the extent being contested in good
faith by appropriate proceedings, for which reserves in respect of Borrower's or
each such Subsidiary's reasonably anticipated liability therefor has been
appropriately established and where failure so to comply could reasonably be
expected to result in a Material Adverse Effect.
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Section 11.3 Maintenance of Property. In addition to, and not in
derogation of, the requirements of Section 10.7 and of the Security Documents,
Borrower will, and will cause each of its Subsidiaries to:
(a) protect and preserve all properties material to its
business, including, without limitation, copyrights, patents, trade
names and trademarks, and maintain in good repair, working order and
condition in all material respects, with reasonable allowance for wear
and tear, all tangible properties, and
(b) from time to time make or cause to be made all needed
and appropriate repairs, renewals, replacements and additions to such
properties necessary for the conduct of its business, so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times.
Section 11.4 Conduct of Business. Borrower will, and will cause
each of its Subsidiaries to, at all times carry on its business in an efficient
manner and engage only the business described in Section 8.1(g).
Section 11.5 Insurance. Borrower will, and will cause each of its
Subsidiaries to, maintain, in addition to the coverage required by Section 10.8
and the Security Documents, insurance with responsible insurance companies
against such risks and in such amounts as is customarily maintained by similar
businesses or as may be required by Applicable Law, and from time to time
deliver to Agent or any Lender upon its request a detailed list of the insurance
then in effect, stating the names of the insurance companies, the amounts and
rates of the insurance, the dates of the expiration thereof and the properties
and risks covered thereby.
Section 11.6 Payment of Taxes and Claims. Borrower will, and will
cause each of its Subsidiaries to, pay or discharge when due
(a) all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or upon any
properties belonging to it, except that real property ad valorem taxes
shall be deemed to have been so paid or discharged if the same are
paid before they become delinquent, and
(b) all lawful claims of materialmen, mechanics,
carriers, warehousemen and landlords for labor, materials, supplies
and rentals which, if unpaid, might become a Lien on any properties of
Borrower;
except that this Section 11.6 shall not require the payment or discharge of any
such tax, assessment, charge, levy or claim which is being contested in good
faith by appropriate proceedings and for which reserves in respect of the
reasonably anticipated liability therefor have been appropriately established.
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Section 11.7 Accounting Methods and Financial Records. Borrower
will, and will cause each of its Subsidiaries to, maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete), as may be required or as may be necessary to permit the preparation
of financial statements in accordance with GAAP.
Section 11.8 Use of Proceeds.
(a) Borrower will use the proceeds of
(i) the initial Revolving Credit Loan to renew,
extend and refinance amounts outstanding under the Existing
Credit Agreement and to pay amounts indicated on Schedule 11.8
to the Persons indicated thereon, and
(ii) all subsequent Loans only for Acquisitions
permitted by Section 13.4, working capital and general
business purposes, and
(b) Borrower will not use any part of such proceeds to
purchase or, to carry or reduce or retire or refinance any credit
incurred to purchase or carry, any "margin stock" (within the meaning
of Regulation U of the Board of Governors of the Federal Reserve
System) or, in any event, for any purpose which would involve a
violation of such Regulation U or of Regulation T or X of such Board
of Governors, or for any purpose prohibited by law or by the terms and
conditions of this Agreement.
Section 11.9 Hazardous Waste and Substances; Environmental
Requirements.
(a) In addition to, and not in derogation of, the
requirements of Section 11.2 and of the Security Documents, Borrower
will, and will cause each of its Subsidiaries to, (i) comply with all
Environmental Laws and all Applicable Laws relating to occupational
health and safety (except for instances of noncompliance that are
being contested in good faith by appropriate proceedings if reserves
in respect of Borrower's or any such Subsidiary's reasonably
anticipated liability therefor have been appropriately established),
(ii) promptly notify Agent of its receipt of any notice of a violation
of any such Environmental Laws or such other Applicable Laws and (iii)
indemnify and hold Agent and the Lenders harmless from all loss, cost,
damage, liability, claim and expense incurred by or imposed upon Agent
or any Lender on account of Borrower's failure to perform its
obligations under this Section 11.9.
(b) Whenever Borrower gives notice to Agent pursuant to
this Section 11.9 with respect to a matter that reasonably could be
expected to result in liability to Borrower or any of its Subsidiaries
in excess of Fifty Thousand Dollars ($50,000) in the aggregate,
Borrower shall, at Agent's request and Borrower's expense (i) cause an
independent environmental engineer acceptable to Agent to conduct an
assessment, including tests where necessary, of the site where the
noncompliance or alleged noncompliance with Environmental Laws has
occurred and prepare and deliver to Agent a report setting forth the
results of such assessment, a proposed plan to bring Borrower into
compliance with such Environmental Laws (if such assessment indicates
noncompliance) and an estimate of the costs thereof, and (ii) provide
to Agent a supplemental report of such engineer whenever the scope of
the noncompliance, or the response thereto or the estimated costs
thereof, shall materially adversely change.
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ARTICLE 12
Information
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner set forth in Section 17.10, Borrower will
provide the following information to Agent and to each Lender at the offices
then designated for such notices pursuant to Section 17.1 and keep the other
covenants contained in this Article 12.
Section 12.1 Financial Statements.
(a) Audited Year-End Statements. As soon as available,
but in any event within ninety (90) days after the end of each fiscal
year of Borrower, Borrower will provide Agent and the Lenders with
copies of the consolidating and consolidated balance sheets of
Borrower and its Consolidated Subsidiaries as at the end of such
fiscal year and the related statements of earnings, shareholders'
equity and statement of cash flows for such fiscal year, in each case
setting forth in comparative form the figures for the previous fiscal
year of Borrower, reported on, as to such consolidated statements,
without qualification as to the scope of the audit or the status of
Borrower as a "going concern", by independent certified public
accountants of nationally recognized standing.
(b) Monthly Financial Statements. As soon as available
after the end of each month, but in any event within twenty (20) days
(forty-five (45) days in the case of the last month in each fiscal
quarter) after the end of each month, Borrower will provide Agent and
the Lenders with copies of the unaudited consolidated balance sheet of
Borrower and its Consolidated Subsidiaries as at the end of such month
and the related unaudited consolidated statements of earnings and cash
flows for Borrower and its Consolidated Subsidiaries for such month
and for the portion of the fiscal year of Borrower and its
Consolidated Subsidiaries through such month, certified by a Financial
Officer as presenting fairly the financial condition and results of
operations of Borrower (subject to normal year-end audit adjustments).
All of the financial statements referenced in this Section 12.1 are to be
complete and correct in all material respects and prepared in accordance with
GAAP (except, with respect to the monthly financial statements referred to in
clause (b), for the omission of footnotes and for the effect of normal year-end
audit adjustments) applied consistently throughout the periods reflected
therein.
Section 12.2 Accountants' Certificate. Together with the
financial statements referred to in Section 12.1(a), Borrower shall deliver a
certificate of such accountants addressed to Agent
(a) stating that in making the examination necessary for
the certification of such financial statements, nothing has come to
their attention to lead them to believe that any Default
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or Event of Default exists and, in particular, they have no knowledge
of any Default or Event of Default or, if such is not the case,
specifying such Default or Event of Default and its nature, and
(b) having attached the calculations, prepared by
Borrower and reviewed by such accountants, required to establish
whether or not Borrower is in compliance with the covenants contained
in Sections 13.1, 13.2, 13.3, 13.4, 13.5, 13.10 and 13.11, as at the
date of such financial statements.
Section 12.3 Officer's Certificate. At the time that Borrower
provides the financial statements pursuant to Section 12.1(b) for any month that
is the last month of a fiscal quarter of Borrower, Borrower shall also provide a
Compliance Certificate which:
(a) sets forth as at the end of such fiscal quarter or
fiscal year, as the case may be, the calculations required to
establish whether or not Borrower was in compliance with the
requirements of Sections 13.1, 13.2, 13.3, 13.4, 13.5, 13.10 and
13.11, as at the end of each respective period;
(b) states that the information on the schedules to this
Agreement is complete and accurate as of the date of such certificate
or, if such is not the case, attaches to such certificate updated
schedules, and
(c) states that, based on a reasonably diligent
examination, no Default or Event of Default has occurred or exists,
or, if such is not the case, specifies such Default or Event of
Default and its nature, when it occurred, whether it is continuing and
the steps taken or being taken by Borrower with respect to such
Default or Event of Default.
Section 12.4 Copies of Other Reports. Borrower will provide Agent
and the Lenders the following:
(a) Promptly upon receipt thereof, copies of all reports,
if any, submitted to Borrower or its Board of Directors by its
independent public accountants, including, without limitation, any
management report;
(b) As soon as practicable, copies of all financial
statements and reports that Borrower sends to its shareholders
generally and of all registration statements and all regular or
periodic reports which Borrower files with the Securities and Exchange
Commission or any successor commission;
(c) From time to time and as soon as reasonably
practicable following each request, such forecasts, data,
certificates, reports, statements, opinions of counsel, documents or
further information regarding the business, assets, liabilities,
financial condition, results of operations or business prospects of
Borrower or any of its Subsidiaries as Agent or any Lender may
reasonably request and that Borrower has or (except in the case of
legal opinions relating to the perfection or priority of the Security
Interest) without unreasonable expense can obtain; provided, however,
that the Lenders shall, to the extent reasonably practicable,
coordinate examinations of Borrower's records by their respective
internal auditors;
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(d) If requested by Agent or any Lender, Borrower will
provide to Agent and the Lenders statements in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U,
respectively, of the Board of Governors of the Federal Reserve System.
The rights of Agent and the Lenders under this Section 12.4 are in addition to
and not in derogation of their rights under any other provision of this
Agreement or of any other Loan Document.
Section 12.5 Notice of Litigation and Other Matters. Borrower will
provide Agent and the Lenders prompt notice of:
(a) the commencement, to the extent Borrower is aware of
the same, of all proceedings and investigations by or before any
Governmental Authority or nongovernmental body and all actions and
proceedings in any court or before any arbitrator against or adversely
affecting Borrower, any of its Subsidiaries or any of Borrower's or
any of its Subsidiaries' properties, assets or businesses, which could
reasonably be expected to, singly or in the aggregate, result in the
occurrence of a Default or an Event of Default, or have a Material
Adverse Effect;
(b) any amendment of the articles of incorporation or
bylaws of Borrower or any of its Subsidiaries;
(c) any change in the business, assets, liabilities,
financial condition, results of operations or business prospects of
Borrower or any of its Subsidiaries which has had or could reasonably
be expected to have, singly or in the aggregate, a Material Adverse
Effect and any change in the executive officers of Borrower or any of
its Subsidiaries; and
(d) any Default or Event of Default or any event which
constitutes or which with the passage of time or giving of notice or
both would constitute a default or event of default by Borrower or any
of its Subsidiaries under any material agreement (other than this
Agreement) to which Borrower or any of its Subsidiaries is a party or
by which Borrower, any of its Subsidiaries or any of Borrower's or any
of its Subsidiaries' properties may be bound.
Section 12.6 ERISA. As soon as possible and in any event within
thirty (30) days after Borrower knows, or has reason to know, that
(a) any Termination Event with respect to a Plan has
occurred or will occur, or
(b) the aggregate present value of the Unfunded Vested
Accrued Benefits under all Plans is equal to an amount in excess of
$0, or
(c) Borrower or any of its Subsidiaries is in "default"
(as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan required by reason of Borrower's or such
Subsidiary's complete or partial withdrawal (as described in Section
4203 or 4205 of ERISA) from such Multiemployer Plan,
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Borrower will provide Agent and the Lenders a certificate of its President or a
Financial Officer setting forth the details of such event and the action which
is proposed to be taken with respect thereto, together with any notice or
filing which may be required by the PBGC or other Governmental Authority with
respect to such event.
Section 12.7 Accuracy of Information. All written information,
reports, statements and other papers and data provided to Agent or any Lender,
whether pursuant to this Article 12 or any other provision of this Agreement or
of any other Loan Document, shall be, at the time the same is so provided,
complete and correct in all material respects to the extent necessary to give
Agent and the Lenders true and accurate knowledge of the subject matter.
Section 12.8 Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect, Borrower shall
deliver to Agent and the Lenders as part of the officer's certificate required
pursuant to Section 12.3(b) such revisions or updates to such Schedule(s) as may
be necessary or appropriate to update or correct such Schedule(s), provided that
no such revisions or updates to any Schedule(s) shall be deemed to have amended,
modified or superseded such Schedule(s) as originally attached hereto, or to
have cured any breach of warranty or representation resulting from the
inaccuracy or incompleteness of any such Schedule(s), unless and until the
Required Lenders in their sole and absolute discretion, shall have accepted in
writing such revisions or updates to such Schedule(s).
Section 12.9 Year 2000 Compliance. Borrower will promptly notify
the Administrative Agent in the event Borrower discovers or determines that any
computer application (including those of its suppliers and vendors) that is
material to its or any of its Subsidiaries' business and operations will not be
Year 2000 Compliant on a timely basis, except to the extent that such failure
could not reasonably be expected to have a Material Adverse Effect.
Section 12.10 Annual Projections. Not sooner than ninety (90) days
prior to the beginning of each of Borrower's fiscal years, but not less than
thirty (30) days prior to the beginning of each such fiscal year, the Borrower
will deliver to the Lenders a draft budget and projections (on a monthly basis)
of Borrower's and its Consolidated Subsidiaries' anticipated operations and
financial performance for such fiscal year, in form reasonably satisfactory to
Agent and containing such information as Agent may reasonably request, such
budget and projections to be finalized to Agent's satisfaction within thirty
(30) days after the beginning of such fiscal year.
ARTICLE 13
Negative Covenants
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner set forth in Section 17.10:
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Section 13.1 Financial Ratios.
(a) Ratio of Senior Funded Debt to EBITDA. Borrower will
not directly or indirectly permit the ratio of Borrower's Senior
Funded Debt to Borrower's EBITDA for any four fiscal quarter period
ending at any time during any period set forth below to be greater
than the following amounts for the periods indicated:
Period Ratio
------ ------
On and From the Effective Date to 6/30/99 6.20 to 1.0
On 6/30/99 and thereafter 5.50 to 1.0
(b) Interest Coverage Ratio. Borrower will not directly
or indirectly permit the ratio of Borrower's EBITDA to Borrower's
Interest Expense for any four fiscal quarter period ending at any time
during any period set forth below to be less than the ratio set forth
opposite each such period:
Period Ratio
------ -----
On and From the Effective Date to 6/30/99 1.25 to 1.0
On 6/30/99 and thereafter 1.50 to 1.0
(c) Fixed Charge Coverage Ratio. Borrower shall never
permit its Fixed Charge Coverage Ratio for any four fiscal quarter
period ending at any time during such period set forth below to be
less than the ratio set forth opposite each such period:
Period Ratio
------ -----
On and From the Effective Date to 6/30/99 1.20 to 1.0
On 6/30/99 and thereafter 1.30 to 1.0
Section 13.2 Indebtedness for Money Borrowed. Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly, create,
assume or otherwise become or remain obligated in respect of, or permit or
suffer to exist or to be created, assumed or incurred or to be outstanding any
Indebtedness for Money Borrowed, except that this Section 13.2 shall not apply
to:
(a) Indebtedness of Borrower for Money Borrowed
represented by the Loans and the Notes;
(b) Indebtedness for Money Borrowed reflected on Schedule
8.1(k), including the Senior Notes (but excluding any such
Indebtedness that is to be paid in full on the Effective Date) and
refinancings, renewals, replacements and refundings thereof provided
that the principal amount thereof and interest thereon is not
increased and the weighted average life
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to maturity is equal to or greater than that of the Indebtedness for
Money Borrowed being refinanced, renewed, replaced or refunded;
(c) Permitted Purchase Money Indebtedness;
(d) Subordinated Indebtedness (including all
inter-company Indebtedness between or among Borrowers); and
(e) Obligations under any Interest Rate Protection
Agreement on any Indebtedness otherwise permitted pursuant to this
Section.
Section 13.3 Guaranties. Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, become or remain liable with
respect to any Guaranty of any obligation of any other Person other than the
Guaranties referred to in the definition of the Senior Notes.
Section 13.4 Investments; Acquisitions. Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, acquire,
after the Agreement Date, any Business Unit or Investment or, after such date,
maintain any Investment other than Permitted Investments and Permitted
Acquisitions. In addition to, and not in derogation of, the foregoing, if at
any time Borrower or any Subsidiary of Borrower obtains any interest in any
Subsidiary, other than such Investments existing on the Agreement Date, Borrower
and such new Subsidiary shall execute and deliver such amendments to this
Agreement and any other Loan Document, and execute such other Loan Documents, as
Agent requires in its discretion in order to cause such Subsidiary to (i) become
a party to this Agreement as a Loan Party, (ii) cause all property of such
Subsidiary which is of a type included in the Collateral to be covered by the
Security Interest, and (iii) Guarantee the prompt payment and performance of the
Secured Obligations pursuant to a Guaranty Agreement.
Section 13.5 Capital Expenditures. Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, make or incur any
Capital Expenditures in the aggregate in excess of the amount set forth below
for the fiscal year of Borrower set forth opposite such amount; provided,
however, that any shortfall in actual Capital Expenditures made during any such
fiscal year may be carried forward to increase permitted Capital Expenditures in
the next fiscal year (but may not be carried forward to any subsequent fiscal
year):
Fiscal Years Amount
------------ ------
1999 $4,345,000
2000 $3,000,000
2001 $3,000,000
Section 13.6 Restricted Dividend Payments and Purchases, Etc.
Borrower will not, and will not permit any of its Subsidiaries to, directly or
indirectly, declare or make any Restricted Dividend Payment, Restricted Payment
or Restricted Purchase, provided that Borrower may make scheduled
payments-in-kind of dividends on GNI's preferred stock so long as no Default or
Event of Default is in existence as of the date of such dividend both with and
without giving effect to the
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payment thereof and provided, further, so long as no Default exists, any
Borrower other than GNI may make Restricted Payments to GNI.
Section 13.7 Merger, Consolidation and Sale of Assets. Borrower
will not, and will not permit any of its Subsidiaries to, merge or consolidate
with any other Person or sell, lease or transfer or otherwise dispose of all or
a substantial portion of its assets to any Person other than sales of Inventory
in the ordinary course of business and Permitted Acquisitions.
Section 13.8 Transactions with Affiliates. Borrower will not, and
will not permit any of its Subsidiaries to, effect any transaction with any
Affiliate on a basis less favorable to Borrower or such Subsidiary than would be
the case if such transaction had been effected with a Person not an Affiliate.
Section 13.9 Liens. Borrower will not, and will not permit any of
its Subsidiaries to, create, assume or permit or suffer to exist or to be
created or assumed any Lien on any of the Collateral or its other assets, other
than Permitted Liens.
Section 13.10 Capitalized Lease Obligations. Borrower will not,
and will not permit any of its Subsidiaries to, without the consent of the
Required Lenders, incur or permit to exist any Capitalized Lease Obligations
which, together with Purchase Money Indebtedness, would exceed Two Million
Dollars ($2,000,000) in the aggregate at any time outstanding.
Section 13.11 Operating Leases. Borrower will not, and will not
permit any of its Subsidiaries to, without the consent of the Required Lenders,
enter into any Operating Lease if the aggregate annual rental payable under all
Operating Leases of Borrower and its Subsidiaries would exceed One Million
Dollars ($1,000,000) in the aggregate at any time after the Effective Date.
Section 13.12 Real Estate Leases. Borrower will not, and will not
permit any of its Subsidiaries to, enter into any real property lease, including
a lease relating to the Real Estate occupied by Borrower on the Effective Date,
without the prior written consent of Agent, on behalf of the Lenders, which
consent shall not be unreasonably withheld.
Section 13.13 Plans. Borrower will not, and will not permit any of
its Subsidiaries to, permit any condition to exist in connection with any Plan
which might constitute grounds for the PBGC to institute proceedings to have
such Plan terminated or a trustee appointed to administer such Plan, and any
other condition, event or transaction with respect to any Plan which could
result in the incurrence by Borrower or any of its Subsidiaries of any material
liability, fine or penalty.
Section 13.14 Sales and Leasebacks. Borrower will not, and will not
permit any of its Subsidiaries to, enter into any arrangement with any Person
providing for Borrower or any of its Subsidiaries to lease from such Person any
real or personal property which has been or is to be sold or transferred,
directly or indirectly, by Borrower or any of its Subsidiaries to such Person.
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ARTICLE 14
Default
Section 14.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any Governmental Authority or nongovernmental body:
(a) Default in Payment. Borrower shall default in any
payment of principal of or interest on any Loan or any Note when and
as due (whether at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. Borrower shall default in the
payment, as and when due, of principal of or interest on, any other
Secured Obligation, and such default shall continue for a period of
ten (10) days after written notice thereof has been given to Borrower
by Agent.
(c) Misrepresentation. Any representation or warranty
made or deemed to be made by Borrower under this Agreement or any
other Loan Document, or any amendment hereto or thereto, shall at any
time prove to have been incorrect or misleading in any material
respect when made.
(d) Default in Performance. Borrower shall default in
the performance or observance of any term, covenant, condition or
agreement to be performed by Borrower, contained in
(i) Articles 9, 10, 12 or 13, or Sections 11.1
(insofar as it requires the preservation of the corporate
existence of Borrower), or 11.8, and Agent shall have
delivered to Borrower written notice of such default, or
(ii) this Agreement (other than as specifically
provided for otherwise in this Section 14.1) or any other Loan
Document and such default shall continue for a period of
thirty (30) days after written notice thereof has been given
to Borrower by Agent.
(e) Indebtedness Cross-Default.
(i) Borrower or any Subsidiary of Borrower shall
fail to pay when due and payable the principal of, interest
on, redemption payment, or any sinking fund with respect to
the Senior Notes (regardless of amount) or any other
Indebtedness for Money Borrowed (other than the Loans) in an
amount in excess of Two Hundred Fifty Thousand Dollars
($250,000), or
(ii) the maturity of any such Indebtedness shall
have (A) been accelerated in accordance with the provisions of
any indenture, contract or instrument providing
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for the creation of or concerning such Indebtedness, or (B)
been required to be prepaid prior to the stated maturity
thereof, or
(iii) any event shall have occurred and be
continuing which would permit any holder or holders of such
Indebtedness, any trustee or agent acting on behalf of such
holder or holders or any other Person so to accelerate such
maturity, and Borrower shall have failed to cure such default
prior to the expiration of any applicable cure or grace
period.
(f) Other Cross-Defaults. Borrower or any of its
Subsidiaries shall default in the payment when due, or in the
performance or observance, of any obligation or condition of any
agreement, contract or lease (other than this Agreement, the Security
Documents or any such agreement, contract or lease relating to
Indebtedness for Money Borrowed) if the existence of any such
defaults, singly or in the aggregate, could in the reasonable judgment
of Agent have a Material Adverse Effect on Borrower or any of its
Subsidiaries; provided, however, that for the purposes of this
provision where such a default could result only in a monetary loss, a
Material Adverse Effect shall not be deemed to have occurred unless
the aggregate of such losses would exceed Two Hundred Fifty Thousand
Dollars ($250,000).
(g) Voluntary Bankruptcy Proceeding. Borrower or any of
its Subsidiaries shall
(i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect),
(ii) file a petition seeking to take advantage of
any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for
adjustment of debts,
(iii) consent to or fail to contest in a timely and
appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws,
(iv) apply for or consent to, or fail to contest
in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of a substantial part of its property,
domestic or foreign,
(v) admit in writing its inability to pay its
debts as they become due,
(vi) make a general assignment for the benefit of
creditors, or
(vii) take any corporate action for the purpose of
authorizing any of the foregoing.
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(h) Involuntary Bankruptcy Proceeding. A case or other
proceeding shall be commenced against Borrower or any of its
Subsidiaries in any court of competent jurisdiction seeking
(i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic
or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts,
(ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of Borrower, any of its
Subsidiaries or of all or any substantial part of the assets,
domestic or foreign, of Borrower or any of its Subsidiaries,
and such case or proceeding shall continue undismissed or unstayed for
a period of sixty (60) consecutive calendar days, or an order granting
the relief requested in such case or proceeding against Borrower or
any of its Subsidiaries (including, but not limited to, an order for
relief under such federal bankruptcy laws) shall be entered.
(i) Failure of Agreements. Borrower shall challenge the
validity and binding effect of any provision of any Loan Document
after delivery thereof hereunder or shall state in writing its
intention to make such a challenge, or any Loan Document, after
delivery thereof hereunder, shall for any reason (except to the extent
permitted by the terms thereof) cease to create a valid and perfected
first priority Lien (except for Permitted Liens) on, or security
interest in, any of the Collateral purported to be covered thereby.
(j) Judgment. A final, unappealable judgment or order
for the payment of money in an amount that exceeds the uncontested
insurance available therefor by Two Hundred Fifty Thousand Dollars
($250,000) or more shall be entered against Borrower by any court or
other Governmental Authority and such judgment or order shall continue
undischarged or unstayed for ten (10) days.
(k) Attachment. A warrant or writ of attachment or
execution or similar process which exceeds Two Hundred Fifty Thousand
($250,000) in value shall be issued against any property of Borrower
or any of its Subsidiaries and such warrant or process shall continue
undischarged or unstayed for ten (10) days.
(l) ERISA.
(i) Any Termination Event with respect to a Plan
shall occur that, after taking into account the excess, if
any, of (A) the fair market value of the assets of any other
Plan with respect to which a Termination Event occurs on the
same day (but only to the extent that such excess is the
property of Borrower) over (B) the present value on such day
of all vested nonforfeitable benefits under such other Plan,
results in an Unfunded Vested Accrued Benefit in excess of $0,
or
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(ii) any Plan shall incur an "accumulated funding
deficiency" (as defined in Section 412 of the Internal Revenue
Code or Section 302 of ERISA) for which a waiver has not been
obtained in accordance with the applicable provisions of the
Internal Revenue Code and ERISA, or
(iii) Borrower is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from Borrower's complete or
partial withdrawal (as described in Section 4203 or 4205 of
ERISA) from such Multiemployer Plan.
(m) Change of Control. The occurrence of a Change of
Control.
(n) Material Adverse Effect. The occurrence of a
Material Adverse Effect.
Section 14.2 Remedies.
(a) Automatic Acceleration and Termination of Facilities.
Upon the occurrence of an Event of Default specified in Section
14.1(g) or (h), (i) the principal of and the interest on the Loans and
any Note at the time outstanding, and all other amounts owed to Agent
or the Lenders under this Agreement or any of the other Loan Documents
and all other Secured Obligations, shall thereupon become due and
payable without presentment, demand, protest or other notice of any
kind, all of which are expressly waived, anything in this Agreement or
any of the other Loan Documents to the contrary notwithstanding, and
(ii) the Revolving Credit Facility and the right of Borrower to
request borrowings under this Agreement shall immediately terminate.
(b) Other Remedies. If any Event of Default shall have
occurred, and during the continuance of any such Event of Default,
Agent may, and at the direction of the Required Lenders in their sole
and absolute discretion shall, do any of the following:
(i) declare the principal of and interest on the
Loans and any Note at the time outstanding, and all other
amounts owed to Agent or the Lenders under this Agreement or
any of the other Loan Documents and all other Secured
Obligations, to be forthwith due and payable, whereupon the
same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all
of which are expressly waived, anything in this Agreement or
the other Loan Documents to the contrary notwithstanding;
(ii) terminate the Revolving Credit Facility and
any other right of Borrower to request borrowings thereunder;
(iii) notify, or request Borrower to notify, in
writing or otherwise, any Account Debtor or obligor with
respect to any one or more of the Receivables to make payment
to Agent, for the benefit of the Lenders, or any agent or
designee of Agent, at such address as may be specified by
Agent and if, notwithstanding the giving of any notice, any
Account Debtor or other such obligor shall make payments
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to Borrower, Borrower shall hold all such payments it receives
in trust for Agent, for the account of the Lenders, without
commingling the same with other funds or property of, or held
by, Borrower, and shall deliver the same to Agent or any such
agent or designee of Agent immediately upon receipt by
Borrower in the identical form received, together with any
necessary endorsements;
(iv) notify, or direct Borrower to notify, and
instruct, in writing or otherwise, any Clearing Bank to
transmit the balances in each Agency Account to Agent in
accordance with the terms of this Agreement and any Agency
Account Agreement;
(v) at Borrower's expense, enforce collection of
any Receivables or settle or compromise the amount or payment
thereof;
(vi) settle or adjust disputes and claims directly
with Account Debtors and other obligors on Receivables for
amounts and on terms which Agent considers advisable and in
all such cases only the net amounts received by Agent, for the
account of the Lenders, in payment of such amounts, after
deductions of costs and attorneys' fees, shall constitute
Collateral and Borrower shall have no further right to make
any such settlements or adjustments or to accept any returns
of merchandise;
(vii) enter upon any premises in which any
Collateral may be located and, without resistance or
interference by Borrower, take physical possession of any or
all thereof and maintain such possession on such premises or
move the same or any part thereof to such other place or
places as Agent shall choose, without being liable to Borrower
on account of any loss, damage or depreciation that may occur
as a result thereof, so long as Agent shall act reasonably and
in good faith;
(viii) require Borrower to and Borrower shall,
without charge to Agent or any Lender, assemble the tangible
Collateral and maintain or deliver it into the possession of
Agent or any agent or representative of Agent at such place or
places as Agent may designate and as are reasonably convenient
to both Agent and Borrower;
(ix) at the expense of Borrower, cause any of the
tangible Collateral to be placed in a public or field
warehouse, and Agent shall not be liable to Borrower on
account of any loss, damage or depreciation that may occur as
a result thereof, so long as Agent shall act reasonably and in
good faith;
(x) without notice, demand or other process, and
without payment of any rent or any other charge, enter any of
Borrower's premises and, without breach of the peace, until
Agent, on behalf of the Lenders, completes the enforcement of
its rights in the Collateral, take possession of such premises
or place custodians in exclusive control thereof, remain on
such premises and use the same and any of Borrower's
Equipment, for the purpose of (A) completing any work in
process, preparing any Inventory for disposition and disposing
thereof, and (B) collecting any Receivable,
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and Agent, for the benefit of the Lenders, is hereby granted a
license or sublicense and all other rights as may be
necessary, appropriate or desirable to use the Proprietary
Rights in connection with the foregoing, and the rights of
Borrower under all licenses, sublicenses and franchise
agreements shall inure to Agent, for the benefit of the
Lenders (provided, however, that any use of any federally
registered Trademarks as to any goods shall be subject to the
control as to the quality of such goods of the owner of such
Trademarks and the goodwill of the business symbolized
thereby);
(xi) exercise any and all of its rights under any
and all of the Security Documents;
(xii) apply any Collateral consisting of cash to
the payment of the Secured Obligations in any order in which
Agent, on behalf of the Lenders, may elect or use such cash in
connection with the exercise of any of its other rights
hereunder or under any of the Security Documents;
(xiii) establish or cause to be established one or
more Lockboxes or other arrangement for the deposit of
proceeds of Receivables, and, in such case, Borrower shall
cause to be forwarded to Agent at its Principal Office, on a
daily basis, copies of all checks and other items of payment
and deposit slips related thereto deposited in such Lockboxes,
together with collection reports in form and substance
satisfactory to Agent; and
(xiv) exercise all of the rights and remedies of a
secured party under the UCC and under any other Applicable
Law, including, without limitation, the right, without notice
except as specified below and with or without taking the
possession thereof, to sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any
location chosen by Agent, for cash, on credit or for future
delivery, and at such price or prices and upon such other
terms as Agent may deem commercially reasonable. Borrower
agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days' notice to Borrower of the time
and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable
notification, but notice given in any other reasonable manner
or at any other reasonable time shall constitute reasonable
notification. Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given.
Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and
place to which it was so adjourned.
Section 14.3 Application of Proceeds. All proceeds from each sale
of, or other realization upon, all or any part of the Collateral following an
Event of Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses
incurred in connection with such sale or other realization, including
reasonable attorneys' fees;
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(b) Second: to the payment of the Secured Obligations
(with Borrower remaining liable for any deficiency) as Agent may
elect; and
(c) Third: the balance (if any) of such proceeds shall
be paid to Borrower, subject to any duty imposed by law, or otherwise
to whomsoever shall be entitled thereto.
BORROWER SHALL REMAIN LIABLE AND WILL PAY, ON DEMAND, ANY DEFICIENCY REMAINING
IN RESPECT OF THE SECURED OBLIGATIONS, TOGETHER WITH INTEREST THEREON AT A RATE
PER ANNUM EQUAL TO THE HIGHEST RATE THEN PAYABLE HEREUNDER ON SUCH SECURED
OBLIGATIONS, WHICH INTEREST SHALL CONSTITUTE PART OF THE SECURED OBLIGATIONS.
Section 14.4 Power of Attorney. In addition to the authorizations
granted to Agent under Section 10.13 or under any other provision of this
Agreement or of any other Loan Document, during the continuance of an Event of
Default, Borrower hereby irrevocably designates, makes, constitutes and appoints
Agent (and all Persons designated by Agent from time to time) as Borrower's true
and lawful attorney, and agent in fact, and Agent, or any such Person, may,
without notice to Borrower, and at such time or times as Agent, or any such
Person in its sole discretion may determine, in the name of Borrower, Agent or
the Lenders,
(i) demand payment of the Receivables,
(ii) enforce payment of the Receivables by legal
proceedings or otherwise,
(iii) exercise all of Borrower's rights and
remedies with respect to the collection of Receivables,
(iv) settle, adjust, compromise, extend or renew
any or all of the Receivables,
(v) settle adjust or compromise any legal
proceedings brought to collect the Receivables,
(vi) discharge and release the Receivables or any
of them,
(vii) prepare, file and sign the name of Borrower
on any proof of claim in bankruptcy or any similar document
against any Account Debtor,
(viii) prepare, file and sign the name of Borrower
on any notice of Lien, assignment or satisfaction of Lien, or
similar document in connection with any of the Collateral,
(ix) endorse the name of Borrower upon any chattel
paper, document, instrument, notice, freight ▇▇▇▇, ▇▇▇▇ of
lading or similar document or agreement relating to the
Receivables, the Inventory or any other Collateral,
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(x) use the stationery of Borrower and sign the
name of Borrower to verifications of the Receivables and on
any notice to the Account Debtors,
(xi) open Borrower's mail,
(xii) notify the post office authorities to change
the address for delivery of Borrower's mail to an address
designated by Agent, and
(xiii) use the information recorded on or contained
in any data processing equipment and computer hardware and
software relating to the Receivables, Inventory or other
Collateral to which Borrower has access.
Section 14.5 Miscellaneous Provisions Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of Agent
and the Lenders under this Agreement, the Notes and each of the other
Loan Documents shall be cumulative and not exclusive of any rights or
remedies which it or they would otherwise have. In exercising such
rights and remedies Agent and the Lenders may be selective and no
failure or delay by Agent or any Lender in exercising any right shall
operate as a waiver of it, nor shall any single or partial exercise of
any power or right preclude its other or further exercise or the
exercise of any other power or right.
(b) Waiver of Marshaling. Borrower hereby waives any
right to require any marshaling of assets and any similar right.
(c) Limitation of Liability. Nothing contained in this
Article 14 or elsewhere in this Agreement or in any of the other Loan
Documents shall be construed as requiring or obligating Agent, any
Lender or any agent or designee of Agent or any Lender to make any
demand or to make any inquiry as to the nature or sufficiency of any
payment received by it, or to present or file any claim or notice or
take any action, with respect to any Receivable or any other
Collateral or the monies due or to become due thereunder or in
connection therewith, or to take any steps necessary to preserve any
rights against prior parties, and Agent, the Lenders and their agents
or designees shall have no liability to Borrower for actions taken
pursuant to this Article 14, any other provision of this Agreement or
any of the other Loan Documents so long as Agent or such Lender shall
act reasonably, in good faith and without gross negligence or willful
misconduct.
(d) Appointment of Receiver. In any action under this
Article 14, Agent shall be entitled during the continuance of an Event
of Default to the appointment of a receiver, without notice of any
kind whatsoever, to take possession of all or any portion of the
Collateral and to exercise such power as the court shall confer upon
such receiver.
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Section 14.6 Registration Rights; Private Sales; Etc.
(a) If Agent shall determine to exercise its right to
sell or otherwise dispose of all or any Investment Property owned by
any Loan Party, pursuant to Section 14.2 or any other Loan Document,
such Loan Party agrees that, upon the reasonable request of Agent
(which request may be made by Agent in its sole discretion), such Loan
Party will, at its own expense use its best efforts to: (i) execute
and deliver, and cause each Issuer of any Collateral or other property
contemplated to be sold and the directors and officers thereof to
execute and deliver, all such agreements, documents and instruments,
and do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of Agent, advisable to register such
Collateral or other property to be sold under the provisions of the
Securities Act, and to cause the registration statement relating
thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished and to make all
amendments and supplements thereto and to the related prospectus
which, in the opinion of Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules
and regulations of the Securities and Exchange Commission applicable
thereto; (ii) to qualify such Collateral or other property to be sold
under all applicable state securities or "Blue Sky" laws and to obtain
all necessary Governmental Approvals for the sale of such Collateral
or other property, as requested by Agent; (iii) cause each such Issuer
to make available to its security holders, as soon as practicable, an
earnings statement which will satisfy the provisions of Section 11(a)
of the Securities Act; and (iv) do or cause to be done all such other
acts and things as may be reasonably necessary to make the sale of
such Collateral or other property or any part thereof valid and
binding and in compliance with applicable law. The Loan Parties will
bear all reasonable costs and expenses, including reasonable
attorneys' fees, of carrying out its obligations under this Section
14.6.
(b) Each Loan Party recognizes that Agent may be unable
to effect a public sale of any or all of the Collateral or other
property to be sold by reason of certain prohibitions contained in the
laws of any jurisdiction outside the U.S. or in the Securities Act and
applicable state securities laws but may be compelled to resort to one
or more private sales thereof to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such
Collateral or other property to be sold for their own account for
investment and not with a view to the distribution or resale thereof.
Each Loan Party acknowledges and agrees that any such private sale may
result in prices and other terms less favorable to the seller than if
such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall, to the extent permitted by
law, be deemed to have been made in a commercially reasonable manner.
Unless required by Applicable Law, Agent shall not be under any
obligation to delay a sale of any of the Collateral or other property
to be sold for the period of time necessary to permit the Issuer of
such securities to register such securities under the laws of any
jurisdiction outside the U.S., under the Securities Act or under any
applicable state securities laws, even if such Issuer would agree to
do so.
(c) Each Loan Party further agrees to do or cause to be
done, to the extent that such Loan Party may do so under Applicable
Law, all such other acts and things as may be necessary to make such
sales or resales of any portion or all of the Collateral or other
property to be sold valid and binding and in compliance with any and
all Applicable Laws of
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any and all Governmental Authorities having jurisdiction over any such
sale or sales, all at the Loan Parties' expense. Each Loan Party
further agrees that a breach of any of the covenants contained in this
Section 14.6 will cause irreparable injury to the Credit Parties and
that the Credit Parties have no adequate remedy at law in respect of
such breach and, as a consequence, agrees that each and every covenant
contained in this Section 14.6 shall be specifically enforceable
against such Loan Party and such Loan Party hereby waives and agrees,
to the fullest extent permitted by law, not to assert as a defense
against an action for specific performance of such covenants that (i)
such Loan Party's failure to perform such covenants will not cause
irreparable injury to the Credit Parties or (ii) the Credit Parties
have an adequate remedy at law in respect of such breach. Each Loan
Party further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by the Credit Parties by
reason of a breach of any of the covenants contained in this Section
14.6 and, consequently, agrees that, if such Loan Party shall breach
any of such covenants and the Credit Parties shall ▇▇▇ for damages for
such breach, such Loan Party shall pay to the Credit Parties, as
liquidated damages and not as a penalty, an aggregate amount equal to
the value of the Collateral or other property to be sold on the date
Agent shall demand compliance with this Section 14.6.
(d) EACH LOAN PARTY HEREBY AGREES TO INDEMNIFY, PROTECT
AND SAVE HARMLESS THE CREDIT PARTIES AND ANY CONTROLLING PERSONS
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT FROM AND AGAINST ANY
AND ALL LIABILITIES, SUITS, CLAIMS, COSTS AND EXPENSES (INCLUDING
COUNSEL FEES AND DISBURSEMENTS) ARISING UNDER THE SECURITIES ACT, THE
SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, ANY APPLICABLE STATE
SECURITIES STATUTE, OR AT COMMON LAW, OR PURSUANT TO ANY OTHER
APPLICABLE LAW IN CONNECTION WITH THE ABOVE REFERENCED REGISTRATION,
INSOFAR AS SUCH LIABILITIES, SUITS, CLAIMS, COSTS AND EXPENSES ARISE
OUT OF, OR ARE BASED UPON, ANY UNTRUE STATEMENT OR ALLEGED UNTRUE
STATEMENT OF A MATERIAL FACT CONTAINED IN ANY REGISTRATION STATEMENT
RELATING TO ANY PART OF THE COLLATERAL OR OTHER PROPERTY TO BE SOLD,
OR SUCH REGISTRATION STATEMENT AS AMENDED OR SUPPLEMENTED, OR ARISES
OUT OF, OR IS BASED UPON, THE OMISSION OR ALLEGED OMISSION TO STATE
THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO
MAKE THE STATEMENTS THEREIN NOT MISLEADING; PROVIDED, THAT SUCH LOAN
PARTY SHALL NOT BE LIABLE IN ANY SUCH CASE TO THE EXTENT THAT ANY SUCH
LIABILITIES, SUITS, CLAIMS, COSTS AND EXPENSES ARISE OUT OF, OR ARE
BASED UPON, ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OR
OMISSION OR ALLEGED OMISSION MADE IN SUCH REGISTRATION STATEMENT OR
SUCH REGISTRATION STATEMENT AS AMENDED OR SUPPLEMENTED, IN RELIANCE
UPON AND IN CONFORMITY WITH WRITTEN INFORMATION FURNISHED TO SUCH LOAN
PARTY BY ANY CREDIT PARTY SPECIFICALLY FOR INCLUSION THEREIN. THE
FOREGOING INDEMNITY AGREEMENT IS IN ADDITION TO ANY INDEBTEDNESS,
LIABILITY OR OBLIGATION THAT SUCH LOAN PARTY MAY OTHERWISE HAVE TO ANY
CREDIT PARTY OR ANY SUCH CONTROLLING PERSON.
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ARTICLE 15
Assignments
Section 15.1 Assignments and Participations.
(a) Each Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its
Loans, its Notes and its Commitment); provided, however, that:
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender's rights
and obligations under this Agreement, any such partial
assignment shall be in an amount at least equal to Five
Million Dollars ($5,000,000) or an integral multiple of One
Million Dollars ($1,000,000) in excess thereof;
(iii) each such assignment by a Lender shall be of
a constant, and not varying, percentage of all of its rights
and obligations under this Agreement and the Notes; and
(iv) the parties to such assignment shall execute
and deliver to Agent for its acceptance an Assignment and
Acceptance in the form of Exhibit "D" hereto, together with
any Notes subject to such assignment and a processing fee of
$3,500.
Upon execution, delivery and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to
the extent of such assignment, have the obligations, rights and
benefits of a Lender hereunder and the assigning Lender shall, to the
extent of such assignment, relinquish its rights and be released from
its obligations under this Agreement. Upon the consummation of any
assignment pursuant to this Section, the assignor, Agent and Borrower
shall make appropriate arrangements so that, if required, new Notes
are issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the U.S., or a state thereof, it shall
deliver to Borrower and Agent certification as to exemption from
deduction or withholding of Taxes in accordance with Section 6.6.
(b) Agent shall maintain at its address referred to in
Section 17.1 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount
of the Loans owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Agent and the Lenders
may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register
shall be
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available for inspection by Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance
executed by the parties thereto, together with any Note subject to
such Assignment and Acceptance and payment of the processing fee,
Agent shall, if such Assignment and Acceptance has been completed and
is in substantially the form of Exhibit "D" hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
(d) Each Lender may sell participations to one or more
Persons in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and its
Loans); provided, however, that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participant shall be entitled to the
benefit of the yield protection provisions contained in Article 6 and
the right of set-off contained in Section 17.4, and (iv) Borrower
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of Borrower relating to its Loans and its Notes and to
approve any amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications or waivers decreasing
the amount of principal of or the rate at which interest is payable on
such Loans or Notes, extending any scheduled principal payment date or
date fixed for the payment of interest on such Loans or Notes, or
extending its Commitment).
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank. No such assignment
shall release the assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning
Borrower or any of its Subsidiaries in the possession of such Lender
from time to time to assignees and participants (including prospective
assignees and participants).
Section 15.2 Representation of Lenders. Each Lender hereby
represents that it will make each Loan hereunder as a commercial loan for its
own account in the ordinary course of its business; provided, however, that
subject to Section 15.1 hereof, the disposition of the Notes or other evidence
of the Secured Obligations held by any Lender shall at all times be within its
exclusive control.
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ARTICLE 16
Agent
Section 16.1 Appointment, Powers, and Immunities. Each Lender and
L/C Issuer hereby irrevocably appoints and authorizes Agent to act as its agent
under this Agreement and the other Loan Documents with such powers and
discretion as are specifically delegated to Agent by the terms of this Agreement
and the other Loan Documents, together with such other powers as are reasonably
incidental thereto. Agent (which term as used in this sentence and in Section
16.5 and the first sentence of Section 16.6 hereof shall include its Affiliates,
and its own and its Affiliates', officers, directors, employees and agents):
(a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee
or fiduciary for any Lender or L/C Issuer;
(b) shall not be responsible to the Lenders or L/C Issuer
for any recital, statement, representation or warranty (whether
written or oral) made in or in connection with any Loan Document or
any certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
any Loan Document, or any other document referred to or provided for
therein or for any failure by any Loan Party or any other Person to
perform any of its obligations thereunder;
(c) shall not be responsible for or have any duty to
ascertain, inquire into or verify the performance or observance of any
covenants or agreements by any Loan Party or the satisfaction of any
condition or to inspect the property (including the books and records)
of any Loan Party or any of its Subsidiaries or Affiliates;
(d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or
omitted to be taken by it under or in connection with any Loan
Document, except for its own gross negligence or willful misconduct.
Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected
by it with reasonable care.
Section 16.2 Reliance by Agent. Agent shall be entitled to rely
upon any certification, notice, instrument, writing or other communication
(including, without limitation, any communication by telephone or telecopy)
believed by it to be genuine and correct and to have been signed, sent or made
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel (including counsel for any Loan Party), independent accountants
and other experts selected by Agent. Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and until Agent
receives and accepts an Assignment and Acceptance executed in accordance with
Section 15.1 hereof. As to any matters not expressly provided for by this
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Agreement, Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of the Required Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that Agent shall not be required to take any action
that exposes Agent to personal liability or that is contrary to any Loan
Document or Applicable Law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking any such action.
Section 16.3 Defaults. Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default or Event of Default unless
Agent has received written notice from a Lender or Borrower specifying such
Default or Event of Default and stating that such notice is a "Notice of
Default." In the event that Agent receives such a notice of the occurrence of
a Default or Event of Default, Agent shall give prompt notice thereof to the
Lenders. Agent shall (subject to Section 16.2 hereof) take such action with
respect to such Default or Event of Default as shall reasonably be directed by
the Required Lenders, provided that, unless and until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
Section 16.4 Rights as Lender. With respect to its Commitment and
the Loans made by it, NationsBank (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include Agent in its individual capacity. NationsBank (and any
successor acting as Agent) and its Affiliates may (without having to account
therefor to any Lender) accept deposits from, lend money to, make investments
in, provide services to and generally engage in any kind of lending, trust or
other business with any Loan Party or any of its Subsidiaries or Affiliates as
if it were not acting as Agent, and NationsBank (and any successor acting as
Agent) and its Affiliates may accept fees and other consideration from any Loan
Party or any of its Subsidiaries or Affiliates for services in connection with
this Agreement or otherwise without having to account for the same to the other
Lenders.
Section 16.5 Indemnification. THE LENDERS AGREE TO INDEMNIFY
AGENT (TO THE EXTENT NOT REIMBURSED UNDER SECTION 17.2 HEREOF, BUT WITHOUT
LIMITING THE OBLIGATIONS OF BORROWER UNDER SUCH SECTION) RATABLY IN ACCORDANCE
WITH THEIR RESPECTIVE COMMITMENTS, FOR ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES) OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER
THAT MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST AGENT (INCLUDING BY ANY
LENDER) IN ANY WAY RELATING TO OR ARISING OUT OF ANY LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY OR ANY ACTION TAKEN OR OMITTED BY AGENT UNDER
ANY LOAN DOCUMENT (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF
AGENT); PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE
EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
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PERSON TO BE INDEMNIFIED. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER
AGREES TO REIMBURSE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY
COSTS OR EXPENSES PAYABLE BY BORROWER UNDER SECTION 17.2, TO THE EXTENT THAT
AGENT IS NOT PROMPTLY REIMBURSED FOR SUCH COSTS AND EXPENSES BY BORROWER. THE
AGREEMENTS CONTAINED IN THIS SECTION SHALL SURVIVE PAYMENT IN FULL OF THE LOANS
AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.
Section 16.6 Non-Reliance on Agent and Other Lenders. Each Lender
agrees that it has, independently and without reliance on Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Loan Parties and their
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under the Loan Documents. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by Agent
hereunder, Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the affairs, financial condition
or business of any Loan Party or any of its Subsidiaries or Affiliates that may
come into the possession of Agent or any of its Affiliates.
Section 16.7 Resignation of Agent. Agent may resign at any time
by giving notice thereof to the Lenders and Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent which shall be a
commercial bank organized under the laws of the U.S. having combined capital and
surplus of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article 16 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
ARTICLE 17
Miscellaneous
Section 17.1 Notices.
(a) Method of Communication. Except as specifically
provided in this Agreement or in any of the other Loan Documents, all
notices and the communications hereunder and thereunder shall be in
writing or by telephone, subsequently confirmed in writing. Notices
in writing shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by overnight courier, telex or
facsimile transmission and shall be deemed received in the case of
personal delivery, when delivered, in the case of mailing, when
receipted for, in the
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case of overnight delivery, on the next Business Day after delivery to
the courier, and in the case of telex and facsimile transmission, upon
transmittal, provided that in the case of notices to Agent, notice
shall be deemed to have been given only when such notice is actually
received by Agent. A telephonic notice to Agent, as understood by
Agent, will be deemed to be the controlling and proper notice in the
event of a discrepancy with or failure to receive a confirming written
notice.
(b) Addresses for Notices. Notices to any party shall be
sent to it at the following addresses, or any other address of which
all the other parties are notified in writing
If to Borrower:
The GNI Group Delivery Address:
▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇
Attn: Chief Financial Officer ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇ Attn: Chief Financial Officer
If to Agent:
Delivery Address:
NationsBank, N.A. NationsBank, N.A.
P. O. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Credit/Regional Manager Attn: Business Credit/Regional Manager
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Lender: At the address of such Lender set forth on the
signature pages hereof.
(c) Principal Office. Agent hereby designates its office
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or any
subsequent office which shall have been specified for such purpose by
written notice to Borrower, as the office to which payments due are to
be made and at which Loans will be disbursed.
Section 17.2 Expenses. Borrower agrees to pay or reimburse on
demand all costs and expenses incurred by Agent or any Lender, including,
without limitation, the reasonable fees and disbursements of counsel, in
connection with the following:
(a) the negotiation, preparation, execution, delivery,
administration, enforcement and termination of this Agreement and each
of the other Loan Documents, whenever the same shall be executed and
delivered, including, without limitation, the following:
(i) the out-of-pocket costs and expenses incurred
in connection with the administration and interpretation of
this Agreement and the other Loan Documents;
(ii) the costs and expenses of appraisals of the
Collateral;
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(iii) the costs and expenses of lien and title
searches and title insurance;
(iv) the costs and expenses of environmental
reports with respect to the Real Estate; and
(v) taxes, fees and other charges for recording
the Mortgages, filing the Financing Statements and
continuations and the costs and expenses of taking other
actions to perfect, protect and continue the Security
Interests;
provided, however, that Borrower shall not be required to pay the
expenses of any Person which becomes a Lender more than ninety (90)
days after the Effective Date incurred in connection with such
Person's so becoming a Lender;
(b) the preparation, execution and delivery of any
waiver, amendment, supplement or consent by Agent and the Lenders
relating to this Agreement or any of the Loan Documents;
(c) sums paid or incurred to pay any amount or take any
action required of Borrower under the Loan Documents that Borrower
fails to pay or take;
(d) costs of inspections and verifications of the
Collateral, including, without limitation, standard per diem fees
charged by Agent (currently Six Hundred Fifty Dollars ($650) per
examiner, per diem, per exam, plus out-of-pocket expenses) or the
Lenders, travel, lodging and meals for inspections of the Collateral
and Borrower's operations and books and records by Agent's and/or the
Lenders' agents up to four (4) times per year and whenever an Event of
Default exists;
(e) costs and expenses of forwarding loan proceeds,
collecting checks and other items of payment, and establishing and
maintaining each Disbursement Account, Agency Account and Lockbox;
(f) costs and expenses of preserving and protecting the
Collateral;
(g) consulting, after the occurrence of a Default, with
one or more Persons, including appraisers, accountants and lawyers,
concerning the value of any Collateral for the Secured Obligations or
related to the nature, scope or value of any right or remedy of Agent
or any Lender hereunder or under any of the Loan Documents, including
any review of factual matters in connection therewith, which expenses
shall include the fees and disbursements of such Persons;
(h) reasonable costs and expenses paid or incurred to
obtain payment of the Secured Obligations, enforce the Security
Interests, sell or otherwise realize upon the Collateral, and
otherwise enforce the provisions of the Loan Documents, or to
prosecute or defend any claim in any way arising out of, related to or
connected with this Agreement or any of the other Loan Documents,
which expenses shall include the reasonable fees and disbursements of
counsel and of experts and other consultants retained by Agent or any
Lender; and
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(i) all reasonable attorney's fees and expenses
(including, without limitation, the cost of internal counsel) incurred
in connection with any of the foregoing.
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by Borrower. Borrower hereby
authorizes Agent and the Lenders to debit Borrower's Loan Accounts (by
increasing the principal amount of the Revolving Credit Loan) in the amount of
any such costs and expenses owed by Borrower when due. Without prejudice to
the survival of any other agreement of Borrower hereunder, the agreements and
obligations of Borrower contained in this Section 17.2 shall survive the
payment in full of the Loans and all other amounts payable under this
Agreement.
Section 17.3 Stamp and Other Taxes. Borrower will pay any and all
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify Agent and the Lenders against any and all liabilities with respect to
or resulting from any delay in the payment or omission to pay any such taxes,
fees or charges, which may be payable or determined to be payable in connection
with the execution, delivery, performance or enforcement of this Agreement and
any of the Loan Documents or the perfection of any rights or security interest
thereunder, including, without limitation, the Security Interest.
Section 17.4 Right of Set-Off; Adjustments.
(a) Upon the occurrence and during the continuance of any
Event of Default, each Lender (and each of its Affiliates) is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, to set-off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and
other Indebtedness at any time owing by such Lender (or any of its
Affiliates) to or for the credit or the account of Borrower against
any and all of the obligations of Borrower now or hereafter existing
under this Agreement and the Notes held by such Lender, irrespective
of whether such Lender shall have made any demand under this Agreement
or such Notes and although such obligations may be unmatured. Each
Lender agrees promptly to notify Borrower after any such set-off and
application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section are in
addition to other rights and remedies (including, without limitation,
other rights of set-off) that such Lender may have.
(b) If any Lender (a "Benefitted Lender") shall at any
time receive any payment of all or part of the Loans owing to it, or
interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off or otherwise), in a
greater proportion than any such payment to or Collateral received by
any other Lender, if any, in respect of such other Lender's Loans
owing to it, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in
such portion of each such other Lender's Loans owing to it, or shall
provide such other Lenders with the benefits of any such Collateral,
or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to
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share the excess payment or benefits of such Collateral or proceeds
ratably with each of the Lenders; provided, however, that if all or
any portion of such excess payment or benefit is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery,
but without interest. Borrower agrees that any Lender so purchasing a
participation from a Lender pursuant to this Section 17.4 may, to the
fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as
fully as if such Person were the direct creditor of Borrower in the
amount of such participation.
Section 17.5 Litigation; Waiver of Trial by Jury. EACH OF
BORROWER, AGENT AND THE LENDERS HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY
COURT IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST BORROWER, AGENT OR ANY
LENDER ARISING OUT OF THIS AGREEMENT, THE COLLATERAL OR ANY ASSIGNMENT THEREOF
OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN BORROWER AND
AGENT OR ANY LENDER OF ANY KIND OR NATURE. EACH SUCH PARTY ACKNOWLEDGES THAT
SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE
RIGHTS AND BENEFITS WAIVED HEREBY AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF
ITS CHOOSING. BORROWER, AGENT AND THE LENDERS HEREBY AGREE THAT THE FEDERAL
COURT OF THE NORTHERN DISTRICT OF TEXAS OR, AT THE OPTION OF AGENT OR ANY
LENDER, ANY COURT IN WHICH AGENT OR SUCH LENDER SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY, SHALL HAVE NONEXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN BORROWER AND AGENT OR SUCH LENDER, PERTAINING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR TO ANY
MATTER ARISING THEREFROM. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS,
HEREBY WAIVING PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS
OR PAPERS ISSUED THEREIN AND AGREEING THAT SERVICE OF SUCH SUMMONS AND
COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO BORROWER AT THE ADDRESS OF BORROWER SET FORTH IN SECTION
17.1. SHOULD BORROWER FAIL TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS
OR PAPERS SO SERVED WITHIN THIRTY (30) DAYS AFTER THE MAILING THEREOF, IT SHALL
BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS
DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE
NONEXCLUSIVE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO
PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING
OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE THE SAME IN ANY APPROPRIATE
JURISDICTION.
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Section 17.6 Consent to Advertising and Publicity. With the prior
written consent of Borrower, which consent shall not be unreasonably withheld,
Agent, on behalf of the Lenders, may issue and disseminate to the public
information describing the credit accommodation entered into pursuant to this
Agreement, including the name and address of Borrower, the amount, interest
rate, maturity, collateral and a general description of Borrower's business.
Section 17.7 Reversal of Payments. Agent and each Lender shall
have the continuing and exclusive right to apply, reverse and re-apply any and
all payments to any portion of the Secured Obligations in a manner consistent
with the terms of this Agreement. To the extent Borrower makes a payment or
payments to Agent, for the account of the Lenders, or any Lender receives any
payment or proceeds of the Collateral for Borrower's benefit, which payment(s)
or proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the Secured Obligations or part thereof intended to be satisfied shall
be revived and continued in full force and effect, as if such payment or
proceeds had not been received by Agent or such Lender.
Section 17.8 Injunctive Relief. Borrower recognizes that, in the
event Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Agent and the Lenders; therefore, Borrower agrees that if any Event of
Default shall have occurred and be continuing, Agent and the Lenders, if Agent
or any Lender so requests, shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damages.
Section 17.9 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by
Borrower to determine whether it is in compliance with any covenant contained
herein, shall, unless this Agreement otherwise provides or unless Required
Lenders shall otherwise consent in writing, be performed in accordance with
GAAP.
Section 17.10 Amendments.
(a) Except as set forth in subsection (b) below, any
term, covenant, agreement or condition of this Agreement or any of the
other Loan Documents may be amended or waived, and any departure
therefrom may be consented to by the Required Lenders, if, but only
if, such amendment, waiver or consent is in writing signed by the
Required Lenders and, in the case of an amendment (other than an
amendment described in Section 17.10(d)), by Borrower, and in any such
event, the failure to observe, perform or discharge any such term,
covenant, agreement or condition (whether such amendment is executed
or such waiver or consent is given before or after such failure) shall
not be construed as a breach of such term, covenant, agreement or
condition or as a Default or an Event of Default. Unless otherwise
specified in such waiver or consent, a waiver or consent given
hereunder shall be effective only in the specific instance and for the
specific purpose for which given. In the event that any such waiver
or amendment is requested by Borrower, Agent and the Lenders may
require and charge a fee in connection therewith and consideration
thereof in such amount as shall be determined by Agent and the
Required Lenders in their discretion.
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(b) Except as otherwise set forth in this Agreement,
without the prior unanimous written consent of the Lenders,
(i) no amendment, consent or waiver shall affect
the amount or extend the time of the obligation of the Lenders
to make Loans or extend the originally scheduled time or times
of payment of the principal of any Loan or alter the time or
times of payment of interest on any Loan or the amount of the
principal thereof or the rate of interest thereon or the
amount of any commitment fee payable hereunder or permit any
subordination of the principal or interest on such Loan,
permit the subordination of the Security Interests in any
material Collateral or amend the provisions of Article 14 or
of this Section 17.10(b),
(ii) no material Collateral shall be released by
Agent other than as specifically permitted in this Agreement,
(iii) except to the extent expressly provided
herein, the definition of "Borrowing Base" shall not be
amended,
(iv) the definition of "Required Lenders" shall
not be amended; and
(v) the Termination Date may not be amended;
provided, however, that anything herein to the contrary
notwithstanding, Required Lenders shall have the right to waive any
Default or Event of Default and the consequences hereunder of such
Default or Event of Default and shall have the right to enter into an
agreement with Borrower providing for the forbearance from the
exercise of any remedies provided hereunder or under the other Loan
Documents without waiving any Default or Event of Default.
(c) The making of Loans hereunder by the Lenders during
the existence of a Default or Event of Default shall not be deemed to
constitute a waiver of such Default or Event of Default.
(d) Notwithstanding any provision of this Agreement or
the other Loan Documents to the contrary, no consent, written or
otherwise, of Borrower shall be necessary or required in connection
with any amendment to Article 16 or Section 5.10, and any amendment to
such provisions shall be effected solely by and among Agent and the
Lenders, provided that no such amendment shall impose any obligation
on Borrower.
Section 17.11 Assignment. All the provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Borrower may not assign or
transfer any of its rights under this Agreement.
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Section 17.12 Performance of Borrower's Duties.
(a) Borrower's obligations under this Agreement and each
of the Loan Documents shall be performed by Borrower at its sole cost
and expense.
(b) If Borrower shall fail to do any act or thing which
it has covenanted to do under this Agreement or any of the other Loan
Documents, Agent, on behalf of the Lenders, may (but shall not be
obligated to) do the same or cause it to be done either in the name of
Agent or the Lenders or in the name and on behalf of Borrower, and
Borrower hereby irrevocably authorizes Agent so to act.
Section 17.13 Indemnification.
(a) BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS AGENT
AND EACH LENDER AND EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND ADVISORS (EACH, AN
"INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES,
LOSSES, LIABILITIES, COSTS AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES) THAT MAY BE
INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN
EACH CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF
(INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY INVESTIGATION,
LITIGATION OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION
THEREWITH) THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED
HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE LOANS
(INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE
INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS,
LIABILITY, COST OR EXPENSE IS FOUND IN A FINAL, NON- APPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM
SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN
THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH
THE INDEMNITY IN THIS SECTION 17.13 APPLIES, SUCH INDEMNITY SHALL BE
EFFECTIVE WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING
IS BROUGHT BY BORROWER, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN
INDEMNIFIED PARTY OR ANY OTHER PERSON OR ANY INDEMNIFIED PARTY IS
OTHERWISE A PARTY THERETO AND WHETHER OR NOT THE TRANSACTIONS
CONTEMPLATED HEREBY ARE CONSUMMATED. BORROWER AGREES NOT TO ASSERT
ANY CLAIM AGAINST AGENT, ANY LENDER, ANY OF THEIR AFFILIATES OR ANY OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS AND
ADVISERS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING
TO THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR
THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE LOANS.
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(b) IN ADDITION TO THE INDEMNIFICATION PROVIDED BY (A)
ABOVE, EACH LOAN PARTY AGREES TO INDEMNIFY AND HOLD HARMLESS AGENT,
EACH LENDER AND EACH OTHER INDEMNIFIED PARTY FROM AND AGAINST ANY AND
ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES, CHARGES,
ADMINISTRATIVE AND JUDICIAL PROCEEDINGS, AND ORDERS, JUDGMENTS,
REMEDIAL ACTIONS, REQUIREMENTS, AND ENFORCEMENT ACTIONS OF ANY KIND,
AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES) ARISING
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, OUT OF (A) THE PRESENCE
OF ANY CONTAMINANT ON, UNDER, OR FROM ITS PROPERTY, WHETHER PRIOR TO
OR DURING THE TERM HEREOF OR (B) ANY ACTIVITY CARRIED ON OR UNDERTAKEN
ON OR OFF ITS REAL ESTATE, WHETHER PRIOR TO OR DURING THE TERM HEREOF,
AND WHETHER BY SUCH LOAN PARTY OR ANY OTHER SUBSIDIARY OR ANY
PREDECESSOR IN TITLE OR ANY EMPLOYEES, AGENTS, CONTRACTORS, OR
SUBCONTRACTORS OF SUCH LOAN PARTY OR ANY OTHER SUBSIDIARY OR ANY
PREDECESSOR IN TITLE, OR ANY THIRD PERSONS AT ANY TIME OCCUPYING OR
PRESENT ON SUCH REAL ESTATE, IN CONNECTION WITH THE HANDLING,
TREATMENT, REMOVAL, STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION,
OR DISPOSAL OF ANY CONTAMINANT AT ANY TIME LOCATED OR PRESENT ON OR
UNDER SUCH REAL ESTATE AND, INCLUDING, WITHOUT LIMITATION, ANY OF THE
FOREGOING ARISING FROM NEGLIGENCE ON THE PART OF AGENT OR THE LENDERS,
WHETHER SOLE OR CONCURRENT; WITH THE FOREGOING INDEMNITY FURTHER
APPLYING TO ANY RESIDUAL CONTAMINATION ON OR UNDER THE REAL ESTATE OF
EACH LOAN PARTY OR ANY OTHER SUBSIDIARY OR ANY THIRD PARTY PROPERTY,
OR AFFECTING ANY NATURAL RESOURCES, AND TO ANY CONTAMINATION OF ANY
REAL ESTATE OR NATURAL RESOURCES ARISING IN CONNECTION WITH THE
GENERATION, USE, HANDLING, STORAGE, TRANSPORTATION, OR DISPOSAL OF ANY
CONTAMINANT, IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE OR
WILL BE UNDERTAKEN IN ACCORDANCE WITH APPLICABLE GOVERNMENTAL
REQUIREMENTS AND SURVIVING SATISFACTION OF ALL SECURED OBLIGATIONS AND
THE TERMINATION OF THIS AGREEMENT, UNLESS ALL SUCH OBLIGATIONS HAVE
BEEN SATISFIED WHOLLY IN CASH FROM THE LOAN PARTIES AND NOT BY WAY OF
REALIZATION AGAINST ANY COLLATERAL OR THE CONVEYANCE OF ANY REAL
ESTATE OF ANY LOAN PARTY IN LIEU THEREOF, PROVIDED THAT THE CLAIMS AND
OTHER ACTIONS OF ANY KIND AGAINST AGENT OR THE LENDERS WHICH GIVE RISE
TO SUCH INDEMNITY ARE NOT BARRED BY THE APPLICABLE STATUTE OF
LIMITATIONS AT THE TIME SUCH CLAIMS OR ACTIONS ARE INSTITUTED AND SUCH
INDEMNITY
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130
SHALL NOT RELATE TO CLAIMS ARISING FROM GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF AGENT OR THE LENDERS OR EXTEND TO ANY ACT OR OMISSION BY
AGENT OR THE LENDERS WITH RESPECT TO THE RELEVANT REAL ESTATE
SUBSEQUENT TO AGENT OR THE LENDERS BECOMING THE OWNER OF ANY REAL
ESTATE PREVIOUSLY OWNED BY ANY LOAN PARTY OR ANY OTHER SUBSIDIARY AND
WITH RESPECT TO SUCH REAL ESTATE SUCH CLAIM, LOSS, DAMAGE, LIABILITY,
FINE, PENALTY, CHARGE, PROCEEDING, ORDER, JUDGMENT, ACTION, OR
REQUIREMENT FIRST ARISES SUBSEQUENT TO THE ACQUISITION OF TITLE
THERETO BY AGENT OR THE LENDERS.
(c) WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER
AGREEMENT OF BORROWER HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF
BORROWER CONTAINED IN THIS SECTION 17.13 SHALL SURVIVE THE PAYMENT IN
FULL OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.
Section 17.14 All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to Agent and the Lenders and any
Persons designated by Agent or the Lenders pursuant to any provisions of this
Agreement or any of the other Loan Documents shall be deemed coupled with an
interest and shall be irrevocable so long as any of the Secured Obligations
remain unpaid or unsatisfied.
Section 17.15 Survival. Notwithstanding any termination of this
Agreement,
(a) until all Secured Obligations have been irrevocably
paid in full or otherwise satisfied, Agent, for the benefit of the
Lenders, shall retain its Security Interest and shall retain all
rights under this Agreement and each of the Security Documents with
respect to such Collateral as fully as though this Agreement had not
been terminated,
(b) the indemnities to which Agent and the Lenders are
entitled under the provisions of this Article 17 and any other
provision of this Agreement and the other Loan Documents shall
continue in full force and effect and shall protect Agent and the
Lenders against events arising after such termination as well as
before, and
(c) in connection with the termination of this Agreement
and the release and termination of the Security Interests, Agent, on
behalf of itself as agent and the Lenders, may require such assurances
and indemnities as it shall reasonably deem necessary or appropriate
to protect Agent and the Lenders against loss on account of such
release and termination, including, without limitation, with respect
to credits previously applied to the Secured Obligations that may
subsequently be reversed or revoked.
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131
Section 17.16 Titles and Captions. Titles and captions of
Articles, Sections and subsections in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.
Section 17.17 Severability of Provisions. Any provision of this
Agreement or any Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 17.18 Governing Law. THIS AGREEMENT AND ALL OTHER LOAN
DOCUMENTS (UNLESS ANY SUCH OTHER LOAN DOCUMENT SPECIFICALLY PROVIDES OTHERWISE)
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS, PROVIDED THAT TO THE EXTENT FEDERAL LAW WOULD ALLOW A HIGHER RATE OF
INTEREST THAN WOULD BE ALLOWED BY THE LAWS OF THE STATE OF TEXAS, THEN WITH
RESPECT TO THE PROVISIONS OF ANY LAWS WHICH PURPORT TO LIMIT THE AMOUNT OF
INTEREST THAT MAY BE CONTRACTED FOR, CHARGED OR RECEIVED IN CONNECTION WITH ANY
OF THE SECURED OBLIGATIONS, SUCH FEDERAL LAW SHALL APPLY.
Section 17.19 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
Section 17.20 Reproduction of Documents. This Agreement, each of
the Loan Documents and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by Agent or any Lender, and (c) financial
statements, certificates and other information previously or hereafter furnished
to Agent or any Lender, may be reproduced by Agent or such Lender by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and such Person may destroy any original document so produced.
Each party hereto stipulates that, to the extent permitted by Applicable Law,
any such reproduction shall be as admissible in evidence as the original itself
in any judicial or administrative proceeding (whether or not the original shall
be in existence and whether or not such reproduction was made by Agent or such
Lender in the regular course of business), and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
Section 17.21 Term of Agreement. This Agreement shall remain in
effect from the Agreement Date through the Termination Date and thereafter until
all Secured Obligations shall have been irrevocably paid and satisfied in full.
No termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
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132
Section 17.22 Confidentiality. Each Lender agrees to keep
confidential any information obtained by it from any Loan Party or its agents
or representatives pursuant hereto and the other Loan Documents identified as
confidential in writing at the time of delivery in accordance with such
Lender's customary practices and agrees that it will only use such information
in connection with the transactions contemplated by this Agreement and not
disclose any of such information other than (a) to such Lender's officers,
directors, employees, representatives, attorneys, agents or affiliates who are
advised of the confidential nature of such information, (b) to the extent such
information presently is or hereafter becomes available to such Lender on a
non-confidential basis from any source or as such information that is in the
public domain at the time of disclosure, (c) to the extent disclosure is
required by law, regulation, subpoena or judicial order or process (provided
that notice of such requirement or order shall be promptly furnished to
Borrower unless such notice is legally prohibited) or requested or required by
bank regulators or auditors or any administrative body, commission or other
Governmental Authority to whose jurisdiction such Lender may be subject, (d) to
assignees or participants or potential assignees or participants or to
professional advisors or direct or indirect contractual counterparties in swap
agreements provided in each case such Person agrees to be bound by the
provisions of this Section 17.22, (e) to the extent required in connection with
any litigation between any Loan Party and any Lender with respect to the Loans
or this Agreement and the other Loan Documents, (f) to rating agencies, their
employees, representatives, attorneys, agents or affiliates who are advised of
the confidential nature of such information and (g) with Borrower's prior
written consent.
Section 17.23 Pro-Rata Participation.
(a) Each Lender agrees that
(i) if it or any of its Affiliates shall exercise
any right of counterclaim, set-off, banker's lien or similar
right, or if under any applicable bankruptcy, insolvency or
other similar law it receives a secured claim the security for
which is a debt owed by it to Borrower, it shall apportion the
amount thereof, on a pro rata basis, between (A) amounts at
the time owed to it by Borrower under this Agreement, and (B)
amounts otherwise owed to it by Borrower, and
(ii) if, as a result of the exercise of a right or
the receipt of a secured claim and the apportionment thereof
described in clause (i) of this Section 17.23(a) or otherwise,
it shall receive payment of a proportion of the aggregate
amount of principal and interest due with respect to the
Secured Obligations owed to it under this Agreement greater
than the proportion of such amounts then received by any other
Lender, such Lender shall purchase a participation (which it
shall be deemed to have purchased simultaneously upon the
receipt of such payment) in the Secured Obligations then held
by the other Lenders so that all such recoveries of principal
and interest with respect to all Secured Obligations owed to
each Lender shall be pro rata on the basis of its respective
amount of the Secured Obligations owed to all Lenders,
provided that if all or part of such proportionately greater
payment received by such purchasing Lender is thereafter
recovered by or on behalf of Borrower from such Lender, such
purchase shall be rescinded and the purchase price paid for
such participation shall be returned to such Lender to the
extent of such recovery, but without interest.
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133
(b) Each Lender which receives such a secured claim shall
exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section
17.23 to share in the benefits of any recovery on such secured claim.
(c) Borrower expressly consents to the foregoing
arrangements and agrees that any holder of a participation in any
Secured Obligation so purchased or otherwise acquired may exercise any
and all rights of banker's lien, set-off or counterclaim with respect
to any and all monies owing by Borrower to such holder as fully as if
such holder were a holder of such Secured Obligation in the amount of
the participation held by such holder.
Section 17.24 Interest Limitation. In no contingency or event
whatsoever shall the amount of interest under the Loan Documents paid by
Borrower, received by the Lenders, agreed to be paid by Borrower, or requested
or demanded to be paid by the Lenders, exceed the Maximum Rate. In the event
any such sums paid to Lender by Borrower would exceed the Maximum Rate, Lender
shall automatically apply such excess to any unpaid amount of the Secured
Obligations or, if the amount of such excess exceeds said unpaid amount, such
excess shall be paid to Borrower. All sums paid, or agreed to be paid, by
Borrower which are or hereafter may be construed to be compensation for the use,
forbearance or detention of money shall be amortized, prorated, spread and
allocated in respect of the Secured Obligations throughout the full term of this
Agreement until the Secured Obligations are paid in full. Notwithstanding any
provisions contained in the Loan Documents, or in any Notes or other related
documents executed pursuant hereto, the Lenders shall never be entitled to
receive, collect or apply as interest any amount in excess of the Maximum Rate
and, in the event any Lender ever receives, collects or applies any amount in
respect of Borrower that otherwise would be in excess of the Maximum Rate, such
amount shall automatically be deemed to be applied in reduction of the unpaid
principal balance of the Secured Obligations and, if such principal balance is
paid in full, any remaining excess shall forthwith be paid to Borrower. In
determining whether or not the interest paid or payable under any specific
contingency exceeds the Maximum Rate, Borrower and Lender shall, to the maximum
extent permitted under applicable law, (i) characterize any non-principal
payment as a standby fee, commitment fee, prepayment charge, delinquency charge
or reimbursement for a third-party expense rather than as interest, (ii) exclude
voluntary prepayments and the effect thereof, and (iii) amortize, prorate,
allocate and spread in equal parts throughout the entire period during which the
Secured Obligations were outstanding the total amount of interest at any time
contracted for, charged or received. Nothing herein contained shall be
construed or so operate as to require Borrower to pay any interest, fees, costs
or charges greater than is permitted by Applicable Law. Subject to the
foregoing, Borrower hereby agrees that the actual effective rate of interest
from time to time existing with respect to Loans made by the Lenders to
Borrower, including all amounts agreed to by Borrower or charged or received by
the Lenders, which may be deemed to be interest under Applicable Law, shall be
deemed to be a rate which is agreed to and stipulated by Borrower and the
Lenders in accordance with Applicable Law. Borrower, Agent and the Lenders
hereby agree that the provisions of Chapter 346 of the Texas Finance Code, which
replaced Tex. Rev. Civ. Stat. ▇▇▇. Art. 5069-15.01 et seq. (▇▇▇▇▇▇ 1987)
(regulating certain revolving credit loans and revolving tri-party accounts),
shall not apply to this Agreement or any of the other Loan Documents.
127
134
Section 17.25 Judgment Currency. The payment obligations of any
Loan Party under this Agreement or any of the other Loan Documents shall not be
discharged by an amount paid in any currency other than Dollars, or in any other
place than required by this Agreement or any such Loan Documents, to the extent
that the amount so paid on conversion to Dollars and transferred to Agent in
Dallas, Dallas County, Texas, U.S., under normal banking procedures does not
yield the amount of Dollars due under this Agreement or any such other Loan
Document. If for the purpose of obtaining judgment in any court it is necessary
to convert a sum due under this Agreement or any of the other Loan Documents in
any currency to another currency (the "Other Currency"), then the rate of
exchange which shall be applied shall be the Spot Rate, determined as of the
Business Day preceding the date on which such judgment is signed by the judge or
other Person acting on behalf of such court. The payment obligations of any
Loan Party in respect of any such amount due by it to any Credit Party pursuant
to such judgment, notwithstanding the rate of exchange actually applied in
rendering such judgment, shall be discharged only to the extent that on the
Business Day following receipt by such Credit Party of any such sum in the Other
Currency pursuant to such judgment, such Credit Party in accordance with normal
banking procedures may purchase and transfer to Dallas, Dallas County, U.S.,
Dollars with the amount of the Other Currency so received.
Section 17.26 Extension, Renewal and Replacement of Existing Credit
Agreement. By their execution hereof, each of NationsBank, in its individual
capacity as Lender under the Existing Credit Agreement and GNI and each of its
Subsidiaries parties to the Existing Credit Agreement acknowledge and agree that
the rights and obligations of such parties under the Existing Credit Agreement
and under or in respect of the "Loan Documents" referred to therein (and the
Liens securing all such obligations) are assigned and transferred to Agent, for
itself and as agent and collateral agent for the Lenders under this Agreement
(including NationsBank as a Lender), that this Agreement constitutes an
extension, modification and restatement in its entirety of the Existing Credit
Agreement (and not a novation thereof) and that the Liens created thereunder and
under such Loan Documents secure the Secured Obligations.
Section 17.27 Amendment and Restatement. This Agreement is in
amendment, restatement and replacement of the certain Loan and Security
Agreement dated as of July 28, 1998 previously executed and entered into among
Borrower, Agent and NationsBank as a Lender (the "July 1998 Agreement"). All
Obligations and the Security Interest under the July 1998 Agreement hereby are
deemed to be renewed and continued, and not extinguished, and hereafter
evidenced by and governed in accordance with this Agreement and the other Loan
Documents. All references to the July 1998 Agreement in any of the Loan
Documents shall be deemed to mean this Agreement, as an amendment and
restatement of the July 1998 Agreement.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
128
135
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their duly authorized officers in
several counterparts all as of the day and year first written above.
BORROWER:
THE GNI GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
------------------------------
Title: Chief Financial Officer
-----------------------------
GNI CHEMICALS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
------------------------------
Title: Vice President
-----------------------------
DISPOSAL SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
------------------------------
Title: Vice President
-----------------------------
RESOURCE TRANSPORTATION SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
------------------------------
Title: Vice President
-----------------------------
DISPOSAL SYSTEMS OF CORPUS CHRISTI, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
------------------------------
Title: Vice President
-----------------------------
GULF NUCLEAR OF LOUISIANA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
------------------------------
Title: Vice President
-----------------------------
AGENT:
NATIONSBANK, N.A.
By: /s/ ▇▇▇▇ ▇. GOOD
-----------------------------------------
Name: ▇▇▇▇ ▇. Good
-----------------------------
Title: Vice President
----------------------------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Credit
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
129
136
LENDERS:
Commitment NATIONSBANK, N.A.
Amount: $12,000,000
By: /s/ ▇▇▇▇ ▇. GOOD
-----------------------------------------
Name: ▇▇▇▇ ▇. Good
-----------------------------
Title: Vice President
----------------------------
Address for Notices:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Credit Regional
Manager: URGENT
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Applicable Lending Office for Base Rate Loans:
NationsBank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Applicable Lending Office for Eurodollar Loans:
NationsBank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
130
137
Schedule 1.1A
Permitted Investments
None.
138
Schedule 1.1B
Permitted Liens
None.
139
Schedule 8.1(a)
Organization
The GNI Group, Inc. - Texas
Disposal Systems, Inc. - Texas
Resource Transportation Services, Inc. - Texas
Gulf Nuclear of Louisiana, Inc. - Louisiana
GNI Chemicals Corporation - Texas
Disposal Systems of Corpus Christi, Inc. - Texas
140
Schedule 8.1(b)
Capitalization
The GNI Group, Inc.
Series A Preferred Stock Class A Common Stock Class B Common Stock
Name of Beneficial Owner
399 Venture Partners, Inc. 181,285.60 39,121.00 456,799
▇▇▇▇ ▇. ▇▇▇▇, ▇▇. 1,791.35 36,416.00 --
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III 1,791.35 36,416.00 --
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 131.70 2,677.00 --
Disposal Systems, Inc.
The GNI Group, Inc. is the beneficial owner of 1,000 issued and
outstanding shares of common stock of Disposal Systems, Inc.
Resource Transportation Services, Inc.
The GNI Group, Inc. is the beneficial owner of 1,000 issued and
outstanding shares of common stock of Resource Transportation Services, Inc.
Disposal Systems, Inc. is the beneficial owner of 100 issued and outstanding
shares of common stock of Resource Transportation Services, Inc.
Gulf Nuclear of Louisiana, Inc.
The GNI Group, Inc. is the beneficial owner of 1,000 issued and
outstanding shares of common stock of Gulf Nuclear of Louisiana, Inc.
GNI Chemicals Corporation
The GNI Group, Inc. is the beneficial owner of 1,000 issued and
outstanding shares of common stock of GNI Chemicals Corporation.
Disposal Systems of Corpus Christi, Inc.
The GNI Group, Inc. is the beneficial owner of 1,000 issued and
outstanding shares of common stock of Disposal Systems of Corpus Christi, Inc.
141
Schedule 8.1(d)
Subsidiaries: Ownership of Stock
Borrower
The GNI Group, Inc.
Name State of Incorporation % of Stock Owned
---- ---------------------- ----------------
Gulf Nuclear of Louisiana, Inc. Delaware 100
Disposal Systems, Inc. Delaware 100
Resource Transportation Services, Inc. Delaware 91*
GNI Chemicals Corporation Delaware 100
Disposal Systems of Corpus Christi, Inc. Delaware 100
Each of the foregoing subsidiaries is a Consolidated Subsidiary.
*9% of the issued and outstanding shares of common stock of Resource
Transportation Services, Inc. is owned by Disposal Systems of Corpus Christi,
Inc.
Disposal Systems, Inc.
The GNI Group, Inc. is the beneficial owner of 1,000 issued and
outstanding shares of common stock of Disposal Systems, Inc.
Resource Transportation Services, Inc.
The GNI Group, Inc. is the beneficial owner of 1,000 issued and outstanding
shares of common stock of Resource Transportation Services, Inc. Disposal
Systems, Inc. is the beneficial owner of 100 issued and outstanding shares of
common stock of Resource Transportation Services, Inc.
Gulf Nuclear of Louisiana, Inc.
The GNI Group, Inc. is the beneficial owner of 1,000 issued and
outstanding shares of common stock of Gulf Nuclear of Louisiana, Inc.
GNI Chemicals Corporation
The GNI Group, Inc. is the beneficial owner of 1,000 issued and
outstanding shares of common stock of GNI Chemicals Corporation.
Disposal Systems of Corpus Christi, Inc.
The GNI Group, Inc. is the beneficial owner of 1,000 issued and
outstanding shares of common stock of Disposal Systems of Corpus Christi, Inc.
142
Schedule 8.1(f)
Compliance with Laws
None.
143
Schedule 8.1(h)
Governmental Approvals
None.
144
Schedule 8.1(I)
Title to Properties
None.
145
Schedule 8.1(j)
Liens
None.
146
Schedule 8.1(k)
Indebtedness and Guaranties
10 7/8% Senior Notes due 2005 of The GNI Group, Inc. (GNI) and the
Guaranties thereof by each of the Subsidiaries of GNI.
147
Schedule 8.1(l)
Litigation
On February 27, 1998, a complaint purporting to state a class action
was filed in the Delaware Court of Chancery (Case Number 16211-NC) by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, alleged to be stockholders of The GNI Group, Inc.
(Company), on behalf of themselves and all others similarly situated, against
the Company and its directors. The plaintiffs allege that the merger of Green I
Acquisition Corporation, an affiliate of 399 Venture Partners, Inc. into the
Company (Merger) is wrongful, unfair and harmful to the Company stockholders,
that the consideration of $7.00 in cash per share is not the result of an
arms-length negotiations or based upon any independent valuation on the current
or projected value of the Company, and that the directors of the Company have
conflicts of interest and have violated their fiduciary duty and other common
law duties owed to the plaintiffs and other members of the class.
148
Schedule 8.1(m)
Tax Matters
None.
149
Schedule 8.1(q)
ERISA
The GNI Group, Inc. 401(k) Plan (Plan). Borrower currently makes
mandatory contributions to the Plan at the rate of $.35 for each $1.00 of
employee pre-tax contributions up to 6% of their eligible earnings.
150
Schedule 8.1(u)
Location of Offices and Receivables, etc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
151
Schedule 8.1(v)
Location of Inventory
1. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
2. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
152
Schedule 8.1(w)
Equipment
1. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
2. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
153
Schedule 8.1(x)
Real Estate
OWNED PROPERTY
Deer Park Facility ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Corpus Christi Facility ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Land 14.9 acres
Deer Park, Texas
Discontinued Operations Properties
Land and Building ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇
Land and Building ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇
Land and Building Neosho Avenue
Baton Rouge, Louisiana
Land and Building Peace Avenue
Port ▇▇▇▇▇▇, New Jersey
LEASED PROPERTY
Land - 3 acres ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Corpus Rail Facility Corpus Christi, Texas
154
Schedule 8.1(y)
Corporate and Fictitious Names
On January 29, 1996, the name Chemical Resource Processing, Inc. was
changed to GNI Chemicals Corporation.
155
Schedule 8.1(bb)
Employee Relations
None.
156
Schedule 8.1(cc)
Proprietary Rights
TRADEMARKS
#75/076,854 Service ▇▇▇▇ Application for ▇▇▇▇: The GNI Group and Design
157
Schedule 8.1(dd)
Trade Names
None.
158
Schedule 8.1(ee)
Investment Property
PaineWebber Inc. Investment Account (No. HS 08454 7D)
159
Schedule 11.8
Use of Proceeds
Not applicable.