EXHIBIT 10.53
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
BY AND AMONG
IDS ENGINEERING, INC.,
THERMAIRE, INC.,
CONSTANT POWER MANUFACTURING, INC.,
INDUSTRIAL DATA SYSTEMS, INC.,
IDS ENGINEERING MANAGEMENT, LC,
PETROCON ENGINEERING, INC.,
TRIANGLE ENGINEERS AND CONSTRUCTORS, INC.,
PETROCON SYSTEMS, INC.,
PETROCON ENGINEERING OF LOUISIANA, INC.,
R.P.M. ENGINEERING, INC.,
PETROCON CONSTRUCTION RESOURCES, INC.,
PETROCON TECHNOLOGIES, INC., AND
ALLIANCE ENGINEERING ASSOCIATES, INC.,
AS BORROWER,
FLEET CAPITAL CORPORATION,
AS AGENT AND AS A LENDER,
AND
THE OTHER LENDERS PARTY THERETO
DATED: DECEMBER 21, 2001
TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITY.......................................... 3
1.1 Revolving Credit Loans....................................... 3
1.1.1 Loans and Reserves.................................... 3
1.1.2 Use of Proceeds....................................... 4
1.2 Term Loan.................................................... 4
1.3 Notes........................................................ 4
1.4 Letters of Credit; LC Guaranties............................. 4
1.5 All Loans to Constitute One Obligation....................... 5
1.6 Joint and Several Liability; Rights of Contribution.......... 5
1.7 Original Borrowers' Obligations.............................. 6
1.8 Structure of Credit Facility................................. 7
SECTION 2. INTEREST, FEES AND CHARGES............................... 7
2.1 Interest..................................................... 7
2.1.1 Rates of Interest..................................... 7
2.1.2 Default Rate of Interest.............................. 7
2.1.3 Maximum Interest...................................... 8
2.1.4 This Section is intentionally omitted................. 9
2.2 Computation of Interest and Fees............................. 9
2.3 Closing Fee.................................................. 9
2.4 Letter of Credit and LC Guaranty Fees........................ 9
2.5 Commitment Fees.............................................. 10
2.6 Audit and Appraisal Fees; Annual Servicing Fee............... 10
2.7 Reimbursement of Expenses.................................... 10
2.8 Bank Charges................................................. 11
SECTION 3. LOAN ADMINISTRATION...................................... 11
3.1 Manner of Borrowing Loans.................................... 11
3.1.1. Loan Requests......................................... 12
3.1.2. Disbursement.......................................... 12
3.1.3 Authorization......................................... 12
3.2 Payments..................................................... 12
3.2.1 Principal............................................. 12
3.2.2 Interest.............................................. 12
3.2.3 Costs, Fees and Charges............................... 13
3.2.4 Other Obligations..................................... 13
3.3 Mandatory Prepayments........................................ 13
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral........................................... 13
3.3.2 Excess Cash Flow Recapture............................ 13
3.4 Application of Payments and Collections...................... 13
3.5 Loan Account................................................. 14
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3.6 Statements of Account........................................ 14
3.7 Additional Provisions Regarding Eurodollar Loans............. 14
3.8 Capital Adequacy and Other Adjustments....................... 15
3.9 Taxes........................................................ 15
3.10 Required Termination and Prepayment.......................... 17
3.11 Compensation................................................. 17
3.12 Booking of Eurodollar Loans.................................. 17
3.13 Assumptions Concerning Funding of Eurodollar Loans........... 17
3.14 Optional Prepayment/Replacement of Agent or Lenders in
Respect of Increased Costs.................................. 17
SECTION 4. TERM AND TERMINATION..................................... 18
4.1 Term of Agreement............................................ 18
4.2 Termination.................................................. 18
4.2.1 Termination by Requisite Lenders...................... 18
4.2.2 Termination by Borrower............................... 18
4.2.3 Termination Charges................................... 19
4.2.4 Effect of Termination................................. 19
SECTION 5. SECURITY INTERESTS....................................... 19
5.1 Security Interest in Collateral.............................. 19
5.2 Other Collateral............................................. 21
5.3 Lien Perfection; Further Assurances.......................... 21
5.4 Lien on Realty............................................... 22
5.5 Representations, Warranties and Covenants -- Collateral...... 23
5.6 Real Property Lien Documentation............................. 23
SECTION 6. COLLATERAL ADMINISTRATION................................ 24
6.1 General...................................................... 24
6.1.1 Location of Collateral................................ 24
6.1.2 Insurance of Collateral............................... 24
6.1.3 Protection of Collateral.............................. 24
6.2 Administration of Accounts................................... 25
6.2.1 Records, Schedules and Assignments of Accounts........ 25
6.2.2 Discounts, Allowances, Disputes....................... 25
6.2.3 Taxes................................................. 25
6.2.4 Account Verification.................................. 26
6.2.5 Maintenance of Dominion Account....................... 26
6.2.6 Collection of Accounts, Proceeds of Collateral........ 26
6.3 Administration of Equipment.................................. 26
6.3.1 Records and Schedules of Equipment.................... 26
6.3.2 Dispositions of Equipment............................. 26
6.3.3 Condition of Equipment................................ 27
6.4 Payment of Charges........................................... 27
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SECTION 7. REPRESENTATIONS AND WARRANTIES........................... 27
7.1 General Representations and Warranties....................... 27
7.1.1 Organization and Qualification........................ 27
7.1.2 Power and Authority................................... 27
7.1.3 Legally Enforceable Agreement......................... 28
7.1.4 Capital Structure..................................... 28
7.1.5 Names................................................. 28
7.1.6 Business Locations; Agent for Process................. 29
7.1.7 Title to Properties; Priority of Liens................ 29
7.1.8 Accounts.............................................. 29
7.1.9 Financial Statements; Fiscal Year..................... 30
7.1.10 Full Disclosure....................................... 30
7.1.11 Solvent Financial Condition........................... 30
7.1.12 Surety Obligations.................................... 30
7.1.13 Taxes................................................. 31
7.1.14 Brokers............................................... 31
7.1.15 Patents, Trademarks, Copyrights and Licenses.......... 31
7.1.16 Governmental Consents................................. 31
7.1.17 Compliance with Laws.................................. 31
7.1.18 Restrictions.......................................... 31
7.1.19 Litigation............................................ 32
7.1.20 No Defaults........................................... 32
7.1.21 Leases................................................ 32
7.1.22 Pension Plans......................................... 32
7.1.23 Trade Relations....................................... 32
7.1.24 Labor Relations....................................... 32
7.1.25 Information Supplied by Borrower...................... 33
7.1.26 Alliance.............................................. 33
7.2 Continuous Nature of Representations and Warranties.......... 33
7.3 Survival of Representations and Warranties................... 33
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS...................... 33
8.1 Affirmative Covenants........................................ 33
8.1.1 Visits and Inspections................................ 33
8.1.2 Notices............................................... 34
8.1.3 Financial Statements.................................. 34
8.1.4 Landlord and Storage Agreements....................... 36
8.1.5 Projections........................................... 36
8.1.6 Taxes................................................. 36
8.1.7 Compliance with Laws.................................. 36
8.1.8 Insurance............................................. 36
8.1.9 Dissolution of Petrocon FSC Ltd....................... 36
8.1.10 Deposit and Brokerage Accounts........................ 36
8.2 Negative Covenants........................................... 36
8.2.1 Mergers; Consolidations; Acquisitions................. 37
8.2.2 Loans................................................. 37
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8.2.3 Total Indebtedness.................................... 37
8.2.4 Affiliate Transactions................................ 38
8.2.5 Limitation on Liens................................... 39
8.2.6 Subordinated Debt; Management Fees.................... 39
8.2.7 Distributions......................................... 40
8.2.8 Capital Expenditures.................................. 40
8.2.9 Disposition of Assets................................. 40
8.2.10 Stock of Subsidiaries................................. 40
8.2.11 ▇▇▇▇-and-Hold Sales, Etc.............................. 40
8.2.12 Restricted Investment................................. 40
8.2.13 Operating Leases...................................... 40
8.2.14 Tax Consolidation..................................... 41
8.2.15 RPM Earnout Payment................................... 41
8.3 Specific Financial Covenants................................. 41
8.3.1 Fixed Charge Ratio.................................... 41
8.3.2 Ratio of Senior Debt and Equus Term Note to EBITDA.... 41
8.3.3 Costs in Excess of ▇▇▇▇▇▇▇▇ Amount.................... 42
SECTION 9. CONDITIONS PRECEDENT..................................... 42
9.1 Documentation................................................ 42
9.2 No Default................................................... 42
9.3 Availability................................................. 42
9.4 Organizational and Governing Documents....................... 42
9.5 Good Standing Certificates................................... 42
9.6 Opinion Letters.............................................. 43
9.7 Insurance.................................................... 43
9.8 Dominion Account............................................. 43
9.9 Landlord Agreements.......................................... 43
9.10 No Litigation................................................ 43
9.11 Evidence of Perfection and Priority of Liens in Collateral... 43
9.12 Evidence of Consummation of IDSC Merger and Equus
Subordinated Debt Restructuring.............................. 43
9.13 Documentation Relating to Transactions....................... 43
9.14 No Material Adverse Effect................................... 44
9.15 Average Daily Availability................................... 44
9.16 Closing Fee.................................................. 44
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT...... 44
10.1 Events of Default............................................ 44
10.1.1 Payment of Note...................................... 44
10.1.2 Payment of Other Obligations......................... 44
10.1.3 Misrepresentations................................... 44
10.1.4 Breach of Specific Covenants......................... 44
10.1.5 Breach of Other Covenants............................ 44
10.1.6 Default Under Other Agreements....................... 44
10.1.7 Other Defaults....................................... 45
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10.1.8 Uninsured Losses.................................... 45
10.1.9 Adverse Changes..................................... 45
10.1.10 Insolvency and Related Proceedings.................. 45
10.1.11 Business Disruption; Condemnation................... 45
10.1.12 Change of Ownership................................. 45
10.1.13 ERISA............................................... 46
10.1.14 Challenge to Agreement.............................. 46
10.1.15 Criminal Forfeiture................................. 46
10.1.16 Judgments........................................... 46
10.1.17 Repudiation of or Default Under Guaranty Agreements. 46
10.2 Acceleration of the Obligations............................... 46
10.3 Other Remedies................................................ 46
10.4 Remedies Cumulative; No Waiver................................ 48
10.5 Power of Attorney............................................. 48
SECTION 11. ASSIGNMENT AND PARTICIPATION........................... 49
11.1 Assignments and Participations in Loans....................... 49
11.2 Agent......................................................... 51
11.3 Consents...................................................... 55
11.4 Set Off and Sharing of Payments............................... 55
11.5 Disbursement of Funds......................................... 55
11.6 Settlements, Payments and Information......................... 56
11.7 Dissemination of Information.................................. 57
11.8 Discretionary Advances........................................ 58
SECTION 12. MISCELLANEOUS.......................................... 58
12.1 Indemnity.................................................... 58
12.2 Amendments and Waivers....................................... 59
12.3 Severability................................................. 60
12.4 Successors and Assigns....................................... 60
12.5 Cumulative Effect; Conflict of Terms......................... 60
12.6 Execution in Counterparts.................................... 60
12.7 Notice....................................................... 60
12.8 Agent's or Lenders' Consent.................................. 61
12.9 Credit Inquiries............................................. 61
12.10 Time of Essence.............................................. 62
12.11 Entire Agreement; Appendix A and Exhibits and Schedules...... 62
12.12 Interpretation............................................... 62
12.13 GOVERNING LAW; CONSENT TO FORUM.............................. 62
12.14 WAIVERS BY BORROWER.......................................... 63
12.15 WAIVER OF CONSUMER RIGHTS.................................... 63
12.16 ORAL AGREEMENTS INEFFECTIVE.................................. 64
12.17 Nonapplicability of Chapter 346 of the Texas Finance Code.... 64
12.18 Certain Matters of Construction.............................. 64
12.19 Confidentiality.............................................. 64
12.20 Amendment and Restatement.................................... 64
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SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement") is made this 21st day of December 2001, by and among IDS
ENGINEERING, INC., a Texas corporation ("IDS Engineering"), THERMAIRE, INC., a
Texas corporation ("Thermaire"), CONSTANT POWER MANUFACTURING, INC., a Texas
corporation ("Constant Power"), INDUSTRIAL DATA SYSTEMS, INC., a Texas
corporation ("Data"), IDS ENGINEERING MANAGEMENT, LC, a Texas limited liability
company ("Management", and collectively with IDS Engineering, Thermaire, Data
and Constant Power, "New Borrowers"), PETROCON ENGINEERING, INC., a Texas
corporation ("Petrocon"), TRIANGLE ENGINEERS AND CONSTRUCTORS, INC., a Texas
corporation ("Triangle"), PETROCON SYSTEMS, INC., a Texas corporation ("Petrocon
Systems"), PETROCON ENGINEERING OF LOUISIANA, INC., a Louisiana corporation
("Petrocon Louisiana"), R.P.M. ENGINEERING, INC., a Louisiana corporation
("RPM"), PETROCON CONSTRUCTION RESOURCES, INC., a Texas corporation ("Petrocon
Construction"), PETROCON TECHNOLOGIES, INC., a Texas corporation ("Petrocon
Technologies"), ALLIANCE ENGINEERING ASSOCIATES, INC., a Texas corporation
("Alliance", and collectively with Petrocon, Triangle, Petrocon Systems,
Petrocon Louisiana, RPM, Petrocon Construction and Petrocon Technologies
"Original Borrowers") (New Borrowers and Original Borrowers are hereinafter
sometimes referred to individually and collectively as "Borrower" or
"Borrowers"), each with its chief executive office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, FLEET CAPITAL CORPORATION, a Rhode Island corporation
("Fleet") with an office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
as Agent (Fleet, in such capacity, the "Agent"), and the financial
institution(s) listed on the signature pages hereof and their respective
successors and assigns (each individually a "Lender" and collectively
"Lenders"). Capitalized terms used in this Agreement have the meanings assigned
to them in Appendix A, General Definitions. Accounting terms not otherwise
specifically defined herein shall be construed in accordance with GAAP
consistently applied.
A. Original Borrowers, Agent and Lenders have entered into that certain
Loan and Security Agreement dated June 15, 1999, as amended by that certain (i)
Forbearance Agreement and First Amendment to Amended and Restated Loan and
Security Agreement, entered into as of January 31, 2000, (ii) Forbearance
Agreement and Second Amendment to Amended and Restated Loan and Security
Agreement, entered into as of June 30, 2000, (iii) Forbearance Agreement and
Third Amendment to Amended and Restated Loan and Security Agreement, entered
into as of March 30, 2001 and (iv) Fourth Amendment to Amended and Restated Loan
Agreement, entered into as of May 14, 2001 (as amended, the "Original Loan
Agreement").
B. The Borrowers desire to enter into and close the following simultaneous
transactions (collectively, the "Transactions"), as of the Closing Date:
(i) The stock merger (hereinafter, the "IDSC Merger") by and between
Petrocon and PEI Acquisition, Inc., a Texas corporation ("PEI
Acquisition"), with Petrocon as the surviving corporation, pursuant to the
terms, conditions and provisions of
1
that certain Agreement and Plan of Merger, dated July 31, 2001, executed by
Petrocon, PEI Acquisition, Management, and Industrial Data Systems
Corporation, a Nevada corporation ("IDSC") (as thereafter amended, the
"IDSC Merger Agreement");
(ii) The inclusion of all Subsidiaries of IDSC (a) as co-borrowers to
the revolving credit facility provided for by the Original Loan Agreement,
(b) as guarantors of the term loan provided for in the Original Loan
Agreement, and (c) as parties to the Original Loan Agreement;
(iii) The restructuring (hereinafter, the "Equus Subordinated Debt
Restructuring") of the existing "Subordinated Debt" (as defined in the
Original Loan Agreement) of Petrocon to Equus II Incorporated, a Delaware
corporation ("Equus") (hereinafter, the "Existing Equus Subordinated
Debt"), pursuant to the terms, conditions and provisions of that certain
Settlement Agreement and Plan of Reorganization dated as of July 31, 2001,
executed by Equus, Petrocon, PEI Acquisition and IDSC (the "Equus
Settlement Agreement"), whereby in exchange for the cancellation of the
Existing Equus Subordinated Debt and forgiveness of approximately
$2,000,000 in payment-in-kind interest on the Existing Equus Subordinated
Debt:
(a) Equus receives on the Closing Date a $2,000,000 payment in
cash from Petrocon, as payment in full of the First Replacement Notes
(as defined in the Equus Settlement Agreement);
(b) Equus receives a new term note dated on or about the Closing
Date in the original principal amount of $3,000,000, executed by
Petrocon and payable to the order of Equus (the "Equus Term Note"),
such Equus Term Note to be subordinated to the prior payment of the
Obligations in the manner and to the extent specified in the Equus
Intercreditor Agreement (as hereinafter defined in Appendix A); and
(c) Equus is issued 2,500,000 shares of the Series A Convertible
Preferred Stock $0.001 par value of IDSC, as payment in full of the
Remainder Note (as defined in the Equus Settlement Agreement);
(iv) The settlement (hereinafter, the "▇▇▇▇▇/▇▇▇▇▇ Settlement") of
existing lawsuits brought by and against ▇▇▇▇ ▇▇▇▇▇, a former chief
executive officer of Petrocon ("▇▇▇▇▇") and ▇▇▇▇ ▇▇▇▇▇, a former chief
financial officer of Petrocon ("▇▇▇▇▇") pursuant to the terms, conditions
and provisions of those certain settlement agreements executed by ▇▇▇▇▇,
▇▇▇▇▇ and Petrocon (the "▇▇▇▇▇/▇▇▇▇▇ Settlement Agreements") whereby
Petrocon agrees to pay to ▇▇▇▇▇ and ▇▇▇▇▇ the aggregate maximum amount of
$475,000, payable in 24 monthly installments in the aggregate amount of
$12,500 each, with an aggregate balloon payment of $175,000, payable 25
months after the date of the ▇▇▇▇▇/▇▇▇▇▇ Settlement;
2
(v) The redemption (hereinafter, the "▇▇▇▇▇ Subordinated Debt
Redemption") by Petrocon of all existing "Subordinated Debt" (as defined in
the Original Loan Agreement) of Petrocon to ▇▇▇▇▇ for an amount of no more
than $72,034.00; and
(vi) The purchase (hereinafter, the "▇▇▇▇▇/▇▇▇▇▇ Stock Purchase")
whereby ▇▇▇▇▇ and ▇▇▇▇▇ sell 288,565 shares of capital stock of Petrocon
for $0.79 a share, Equus paying ▇▇▇▇▇ and ▇▇▇▇▇ $0.67 a share for and being
transferred each such share of capital stock of Petrocon owned by ▇▇▇▇▇ and
▇▇▇▇▇, and Petrocon paying ▇▇▇▇▇ and ▇▇▇▇▇ in cash the amount necessary so
that when added to the payment by Equus to ▇▇▇▇▇ and ▇▇▇▇▇ in connection
with the ▇▇▇▇▇/▇▇▇▇▇ Stock Purchase, ▇▇▇▇▇ and ▇▇▇▇▇ receive in total an
aggregate amount equal to $227,966.60 (such payment by Petrocon being
hereinafter referred to as the "▇▇▇▇▇/▇▇▇▇▇ Distribution");
and obtain the consent of Agent and Lenders to the consummation of the
Transactions.
C. As a result of and in connection with the permitted closing of the
Transactions, the parties hereto desire to extend the maturity of the Original
Loan Agreement and make certain revisions to the Original Loan Agreement.
D. To effectuate the foregoing, Borrower, Lenders and Agent desire to
amend, restate and modify (but not extinguish) the Original Loan Agreement as
hereinafter set forth.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders agree to continue to provide a $15,000,000 revolving credit
facility available upon Borrower's request therefor, and to continue an existing
$522,285.70 term loan, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lenders agree, during the term of this
Agreement and for so long as no Default or Event of Default exists, to make
Revolving Credit Loans to Borrower from time to time, as requested by Borrower
in the manner set forth in Section 3.1.1 hereof, up to a maximum principal
amount at any time outstanding equal to the Borrowing Base at such time;
provided, however, that each Lender's obligation to make Revolving Credit Loans
hereunder is several and not joint in nature, and, except as otherwise
specifically provided herein, no Lender shall be obligated to make more than its
Pro Rata Share of any Revolving Credit Loan. Agent shall have the right to
establish reserves in such amounts, and with respect to such matters, as Agent
shall, in its reasonable credit judgment, deem necessary or appropriate, against
the amount of Revolving Credit Loans which Borrower may otherwise request under
this Section 1.1.1, including, without limitation, with respect to (i) other
sums chargeable against Borrower's Loan Account as Revolving Credit Loans under
any section of this Agreement; (ii) amounts owing by Borrower to any Person to
the extent secured by a Lien on, or trust over, any Property of Borrower; (iii)
all amounts of past due rent or other charges owing at such time by Borrower
3
to any landlord of any premises where any of the Collateral is located; and (iv)
such other matters, events, conditions or contingencies as to which Agent, in
its sole credit judgment, determines reserves should be established from time to
time hereunder. Subject to the terms and conditions of this Agreement, Borrower
shall have the right to borrow, repay and reborrow Revolving Credit Loans.
1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used solely
for the purpose of payments to be made and costs incurred in connection with the
Transactions, the payoff of the Chase Term Note, for Borrower's Capital
Expenditures, and for Borrower's general operating capital needs and general
corporate purposes in a manner consistent with the provisions of this Agreement
and Applicable Law. In no event shall any proceeds of any Revolving Credit Loans
be used to purchase or to carry, reduce, retire or refinance any Indebtedness
incurred to purchase or carry any margin stock (within the meaning of Regulation
U of the Federal Reserve Board).
1.2 Term Loan. The Borrowers hereby agree and acknowledge that on or
about June 15, 1999, Lenders made a term loan (referred to in this Agreement as
the Term Loan), to Original Borrowers in the amount of $5,000,000, and that on
the date hereof the unpaid principal balance of the Term Loan is $522,285.70,
and that such amount is unconditionally owed by Original Borrowers to Lenders
without offset, defense or counterclaim of any kind, nature or description
whatsoever. The Term Loan shall continue to be repayable in accordance with the
terms of the Term Note and shall continue to be secured by all of the
Collateral. Borrower may not reborrow any amount repaid with respect to the Term
Loan. No further amounts are available for advance with respect to the Term
Loan.
1.3 Notes. On the Closing Date, Borrower shall execute and deliver to
each Lender with appropriate insertions a Revolving Note to evidence such
Lender's Revolving Loan Commitment. Each Lender's Term Loan Commitment shall
continue to be evidenced by the existing Term Note. In the event of an
assignment under Section 11.1, Borrower shall, upon surrender of the assigning
Lender's Notes, issue new Notes to reflect the interest held by the assigning
Lender and its assignee. Each Revolving Credit Loan shall be evidenced by this
Agreement, the Revolving Note and notations made from time to time by Agent in
its books and records, including computer records. Agent shall record in its
books and records, including computer records, the principal amount of the
Revolving Credit Loans owing to each Lender from time to time. Agent's books
and records shall constitute presumptive evidence, absent manifest error, of the
accuracy of the information contained therein. Failure by Agent to make any
such notation or record shall not affect the obligations of Borrower to Lenders
with respect to the Revolving Credit Loans.
1.4 Letters of Credit; LC Guaranties. Agent agrees, for so long as no
Default or Event of Default exists and if requested by Borrower, to (i) issue
its, or cause to be issued its Affiliate's, standby Letters of Credit for the
account of Borrower and/or (ii) execute LC Guaranties by which Agent or its
Affiliate shall guaranty the payment or performance by Borrower of its
reimbursement obligations with respect to standby Letters of Credit, provided
that the LC Amount at any time shall not exceed Three Million Dollars
($3,000,000). No Letter of Credit
4
or LC Guaranty may have an expiration date that is after the last day of the
Original Term. Any amounts paid by Agent under any LC Guaranty or in connection
with any Letter of Credit shall be treated as Revolving Credit Loans, shall be
secured by all of the Collateral and shall bear interest and be payable at the
same rate and in the same manner as Revolving Credit Loans. Each Lender shall be
deemed to have purchased a participation in each Letter of Credit and each LC
Guaranty that is issued by Agent or its Affiliate on behalf of Borrower in an
amount equal to its Pro Rata Share thereof.
1.5 All Loans to Constitute One Obligation. All Loans shall constitute
one general joint and several obligation of Borrowers, and shall be secured by
Agent's security interest in and Lien upon all of the Collateral, for the
benefit of Lenders, and by all other security interests and Liens heretofore,
now or at any time or times hereafter granted by Borrower to Agent for the
benefit of Lenders.
1.6 Joint and Several Liability; Rights of Contribution.
(A) Each Borrower states and acknowledges that: (i) pursuant to this
Agreement, Borrowers desire to utilize their borrowing potential on a
consolidated basis to the same extent possible if they were merged into a single
corporate entity and that this Agreement reflects the establishment of credit
facilities which would not otherwise be available to such Borrower if each
Borrower were not jointly and severally liable for payment of all of the
Obligations; (ii) it has determined that it will benefit specifically and
materially from the advances of credit contemplated by this Agreement; (iii) it
is both a condition precedent to the obligations of each Lender hereunder and a
desire of the Borrowers that each Borrower execute and deliver to Lenders this
Agreement; and (iv) Borrowers have requested and bargained for the structure and
terms of and security for the advances contemplated by this Agreement.
(B) Each Borrower hereby irrevocably and unconditionally: (i) agrees
that it is jointly and severally liable to Agent and Lenders for the full and
prompt payment of the Obligations and the performance by each Borrower of its
obligations hereunder in accordance with the terms hereof; (ii) agrees to fully
and promptly perform all of its obligations hereunder with respect to each
advance of credit hereunder as if such advance had been made directly to it; and
(iii) agrees as a primary obligation to indemnify Agent and Lenders on demand
for and against any loss incurred by Agent or Lenders as a result of any of the
obligations of any one or more of the Borrowers being or becoming void,
voidable, unenforceable or ineffective for any reason whatsoever, whether or not
known to Agent or Lenders or any Person, the amount of such loss being the
amount which Agent and/or Lenders would otherwise have been entitled to recover
from any one or more of the Borrowers whose obligation becomes void, voidable,
unenforceable or ineffective.
(C) It is the intent of each Borrower that the indebtedness,
obligations and liability hereunder of no one of them be subject to challenge on
any basis, including, without limitation, pursuant to any applicable fraudulent
conveyance or fraudulent transfer laws. Accordingly, as of the date hereof, the
liability of each Borrower under this Section 1.6, together with all of its
other liabilities to all Persons as of the date hereof and as of any other date
on
5
which a transfer or conveyance is deemed to occur by virtue of this Agreement,
calculated in amount sufficient to pay its probable net liabilities on its
existing Indebtedness as the same become absolute and matured ("Dated
Liabilities") is, and is to be, less than the amount of the aggregate of a fair
valuation of its property as of such corresponding date ("Dated Assets"). To
this end, each Borrower under this Section 1.6, (i) grants to and recognizes in
each other Borrower, ratably, rights of subrogation and contribution in the
amount, if any, by which the Dated Assets of such Borrower, but for the
aggregate of subrogation and contribution in its favor recognized herein, would
exceed the Dated Liabilities of such Borrower or, as the case may be, (ii)
acknowledges receipt of and recognizes its right to subrogation and contribution
ratably from each of the other Borrowers in the amount, if any, by which the
Dated Liabilities of such Borrower, but for the aggregate of subrogation and
contribution in its favor recognized herein, would exceed the Dated Assets of
such Borrower under this Section 1.6. In recognizing the value of the Dated
Assets and the Dated Liabilities, it is understood that Borrowers will
recognize, to at least the same extent of their aggregate recognition of
liabilities hereunder, their rights to subrogation and contribution hereunder.
It is a material objective of this Section 1.6 that each Borrower recognizes
rights to subrogation and contribution rather than be deemed to be insolvent (or
in contemplation thereof) by reason of an arbitrary interpretation of its joint
and several obligations hereunder. In addition to and not in limitation of the
foregoing provisions of this Section 1.6, the Borrowers, Agent and Lenders
hereby agree and acknowledge that it is the intent of each Borrower and of Agent
and each Lender that the obligations of each Borrower hereunder be in all
respects in compliance with, and not be voidable pursuant to, applicable
fraudulent conveyance and fraudulent transfer laws.
1.7 Original Borrowers' Obligations. Notwithstanding any other
provision of the Revolving Note or Term Note or this Agreement to the contrary,
the parties hereto agree and acknowledge that New Borrowers shall not be
directly liable for the payment of any of the Obligations incurred by the
Original Borrowers prior to the date of execution of this Agreement
(collectively, the "Original Borrowers' Obligations"). However, the parties
hereto agree and acknowledge that the preceding sentence shall not (i) limit any
contingent liability of any New Borrower for payment of any of the Original
Borrowers' Obligations which arises pursuant to its respective Guaranty
Agreement, or (ii) limit the security interest and Liens in favor of Lenders
granted by any New Borrower against the assets of such New Borrower as a result
of such New Borrower becoming an additional named `Borrower', which Liens shall
secure payment of all Obligations arising in connection with this Agreement,
whether currently existing or hereafter arising. For purposes of determining on
or after the date of this Agreement which Obligations outstanding constitute
Original Borrowers' Obligations and how payments are applied to Original
Borrowers' Obligations, (x) all payments received by Agent from the Original
Borrowers on account of the Obligations shall be deemed to be applied first in
payment of all then due and payable Original Borrowers' Obligations (until such
time as the Original Borrowers' Obligations shall have been reduced to zero),
and thereafter to the other Obligations as hereinafter set forth, and unless
Borrower specifically indicates to the contrary in writing to Agent, all
payments received by Agent through the Dominion Account (with the sole exception
of any New Borrower's Dominion Account) shall be deemed to be payments received
by Agent from the Original Borrowers and (y) all payments received by Agent from
New Borrowers shall be deemed to be applied on account of Obligations which are
not Original Borrowers'
6
Obligations, and to the extent that, notwithstanding the foregoing, for any
reason any payment received by Agent from any New Borrower shall instead be
determined to have been applied on account of any Original Borrowers'
Obligations, such payment shall be deemed to have been made by any New Borrower
pursuant to the relevant Guaranty Agreement executed by such New Borrower.
1.8 Structure of Credit Facility. Each Borrower agrees and acknowledges
that the present structure of the credit facilities detailed in this Agreement
is based in part upon the financial and other information presently known to
Agent and Lenders regarding each Borrower, the corporate structure of Borrowers,
and the present financial condition of each Borrower. Each Borrower hereby
agrees that Agent shall have the right, in its reasonable credit judgment, to
require that any or all of the following changes be made to these credit
facilities: (i) upon and after the occurrence of an Event of Default, establish
separate lockbox and/or dominion accounts for each Borrower, (ii) upon and after
the occurrence of an Event of Default, separate the Term Loan into separate term
loans to such of the Borrowers as shall be determined by Agent, and (iii)
establish such other procedures as shall be reasonably deemed by Agent to be
useful in tracking where Loans are made under this Agreement and the source of
payments received by Agent on such Loans.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest. Subject to the terms of Section 2.1.4, the
outstanding principal amount of the Loans shall bear interest at the following
rates per annum (individually called, as applicable, an "Applicable Annual
Rate"): (i) with respect to Revolving Credit Loans, (x) each Eurodollar Loan
shall bear interest at a rate per annum equal to two and three-quarters percent
(2.75%) above LIBOR for the LIBOR Interest Period applicable thereto, and (y)
each Base Rate Loan shall bear interest at a rate per annum equal to one-quarter
of one percent (0.25%) above the Base Rate and (ii) with respect to the Term
Loan, (x) each Eurodollar Loan shall bear interest at a rate per annum equal to
three percent (3.00%) above LIBOR for the LIBOR Interest Period applicable
thereto, and (y) each Base Rate Loan shall bear interest at a rate per annum
equal to one-half of one percent (0.50%) above the Base Rate. Unless Borrower
delivers a Borrowing Notice to Agent in accordance with Section 3.1.1(A) hereof
irrevocably electing that all or any portion of the Loans are to bear interest
at a rate based upon LIBOR, all of the Loans shall bear interest at a rate based
upon the Base Rate as provided in clause (ii) of this Section 2.1.1. The rate of
interest applicable to Base Rate Loans shall increase or decrease by an amount
equal to any increase or decrease in the Base Rate, effective as of the opening
of business on the day that any such change in the Base Rate occurs.
2.1.2 Default Rate of Interest. While an Event of Default exists, the
principal amount of all Loans shall bear interest at a rate per annum equal to
two percent (2.00%) above the Applicable Annual Rate or at such other rate per
annum above the Applicable Annual Rate (not to exceed two percent (2.00%)) as
Agent shall, in its sole discretion, elect (the "Default Rate").
7
2.1.3 Maximum Interest. (A) Notwithstanding anything to the contrary
in this Agreement or otherwise, (i) if at any time the amount of interest
computed on the basis of an Applicable Annual Rate or a Default Rate would
exceed the amount of such interest computed upon the basis of the maximum rate
of interest permitted by applicable state or federal law in effect from time to
time hereafter (the "Maximum Legal Rate"), the interest payable under this
Agreement shall be computed upon the basis of the Maximum Legal Rate, but any
subsequent reduction in such Applicable Annual Rate or Default Rate, as
applicable, shall not reduce such interest thereafter payable hereunder below
the amount computed on the basis of the Maximum Legal Rate until the aggregate
amount of such interest accrued and payable under this Agreement equals the
total amount of interest which would have accrued if such interest had been at
all times computed solely on the basis of an Applicable Annual Rate or Default
Rate, as applicable; and (ii) unless preempted by federal law, an Applicable
Annual Rate or Default Rate, as applicable, from time to time in effect
hereunder may not exceed the "monthly ceiling" from time to time in effect under
Chapter 303 of the Texas Finance Code. If the applicable state or federal law is
amended in the future to allow a greater rate of interest to be charged under
this Agreement than is presently allowed by applicable state or federal law,
then the limitation of interest hereunder shall be increased to the maximum rate
of interest allowed by applicable state or federal law as amended, which
increase shall be effective hereunder on the effective date of such amendment,
and all interest charges owing to Agent and/or Lenders by reason thereof shall
be payable in accordance with Section 3.2.2 hereof.
(B) Excess Interest. No agreements, conditions, provisions or
stipulations contained in this Agreement or any other instrument, document or
agreement between Borrower, Agent and/or any Lender, or default of Borrower, or
the exercise by Agent or Lenders of the right to accelerate the payment of the
maturity of principal and interest, or to exercise any option whatsoever
contained in this Agreement or any other Loan Document, or the arising of any
contingency whatsoever, shall entitle Agent or any Lender to contract for,
charge, or receive, in any event, interest exceeding an amount calculated at the
Maximum Legal Rate. In no event shall Borrower be obligated to pay interest
exceeding an amount calculated at such Maximum Legal Rate and all agreements,
conditions or stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel Borrower to pay a rate of
interest exceeding the Maximum Legal Rate, shall be without binding force or
effect, at law or in equity, to the extent only of the excess of interest over
such Maximum Legal Rate. In the event any interest is contracted for, charged
or received in excess of an amount calculated at the Maximum Legal Rate ("Excess
Interest"), Borrower acknowledges and stipulates that any such Excess Interest
received by Agent and/or any Lender shall be applied, first, to reduce the
principal then unpaid hereunder; second, to reduce the other Obligations; and
third, returned to Borrower, it being the intention of the parties hereto not to
enter at any time into a usurious or otherwise illegal relationship. Borrower
recognizes that, with fluctuations in the Base Rate and the Maximum Legal Rate,
such a result could inadvertently occur. By the execution of this Agreement,
Borrower covenants that (i) the credit or return of any Excess Interest shall
constitute the acceptance by Borrower of such Excess Interest, and (ii) in the
event such Excess Interest is credited or returned to Borrower, Borrower shall
not seek or pursue any other remedy, legal or equitable, against Agent or
Lenders, based in whole or in part upon contracting for, charging or
8
receiving of any interest in excess of the maximum authorized by applicable law.
For the purpose of determining whether or not any Excess Interest has been
contracted for, charged or received by Agent and/or any Lender, all interest at
any time contracted for, charged or received by Agent and/or any Lender in
connection with this Agreement shall be amortized, prorated, allocated and
spread in equal parts during the entire term of this Agreement.
(C) Incorporation by this Reference. The provisions of Section
2.1.3(B) shall be deemed to be incorporated into every document or communication
relating to the Obligations which sets forth or prescribes any account, right or
claim or alleged account, right or claim of Agent and/or Lender with respect to
Borrower (or any other obligor in respect of Obligations), whether or not any
provision of Section 2.1.3(B) is referred to therein. All such documents and
communications and all figures set forth therein shall, for the sole purpose of
computing the extent of the Obligations of Borrower (or any other obligor)
asserted by Agent and/or any Lender thereunder, be automatically re-computed by
Borrower or any such obligor, and by any court considering the same, to give
effect to the adjustments or credits required by Section 2.1.3(B).
2.1.4 [This Section is intentionally omitted.].
2.2 Computation of Interest and Fees. Interest, Letter of Credit and LC
Guaranty fees and commitment fees hereunder shall be calculated daily and shall
be computed on the actual number of days elapsed over a year of three hundred
sixty (360) days. For the purpose of computing interest hereunder, all items of
payment received by Agent shall be deemed applied by Agent on account of the
Obligations (subject to final payment of such items) one (1) Business Day after
receipt by Agent of such items in Agent's account located in Providence, Rhode
Island, and Agent shall be deemed to have received such items of payment on the
date specified in Section 3.4 hereof.
2.3 Closing Fee. Borrower shall pay to Agent, for the account of
Lenders, a closing fee of $30,000, which shall be fully earned and (except to
the extent otherwise required by Applicable Law) nonrefundable on the Closing
Date, and shall be paid concurrently with the initial Loan hereunder.
2.4 Letter of Credit and LC Guaranty Fees. Borrower shall pay to Agent,
for the account of Lenders, for standby Letters of Credit and LC Guaranties of
standby Letters of Credit, one and one-half percent (1.50%) per annum of the
aggregate face amount of such Letters of Credit and LC Guaranties outstanding
from time to time during the term of this Agreement, which fee shall be due and
payable and shall be deemed fully earned and nonrefundable on the date of
issuance of each such Letter of Credit or LC Guaranty, plus Borrower shall pay
to Agent, for its own account, all normal and customary charges associated with
the issuance of each such Letter of Credit or LC Guaranty in accordance with
Fleet National Bank's standard fee schedule, which fees and charges shall be
deemed fully earned upon issuance of each such Letter of Credit or LC Guaranty,
shall be due and payable on the first Business Day of each month and shall not
be subject to rebate or proration upon the termination of this Agreement for any
reason.
9
2.5 Commitment Fees. Borrower shall pay to Agent, for the account of
Lenders, a commitment fee equal to three-eighths percent (0.375%) per annum of
the amount by which the Average Monthly Revolving Credit Loan Balance is less
than the Total Revolving Credit Facility. The commitment fees shall be payable
monthly, in arrears, on the first day of each calendar month hereafter.
2.6 Audit and Appraisal Fees; Annual Servicing Fee. Borrower shall
reimburse Agent for all reasonable out-of-pocket costs and expenses incurred by
Agent in connection with audits and appraisals of Borrower's books and records
and such other matters as Agent shall deem appropriate. In connection with any
audit by Agent of Borrower's books and records, Borrower shall also pay Agent a
per diem fee of Six Hundred Fifty Dollars ($650). In addition to the foregoing,
Borrower shall pay to Agent an annual servicing fee of Ten Thousand Dollars
($10,000), which fee shall be paid on June 15th of each year during the term of
this Agreement. All such out-of-pocket costs, fees and expenses shall be
payable on demand.
2.7 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Agent or any Lender incurs
reasonable legal or accounting expenses or any other costs or out-of-pocket
expenses in connection with (i) the negotiation and preparation of this
Agreement or any of the other Loan Documents, any amendment of or modification
of this Agreement or any of the other Loan Documents, any waiver of any
provisions of this Agreement or any of the other Loan Documents; (ii) the
administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby (provided that the Borrower shall
not be obligated to pay (a) Agent or any Lender for any general overhead costs
of Agent or any Lender, including (I) the salaries of Agent's and/or any
Lender's officers and employees or (II) any contribution by Borrower to Agent's
and/or any Lender's general overhead costs or (b) Agent for any administration
costs associated with the communication and/or dissemination of documentation
and/or information regarding Borrower to the Lenders, or the receipt or
disbursement of funds, as a routine part of Agent's duties as Agent hereunder);
(iii) any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent, any Lender, Borrower or any other Person) in any way
relating to the Collateral, this Agreement or any of the other Loan Documents or
Borrower's affairs; (iv) any attempt to enforce any rights of Agent or any
Lender against Borrower or any other Person which may be obligated to Agent
and/or Lender by virtue of this Agreement or any of the other Loan Documents,
including the Account Debtors; or (v) any attempt to inspect, verify, protect,
preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral (including, without limitation, the costs of any periodic
lien searches conducted by Agent); then all such legal and accounting expenses,
other costs and out of pocket expenses of Agent and/or any Lender shall be
charged to Borrower. In addition, at any time that an Event of Default exists
hereunder, Borrower shall reimburse Agent and/or any Lender for any and all
costs or out-of-pocket expenses incurred in connection with any sale or
attempted sale of any interest herein to any other Person. All amounts
chargeable to Borrower under this Section 2.7 shall be Obligations secured by
all of the Collateral, shall be payable on demand to Agent or to such Lender, as
the case may be, and shall bear interest from the date such demand is made until
paid in full at the rate applicable to Revolving Credit Loans from time to time.
Borrower shall also
10
reimburse Agent for expenses incurred by Agent in its administration of the
Collateral to the extent and in the manner provided in Section 6 hereof.
2.8 Bank Charges. Borrower shall pay to Agent and/or Lenders, on demand,
any and all normal and customary fees, costs or expenses which Agent or any
Lender pays to a bank or other similar institution arising out of or in
connection with (i) the forwarding to Borrower or any other Person on behalf of
Borrower, by Agent or any Lender, of proceeds of loans made by any Lender to
Borrower pursuant to this Agreement and (ii) the depositing for collection, by
Agent or any Lender, of any check or item of payment received or delivered to
Agent or any Lender on account of the Obligations.
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Loans. Borrowings under the credit facility
established pursuant to Section 1 hereof shall be as follows:
3.1.1. Loan Requests.
(A) A request for a Eurodollar Loan shall be made, or shall be deemed
to be made, if Borrower gives Agent notice of its intention to borrow in the
form of Exhibit Q hereto (a "Borrowing Notice"), in which notice Borrower shall
specify (i) the aggregate amount of such Eurodollar Loan, (ii) the requested
date of such Eurodollar Loan, (iii) the Applicable Annual Rate selected in
accordance with Section 2.1.1, and (iv) the LIBOR Interest Period applicable
thereto. If Borrower selects a Eurodollar Loan, Borrower shall give Agent the
Borrowing Notice no later than 11:00 a.m. Dallas, Texas time at least two (2)
Business Days prior to the requested date of the Eurodollar Loan.
Notwithstanding anything herein to the contrary, Agent shall have the right to
refuse to accept a request for a Eurodollar Loan and to refuse to make a
Eurodollar Loan if at the date such request is made or such Eurodollar Loan is
to be made there exists a Default or an Event of Default.
(B) A request for a Base Rate Loan shall be made, or shall be deemed
to be made, in the following manner: (i) Borrower shall give Agent notice of
its intention to borrow, in which notice Borrower shall specify the amount of
the proposed borrowing and the proposed borrowing date, no later than 11:00 a.m.
Dallas, Texas time on the proposed borrowing date; provided, however, Agent
shall have the right to refuse to accept such a request or make such a Loan if
at such time there exists a Default or an Event of Default; and (ii) the
becoming due of any amount required to be paid under this Agreement, under the
Notes or any of the other Loan Documents, whether as principal, accrued
interest, fees or other charges, shall be deemed irrevocably to be a request by
Borrower from Lender for a Revolving Credit Loan on the due date of, and in an
aggregate amount required to pay, such principal, accrued interest, fees or
other charges and the proceeds of each such Revolving Credit Loan may be
disbursed by Lender by way of direct payment of the relevant Obligation and
shall bear interest at the rate of interest applicable to Revolving Credit Loans
(whether or not any Default, Event of Default or Out-of-Formula Condition exists
at the time of or would result from such Revolving Credit Loan). As an
accommodation to Borrower, Agent may permit telephonic requests for loans and
electronic
11
transmittal of instructions, authorizations, agreements or reports to Agent by
any individual from time to time designated by Borrower as an authorized agent
of Borrower. Unless Borrower specifically directs Agent in writing not to accept
or act upon telephonic or electronic communications from Borrower, Agent shall
have no liability to Borrower for any loss or damage suffered by Borrower as a
result of Agent's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to Agent
telephonically or electronically and purporting to have been sent to Agent by
any individual from time to time designated by Borrower as an authorized
officer, and Lender shall have no duty to verify the origin or authenticity of
any such communication.
3.1.2 Disbursement. Borrower hereby irrevocably authorizes Agent to
disburse the proceeds of each Loan requested, or deemed to be requested,
pursuant to this Section 3.1.2 as follows: (i) the proceeds of each Loan
requested under Section 3.1.1(A) or Section 3.1.1(B)(i) shall be disbursed by
Agent in lawful money of the United States of America in immediately available
funds, in the case of the initial borrowing, in accordance with the terms of the
written disbursement letter from Borrower, and in the case of each subsequent
borrowing, by wire transfer to such bank account as may be agreed upon by
Borrower and Agent from time to time or elsewhere if pursuant to a written
direction from Borrower; and (ii) the proceeds of each Revolving Credit Loan
requested under Section 3.1.1(B)(ii) shall be disbursed by Agent by way of
direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrower hereby irrevocably authorizes Agent, in
Agent's sole discretion, to advance to Borrower, and to charge to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
principal when due in respect of the Term Loan, all interest accrued on the
Obligations during the immediately preceding month and all costs, fees and
expenses at any time owed by Borrower to Agent and/or any Lender hereunder.
3.2 Payments. All payments with respect to any of the Obligations shall
be made to Agent and/or Lenders on the date when due, in Dollars and in
immediately available funds, without any offset or counterclaim. Except as
otherwise provided in the Term Notes (with respect to principal payments due on
account of the Term Loan), the Obligations shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Agent, for the account of Lenders,
immediately upon the earliest of (i) except as otherwise provided in Section 3.3
hereof, the receipt by Agent or Borrower of any proceeds of any of the
Collateral, to the extent of said proceeds, (ii) the occurrence of an Event of
Default in consequence of which Agent or Requisite Lenders elect to accelerate
the maturity and payment of the Obligations, or (iii) termination of this
Agreement pursuant to Section 4 hereof; provided, however, that if an Out-of-
Formula Condition shall exist at any time, Borrower shall, on demand by Agent,
repay the Obligations to the extent necessary to eliminate the Out-of-Formula
Condition.
3.2.2 Interest. Interest accrued on the Loans shall be due on the
earliest of (i) the first calendar day of each month (for the immediately
preceding month), computed
12
through the last calendar day of the preceding month, (ii) the occurrence of an
Event of Default in consequence of which Agent or Requisite Lenders elect to
accelerate the maturity and payment of the Obligations, or (iii) termination of
this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Agent, for its account and for the account of Lenders, as
the case may be, or to any other Person designated by Requisite Lenders in
writing.
3.2.4 Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrower to Agent and/or Lenders
as and when provided in this Agreement or the Other Agreements, or, if no date
of payment is otherwise specified in the Loan Documents, on demand.
3.3 Mandatory Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. If Borrower sells any of the Equipment (except as permitted under
Section 6.3.2(ii) hereof) or real Property, or if any of the Collateral is lost
or destroyed or taken by condemnation, Borrower shall pay to Agent, for the
account of Lenders, unless otherwise agreed by Requisite Lenders, as and when
received by Borrower and as a mandatory prepayment of the Term Loan (or, at
Requisite Lender's option, such of the other Obligations as Requisite Lenders
may elect), a sum equal to the net proceeds (including insurance payments)
received by Borrower from such sale, loss, destruction or condemnation. Nothing
in this Section 3.3 shall authorize Borrower to sell any of the Collateral
without Agent's or Requisite Lender's prior written consent, as the case may be,
except as otherwise expressly provided elsewhere in this Agreement.
3.3.2 Excess Cash Flow Recapture. Borrower shall prepay the Term Loan
in an amount equal to twenty-five percent (25%) of Borrower's Excess Cash Flow
with respect to each fiscal year of Borrower, commencing with the fiscal year of
Borrower ending on December 31, 2001, with such payment being made within two
(2) Business Days following the earlier to occur of (i) the due date for
delivery by Borrower to Agent and Lenders of its annual audited financial
statements required by Section 8.1.3(i) hereof and (ii) Agent and Lender's
receipt of such annual audited financial statements. Each such prepayment shall
be applied first to the installments of principal due under the Term Loan in the
inverse order of their maturities until payment thereof in full, and thereafter
to the outstanding principal balance of the Revolving Credit Loans.
3.4 Application of Payments and Collections. All items of payment
received by Agent, for the benefit of Lenders, by 12:00 noon, Dallas, Texas
time, on any Business Day shall be deemed received on that Business Day. All
items of payment received after 1:00 p.m., Providence, Rhode Island time, on any
Business Day shall be deemed received on the following Business Day. Borrower
irrevocably waives the right to direct the application of any and all payments
and collections at any time or times hereafter received by Agent or any Lender
from or on behalf of Borrower, and Borrower does hereby irrevocably agree that
Agent shall have the continuing exclusive right to apply and reapply any and all
such payments and collections
13
received at any time or times hereafter by Agent or its agent against the
Obligations, in such manner as Agent may deem advisable, notwithstanding any
entry by Agent upon any of its books and records. If as the result of
collections of Accounts as authorized by Section 6.2.6 hereof a credit balance
exists in the Loan Account, such credit balance shall not accrue interest in
favor of Borrower, but shall be available to Borrower at any time or times for
so long as no Default or Event of Default exists. Such credit balance shall not
be applied or be deemed to have been applied as a prepayment of the Term Loan,
except that Agent may, at its option, offset such credit balance against any of
the Obligations upon and after the occurrence of an Event of Default.
3.5 Loan Account. Agent shall establish an account on its books (the
"Loan Account") and shall enter all Loans as debits to the Loan Account and
shall also record in the Loan Account all payments made by Borrower on any
Obligations and all proceeds of Collateral which are finally paid to Agent, and
may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrower.
3.6 Statements of Account. Agent will account to Borrower monthly with
a statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Agent shall be deemed final, binding and conclusive
upon Borrower unless Agent is notified by Borrower in writing to the contrary
within thirty (30) days after the date any such accounting is sent to Borrower.
Such notice shall only be deemed an objection to those items specifically
objected to therein.
3.7 Additional Provisions Regarding Eurodollar Loans.
(A) Borrower may select LIBOR with respect to all or any portion of
the Loans in accordance with the provisions of Section 3.1.1(A) hereof and of
this Section 3.7; provided, however, that (i) each Eurodollar Loan shall be in a
principal amount of not less than One Million Dollars ($1,000,000) and, if
greater than One Million Dollars ($1,000,000), in integral multiples of One
Hundred Thousand Dollars ($100,000), and (ii) no more than five (5) LIBOR
Interest Periods in the aggregate may be in existence at any one time. Borrower
shall select LIBOR Interest Periods with respect to Eurodollar Loans so that no
LIBOR Interest Period expires after the end of the Original Term or any then
applicable Renewal Term. An outstanding Base Rate Loan may be converted to a
Eurodollar Loan at any time subject to the provisions of this Section 3.7.
(B) Each Eurodollar Loan shall bear interest from and including the
first day of the LIBOR Interest Period applicable thereto (but not including the
last day of such LIBOR Interest Period) at the interest rate determined as
applicable to such Eurodollar Loan, but interest on such Eurodollar Loan shall
be payable as provided in the Term Note and in Section 3.2.2 hereof. If at the
end of a LIBOR Interest Period for an outstanding Eurodollar Loan, Borrower has
failed to deliver to Agent a new Borrowing Notice with respect to such
Eurodollar Loan or to pay such Eurodollar Loan, then such Eurodollar Loan shall
be converted to a Base Rate Loan on and after the last day of such LIBOR
Interest Period and shall remain a Base Rate Loan until paid or until the
effective date of a new Borrowing Notice with respect thereto.
14
3.8 Capital Adequacy and Other Adjustments. In the event Agent or any
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by Agent or such Lender or any corporation controlling Agent or
such Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) from any central
bank or governmental agency or body having jurisdiction does or shall have the
effect of increasing the amount of capital, reserves or other funds required to
be maintained by Agent or such Lender or any corporation controlling Agent or
such Lender and thereby reducing the rate of return on Agent's or such Lender's
or such corporation's capital as a consequence of its obligations hereunder,
then Borrower shall from time to time within fifteen (15) days after notice and
demand from such Lender (with a copy to Agent) or Agent (together with the
certificate referred to in the next sentence) pay to Agent or such Lender
additional amounts sufficient to compensate Agent or such Lender for such
reduction. A certificate as to the amount of such cost and showing the basis of
the computation of such cost submitted by Agent or any Lender to Borrower shall
constitute presumptive evidence, absent manifest error, of the accuracy of such
computation.
3.9 Taxes.
(A) No Deductions. Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto; excluding, however, the
following: taxes imposed on the net income or the capital or net worth of any
Lender or Agent by the jurisdiction under the laws of which Agent or such Lender
is organized or doing business or any political subdivision thereof and taxes
imposed on its net income, capital or net worth by the jurisdiction of Agent's
or such Lender's applicable lending office or any political subdivision thereof
(all such taxes, levies, imposts, deductions, charges or withholdings and all
liabilities with respect thereto excluding such taxes imposed on net income,
herein "Tax Liabilities"). If Borrower shall be required by law to deduct any
such Tax Liabilities from or in respect of any sum payable hereunder to Agent or
any Lender, then the sum payable hereunder shall be increased as may be
necessary so that, after making all required deductions, Agent or such Lender
receives an amount equal to the sum it would have received had no such
deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the Closing
Date, (i) any changes in any existing law, regulation, treaty or directive or in
the interpretation or application thereof, (ii) any new law, regulation, treaty
or directive enacted or any interpretation or application thereof, or (iii)
compliance by Lender with any request or directive (whether or not having the
force of law) from any governmental authority, agency or instrumentality:
(1) does or shall subject Agent or any Lender to any tax of any
kind whatsoever with respect to this Agreement, the other Loan Documents or any
Loans made or Letters of Credit issued hereunder, or changes the basis of
taxation of payments to Agent or such
15
Lender of principal, fees, interest or any other amount payable hereunder
(except for net income taxes, or franchise taxes imposed in lieu of net income
taxes, imposed generally by federal, state or local taxing authorities with
respect to interest or commitment or other fees payable hereunder or changes in
the rate of tax on the overall net income of or in the calculation of the
franchise taxes of Agent or such Lender); or
(2) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions contemplated
hereby or participations herein; and the result of any of the foregoing is to
increase the cost to Agent or such Lender of issuing any Letter of Credit or
making or continuing any Loan hereunder, as the case may be, or to reduce any
amount receivable hereunder, then, in any such case, Borrower shall promptly pay
to Agent or such Lender, upon its demand, any additional amounts necessary to
compensate Agent or such Lender, on an after-tax basis, for such additional cost
or reduced amount receivable, as determined by Agent or such Lender with respect
to this Agreement or the other Loan Documents. If Agent or any Lender becomes
entitled to claim any additional amounts pursuant to this Section, it shall
promptly notify Borrower of the event by reason of which Agent or such Lender
has become so entitled. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Agent or any Lender to Borrower
shall, absent manifest error, be final, conclusive and binding for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax or are subject to United States withholding tax at a reduced
rate under an applicable statute or tax treaty shall provide to Borrower and
Agent (i) a properly completed and executed Internal Revenue Service Form 4224
or Form 1001 or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to such Foreign
Lender's entitlement to such exemption or reduced rate of withholding with
respect to payments to be made to such Foreign Lender under this Agreement, or
under the Notes (a "Certificate of Exemption"), or (ii) a letter from any such
Foreign Lender stating that it is not entitled to any such exemption or reduced
rate of withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender
under this Agreement and within fifteen (15) days after a reasonable written
request of Borrower or Agent from time to time thereafter, each Foreign Lender
that becomes a Lender under this Agreement shall provide a Certificate of
Exemption or a Letter of Non-Exemption to Borrower and Agent.
If a Foreign Lender is entitled to an exemption with respect to
payments to be made to such Foreign Lender under this Agreement (or to a reduced
rate of withholding) and does not provide a Certificate of Exemption to Borrower
and Agent within the time periods set forth in the preceding paragraph, Borrower
shall withhold taxes from payments to such Foreign Lender at the applicable
statutory rates and Borrower shall not be required to pay any additional amounts
as a result of such withholding; provided, however, that all such withholding
shall cease upon delivery by such Foreign Lender of a Certificate of Exemption
to Borrower and Agent.
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3.10 Required Termination and Prepayment. If on any date any Lender shall
have reasonably determined (which determination shall be final and conclusive
and binding upon all parties) that the making or continuation of its Eurodollar
Loans has become unlawful or impossible by compliance by Lender in good faith
with any law, governmental rule, regulation or order (whether or not having the
force of law and whether or not failure to comply therewith would be unlawful),
then, and in any such event, that Lender shall promptly give notice (by
telephone confirmed in writing) to Borrower and Agent of that determination.
Subject to prior withdrawal of a Borrowing Notice or prepayment of Eurodollar
Loans as contemplated by Section 3.14, the obligation of Lender to make or
maintain its Eurodollar Loans during any such period shall be terminated at the
earlier of the termination of the LIBOR Interest Period then in effect or when
required by law and Borrower shall no later than the termination of the LIBOR
Interest Period in effect at the time any such determination pursuant to this
Section 3.10 is made or, earlier when required by law, repay or prepay
Eurodollar Loans together with all interest accrued thereon or convert
Eurodollar Loans to Base Rate Loans.
3.11 Compensation. Borrower shall compensate each Lender, upon written
request by such Lender (which request shall set forth in reasonable detail the
basis for requesting such amounts and which shall, absent manifest error, be
conclusive and binding upon all parties hereto), for all reasonable actual
losses, expenses and liabilities including, without limitation, any loss
sustained by such Lender in connection with the re-employment of such funds:
(i) if for any reason (other than a default by such Lender) a borrowing of any
Eurodollar Loan does not occur on a date specified therefor in a Borrowing
Notice or a telephonic request for borrowing or conversion/continuation; (ii) if
any prepayment of any of its Eurodollar Loans occurs on a date that is not the
last day of LIBOR Interest Period applicable to that Loan; (iii) if any
prepayment of any of its Eurodollar Loans is not made on any date specified in a
notice of prepayment given by Borrower; or (iv) as a consequence of any other
default by Borrower to repay its Eurodollar Loans when required by the terms of
this Agreement; provided, that, during the period while any such amounts have
not been paid, such Lender shall reserve an equal amount from amounts otherwise
available to be borrowed under the Revolving Credit Loans.
3.12 Booking of Eurodollar Loans. Each Lender may make, carry or transfer
Eurodollar Loans at, to, or for the account of, any of its branch offices or the
office of an affiliate of such Lender.
3.13 Assumptions Concerning Funding of Eurodollar Loans. Calculation of
all amounts payable to each Lender under Section 3.11 shall be made as though
each Lender had actually funded its relevant Eurodollar Loan through the
purchase of a deposit bearing interest in an amount equal to the amount of that
Eurodollar Loan and having maturity comparable to the relevant LIBOR Interest
Period and through the transfer of such deposit from an offshore office to a
domestic office in the United States of America; provided, however, that each
Lender may fund each of its Eurodollar Loans in any manner it sees fit and the
foregoing assumption shall be utilized only for the calculation of amounts
payable under Section 3.11.
3.14 Optional Prepayment/Replacement of Agent or Lenders in Respect of
Increased Costs. Within fifteen (15) days after receipt by Borrower of
written notice and demand from
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Agent or any Lender (an "Affected Lender") for payment of additional costs as
provided in Section 3.8 or 3.9, Borrower may, at its option, notify Agent and
such Affected Lender of its intention to do one of the following:
(A) Borrower may obtain, at Borrower's expense, a replacement Lender
("Replacement Lender") for such Affected Lender, which Replacement Lender shall
be reasonably satisfactory to Agent. In the event Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to
do so, the Affected Lender shall sell and assign its Loans and Commitments to
such Replacement Lender; provided, that, Borrower has reimbursed such Affected
Lender for its increased costs for which it is entitled to reimbursement under
this Agreement through the date of such sale and assignment.
(B) Borrower may prepay in full all outstanding Obligations owed to
such Affected Lender and terminate such Affected Lender's Commitments. Borrower
shall, within ninety (90) days following notice of its intention to do so,
prepay in full all outstanding Obligations owed to such Affected Lender
(including such Affected Lender's increased costs for which it is entitled to
reimbursement under this Agreement through the date of such prepayment) and
terminate such Affected Lender's Commitments.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Section 4.2 hereof and Lenders' right
to cease making Loans to Borrower upon or after the occurrence of any Default or
Event of Default, this Agreement shall be in, through and including June 14,
2003 (the "Original Term").
4.2 Termination.
4.2.1 Termination by Requisite Lenders. Requisite Lenders may
terminate this Agreement without notice as of the last day of the Original Term
and Requisite Lenders may terminate this Agreement without notice upon or after
the occurrence and during the continuance of an Event of Default.
4.2.2 Termination by Borrower. Upon at least thirty (30) days
prior written notice to Agent, Borrower may, at its option, terminate this
Agreement; provided, however, no such termination shall be effective until
Borrower has paid all of the Obligations in immediately available funds and all
Letters of Credit and LC Guaranties have expired or have been cash
collateralized to Agent's satisfaction. Any notice of termination given by
Borrower shall be irrevocable unless Agent otherwise agrees in writing, and
Agent and/or Lenders shall have no obligation to make any Loans or issue or
procure any Letters of Credit or LC Guaranties on or after the termination date
stated in such notice. Borrower may elect to terminate this Agreement in its
entirety only. No section of this Agreement or type of Loan available hereunder
may be terminated singly.
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4.2.3 Termination Charges. On the effective date of termination of
this Agreement for any reason, Borrower shall pay to Agent, for the account of
Lenders (in addition to the then outstanding principal, accrued interest and
other charges owing under the terms of this Agreement and any of the other Loan
Documents), as liquidated damages for the loss of the bargain and not as a
penalty, an amount equal to one percent (1.0%) of the Total Credit Facility.
Notwithstanding the foregoing, if termination occurs after June 14, 2003, no
termination charge shall be payable.
4.2.4 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination and Agent shall retain its Liens in the Collateral,
for the benefit of Lenders, and all of its rights and remedies under the Loan
Documents notwithstanding such termination until Borrower has paid the
Obligations to Agent and/or Lenders, in full, in immediately available funds,
together with the applicable termination charge, if any. Notwithstanding the
payment in full of the Obligations, Agent shall not be required to terminate its
security interests in the Collateral unless, with respect to any loss or damage
Agent and/or Lenders may incur as a result of dishonored checks or other items
of payment received by Agent from Borrower or any Account Debtor and applied to
the Obligations, Agent shall, at its option, (i) have received a written
agreement, executed by Borrower and by any Person whose loans or other advances
to Borrower are used in whole or in part to satisfy the Obligations,
indemnifying Agent and Lenders from any such loss or damage; or (ii) have
retained such monetary reserves and Liens on the Collateral for such period of
time as Agent, in its discretion, may deem necessary to protect Agent and/or
Lenders from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Lenders of all of the Obligations, Borrower hereby grants to
Agent, for the benefit of Lenders, a continuing security interest and Lien upon
all of Borrower's assets (except as specifically excluded herein), including all
of the following Property and interests in Property of Borrower, whether now
owned or existing or hereafter created, acquired or arising and wheresoever
located:
(a) Accounts;
(b) Certified Securities;
(c) Chattel paper;
(d) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support rights,
improvement rights, renewal rights and indemnifications, and any substitutions,
replacements, additions or model conversions of any of the foregoing;
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(e) Contract Rights;
(f) Deposit Accounts;
(g) Documents;
(h) Equipment;
(i) Financial Assets;
(j) Fixtures;
(k) General Intangibles, including Payment Intangibles and Software;
(l) Goods (including all of its Equipment, Fixtures and Inventory),
and all accessions, additions, attachments, improvements, substitutions and
replacements thereto and therefor;
(m) Instruments;
(n) Intellectual Property;
(o) Inventory;
(p) Investment Property;
(q) money (of every jurisdiction whatsoever);
(r) Letter of Credit Rights;
(s) Payment Intangibles;
(t) Security Entitlements;
(u) Software;
(v) Supporting Obligations;
(w) Uncertified Securities; and
(x) to the extent not included in the foregoing, all other personal
property of any kind or description;
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together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided, that, to the extent that the provisions of any lease or
license of Computer Hardware and Software or Intellectual Property expressly
prohibit (which prohibition is enforceable under applicable law) any assignment
thereof and the grant of a security interest therein, Agent will not enforce its
security interest in Borrower's rights under such lease or license (other than
in respect of the Proceeds thereof) for so long as such prohibition continues,
it being understood that upon request of Agent, Borrower will in good faith use
reasonable efforts to obtain consent for the creation of a security interest in
favor of Agent, for the benefit of Lenders (and to Agent's enforcement of such
security interest) in the Lenders' rights under such lease or license.
As to Original Borrowers, the security interests granted by Original
Borrowers in the Collateral are given in renewal, extension and modification of
the security interests previously granted to Agent, for the benefit of Lenders,
by Original Borrowers, such prior security interests are not extinguished
hereby; and the ranking, perfection and priority of such prior security
interests shall continue in full force and effect.
5.2 Other Collateral.
(A) Commercial Tort Claims. Borrower shall promptly notify Agent in
writing upon incurring or otherwise obtaining a Commercial Tort Claim after the
Closing Date against any third party and, upon request of Agent in its
reasonable credit judgment, promptly enter into an amendment to this Agreement
and do such other acts or things reasonably deemed appropriate by Agent to give
Agent, for the benefit of Lenders, a security interest in any such Commercial
Tort Claim.
(B) Other Collateral. Borrower shall promptly notify Agent in writing
upon acquiring or otherwise obtaining any Collateral after the date hereof
consisting of Deposit Accounts, Investment Property, Letter of Credit Rights or
Electronic Chattel Paper and, upon the request of Agent, promptly execute such
other documents, and do such other acts or things reasonably deemed appropriate
by Agent to deliver to Agent, for the benefit of Lenders, control with respect
to such Collateral; promptly notify Agent in writing upon acquiring or otherwise
obtaining any Collateral after the date hereof consisting of Documents or
Instruments and, upon the request of Agent, will promptly execute such other
documents, and do such other acts or things deemed appropriate by Agent to
deliver to Agent, for the benefit of Lenders, possession of such Documents which
are negotiable and Instruments, and, with respect to nonnegotiable Documents, to
have such nonnegotiable Documents issued in the name of Agent; and with respect
to Collateral in the possession of a third party, other than Certificated
Securities and Goods covered by a Document and obtain an acknowledgement from
the third party that it is holding the Collateral for the benefit of Lenders.
5.3 Lien Perfection; Further Assurances. Borrower agrees to execute the
UCC-1 financing statements provided for by the UCC or otherwise together with
any and all other
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instruments, assignments or documents and shall take such other action as may be
required to perfect or to continue the perfection of Agent's security interest,
for the benefit of the Lenders, in the Collateral, including, without
limitation, the execution at Agent's request of all documents deemed necessary
by Agent to cause Agent's Lien , for the benefit of Lenders, to be noted on any
motor vehicle title certificates for motor vehicles forming a part of the
Collateral. Unless prohibited by applicable law, Borrower hereby authorizes
Agent to execute and file any such financing statements, including, without
limitation, financing statements that indicate the Collateral (a) as all assets
of Borrower or words of similar effect, or (b) as being of an equal or lesser
scope, or with greater or lesser detail, than as set forth in Section 5.1, on
Borrower's behalf. Borrower also hereby ratifies its authorization for Agent to
have filed in any jurisdiction any like financing statements or amendments
thereto if filed prior to the date hereof. The parties agree that a photographic
or other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof. At Agents'
request, Borrower shall also promptly execute or cause to be executed and shall
deliver to Agent, for the benefit of Lenders, any and all documents, instruments
and agreements deemed necessary by Agents to give effect to or carry out the
terms or intent of the Loan Documents.
5.4 Lien on Realty. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by the Mortgages upon all
real Property of Borrower described therein. If Borrower shall acquire at any
time or times hereafter any interest in other real Property, or in the case of
the IDSC Houston Real Property, by the sixtieth day after the date of this
Agreement Borrower has not either sold the IDSC Houston Real Property (whether
as an outright sale of the IDSC Houston Real Property or pursuant to a sale of
Thermaire otherwise consented to by Agent) and paid the net proceeds from such
sale to Agent for application on the Obligations (which net proceeds must be at
least equal to the payoff amount of the Chase Term Note) or obtained
Indebtedness secured by the IDSC Houston Real Property incurred to take the
place of the Chase Term Note and paid the net proceeds from such Indebtedness to
Agent for application on the Obligations (which net proceeds must be at least
equal to the payoff amount of the Chase Term Note), Borrower agrees promptly to
execute and deliver to Agent, as additional security and Collateral for the
Obligations, deeds of trust, security deeds, mortgages or other collateral
assignments reasonably satisfactory in form and substance to Agent and its
counsel (herein collectively referred to as "New Mortgages") covering such real
Property or the IDSC Houston Real Property, as the case may be. The Mortgages
and each New Mortgage shall be duly recorded in each office where such recording
is required to constitute a valid Lien on the real Property covered thereby.
Borrower shall deliver to Agent, at Borrower's expense, mortgagee title
insurance policies issued by a title insurance company satisfactory to Agents
insuring Agent, for the benefit of Lenders, as mortgagee; such policies shall be
in form and substance reasonably satisfactory to Agent and shall insure a valid
first Lien in favor of Agent, for the benefit of Lenders, on the Property
covered thereby, subject only to Permitted Liens and those exceptions acceptable
to Agent and its counsel. Borrower shall deliver to Agent such other documents,
including, without limitation, as-built survey prints of the real Property, as
Agent and its counsel may reasonably request relating to the real Property
subject to the Mortgages. Notwithstanding the foregoing, if the requirements in
this Section 5.4 as to New Mortgage, mortgagee title insurance policy, etc.,
become applicable to the IDSC Houston Real
22
Property, Borrower shall be required to satisfy such requirements by the
sixtieth day after the date of this Agreement.
5.5 Representations, Warranties and Covenants -- Collateral. To induce
Agent and Lenders to enter into this Agreement, Borrower represents, warrants,
and covenants to Agent and Lenders:
(A) The Collateral (other than any capital stock owned by IDSC) is now
and, so long as any of the Obligations are outstanding, will continue to be
owned solely by Borrower. No other Person has or will have any right, title,
interest, claim, or Lien therein, thereof or thereto other than a Permitted
Lien.
(B) Except as specifically consented to in writing by Majority Lenders
or for Permitted Liens, the Liens granted to Agent, for the benefit of Lenders,
shall be first and prior on the Collateral and as to the Accounts and proceeds,
including insurance proceeds, resulting from the sale, disposition, or loss
thereof. No further action need be taken to perfect the Liens (except Liens in
any Intellectual Property of any Borrower which is registered under the laws of
a country other than the United States) granted to Agent, for the benefit of
Lenders, other than the filing of continuation statements under the UCC or other
applicable law, continued possession by Agent, for the benefit of Lenders, of
that portion of the Collateral constituting instruments or documents, the
processing of Lien notations on motor vehicle title certificates, the recording
of the Mortgages and the filing in the applicable federal office of the Patent
Assignment, Trademark Assignment and Copyright Assignment, except Liens in any
Intellectual Property of any Borrower which is registered under the laws of a
country other than the United States.
(C) All goods evidenced by the Collateral constituting chattel paper,
documents or instruments, the possession of which has been given to Agent, are
owned by Borrower and the same are free and clear of any prior Lien, except
Permitted Liens. Borrower shall pay and discharge when due all taxes, levies,
and other charges upon said Collateral and upon the goods evidenced by any
documents constituting Collateral (except and to the extent that such taxes,
levies, and other charges are being actively contested in good faith and by
appropriate proceedings, Borrower maintains adequate reserves on its books
therefor and the nonpayment thereof does not result in a lien upon any of the
Collateral other than a Permitted Lien), and BORROWER SHALL DEFEND AGENT AND
LENDERS AGAINST AND SAVE EACH OF THEM HARMLESS FROM ALL CLAIMS OF ANY PERSON
WITH RESPECT TO THE COLLATERAL. THIS INDEMNITY SHALL INCLUDE REASONABLE
ATTORNEYS' FEES AND LEGAL EXPENSES.
5.6 Real Property Lien Documentation. Borrower agrees to execute for
Agent's and Lenders' benefit the Mortgages and such leasehold mortgages, deeds
of trust or other documents evidencing a collateral assignment of Borrower's
interest in the real Property and any additional real Property now or hereafter
owned or leased by Borrower as Agent may request. Such documents shall be
recorded, at the expense of Borrower, with such filing offices as may be
required to evidence Agent's Lien, for the benefit of Lenders, upon the real
Property owned or hereafter acquired by Borrower.
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SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
6.1.1 Location of Collateral. All tangible items of Collateral,
other than Inventory in transit, motor vehicles and investment property held in
an account with a securities intermediary, shall at all times be kept by
Borrower and its Subsidiaries at one or more of the business locations set forth
on Exhibit B hereto and shall not, without giving Agent prior notice thereof, be
moved therefrom except, prior to an Event of Default, for (i) sales of Inventory
in the ordinary course of business; (ii) removals in connection with
dispositions of Equipment that are authorized by Section 6.3.2 hereof; and (iii)
the relocation of assets from one location set forth on Exhibit B to another
location set forth on Exhibit B. Notwithstanding anything to the contrary
contained in this Section 6.1.1 or elsewhere in this Agreement, no tangible
items of Collateral may be moved by Borrower to a location outside the
continental United States without the prior written approval of Agent.
6.1.2 Insurance of Collateral. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower's
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrower shall deliver the originals or certified copies of such
policies to Agent with satisfactory lender's loss payable endorsements, which
policies shall name Agent as sole loss payee, assignee or additional insured, as
appropriate, in each case, for the benefit of the Lenders. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than thirty (30) days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever and a clause specifying
that the interest of Agent shall not be impaired or invalidated by any act or
neglect of Borrower or the owner of the Property or by the occupation of the
premises for purposes more hazardous than are permitted by said policy. If
Borrower fails to provide and pay for such insurance, Agent may, at its option,
but shall not be required to, procure the same and charge Borrower therefor.
Borrower agrees to deliver to Agent, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
Applicable Law on any of the Collateral or in respect of the sale thereof, and
all other payments required to be made by Agent and/or Lenders to any Person to
realize upon any Collateral shall be borne and paid by Borrower. If Borrower
fails to promptly pay any portion thereof when due, Agent may, at its option,
but shall not be required to, pay the same and charge Borrower therefor.
Neither Agent nor any Lender shall be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Agent's or
any Lender's actual possession) or for any diminution in the value thereof, or
for any act or default of any warehouseman, carrier, forwarding agency, or other
Person whomsoever, but the same shall be at Borrower's sole risk.
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6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Agent on such periodic basis as Agent
shall reasonably request a sales and collections report for the preceding
period, in form satisfactory to Agent. On or before the twentieth day of each
month from and after the date hereof, Borrower shall deliver to Agent, in form
acceptable to Agent, a detailed aged trial balance of all Accounts existing as
of the last day of the preceding month, specifying the names, addresses, face
value, dates of invoices and due dates for each Account Debtor obligated on an
Account so listed ("Schedule of Accounts"), and, upon Agent's request therefor,
copies of proof of delivery and the original copy of all documents, including,
without limitation, repayment histories and present status reports relating to
the Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Agent shall reasonably request. In
addition, if Accounts in an aggregate face amount in excess of Fifty Thousand
Dollars ($50,000) become ineligible because they fall within one of the
specified categories of ineligibility set forth in the definition of Eligible
Accounts, the Borrowing Base shall thereupon be adjusted to reflect such
occurrence. If Borrower becomes aware that any of its Accounts have become
ineligible because they fall within one of the specified categories of
ineligibility set forth in the definition of Eligible Accounts, Borrower shall
provide Agent with written notice of such ineligible Accounts at the time of
submission of the next Schedule of Accounts, explaining in detail the nature of
such ineligible Accounts and the amounts thereof. If requested by Agent,
Borrower shall execute and deliver to Agent agings and formal written
assignments of all of its Accounts weekly or daily, which shall include all
Accounts that have been created since the date of the last assignment, together
with copies of invoices or invoice registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Agent as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of Fifty Thousand Dollars
($50,000) are in dispute between Borrower and any Account Debtor, Borrower shall
provide Agent with written notice thereof at the time of submission of the next
Schedule of Accounts, explaining in detail the reason for the dispute, all
claims related thereto and the amount in controversy. Upon and after the
occurrence and during the continuance of an Event of Default, Agent shall have
the right to settle or adjust all disputes and claims directly with the Account
Debtor and to compromise the amount or extend the time for payment of the
Accounts upon such terms and conditions as Agent may deem advisable, and to
charge the deficiencies, costs and expenses thereof, including attorney's fees,
to Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax payable
to any governmental taxing authority that is not being diligently contested by
appropriate proceedings, Agent is authorized, in its sole discretion, to pay the
amount thereof to the proper taxing authority for the account of Borrower and to
charge Borrower therefor; provided, however, that
25
Agent shall not be liable for any such taxes to any governmental taxing
authority that may be due by Borrower.
6.2.4 Account Verification. Whether or not a Default or an Event
of Default has occurred, any of Agent's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Agent, any designee of
Agent or Borrower, to verify the validity, amount or any other matter relating
to any Accounts by mail, telephone, facsimile transmission or otherwise.
Borrower shall cooperate fully with Agent in an effort to facilitate and
promptly conclude any such verification process.
6.2.5 Maintenance of Dominion Account. Borrower shall maintain one
or more Dominion Accounts acceptable to Agent with such banks as may be selected
by Borrower and be acceptable to Agent. Borrower shall deposit all payments or
other remittances received by Borrower in the Dominion Accounts for application
on account of the Obligations. All funds deposited in the Dominion Accounts
shall immediately become the property of Agent, for the benefit of Lenders, and
Borrower shall obtain the agreement by such banks in favor of Agent to waive any
offset rights against the funds so deposited.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Agent and Lenders. All remittances received by Borrower in
respect of Accounts, together with the proceeds of any other Collateral, shall
be held as Lenders' property by Borrower as trustee of an express trust for
Lenders' benefit and Borrower shall immediately deposit same in kind in the
Dominion Account. Agent retains the right at all times while an Event of Default
exists to notify Account Debtors that Accounts have been assigned to Agent and
Lenders and to collect Accounts directly in its own name and to charge the
collection costs and expenses, including reasonable attorneys' fees to Borrower.
6.3 Administration of Equipment.
6.3.1 Records and Schedules of Equipment. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
value (both cost and book) of its Equipment and all dispositions made in
accordance with Section 6.3.2 hereof, and shall furnish Agent with a current
schedule containing the foregoing information on at least an annual basis and
more often if requested by Agent. Within five (5) Business Days after any
request therefor by Agent, Borrower shall deliver to Agent any and all evidence
of ownership, if any, of any of the Equipment.
6.3.2 Dispositions of Equipment. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Agent; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of One Hundred Fifty Thousand Dollars ($150,000) or less,
provided that all proceeds thereof are remitted to Agent for application to the
Loans, or (ii) replacements of Equipment that
26
is substantially worn, damaged or obsolete with Equipment of like kind, function
and value, provided that the replacement Equipment shall be acquired within
thirty (30) days of any disposition of the Equipment that is to be replaced, the
replacement Equipment shall be free and clear of Liens other than Permitted
Liens that are not Purchase Money Liens, or (iii) lease (as lessor) Equipment,
so long as the Equipment subject to any such lease is not necessary for the
conduct of Borrower's business, provided, further, however, that no such
disposition or lease shall be permitted unless Borrower shall have given Agent
at least five (5) days' prior written notice of such disposition or lease.
6.3.3 Condition of Equipment. Borrower represents and warrants to
Agent and Lenders that the Equipment is in good operating condition and repair
(normal wear and tear excepted), and all necessary replacements of and repairs
thereto shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved, reasonable wear and tear excepted.
Borrower will not permit any of the Equipment to become affixed to any real
Property leased to Borrower so that an interest arises therein under the real
estate laws of the applicable jurisdiction unless the landlord of such real
Property has executed a landlord waiver or leasehold mortgage in favor of and in
form reasonably acceptable to Agent, and Borrower will not knowingly permit any
of the Equipment to become an accession to any personal Property that is subject
to a Lien unless the Lien is a Permitted Lien (other than a Purchase Money
Lien).
6.4 Payment of Charges. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was made
until paid in full at the rate then applicable to Revolving Credit Loans.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Agent and Lenders
to enter into this Agreement and to make advances hereunder, each applicable
Borrower warrants and represents to Agent and Lenders that:
7.1.1 Organization and Qualification. Each of IDSC and its
Subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization. Each of IDSC and its
Subsidiaries is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in each state or jurisdiction listed on
Exhibit C hereto and in all other states and jurisdictions where the character
of its Properties or the nature of its activities make such qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect.
7.1.2 Power and Authority. Each of Borrower and its Subsidiaries
is duly authorized and empowered to enter into, execute, deliver and perform
this Agreement and each of the other Loan Documents to which it is a party and
IDSC is duly authorized and empowered to enter into, execute, deliver and
perform each of the Loan Documents to which it is a party. The execution,
delivery and performance of this Agreement and each of the other Loan Documents
have been duly authorized by all necessary organizational action and do not (i)
27
require any consent or approval of the shareholders or members of IDSC or any of
its Subsidiaries that has not been obtained; (ii) contravene IDSC's or any of
its Subsidiaries' organizational or governing documents; (iii) to Borrower's
knowledge, violate, or cause IDSC or any of its Subsidiaries to be in default
under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having applicability to
IDSC or any of its Subsidiaries; (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other material
agreement, lease or instrument to which IDSC or any of its Subsidiaries is a
party or by which it or its Properties may be bound or affected; or (v) result
in, or require, the creation or imposition of any Lien (other than Permitted
Liens) upon or with respect to any of the Properties owned by IDSC or any of its
Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each
of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each of Borrower and its Subsidiaries
(and of IDSC to the extent it is a party thereto) enforceable against them in
accordance with its respective terms, except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or by principles of equity pertaining to the
availability of equitable remedies.
7.1.4 Capital Structure. Exhibit D hereto states (i) the correct
name of each of the Subsidiaries of IDSC, its jurisdiction of organization and
the percentage of its Voting Stock owned by IDSC or a Subsidiary of IDSC, (ii)
the name of each of IDSC's and each Borrower's corporate or joint venture
Affiliates and the nature of the affiliation, (iii) the number, nature and
holder of all outstanding Securities of Borrower and each Subsidiary of Borrower
and (iv) the number of authorized, issued and treasury shares of Borrower and
each Subsidiary of Borrower. IDSC or Borrower, as the case may be, has good
title to all of the shares it purports to own of the stock of each of its
Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and non-
assessable. Except as set forth on Exhibit D, there are no outstanding options
to purchase, or any rights or warrants to subscribe for, or any commitments or
agreements to issue or sell, or any Securities or obligations convertible into,
or any powers of attorney relating to, shares of the capital stock of IDSC or
any of its Subsidiaries. Except as set forth on Exhibit D, there are no
outstanding agreements or instruments binding upon any of Borrower's
shareholders or member relating to the ownership of its shares of capital stock
or member interests.
7.1.5 Names. Since January 1, 1993, neither IDSC nor any of its
Subsidiaries has been known as or used any corporate, fictitious or trade names
except those listed on Exhibit E hereto. Except (i) pursuant to the IDSC Merger
and (ii) as set forth on Exhibit E, neither IDSC nor any of its Subsidiaries has
been the surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person since January 1, 1993. Each of
IDSC's and its Subsidiaries' states of incorporation or organization, Type of
Organization and Organizational I.D. Number is set forth on Exhibit E. The
exact legal name of IDSC and each of its Subsidiaries is set forth on Exhibit E.
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7.1.6 Business Locations; Agent for Process. Each of IDSC's and
its Subsidiaries' chief executive office and other places of business are as
listed on Exhibit B hereto. Since January 1, 1993, neither IDSC nor any of its
Subsidiaries has had an office, place of business or agent for service of
process other than as listed on Exhibit B. Except as shown on Exhibit B, no
Inventory of Borrower or any of its Subsidiaries is stored with a bailee,
warehouseman or similar Person, nor is any Inventory consigned to or from any
Person.
7.1.7 Title to Properties; Priority of Liens. Each of IDSC and its
Subsidiaries has good and indefeasible title to and fee simple ownership of, or
valid and subsisting leasehold interests in, all of the real Property owned or
leased by it, and good title to all other Property owned or leased by it
(including, without limitation, the Collateral), in each case, free and clear of
all Liens except Permitted Liens. Except as set forth on Exhibit E, neither
IDSC nor any of its Subsidiaries has acquired any of the Collateral from any
Person (other than purchases of Equipment in the ordinary course of business
from the seller thereof within the five-year period immediately preceding the
Closing Date. IDSC or Borrower has paid or discharged all lawful claims which,
if unpaid, might become a Lien against any of IDSC's or Borrower's Properties
that is not a Permitted Lien. The Liens granted to Agent under Section 5 hereof
are first priority Liens, subject only to Permitted Liens or except as otherwise
set forth herein.
7.1.8 Accounts. Agent and Lenders may rely, in determining which
Accounts of Borrower are Eligible Accounts, on all statements and
representations made by Borrower with respect to any Account or Accounts.
Unless otherwise indicated in writing to Agent, with respect to each Account:
(i) It is genuine and in all respects what it purports to be, and
it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and delivery of
goods or rendition of services by Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase orders,
contracts or other documents relating thereto and forming a part of the contract
between Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in the invoice
covering such sale or rendition of services, a copy of which has been furnished
or is available to Agent;
(iv) Such Account, and Agent's security interest therein, for the
benefit of Lenders, is not subject to any offset, Lien, deduction, defense,
dispute, counterclaim or any other adverse condition, except for disputes
resulting in returned goods where the amount in controversy is deemed by Agent
to be immaterial, and each such Account is absolutely owing to Borrower and is
not contingent in any respect or for any reason;
(v) Borrower has made no agreement with any Account Debtor thereunder
for any extension, compromise, settlement or modification of any such Account or
29
any deduction therefrom, except discounts or allowances which are granted by
Borrower in the ordinary course of its business for prompt payment and which are
reflected in the calculation of the net amount of each respective invoice
related thereto and are reflected in the Schedules of Accounts submitted to
Agent pursuant to Section 6.2.1 hereof;
(vi) There are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or tend to reduce the
amount payable thereunder from the face amount of the invoice and statements
delivered to Agent with respect thereto;
(vii) To the best of Borrower's knowledge, the Account Debtor
thereunder (a) had the capacity to contract at the time any contract or other
document giving rise to the Account was executed and (b) such Account Debtor is
Solvent; and
(viii) To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any Account
Debtor thereunder which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such Account.
7.1.9 Financial Statements; Fiscal Year. The respective
Consolidated balance sheets of Petrocon and its Subsidiaries as of October 31,
2001, and Consolidated balance sheet of IDSC and the New Borrowers as of October
31, 2001, and the related statements of income and changes in financial position
for the period ended on such dates, have been prepared substantially in
accordance with GAAP, and present fairly the respective financial position of
Petrocon and its Subsidiaries and of IDSC and New Borrowers at such date and the
results of Petrocon's and its Subsidiaries' operations and of IDSC's and New
Borrowers' operations for such period. Since October 31, 2001, there has been
no material change in the condition, financial or otherwise, of IDSC and its
Subsidiaries and since such date there has been no change in the aggregate value
of Equipment and real Property owned by IDSC and its Subsidiaries, except
changes in the ordinary course of business, none of which individually or in the
aggregate has had a Material Adverse Effect. The fiscal year of IDSC's and each
of its Subsidiaries ends on December 31 of each year.
7.1.10 Full Disclosure. The financial statements referred to in
Section 7.1.9 hereof do not, nor does this Agreement or any other written
statement of IDSC or any of its Subsidiaries to Agent, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading. There is no fact or
circumstance which Borrower has failed to disclose to Agent and Lenders in
writing which could reasonably be expected to have a Material Adverse Effect.
7.1.11 Solvent Financial Condition. Each of IDSC and its
Subsidiaries is now and, after giving effect to the Loans to be made and the
Letters of Credit and LC Guaranties to be issued hereunder, at all times will
be, Solvent.
7.1.12 Surety Obligations. Neither IDSC nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into
30
any agreement to assure payment, performance or completion of performance of any
undertaking or obligation of any Person, other than in the ordinary course of
business.
7.1.13 Taxes. The federal tax identification number of IDSC and
each Borrower and of each of Borrower's Subsidiaries is shown on Exhibit F
hereto. Except as set forth on Exhibit F, IDSC and each of its Subsidiaries has
filed all federal, state and local tax returns and other reports it is required
by law to file and has paid, or made provision for the payment of, all Taxes
upon it, its income and Properties as and when such Taxes are due and payable,
except to the extent any such Taxes are being Properly Contested. The provision
for Taxes on the books of IDSC and its Subsidiaries are adequate for all years
not closed by applicable statutes, and for its current fiscal year.
7.1.14 Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
7.1.15 Patents, Trademarks, Copyrights and Licenses. Each of
Borrower and its Subsidiaries owns or possesses all the patents, trademarks,
service marks, trade names, copyrights and licenses material to the present and
planned future conduct of its business without, except as set forth on Exhibit
G, any known conflict with the rights of others. All such patents, trademarks,
service marks, trade names, copyrights, licenses and other similar rights are
listed on Exhibit G hereto.
7.1.16 Governmental Consents. Each of Borrower and its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Properties as now owned or leased by it.
7.1.17 Compliance with Laws. Except as set forth on Exhibit R,
each of IDSC and its Subsidiaries has duly complied with, and its Properties,
business operations and leaseholds are in compliance in all material respects
with, the provisions of all Applicable Laws (except where the failure to so
comply would not have a Material Adverse Effect), and, to Borrower's knowledge,
there have been no citations, notices or orders of noncompliance issued to IDSC
or any of its Subsidiaries under any such law, rule or regulation. No Inventory
has been produced in violation of the Fair Labor Standards Act (29 U.S.C. (S)
201 et seq.), as amended.
7.1.18 Restrictions. Neither IDSC nor any of its Subsidiaries is a
party or subject to any contract, agreement, or charter or other corporate
restriction, which has, or could reasonably be expected to have, a Material
Adverse Effect. Neither IDSC nor any of its Subsidiaries is a party or subject
to any contract or agreement which restricts its right or ability to incur
Indebtedness, other than as set forth on Exhibit H hereto, none of which
prohibit the execution of or compliance with this Agreement or the other Loan
Documents by Borrower or any of its Subsidiaries, as applicable, or by IDSC.
31
7.1.19 Litigation. Except as set forth on Exhibit I hereto, there
are no actions, suits, proceedings or investigations pending in respect of which
IDSC or Borrower has been served with process or notice, or to the knowledge of
Borrower, threatened, against or affecting IDSC or any of its Subsidiaries, or
the business, operations, Properties, prospects, profits or condition of IDSC or
any of its Subsidiaries. Neither IDSC nor any of its Subsidiaries is in default
with respect to any order, writ, injunction, judgment, decree or rule of any
court, governmental authority or arbitration board or tribunal in respect of a
proceeding to which it is a party.
7.1.20 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither IDSC nor any of its Subsidiaries is in default, and, to Borrower's
knowledge, no event has occurred and no condition exists which constitutes, or
which with the passage of time or the giving of notice or both would constitute,
a default in the payment of any Indebtedness to any Person for Money Borrowed by
IDSC or any Subsidiary of IDSC.
7.1.21 Leases. Exhibit J hereto sets forth a complete listing of
all capitalized leases of IDSC and its Subsidiaries and Exhibit K hereto sets
forth a complete listing of all operating leases of IDSC and its Subsidiaries.
Each of IDSC and its Subsidiaries is in compliance in all material respects with
all of the terms of each of its respective capitalized and operating leases.
7.1.22 Pension Plans. Except as disclosed on Exhibit L hereto,
neither IDSC nor any of its Subsidiaries has any Plan. IDSC and each of its
Subsidiaries is in full compliance in all material respects with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. To Borrower's knowledge, no fact or situation that could result in a
material adverse change in the financial condition of IDSC or any of its
Subsidiaries exists in connection with any Plan. Neither IDSC nor any of its
Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.
7.1.23 Trade Relations. There exists no actual or, to Borrower's
knowledge, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between IDSC or any of its
Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of IDSC or any of
its Subsidiaries, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would have a Material Adverse
Effect or prevent IDSC or any of its Subsidiaries from conducting such business
after the consummation of the transaction contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted.
7.1.24 Labor Relations. Except as described on Exhibit M hereto,
neither IDSC nor any of its Subsidiaries is a party to any collective bargaining
agreement. There are no material grievances, disputes or controversies with any
union or any other organization of Borrower's or any of its Subsidiaries'
employees, or to IDSC's knowledge, threats of strikes,
32
work stoppages or any asserted pending demands for collective bargaining by any
union or organization.
7.1.25 Information Supplied by Borrower. All information, reports,
papers and data given by or on behalf of Borrower to Agent and Lenders with
respect to the Property are accurate, complete and correct in all material
respects and do not omit any fact the inclusion of which is necessary to prevent
the facts contained therein from being materially misleading.
7.1.26 Alliance. Alliance is currently and shall remain an
inactive Subsidiary of Petrocon. Alliance currently owns no Property and shall
not at any time own any Property or engage in any transaction with any other
Person including, without limitation, IDSC or any other Subsidiary of IDSC.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of IDSC's or its Subsidiaries' business or operations that
would render the information in any exhibit attached hereto either inaccurate,
incomplete or misleading, so long as Requisite Lenders have consented to such
changes or such changes are expressly permitted by this Agreement, and except
for such representations and warranties that by their nature are limited only to
a specific date in time.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall (i) survive the execution, delivery and acceptance thereof by
Agent and/or Lenders and the parties thereto and the closing of the transactions
described therein or related thereto, and (ii) expire the later to occur of (a)
the date of termination of this Agreement, (b) the date that the Obligations
have been paid in full in immediately available funds and all Letters of Credit
and LC Guaranties have expired or have been cash collateralized to Agent's
satisfaction, and (c) the date that the Commitments have been terminated and the
Lenders no longer have any obligation to make any Loans hereunder.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless otherwise consented to by Requisite Lenders in
writing, it shall:
8.1.1 Visits and Inspections. Permit representatives of Agent and
Lenders, from time to time, as often as may be reasonably requested, but only
during normal business hours, to (i) visit and inspect its Properties and the
Properties of each of its Subsidiaries, and (ii) inspect, audit and make
extracts from its books and records, and discuss with its officers, its
employees and its independent accountants, Borrower's and each of its
Subsidiaries' business, assets, liabilities, financial condition, business
prospects and results of operations. Notwithstanding anything to the contrary
contained in this Section 8.1.1 or elsewhere in this Agreement, no
33
Lender shall be permitted to visit and inspect the Properties of Borrower or its
Subsidiaries at a time that Agent is not also visiting and inspecting such
Properties.
8.1.2 Notices. Notify Agent and each Lender in writing (i) of the
occurrence of any event or the existence of any fact which renders any
representation or warranty in this Agreement or any of the other Loan Documents
inaccurate, incomplete or misleading; (ii) promptly after Borrower's learning
thereof, of the commencement of any litigation affecting IDSC, any Subsidiary of
IDSC or any of their respective Properties, whether or not the claim is
considered by Borrower to be covered by insurance, and of the institution of any
administrative proceeding, in each case which if determined adversely to IDSC or
any of its Subsidiaries, would have a Material Adverse Effect; (iii) at least
sixty (60) days prior thereto, of Borrower's opening of any new office or place
of business or Borrower's closing of any existing office or place of business;
(iv) promptly after Borrower's learning thereof, of any labor dispute to which
IDSC or any of its Subsidiaries may become a party, any strikes or walkouts
relating to any of their respective plants or other facilities, and the
expiration of any labor contract to which any of them is a party or by which any
of them is bound; (v) promptly after Borrower's learning thereof, of any
material default by any Loan Party under any note, indenture, loan agreement,
mortgage, lease, deed, guaranty or other similar agreement relating to any
Indebtedness exceeding Fifty Thousand Dollars ($50,000); (vi) promptly after the
occurrence thereof, of any Default or Event of Default; (vii) promptly after the
occurrence thereof, of any default by any obligor under any note or other
evidence of Indebtedness of Fifty Thousand Dollars ($50,000) or more payable to
Borrower or any of its Subsidiaries; and (viii) promptly after the rendition
thereof, of any judgment rendered against any Loan Party in an amount exceeding
One Hundred Thousand Dollars ($100,000).
8.1.3 Financial Statements. Keep, and cause IDSC and each
Subsidiary of IDSC to keep, adequate records and books of account with respect
to its business activities in which proper entries are made in accordance with
GAAP reflecting all its financial transactions; and cause to be prepared and
furnished to Agent and each Lender the following (all to be prepared in
accordance with GAAP applied on a consistent basis, unless Borrower's certified
public accountants concur in any change therein and such change is disclosed to
Agent and each Lender and is consistent with GAAP, provided that interim
financial statements will not be required to contain footnotes and will continue
to follow the format of the interim financial statements supplied pursuant to
the Original Loan Agreement):
(i) as soon as available, but not later than one hundred twenty (120)
days after the close of each fiscal year of IDSC, unqualified audited financial
statements of IDSC and its Subsidiaries as of the end of such year, on a
Consolidated basis, consisting of a balance sheet, income statement and
statement of cash flows, certified by a firm of independent certified public
accountants of recognized standing selected by IDSC but acceptable to Agent and
each Lender (except for a qualification for a change in accounting principles
with which the accountant concurs);
(ii) as soon as available, but not later than thirty (30) days after
the end of each month hereafter, including the last month of IDSC's fiscal year,
unaudited interim
34
financial statements of IDSC and its Subsidiaries as of the end of such month
and of the portion of IDSC's financial year then elapsed, on a Consolidated
basis, consisting of a balance sheet, income statement and statement of cash
flows, certified by the principal financial officer of IDSC as prepared in
accordance with GAAP and fairly presenting the Consolidated financial position
and results of operations of IDSC and its Subsidiaries for such month and period
subject only to changes from audit and year-end adjustments and except that such
statements need not contain footnotes;
(iii) promptly after the sending or filing thereof, as the case may
be, copies of any proxy statements, financial statements or reports which IDSC
and/or its Subsidiaries has made available to its shareholders and copies of any
regular, periodic and special reports or registration statements which IDSC
and/or its Subsidiaries files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;
(iv) promptly after the filing thereof, copies of any annual report to
be filed with ERISA in connection with each Plan;
(v) as soon as possible, but not later than the twenty (20) days after
the end of each month hereafter, an accounts payable aging schedule, in form and
content reasonably satisfactory to Agent; and
(vi) such other data and information (financial and otherwise) as
Agent, from time to time, may reasonably request, bearing upon or related to the
Collateral or IDSC's and each of its Subsidiaries' accounts payable, accounts
receivable, financial condition or results of operations.
Concurrently with the delivery of the financial statements described
in clause (i) of this Section 8.1.3, Borrower shall forward to Agent and each
Lender a copy of the accountants' letter to IDSC's management that is prepared
in connection with such audited financial statements and also shall cause to be
prepared and shall furnish to Agent and each Lender a report of the aforesaid
certified public accountants reporting to Agent and each Lender that, based upon
their examination of the financial statements of IDSC and its Subsidiaries
performed in connection with their examination of said financial statements,
they are not aware of any Default or Event of Default, or, if they are aware of
such Default or Event of Default, specifying the nature thereof, and
acknowledging, in a manner satisfactory to Agent and each Lender, that they are
aware that Agent and each Lender is relying on such financial statements in
making its decisions with respect to the Loans. Concurrently with the delivery
of the financial statements described in clauses (i) and (ii) of this Section
8.1.3, or more frequently if requested by Agent, Borrower shall cause to be
prepared and furnished to Agent and each Lender a Compliance Certificate in the
form of Exhibit N hereto executed by the Chief Financial Officer of Borrower.
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8.1.4 Landlord and Storage Agreements. Provide Agent with copies
of all agreements between IDSC or any of its Subsidiaries and any landlord or
warehouseman which owns any premises at which any Inventory may, from time to
time, be kept.
8.1.5 Projections. No later than fifteen (15) days prior to the
end of each fiscal year of IDSC beginning December 31, 2001, deliver to Agent
and each Lender projections of IDSC and its Subsidiaries (consisting of
Consolidated balance sheets, income statements and cash flow statements,
together with appropriate supporting details and underlying assumptions) for the
forthcoming fiscal year, month by month, the form of which shall be consistent
with those furnished by Existing Borrowers to Agent and each Lender under the
Original Loan Agreement.
8.1.6 Taxes. Pay and discharge, and cause IDSC and each Subsidiary
of IDSC to pay and discharge, all Taxes prior to the date on which such Taxes
become delinquent or penalties attach thereto, except and only to the extent
that such Taxes are being Properly Contested.
8.1.7 Compliance with Laws. Comply and cause IDSC and each
Subsidiary of IDSC to comply, with all Applicable Laws, including all laws,
statutes, regulations and ordinances regarding the collection, payment and
deposit of all Taxes, and all ERISA and Environmental Laws, and obtain and keep
in force any and all licenses, permits, franchises, or other governmental
authorizations material to the ownership of its Properties or to the conduct of
its business, which noncompliance or failure to obtain could reasonably be
expected to have a Material Adverse Effect.
8.1.8 Insurance. In addition to the insurance required herein with
respect to the Collateral, Borrower and each of its Subsidiaries shall maintain,
with financially sound and reputable insurers, insurance with respect to its
Properties and business against such casualties and contingencies of such type
(including product liability, business interruption, larceny, embezzlement, or
other criminal misappropriation insurance) as is customary in its business and
in such amounts as is reasonably acceptable to Agent.
8.1.9 Dissolution of Petrocon FSC Ltd. Provide to Agent within 90
days of the Closing Date, evidence satisfactory to Agent that Petrocon FSC Ltd.
has been dissolved.
8.1.10 Deposit and Brokerage Accounts. For each deposit account
or brokerage account that Borrower at any time opens or maintains, Borrower
shall, at Agent's request and option, pursuant to an agreement in form and
substance satisfactory to Agent, cause the depository bank or securities
intermediary, as applicable, to agree to comply at any time with instructions
from Agent to such depository bank or securities intermediary, as applicable,
directing the disposition of funds from time to time credited to such deposit or
brokerage account, without further consent of Borrower.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless Requisite Lenders have first consented thereto
in writing, it will not:
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8.2.1 Mergers; Consolidations; Acquisitions. Except pursuant to
the IDS Merger, (i) merge or consolidate, or permit any of its Subsidiaries to
merge or consolidate, with any Person; nor (ii) acquire, nor permit any of its
Subsidiaries to acquire, all or any substantial part of the Properties of any
Person, or (iii) change its or any of its Subsidiaries' state of incorporation
or organization or Type of Organization, nor (iv) change its or any of its
Subsidiaries' legal names (provided, however, that notwithstanding the above,
one or more Borrowers may merge with and into any other Borrower).
8.2.2 Loans. Make, or permit IDSC or any of IDSC's Subsidiaries to
make, any loans or other advances of money to any Person, except for (i) travel
advances, advances against commissions and other similar advances in the
ordinary course of business, (ii) such loans or other advances as are
outstanding on the Closing Date and disclosed in writing to Agent, (iii)
extensions of trade credit in the ordinary course of business, (iv) prior to the
occurrence of any Default or Event of Default, intercompany loans and advances
from one Borrower to another Borrower, (v) prior to the occurrence of any
Default or Event of Default, payments of scheduled principal and interest when
due in respect of the PAL Note in accordance with its terms, and (vi) the
remittance to PAL of Accounts arising out of services performed by PAL's
employees in PAL's capacity as a subcontractor to Borrower; provided, however,
that Borrower shall give Agent prompt written notice of any such payment or
remittance that is made to PAL under clause (v) or (vi) of this Section 8.2.2
(and, if requested by Agent, Borrower shall furnish Agent with such supporting
information as Agent shall reasonably request regarding any such loan or
remittance).
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to
exist, or permit any of its Subsidiaries to create, incur or suffer to exist,
any Indebtedness, except:
(i) Obligations owing to Agent or any Lender;
(ii) Subordinated Debt;
(iii) Indebtedness of any Subsidiary of Borrower to Borrower or
between Borrowers (to the extent permitted under Section 8.2.2(ii));
(iv) accounts payable to trade creditors and current operating
expenses (other than for (a) Money Borrowed and (b) accounts payable owing by
Borrower to PAL) which are not aged more than sixty (60) days from the due date,
in each case incurred in the ordinary course of business and paid within such
time period, unless the same are being Properly Contested;
(v) Obligations to pay Rentals permitted by Section 8.2.13;
(vi) Permitted Purchase Money Indebtedness;
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(vii) contingent liabilities arising out of endorsements of checks
and other negotiable instruments for deposit or collection in the ordinary
course of business;
(viii) Indebtedness existing on the date hereof and described on
Exhibit O hereto (including Loans to PAL), and any extensions, renewals or
refinancings thereof so long as (i) the principal amount thereof does not exceed
the then outstanding principal amount of the Indebtedness being so extended,
renewed or refinanced, and (ii) the amortization of principal on any such
refinancings shall be for no shorter period, and for no greater annual amounts,
than the original amortization established for such Indebtedness; and
(ix) contingent obligations under any guarantee by Borrower or its
Subsidiaries of any of the obligations of any other Subsidiary as lessee under
any lease which is otherwise permitted under this Agreement;
(x) Indebtedness constituting deposits to secure the performance of
bids, trade contracts (other than for Money Borrowed), leases, statutory
obligations, surety and appeal bonds and performance bonds under other
obligations of a like nature that are incurred in the ordinary course of
business, not to exceed Five Hundred Thousand Dollars ($500,000) in the
aggregate at any time outstanding;
(xi) indemnities arising under agreements entered into by Borrower or
any of its Subsidiaries in the ordinary course of business;
(xii) Indebtedness arising on account of deferred taxes, deferred
workers' compensation liabilities, or deferred employee medical liabilities;
(xiii) Indebtedness owing to ▇▇▇▇▇ and ▇▇▇▇▇ not to exceed $475,000
and paid pursuant to the ▇▇▇▇▇/▇▇▇▇▇ Settlement;
(xiv) Indebtedness owing to Equus pursuant to the Equus Term Note; and
(xv) Indebtedness not included in paragraphs (i) through (xii) above
which does not exceed at any time, in the aggregate, the sum of One Hundred
Thousand Dollars ($100,000).
8.2.4 Affiliate Transactions. Enter into or be a party to, or
permit any of its Subsidiaries to enter into or be a party to, any transaction
with any Affiliate or stockholder, except (i) those in existence on the Closing
Date and fully disclosed to Agent, or (ii) in the ordinary course of and
pursuant to the reasonable requirements of Borrower's or such Subsidiary's
business and upon fair and reasonable terms which are fully disclosed to Agent
and are no less favorable than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate or stockholder of Borrower or such
Subsidiary.
38
8.2.5 Limitation on Liens. Create or suffer to exist, or permit
any its Subsidiaries to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Agent or any Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant to any of
the provisions of ERISA) not yet due or being Properly Contested;
(iii) Liens arising in the ordinary course of its business by
operation of law or regulation in favor of materialmen, mechanics, carriers,
warehousemen, landlords and similar Persons, but only if (a) payment in respect
of any such Lien is not at the time required or (b) the Indebtedness secured by
such Lien is being Properly Contested and such Lien does not materially detract
from the value of the Property or materially impair the use thereof in the
operation of its business;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) Liens securing Indebtedness of one of Borrower's Subsidiaries to
Borrower or another such Subsidiary;
(vi) such other Liens as appear on Exhibit P hereto;
(vii) with respect to any real Property of Borrower or any of its
Subsidiaries, such other easements or encumbrances or other imperfections of
title to the extent they do not materially affect the value of, interfere with
the use of, or materially impair the business or operations of, Borrower or any
of its Subsidiaries;
(viii) Liens securing the Equus Term Note which are subordinated to
the Agent's Liens in a manner and pursuant to documentation satisfactory to
Agent; and
(ix) such other Liens as Requisite Lenders may hereafter approve in
writing.
8.2.6 Subordinated Debt; Management Fees. Make, or permit any of
its Subsidiaries to make, any payment of all or any part of any (a) Subordinated
Debt or take any other action or omit to take any other action in respect of any
Subordinated Debt (including, but not limited to, any amendment, supplement or
modification of any agreement, instrument or document evidencing any such
Subordinated Debt), and (b) management fees, consulting fees or similar payments
(excluding ordinary and reasonable fees and reimbursable expenses which are
payable by Borrower to members of its Board of Directors as remuneration for
serving as a board member) to any Person, including, without limitation, Equus
or any Affiliate of Equus. Absent the prior written consent of Requisite
Lenders, Borrower shall not make, and shall not permit any of its Subsidiaries
to make, a prepayment of all or any part of any Subordinated Debt.
39
Notwithstanding the foregoing, so long as no Default or Event of Default has
occurred and is continuing, or would result therefrom, Borrower may make and pay
all regularly scheduled (x) principal and interest payments when due on the PAL
Note and (y) consulting fees due pursuant to the terms of the Consultant
Agreement, as in effect on July 1, 2001, by and between Petrocon and ▇▇▇▇▇ ▇▇-
▇▇▇▇▇▇, an individual domiciled in Riyadh, Saudi Arabia. In addition, Borrower
shall be permitted to make payments on the Equus Term Note to the extent
permitted under the Equus Intercreditor Agreement.
8.2.7 Distributions. Declare or make, or permit any of its
Subsidiaries to declare or make, any Distributions, except the ▇▇▇▇▇/▇▇▇▇▇
Distribution.
8.2.8 Capital Expenditures. Make Capital Expenditures (including
Capitalized Lease Obligations) which, in the aggregate, as to Borrower and its
Subsidiaries, exceed Six Hundred Thousand Dollars ($600,000) during any fiscal
year.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of,
or permit IDSC or any of its Subsidiaries to sell, lease or otherwise dispose
of, any of its Properties, including any disposition of Property as part of a
sale and leaseback transaction, to or in favor of any Person, except for (i)
sales of Inventory in the ordinary course of business for so long as no Event of
Default exists hereunder, (ii) a transfer of Property to Borrower by a
Subsidiary of Borrower, (iii) the sale, lease or other disposition of Equipment
to the extent permitted under Section 6.3.2, (iv) the lease (as lessor) of any
real Property, so long as (a) the real Property subject to any such lease is not
necessary for the conduct of Borrower's or any Subsidiary's business and (b) any
such lease is collaterally assigned to Agent, for the benefit of Lenders, as
collateral security for the Obligations, (v) the sale, assignment, lease,
transfer or other disposition of Property by a Borrower to another Borrower so
long as (a) no Default or Event of Default then exists or would exist after
giving effect to any such transfer, (b) the transferee Borrower is organized
under the laws of the United States or any state thereof and conducts its
operations within the United States, (c) the Property so transferred will
continue to be located at a business location of Borrower listed on Exhibit B
hereto and (d) such transfer is otherwise permitted under Section 8.2.4 hereof,
or (vi) dispositions expressly authorized by this Agreement.
8.2.10 Stock of Subsidiaries. Permit Borrower or any of its
Subsidiaries to issue any additional shares of its capital stock, except
director's qualifying shares.
8.2.11 ▇▇▇▇-and-Hold Sales, Etc. During any calendar year make
sales on a ▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval or
consignment basis, or on a repurchase or return basis, in excess of $5,000,000
in the aggregate for all Borrowers.
8.2.12 Restricted Investment. Make or have, or permit IDSC or any
of its Subsidiaries to make or have, any Restricted Investment.
8.2.13 Operating Leases. Become, or permit IDSC or any of its
Subsidiaries to become, a lessee under any operating lease (other than a lease
under which Borrower or any of its Subsidiaries is lessor) of Property if the
aggregate Rentals payable during any current or future
40
period of twelve (12) consecutive months under the lease in question and all
other leases under which IDSC or any of its Subsidiaries is then lessee would
exceed Three Million Five Hundred Thousand Dollars ($3,500,000). The term
"Rentals" means, as of the date of determination, all payments which the lessee
is required to make by the terms of any operating lease.
8.2.14 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than its Subsidiaries or
another Borrower.
8.2.15 RPM Earnout Payment. Make, or permit IDSC or any of its
Subsidiaries to make, any payment of all or any part of any RPM Earnout Payment
or take any other action or omit to take any other action in respect of any RPM
Earnout Payment (including, but not limited to, any amendment, supplement or
modification of any agreement, instrument, or document evidencing any such RPM
Earnout Payment); provided, however, that so long as no Default or Event of
Default has occurred and is continuing, Borrower may make and pay the RPM
Earnout Payments when due in accordance with the RPM Stock Purchase Agreement.
8.3 Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Agent or any Lenders,
Borrower covenants that, unless otherwise consented to by Requisite Lenders in
writing, it shall:
8.3.1 Fixed Charge Ratio. Maintain, on a Consolidated basis, as of
the last day of each calendar month set forth below, for the twelve- (12)
calendar month period ending on such date, a Fixed Charge Ratio equal to or
greater than the ratio set forth below for the period corresponding thereto:
Period Ratio
------------------------------------- -------
September 31, 2001 - December 31, 2001 1.00 to 1:00
January 31, 2002 - May 31, 2002 1.1 to 1:00
June 30, 2002 and thereafter 1.15 to 1.00
8.3.2 Ratio of Senior Debt and Equus Term Note to EBITDA. Maintain, on
a Consolidated basis, as of the end of each calendar month set forth below, a
ratio of (i) the sum of (a) Borrower's Senior Debt on such date and (b) the
unpaid principal amount of the Equus Term Note on such date, to (ii) Borrower's
EBITDA for the twelve- (12) calendar month period ending on such date, equal to
or greater than the ratio set forth below for the period corresponding thereto:
Period Ratio
-------------------------------------- -------
September 31, 2001 - December 31, 2001 2.50 to 1:00
January 31, 2002 - February 28, 2002 3.50 to 1:00
41
March 31, 2002 - May 31, 2002 3.25 to 1.00
June 30, 2002 - August 31, 2002 3.00 to 1.00
September 30, 2002 - November 30, 2002 2.75 to 1.00
December 31, 2002 and thereafter 2.50 to 1.00
8.3.3 Costs in Excess of ▇▇▇▇▇▇▇▇ Amount Maintain, on a Consolidated
basis, as of the last day of each calendar month, a Costs in Excess of ▇▇▇▇▇▇▇▇
Amount of not greater than $5,500,000.
SECTION 9. CONDITIONS PRECEDENT
Subject to the satisfaction in a manner and pursuant to documentation
satisfactory to Agent of the conditions specified in this Section 9, Agent and
Lenders hereby consent to the consummation of the Transactions. Notwithstanding
any other provision of this Agreement or any of the other Loan Documents, and
without affecting in any manner the rights of Agent or any Lender under the
other sections of this Agreement, no Lender shall be required to make any Loan
under this Agreement unless and until each of the following conditions has been
and continues to be satisfied:
9.1 Documentation. Agent shall have received, in form and substance
satisfactory to Agent and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Agent and its counsel shall reasonably require
in connection therewith from time to time, all in form and substance
satisfactory to Agent and its counsel, including, without limitation, the Stock
Pledge Agreement, the Equus Intercreditor Agreement, and the Guaranty
Agreements.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Availability. Agent shall have determined that immediately after
consummation of the Transactions and the making by Lenders on the Closing Date
of the Loans contemplated hereby, and payment (or provisions made for payment
of) all closing costs incurred in connection with the transactions contemplated
hereby, including, without limitation, the Transactions, Availability shall not
be less than Two Million Dollars ($2,000,000).
9.4 Organizational and Governing Documents. Agent shall have received a
copy of the organizational and governing documents of IDSC and each of its
Subsidiaries, and all amendments thereto, certified where relevant by the
Secretary of State or other appropriate official of the jurisdiction of IDSC's
and each Subsidiary's organization.
9.5 Good Standing Certificates. Agent shall have received good standing
certificates for IDSC and each of its Subsidiaries, issued by the Secretary of
State or other appropriate official of IDSC's and each Subsidiary's jurisdiction
of organization and each jurisdiction where
42
the conduct of IDSC's or any of its Subsidiary's business activities or
ownership of its Property necessitates qualification.
9.6 Opinion Letters. Agent shall have received a favorable, written
opinion of counsel to Borrower, as to the transactions contemplated by this
Agreement, including, without limitation, the Transactions, to be in form and
substance satisfactory to Agent and Agent's counsel.
9.7 Insurance. Agent shall have received binders with respect to the
casualty insurance policies of IDSC and each of its Subsidiaries, together with
loss payable endorsements on Agent's standard form of loss payee endorsement
naming Agent as loss payee and binders with respect to IDSC's and each such
Subsidiary's liability insurance policies, together with endorsements naming
Agent as a co-insured.
9.8 Dominion Account. Agent shall have received the duly executed
agreements establishing the Dominion Accounts with one or more financial
institutions acceptable to Agent for the collection or servicing of the
Accounts.
9.9 Landlord Agreements. Agent shall have received all landlord or
warehouseman agreements with respect to all premises leased by IDSC and its
Subsidiaries and which are disclosed on Exhibit K hereto.
9.10 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body 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 hereby.
9.11 Evidence of Perfection and Priority of Liens in Collateral. Agent
shall have received copies of all filing receipts or acknowledgments issued by
any governmental authority to evidence any filing or recordation necessary to
perfect the Liens of Agent in the Collateral and evidence in form satisfactory
to Agent that such Liens constitute valid and perfected security interests and
Liens, and that there are no other Liens upon any Collateral except for
Permitted Liens.
9.12 Evidence of Consummation of IDSC Merger and Equus Subordinated Debt
Restructuring. Agent shall have received evidence satisfactory to Agent, in
its sole discretion, of the consummation of the IDSC Merger and the Equus
Subordinated Debt Restructuring in conformity with the terms, conditions and
provisions described in the recitals of this Agreement, pursuant to
documentation and related materials satisfactory to Agent, and Agent shall have
received copies of all such documentation and materials.
9.13 Documentation Relating to Transactions. Agent shall have received
all other documentation and materials relating to the Transactions as shall be
required by Agent, all of which shall be in form and substance satisfactory to
Agent.
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9.14 No Material Adverse Effect. No Material Adverse Effect shall have
occurred with respect to IDSC or any Subsidiary of IDSC between October 31, 2001
and the Closing Date.
9.15 Average Daily Availability. For the thirty days prior to the Closing
Date, Average Daily Availability shall have been not less than $2,000,000.
9.16 Closing Fee. Agent shall have received for the account of Lenders
payment by Borrower of the closing fee provided for in Section 2.3 of this
Agreement.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Note. Borrower shall fail to pay any installment of
principal, interest or premium, if any, owing on the Notes on the due date of
such installment.
10.1.2 Payment of Other Obligations. Borrower shall fail to pay
any of the Obligations that are not evidenced by the Notes on the due date
thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise).
10.1.3 Misrepresentations. Any representation, warranty or other
statement made or furnished to Agent or any Lender by or on behalf of Borrower,
any Subsidiary of Borrower or any other Loan Party in this Agreement, any of the
other Loan Documents or any instrument, certificate or financial statement
furnished in compliance with or in reference thereto proves to have been false
or misleading in any material respect when made or furnished or when reaffirmed
pursuant to Section 7.2 hereof.
10.1.4 Breach of Specific Covenants. Borrower shall fail to
perform, keep or observe any covenant contained in Sections 5.2, 5.3, 5.4,
6.1.1, 6.1.2, 6.2, 8.1.1, 8.1.3, 8.2 or 8.3 hereof on the date that Borrower is
required to perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrower shall fail to perform,
keep or observe any covenant contained in this Agreement (other than a covenant
which is dealt with specifically elsewhere in Section 10.1 hereof) and the
breach of such other covenant is not cured to Requisite Lenders' satisfaction
within ten (10) days after the sooner to occur of Borrower's receipt of notice
of such breach from Agent or the date on which such failure first becomes known
to any officer of Borrower.
10.1.6 Default Under Other Agreements. Any event of default shall
occur under, or any Loan Party shall default in the performance or observance of
any term, covenant, condition or agreement contained in, the Other Agreements
and such default shall continue beyond any applicable grace period.
44
10.1.7 Other Defaults. There shall occur any default or event of
default on the part of Borrower or any of its Subsidiaries under any agreement,
document or instrument to which Borrower or any such Subsidiary is a party or by
which Borrower or any of its Subsidiaries or any of their respective Property is
bound, creating or relating to any Indebtedness (other than the Obligations)
having an outstanding principal amount (individually or in the aggregate) of One
Hundred Thousand Dollars ($100,000) or more, if the payment or maturity of such
Indebtedness is or may be accelerated in consequence of such event of default or
demand for payment of such Indebtedness is made.
10.1.8 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Agent shall have permitted) by insurance.
10.1.9 Adverse Changes. There shall occur any material adverse
change in the financial condition or business prospects of Borrower or any Loan
Party which has a Material Adverse Effect.
10.1.10 Insolvency and Related Proceedings. Any Loan Party shall
cease to be Solvent or shall suffer the appointment of a receiver, trustee,
custodian or similar fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be filed by or against
a Loan Party under the Bankruptcy Code (and if, with respect to any petition
filed against any Loan Party, such proceeding shall continue for more than
thirty (30) days), or any Loan Party shall make any offer of settlement,
extension or compromise to such Loan Party's unsecured creditors generally.
10.1.11 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower or any Subsidiary of
Borrower for a period which significantly affects Borrower's or such
Subsidiary's capacity to continue its business, on a profitable basis; or
Borrower or any Subsidiary of Borrower shall suffer the loss or revocation of
any license or permit now held or hereafter acquired by Borrower or such
Subsidiary which is necessary to the continued or lawful operation of its
business; or Borrower or any Subsidiary of Borrower shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which Borrower or any Subsidiary of
Borrower leases, uses or occupies any Property shall be canceled or terminated
prior to the expiration of its stated term; or any part of the Collateral shall
be taken through condemnation or the value of such Property shall be impaired
through condemnation and the fair market value of such Collateral exceeds Fifty
Thousand Dollars ($50,000).
10.1.12 Change of Ownership. (i) The occurrence of any transaction
or event by which (a) a majority of the Board of Directors of IDSC shall consist
of Persons who are not Continuing Directors, or (b) a majority of the Board of
Directors of Petrocon shall consist of Persons who are not Continuing Directors;
or (ii) (a) Equus shall sell, transfer or otherwise dispose of any Voting Stock
and/or Voting Stock Equivalents of Petrocon owned by it on the Closing Date, or
(b) Equus or its designees shall cease to maintain the number of seats on the
45
Board of Directors of Petrocon or IDSC held by it/them on the Closing Date; or
(iii) Petrocon shall cease to own and control, beneficially and of record, all
of the issued and outstanding capital stock of each of its Subsidiaries that is
a Borrower; or (iv) IDSC shall cease to own and control, beneficially and of
record, all of the issued and outstanding equity ownership interests of IDS
Engineering, Thermaire, Data, Management and Constant Power; or (v) Management
shall cease to own and control, beneficially and of record, all of the issued
and outstanding capital stock of Petrocon.
10.1.13 ERISA. A Reportable Event shall occur which Agent, in its
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if IDSC or any Subsidiary of IDSC is in "default" (as defined
in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from IDSC's or such Subsidiary's complete or partial withdrawal from
such Plan.
10.1.14 Challenge to Agreement. Borrower, any Subsidiary of Borrower
or any other Loan Party, or any Affiliate of any of them, shall challenge or
contest in any action, suit or proceeding the validity or enforceability of this
Agreement, or any of the other Loan Documents, the legality or enforceability of
any of the Obligations or the perfection or priority of any Lien granted to
Agent.
10.1.15 Criminal Forfeiture. IDSC or any Subsidiary of IDSC shall be
criminally indicted or convicted under any law that could lead to a forfeiture
of any Property of IDSC or any Subsidiary of Borrower.
10.1.16 Judgments. Any (i) money judgment(s) in excess of One
Hundred Thousand Dollars ($100,000) is/are filed against IDSC or any Subsidiary
of IDSC or any of their respective Property, and such judgment(s) shall remain
unpaid, unsatisfied by insurance, and unstayed for more than thirty (30) days,
whether or not consecutive, or (ii) writ of attachment or similar process is
filed against IDSC or any Subsidiary of IDSC, or any of their respective
Property, and such writ of attachment or similar process is not bonded or
secured in an amount and manner reasonably satisfactory to Agent.
10.1.17 Repudiation of or Default Under Guaranty Agreements. Any
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
10.2 Acceleration of the Obligations. Without in any way limiting the
right of Agent and/or Lenders to demand payment of any portion of the
Obligations payable on demand in accordance with Section 3.2 hereof, upon or at
any time after the occurrence and during the continuance of an Event of Default,
all or any portion of the Obligations shall, at the option of Agent and/or
Requisite Lenders and without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration, or any other further notice by Agent or any
Lender, become at once due and payable and Borrower shall forthwith pay to
Lenders, the full amount of such
46
Obligations; provided, however, that upon the occurrence of an Event of Default
specified in Section 10.1.10 hereof, all of the Obligations shall become
automatically due and payable without declaration, notice or demand by Agent or
Lenders.
10.3 Other Remedies. Upon and after the occurrence and during the
continuance of an Event of Default, Lender may or upon demand by Requisite
Lenders shall, exercise from time to time the following rights and remedies:
10.3.1 All of the rights and remedies of a secured party under the
Code or under other Applicable Law, and all other legal and equitable rights to
which Agent or any Lender may be entitled, all of which rights and remedies
shall be cumulative and shall be in addition to any other rights or remedies
contained in this Agreement or any of the other Loan Documents, and none of
which shall be exclusive.
10.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrower to assemble the Collateral, at Borrower's expense, and
make it available to Agent at a place designated by Agent which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Agent for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Agent, in
its sole discretion, may deem advisable. Borrower agrees that any requirement
of notice to Borrower of any proposed public or private sale or other
disposition of Collateral by Agent shall be deemed reasonable notice thereof if
given at least ten (10) days prior thereto, and any such sale may be held at
such locations as Agent may designate in said notice. Agent shall have the
right to conduct such sales on Borrower's premises, without charge therefor, and
such sales may be adjourned from time to time in accordance with Applicable Law.
Agent shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Agent or any Lender may purchase all or any part of the Collateral at public
or, if permitted by law, private sale and, in lieu of actual payment of such
purchase price, may set off the amount of such price against the Obligations.
The proceeds realized from the sale of any Collateral may be applied, after
allowing two (2) Business Days for collection, first to the reasonable costs,
expenses and attorneys' fees incurred by Agent or any Lender in collecting the
Obligations, in enforcing the rights of Agent or any Lender under the Loan
Documents and in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivering any Collateral; second to
the interest due upon any of the Obligations; third, to the principal of the
Obligations, and fourth, to Borrower. If any deficiency shall arise, Borrower
shall remain liable to Agent and Lenders therefor.
10.3.4 The right to exercise all of Agent's rights and remedies under
any mortgage/deed of trust with respect to any real Property forming a part of
the Collateral.
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10.3.5 For the limited purpose of exercising their rights under this
Section 10, Lenders are hereby granted a license or other right to use, without
charge, Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter, or any Property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral and Borrower's rights under all licenses and all
franchise agreements shall inure to Agent's and Lenders' benefit.
10.3.6 Agent may, at its option, require Borrower to deposit with
Agent funds equal to the LC Amount and, if Borrower fails to promptly make such
deposit, Agent may advance such amount as a Revolving Credit Loan (whether or
not an Out-of-Formula Condition is created thereby). Any such deposit or
advance shall be held by Agent as a reserve to fund future payments on such LC
Guaranties and future drawings against such Letters of Credit. At such time as
all LC Guaranties have been paid or terminated and all Letters of Credit have
been drawn upon or expired, any amounts remaining in such reserve shall be
applied against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to Borrower.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Agent or contained in any other agreement between
Agent and/or any Lender and Borrower, heretofore, concurrently, or hereafter
entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Agent and/or any Lender to
require strict performance by Borrower of any provision of this Agreement or to
exercise or enforce any rights, Liens, powers, or remedies hereunder or under
any of the aforesaid agreements or other documents or security or Collateral
shall not operate as a waiver of such performance, Liens, rights, powers and
remedies, but all such requirements, Liens, rights, powers, and remedies shall
continue in full force and effect until all Loans and all other Obligations
owing or to become owing from Borrower to Agent and/or any Lender shall have
been fully satisfied. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or any of
the other Loan Documents and no Event of Default by Borrower under this
Agreement or any other Loan Documents shall be deemed to have been suspended or
waived by Agent and/or any Lender, unless such suspension or waiver is by an
instrument in writing specifying such suspension or waiver and is signed by a
duly authorized representative of Agent and Requisite Lenders and directed to
Borrower.
10.5 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower's true and lawful attorney (and agent-in-fact) and Agent, or Agent's
agent, may, without notice to Borrower and in either Borrower's or Agent's name,
but at the cost and expense of Borrower:
10.5.1 At such time or times as Agent or said agent, in its sole
discretion, may determine, upon the occurrence and during the continuance of an
Event of Default, endorse
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Borrower's name on any checks, notes, acceptances, drafts, money orders or any
other evidence of payment or proceeds of the Collateral which come into the
possession of Agent or any Lender or under Agent's or any Lender's control.
10.5.2 At such time or times upon or after the occurrence and during
the continuance of an Event of Default as Agent or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of Borrower's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal proceedings brought
to collect any of the Accounts or other Collateral; (iii) sell or assign any of
the Accounts and other Collateral upon such terms, for such amounts and at such
time or times as Agent deems advisable; (iv) take control, in any manner, of any
item of payment or proceeds relating to any Collateral; (v) prepare, file and
sign Borrower's name to a proof of claim in bankruptcy or similar document
against any Account Debtor or to any notice of lien, assignment or satisfaction
of lien or similar document in connection with any of the Collateral; (vi)
receive, open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such address as Agent
may designate; (vii) endorse the name of Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Agent on account of the Obligations; (viii) endorse the name of
Borrower upon any chattel paper, document, instrument, invoice, freight ▇▇▇▇,
▇▇▇▇ of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use Borrower's stationery and sign the
name of Borrower to verifications of the Accounts and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Accounts,
Inventory, Equipment and any other Collateral; (xi) make and adjust claims under
policies of insurance; and (xii) do all other acts and things necessary, in
Agent's determination, to fulfill Borrower's obligations under this Agreement.
SECTION 11. ASSIGNMENT AND PARTICIPATION
11.1 Assignments and Participations in Loans.
(A) Each Lender may assign its rights and delegate its obligations
under this Agreement to another Person; provided, that (a) such Lender shall
first obtain the written consent of Agent, and, while no Default or Event of
Default exists, Borrower, in each case which shall not be unreasonably withheld,
(b) the amount of Commitments and Loans of the assigning Lender being assigned
shall in no event be less than the lesser of (i) $5,000,000 or (ii) the entire
amount of the Commitments and Loans of such assigning Lender and (c)(i) each
such assignment shall be of a pro rata portion of all such assigning Lender's
Loans and Commitments hereunder, and (ii) the parties to such assignment shall
execute and deliver to Agent for acceptance and recording a Lender Addition
Agreement together with (x) a processing and recording fee of $2,500 payable to
Agent and (y) the Notes originally delivered to the assigning Lender. Upon
receipt of all of the foregoing, Agent shall notify Borrower of such assignment
and Borrower shall comply with its obligations under the second sentence of
Section 1.3. In the case of an
49
assignment authorized under this Section 11.1, the assignee shall have, to the
extent of such assignment, the same rights, benefits and obligations as it would
if it were a Lender hereunder. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitment or assigned portion
thereof. Borrower hereby acknowledges and agrees that any assignment will give
rise to a direct obligation of Borrower to the assignee and that the assignee
shall be considered to be a "Lender". Borrower may not sell, assign or transfer
any interest in this Agreement, any of the other Loan Documents, or any of the
Obligations, or any portion thereof, including Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder.
(B) Each Lender may sell participations in all or any part of any
Loans made by it to another Person; provided, that any such participation shall
be in a minimum amount of $5,000,000, and provided, further, that all amounts
payable by Borrower hereunder shall be determined as if that Lender had not sold
such participation and the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except action directly effecting (a) any reduction in the principal amount,
interest rate or fees payable with respect to any Loan in which such holder
participates; (b) any extension of the Original Term or the date fixed for any
payment of principal, interest or fees payable with respect to any Loan in which
such holder participates; and (c) any release of substantially all of the
Collateral (other than in accordance with the terms of this Agreement or the
Loan Documents). Borrower hereby acknowledges and agrees that the participant
under each participation shall for purposes of Sections 3.8, 3.9, 3.10, 11.4 and
12.1 be considered to be a "Lender".
(C) Except as otherwise provided in this Section 11.1 no Lender shall,
as between Borrower and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of participation in, all or any part of the Loans or other Obligations
owed to such Lender. Each Lender may furnish any information concerning
Borrower and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and participants)
provided that the Persons obtaining such information agrees to maintain the
confidentiality of such information to the extent required by Section 12.19.
(D) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Loans owing
to it and the Notes held by it in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System).
(E) Borrower agrees to use its best efforts to assist any Lender in
assigning or selling participations in all or any part of any Loans made by such
Lender to another Person.
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11.2 Agent.
(A) Appointment. Each Lender hereby designates and appoints Fleet as
its agent under this Agreement and the Loan Documents, and each Lender hereby
irrevocably authorizes Agent to take such action or to refrain from taking such
action on its behalf under the provisions of this Agreement and the Loan
Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are reasonably incidental thereto. Agent is
authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consent be obtained in certain instances as
provided in Section 11.3. Agent agrees to act as such on the express conditions
contained in this Section 11.2. The provisions of this Section 11.2 are solely
for the benefit of Agent and Lenders and neither Borrower nor any Loan Party
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, Agent
shall act solely as an administrative representative of Lenders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Lenders, Borrower or any Loan Party.
Agent may perform any of its duties hereunder, or under the Loan Documents, by
or through its agents or employees.
(B) Nature of Duties. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of Agent shall be mechanical and administrative in
nature. Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender. Each Lender shall make its own
independent investigation of the financial condition and affairs of Borrower in
connection with the extension of credit hereunder and shall make its own
appraisal of the credit worthiness of Borrower, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the Closing Date or at any time or times thereafter. If
Agent seeks the consent or approval of any Lenders to the taking or refraining
from taking any action hereunder, then Agent shall send notice thereof to each
Lender. Agent shall promptly notify each Lender any time that the applicable
percentage of Lenders have instructed Agent to act or refrain from acting
pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be obligated on the
terms set forth herein for performance of its express obligations hereunder, and
except that Agent shall be liable with respect to its own gross negligence or
willful misconduct. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith and if any such apportionment
or distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by them). In performing its
functions and duties hereunder, Agent shall exercise the same care which it
would in dealing
51
with loans for its own account, but Agent shall not be responsible to any Lender
for any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, enforceability, collectibility,
or sufficiency of this Agreement or any of the Loan Documents or the
transactions contemplated thereby, or for the financial condition of any Loan
Party. Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any of the Loan Documents or the financial condition of any Loan
Party, or the existence or possible existence of any Default or Event of
Default. Agent may at any time request instructions from Lenders with respect to
any actions or approvals which by the terms of this Agreement or of any of the
Loan Documents Agent is permitted or required to take or to grant, and Agent
shall be absolutely entitled to refrain from taking any action or to withhold
any approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from the applicable
percentage of the Lenders. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting under this Agreement or any of the other Loan Documents
in accordance with the instructions of the applicable percentage of the Lenders
and notwithstanding the instructions of Lenders, Agent shall have no obligation
to take any action if it, in good faith believes that such action exposes Agent
to any liability.
(D) Reliance. Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone
message or other communication (including any writing, telex, telecopy or
telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it. Agent shall be
entitled to rely upon the advice of legal counsel, independent accountants, and
other experts selected by Agent in its sole discretion.
(E) Indemnification. Each Lender, severally, agrees to reimburse and
indemnify Agent for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of this
Agreement or any of the Loan Documents or any action taken or omitted by Agent
under this Agreement for any of the Loan Documents, in proportion to each
Lender's Pro Rata Share; provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements resulting
from Agent's gross negligence or willful misconduct. The obligations of Lenders
under this Section 11.2(E) shall survive the payment in full of the Obligations
and the termination of this Agreement.
(F) Fleet Individually. With respect to its Commitments and the Loans
made by it, and the Notes issued to it, Fleet shall have and may exercise the
same rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders" or "Requisite Lenders" or any similar terms
52
shall, unless the context clearly otherwise indicates, include Fleet in its
individual capacity as a Lender or one of the Requisite Lenders. Fleet may lend
money to, and generally engage in any kind of banking, trust or other business
with any Loan Party as if it were not acting as Agent pursuant hereto.
(G) Successor Agent.
(1) Resignation. Agent may resign from the performance of all its
functions and duties hereunder at any time by giving at least thirty (30)
Business Days' prior written notice to Borrower and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (2) below or as otherwise provided below.
(2) Appointment of Successor. Upon any such notice of resignation
pursuant to clause (G)(1) above, Requisite Lenders shall, upon receipt of
Borrower's prior consent which shall not unreasonably be withheld, appoint a
successor Agent. If a successor Agent shall not have been so appointed within
said thirty (30) Business Day period, the retiring Agent, upon notice to
Borrower, shall then appoint a successor Agent who shall serve as Agent until
such time, as Requisite Lenders, upon receipt of Borrower's prior written
consent which shall not be unreasonably withheld, appoint a successor Agent as
provided above.
(3) Successor Agent. Upon the acceptance of any appointment as Agent
under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation as Agent under the Loan Documents, the provisions of this
Section 11.2 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under the Loan Documents.
(H) Collateral Matters.
(1) Release of Collateral. Lenders hereby irrevocably authorize
Agent, at its option and in its discretion, to release any Lien granted to or
held by Agent upon any property covered by this Agreement or the Loan Documents
(i) upon termination of the Commitments and payment and satisfaction of all
Obligations; (ii) constituting property being sold or disposed of if Borrower
certifies to Agent that the sale or disposition is made in compliance with the
provisions of this Agreement (and Agent may rely in good faith conclusively on
any such certificate, without further inquiry); or (iii) constituting property
leased to Borrower under a lease which has expired or been terminated in a
transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by Borrower to be, renewed or extended. In
addition during any fiscal year of Borrower (x) Agent may release Collateral
having a book value of not more than 10% of the book value of all Collateral,
(y) Agent, with the consent of Requisite Lenders, may release Collateral having
a book value of not more than 25% of the book value of all Collateral and (z)
Agent, with the consent of Lenders having 90% of (i) the Total Loan Commitments
and (ii) Loans, may release all the Collateral.
53
(2) Confirmation of Authority; Execution of Releases. Without in any
manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in Section 11.2(H)(1)), each
Lender agrees to confirm in writing, upon request by Borrower, the authority to
release any property covered by this Agreement or the Loan Documents conferred
upon Agent under Section 11.2(H)(1). So long as no Event of Default is then
continuing, upon receipt by Agent of confirmation from the requisite percentage
of Lenders, of its authority to release any particular item or types of property
covered by this Agreement or the Loan Documents, and upon at least five (5)
Business Days prior written request by Borrower, Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be necessary
to evidence the release of the Liens granted to Agent for the benefit of Lenders
herein or pursuant hereto upon such Collateral; provided, however, that (i)
Agent shall not be required to execute any such document on terms which, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of any Loan Party, in
respect of), all interests retained by any Loan Party, including, without
limitation, the proceeds of any sale, all of which shall continue to constitute
part of the property covered by this Agreement or the Loan Documents.
(3) Absence of Duty. Agent shall have no obligation whatsoever to any
Lender or any other Person to assure that the property covered by this Agreement
or the Loan Documents exists or is owned by Borrower or is cared for, protected
or insured or has been encumbered or that the Liens granted to Agent on behalf
of Lenders herein or pursuant hereto have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent in this Section
11.2(H) or in any of the Loan Documents, it being understood and agreed that in
respect of the property covered by this Agreement or the Loan Documents or any
act, omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its discretion, given Agent's own interest in property covered
by this Agreement or the Loan Documents as one of the Lenders and that Agent
shall have no duty or liability whatsoever to any of the other Lenders;
provided, that Agent shall exercise the same care which it would in dealing with
loans for its own account.
(I) Agency for Perfection. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting Lenders' security interest in
Collateral which, in accordance with Article 9 of the Uniform Commercial Code in
any applicable jurisdiction, can be perfected only by possession. Should any
Lender (other than Agent) obtain possession of any such Collateral, such Lender
shall notify Agent thereof, and, promptly upon Agent's request therefor, shall
deliver such Collateral to Agent or in accordance with Agent's instructions.
(J) Exercise of Remedies. Each Lender agrees that it will not have
any right individually to enforce or seek to enforce this Agreement or any Loan
Document or to realize
54
upon any collateral security for the Loans, it being understood and agreed that
such rights and remedies may be exercised only by Agent.
11.3 Consents.
(A) In the event Agent requests the consent of a Lender and does not
receive a written denial thereof within five (5) Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have given
such consent.
(B) In the event Agent requests the consent of a Lender and such
consent is denied, then Fleet may, at its option, require such Lender to assign
its interest in the Loans to Fleet for a price equal to the then outstanding
principal amount thereof plus accrued and unpaid interest and fees due such
Lender, which interest and fees will be paid when collected from Borrower. In
the event that Fleet elects to require any Lender to assign its interest to
Fleet, Fleet will so notify such Lender in writing within forty-five (45) days
following such Lender's denial, and such Lender will assign its interest to
Fleet no later than five (5) days following receipt of such notice.
11.4 Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized by Borrower at any time or from time to time,
with reasonably prompt subsequent notice to Borrower or to any other Person (any
prior or contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (A) balances held by such Lender or such
holder at any of its offices for the account of Borrower or any of its
Subsidiaries (regardless of whether such balances are then due to Borrower or
its Subsidiaries), and (B) other property at any time held or owing by such
Lender or such holder to or for the credit or for the account of Borrower or
any of its Subsidiaries, against and on account of any of the Obligations which
are not paid when due; except that no Lender or any such holder shall exercise
any such right without the prior written consent of Agent. Any Lender which has
exercised its right to set off shall, to the extent the amount of any such set
off exceeds its Pro Rata Share of the Obligations, purchase for cash (and the
other Lenders or holders shall sell) participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share such excess with each other Lender or holder in accordance
with their respective Pro Rata Shares. Borrower agrees, to the fullest extent
permitted by law, that (a) any Lender or holder may exercise its right to set
off with respect to amounts in excess of its Pro Rata Share of the Obligations
and may sell participations in such excess to other Lenders and holders, and (b)
any Lender or holder so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of set-off,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of Loans and other
Obligations in the amount of such participation.
11.5 Disbursement of Funds. Agent may, on behalf of Lenders, disburse
funds to Borrower for Loans requested. Each Lender shall reimburse Agent on
demand for all funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro
55
Rata Share of any Loan before Agent disburses same to Borrower. If Agent elects
to require that funds be made available prior to disbursement to Borrower, Agent
shall advise each Lender by telephone, telex or telecopy of the amount of such
Lender's Pro Rata Share of such requested Loan no later than (a) one (1)
Business Day prior to the funding date applicable thereto for Eurodollar Loans
and (b) by 1:00 p.m. Dallas, Texas time on the funding date for Base Rate Loans,
and each such Lender shall pay Agent such Lender's Pro Rata Share of such
requested Loan, in same day funds, by wire transfer to Agent's account not later
than 10:00 a.m. Dallas, Texas time on such funding date for Eurodollar Loans and
3:00 p.m. Dallas, Texas time for Base Rate Loans. If any Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower, and Borrower shall immediately repay such amount to Agent. Any
repayment required pursuant to this Section 11.5 shall be without premium or
penalty. Nothing in this Section 11.5 or elsewhere in this Agreement or the
other Loan Documents, including without limitation the provisions of Section
11.6, shall be deemed to require Agent to advance funds on behalf of any Lender
or to relieve any Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that Agent or Borrower may have against any
Lender as a result of any default by such Lender hereunder.
11.6 Settlements, Payments and Information.
(A) Revolving Credit Loans and Payments; Fee Payments.
(1) The Revolving Credit Loans may fluctuate from day to day through
Agent's disbursement of funds to, and receipt of funds from, Borrower. In order
to minimize the frequency of transfers of funds between Agent and each Lender
notwithstanding terms to the contrary set forth in Section 3 and Section 11.5,
Revolving Credit Loans and repayments may be settled according to the procedures
described in Sections 11.6(A)(2) and 11.6(A)(3) of this Agreement. Payments of
principal, interest and fees in respect of the Term Loans will be settled on the
Business Day received in accordance with the provisions of Section 2.
Notwithstanding these procedures, each Lender's obligation to fund its Pro Rata
Share of any advances made by Agent to Borrower will commence on the date such
advances are made by Agent. Such payments will be made by such Lender without
set-off, counterclaim or reduction of any kind.
(2) Once each week, or more frequently (including daily), if Agent so
elects (each such day being a "Settlement Date"), Agent will advise each Lender
by 1 p.m. Dallas, Texas time by telephone, telex, or telecopy of the amount of
each such Lender's Pro Rata Share of the Revolving Credit Loans. In the event
payments are necessary to adjust the amount of such Lender's share of the
Revolving Credit Loans to such Lender's Pro Rata Share of the Revolving Credit
Loans, the party from which such payment is due will pay the other, in same day
funds, by wire transfer to the other's account not later than 3:00 p.m. Dallas,
Texas time on the Business Day following the Settlement Date.
(3) On the first Business Day of each month ("Interest Settlement
Date"), Agent will advise each Lender by telephone, telefax or telecopy of the
amount of interest and fees charged to and collected from Borrower for the
proceeding month. Provided that such Lender has made all payments required to
be made by it under this Agreement, Agent will pay to
56
such Lender, by wire transfer to such Lender's account (as specified by such
Lender on the signature page of this Agreement as amended by such Lender from
time to time after the date hereof pursuant to the notice provisions contained
herein or in the applicable Lender Addition Agreement) not later than 3 p.m.
Dallas, Texas time on the next Business Day following the Interest Settlement
Date such Lender's share of such interest and fees.
(B) Availability of Lender's Pro Rata Share.
(1) Unless Agent has been notified by a Lender prior to any proposed
funding date of such Lender's intention not to fund its Pro Rata Share of the
Loan amount requested by Borrower, Agent may assume that such Lender will make
such amount available to Agent on the proposed funding date or the Business Day
following the next Settlement Date, as applicable. If such amount is not, in
fact, made available to Agent by such Lender when due, Agent will be entitled to
recover such amount on demand from such Lender without set-off, counterclaim or
deduction of any kind.
(2) Nothing contained in this Section 11.6(B) will be deemed to
relieve a Lender of its obligation to fulfill its Commitments or to prejudice
any rights Agent or Borrower may have against such Lender as a result of any
default by such Lender under this Agreement.
(3) Without limiting the generality of the foregoing, each Lender
shall be obligated to fund its Pro Rata Share of any Revolving Credit Loans made
with respect to any draw on a Lender Letter of Credit.
(C) Return of Payments.
(1) If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender without set-off,
counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to Borrower or paid to any other person
pursuant to any solvency law or otherwise, then, notwithstanding any other term
or condition of this Agreement, Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender will repay to Agent on
demand any portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to pay to
Borrower or such other Person, without set-off, counterclaim or deduction of any
kind.
11.7 Dissemination of Information. Agent will provide Lenders with any
information received by Agent from Borrower which is required to be provided to
a Lender hereunder; provided, however, that Agent shall not be liable to Lenders
for any failure to do so, except to the extent that such failure is attributable
to Agent's gross negligence or willful misconduct.
57
11.8 Discretionary Advances. Agent may, in its sole discretion, (i)
provided that no Event of Default exists, make Revolving Credit Loans of up to
10% in excess of the Borrowing Base for a period of not more than 30 consecutive
days and (ii) during the continuance of an Event of Default, make Revolving
Credit Loans in excess of the Borrowing Base for the purpose of preserving or
protection the Collateral.
SECTION 12. MISCELLANEOUS
12.1 Indemnity. BORROWER HEREBY INDEMNIFIES, HOLDS HARMLESS, AND SHALL
DEFEND AGENT, EACH LENDER AND THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS,
COUNSEL AND EMPLOYEES ("INDEMNIFIED PERSONS") FROM AND AGAINST ANY AND ALL
LOSSES, LIABILITIES, DAMAGES, COSTS, EXPENSES, SUITS, ACTIONS AND PROCEEDINGS
("LOSSES") EVER SUFFERED OR INCURRED BY ANY INDEMNIFIED PERSON ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION CONTEMPLATED HEREBY,
INCLUDING, WITHOUT LIMITATION, ANY LOSSES CAUSED BY THE NEGLIGENCE OF ANY SUCH
INDEMNIFIED PERSON, BUT NOT INCLUDING ANY LOSSES CAUSED BY THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF ANY SUCH INDEMNIFIED PERSON, AND BORROWER SHALL
REIMBURSE AGENT, EACH LENDER AND EACH OTHER INDEMNIFIED PERSON FOR ANY EXPENSES
(INCLUDING IN CONNECTION WITH THE INVESTIGATION OF, PREPARATION FOR OR DEFENSE
OF ANY ACTUAL OR THREATENED CLAIM, ACTION OR PROCEEDING ARISING THEREFROM,
INCLUDING ANY SUCH COSTS OF RESPONDING TO DISCOVERY REQUESTS OR SUBPOENAS,
REGARDLESS OF WHETHER AGENT, LENDER OR SUCH OTHER INDEMNIFIED PERSON IS A PARTY
THERETO). WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THIS INDEMNITY
SHALL EXTEND TO ANY CLAIMS ASSERTED AGAINST AGENT, LENDER OR ANY OTHER
INDEMNIFIED PERSON BY ANY PERSON UNDER ANY ENVIRONMENTAL LAWS OR SIMILAR LAWS BY
REASON OF BORROWER'S OR ANY OTHER PERSON'S FAILURE TO COMPLY WITH LAWS
APPLICABLE TO SOLID OR HAZARDOUS WASTE MATERIALS OR OTHER TOXIC SUBSTANCES AND
WHICH AFFECT THE BORROWER AND/OR ITS PROPERTIES. BORROWER MAY SELECT COUNSEL
WITH RESPECT TO ANY LOSSES; PROVIDED, HOWEVER, EACH INDEMNIFIED PERSON SHALL
HAVE THE RIGHT TO MONITOR THE PROGRESS OF ANY CLAIMS, SUITS AND ADMINISTRATIVE
PROCEEDINGS DEFENDED BY BORROWER HEREUNDER WITH COUNSEL OF SUCH INDEMNIFIED
PERSON'S CHOICE, OR CONDUCT ITS DEFENSE THROUGH COUNSEL OF SUCH INDEMNIFIED
PERSON'S CHOICE, IN THE EVENT THAT (I) SUCH INDEMNIFIED PERSON DETERMINES IN
GOOD FAITH THAT THE CONDUCT OF ITS DEFENSE BY BORROWER COULD BE MATERIALLY
PREJUDICIAL TO SUCH INDEMNIFIED PERSON'S INTERESTS OR THAT OTHER REASONABLE
GROUNDS EXIST WHICH DEMONSTRATE A LACK OF EFFECTIVENESS OR HIGH LEVEL OF QUALITY
IN THE CONDUCT OF SUCH DEFENSE BY BORROWER, AND (II) PRIOR TO RETAINING SUCH
COUNSEL FOR SUCH PURPOSE, SUCH INDEMNIFIED PERSON SHALL CONSULT WITH BORROWER
AND SHALL ATTEMPT IN GOOD FAITH TO AGREE UPON COUNSEL TO CONDUCT THE DEFENSE ON
BEHALF OF
58
BORROWER AND SUCH INDEMNIFIED PERSON, AND IN EACH CASE THE FEES AND
DISBURSEMENTS OF SUCH COUNSEL SHALL BE PAID BY BORROWER; PROVIDED, HOWEVER, THAT
IF SUCH MUTUAL AGREEMENT IS NOT REACHED WITHIN A REASONABLE TIME ON SELECTING
COUNSEL, THEN SUCH INDEMNIFIED PERSON MAY RETAIN ITS OWN COUNSEL AT BORROWER'S
EXPENSE; PROVIDED FURTHER, HOWEVER, THAT BORROWER SHALL NOT BE OBLIGATED TO PAY
THE FEES AND EXPENSES OF MORE THAN ONE (1) COUNSEL FOR ALL INDEMNIFIED PERSONS
IN ANY PARTICULAR ACTION OR PROCEEDING. NOTWITHSTANDING ANY CONTRARY PROVISION
OF THIS AGREEMENT, THE OBLIGATION OF BORROWER UNDER THIS SECTION 12.1 SHALL
SURVIVE THE PAYMENT IN FULL OF THE OBLIGATIONS AND THE TERMINATION OF THIS
AGREEMENT.
12.2 Amendments and Waivers.
(A) Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement or any Loan Document,
or consent to any departure by any Loan Party therefrom, shall in any event be
effective unless the same shall be in writing and signed by Requisite Lenders or
Agent, as applicable; provided, that no amendment, modification, termination or
waiver shall, unless in writing and signed by all Lenders, do any of the
following: (i) increase the Commitment of any Lender; (ii) reduce the principal
of, rate of interest on or fees payable with respect to any Loan; (iii) extend
the scheduled due date of any installment of principal of the Loans; (iv) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Loans, or the percentage of Lenders which shall be required for Lenders or
any of them to take any action hereunder; (v) amend or waive this Section 12.2
or the definitions of the terms used in this Section 12.2 insofar as the
definitions affect the substance of this Section 12.2; (vi) consent to the
assignment or other transfer by any Loan Party of any of its rights and
obligations under any Loan Document; and (vii) increase the percentages
contained in the definition of Borrowing Base and provided, further, that no
amendment, modification, termination or waiver affecting the rights or duties of
Agent under any Loan Document shall in any event be effective, unless in writing
and signed by Agent, in addition to the Lenders required herein above to take
such action.
(B) Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
(C) No amendment, modification or waiver of any provision of any
Lender Letter of Credit shall be applicable without the written concurrence of
the issuer of such Lender Letter of Credit. No notice to or demand on Borrower
or any other Loan Party in any case shall entitle Borrower or any other Loan
Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 12.2 shall be binding upon each Lender,
and, if signed by a Loan Party, on such Loan Party.
59
(D) In the event Agent waives (1) any Default arising under Section
10.1.5 as a result of the breach of any of the provisions of Section 8 of this
Agreement (other than any such breach which constitutes an Event of Default) or
(2) any Default constituting a condition to the funding of any Revolving Credit
Loan or issuance of any Lender Letter of Credit, such waiver shall expire on the
date upon which the Default which was the subject of such waiver matures into an
Event of Default pursuant to the terms of this Agreement.
12.3 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.4 Successors and Assigns. This Agreement and the Other Agreements
shall be binding upon and inure to the benefit of the successors and assigns of
Borrower, Agent and each Lender permitted under Section 11 hereof. No Person
other than a successor or assign of Borrower, Agent or Lender permitted under
Section 11 hereof shall have any right, benefit, priority or other interest
under, or because of the existence of, this Agreement.
12.5 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements are hereby made cumulative with the provisions of this Agreement.
Except as otherwise provided in Section 3.2 hereof and except as otherwise
provided in any of the other Loan Documents by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in direct conflict with, or inconsistent with, any provision in any
of the other Loan Documents, the provision contained in this Agreement shall
govern and control.
12.6 Execution in 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 and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
12.7 Notice. All notices, requests and demands to or upon a party hereto
shall be in writing and shall be sent by certified or registered mail, return
receipt requested, by personal delivery against receipt, by overnight courier or
by facsimile transmissions and shall be deemed to have been validly served,
given or delivered immediately when delivered against receipt or three (3)
Business Days after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile transmission, when sent, answerback
received, in each case addressed as follows:
60
If to Agent: Fleet Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. R. ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: Petrocon Engineering, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
3000 Thanksgiving Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender: To the address set forth below such Lender's
name on the signature pages hereto,
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.7; provided, however, that any notice,
request or demand to or upon Agent or any Lender pursuant to Section 3.1.1 or
4.2.2 hereof shall not be effective until received by Agent or such Lender. Any
written notice or demand that is not sent in conformity with the provisions
hereof shall nevertheless be effective on the date that such notice is actually
received by the noticed party.
12.8 Agent's or Lenders' Consent. Whenever Agent's or Lenders' consent
is required to be obtained under this Agreement or any of the Other Agreements
as a condition to any action, inaction, condition or event, Agent or Lenders
shall be authorized to give or withhold such consent in its sole and absolute
discretion.
12.9 Credit Inquiries. Borrower hereby authorizes and permits Agent and
each Lender (but neither Agent nor any Lender shall have any obligation) to
respond to usual and customary credit inquiries from third parties concerning
Borrower or any of its Subsidiaries.
61
12.10 Time of Essence. Time is of the essence of this Agreement and the
Other Agreements.
12.11 Entire Agreement; Appendix A and Exhibits and Schedules. This
Agreement and the other Loan Documents, together with all other instruments,
agreements and certificates executed by the parties in connection therewith or
with reference thereto, embody the entire understanding and agreement between
the parties hereto and thereto with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings and inducements,
whether express or implied, oral or written. Appendix A and each of the
Exhibits and Schedules attached hereto are incorporated into this Agreement and
by this reference made a part hereof.
12.12 Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
12.13 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
DALLAS, DALLAS COUNTY, TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS: PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF
LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE
LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF
TEXAS. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF
ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER, AGENT
OR LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE DISTRICT COURT OF DALLAS
COUNTY, TEXAS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, SHALL HAVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND AGENT AND/OR ANY LENDER
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER
HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
62
AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE
BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH
IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY
LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
12.14 WAIVERS BY BORROWER. BORROWER WAIVES (I) THE RIGHT TO TRIAL BY
JURY (WHICH AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE
LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (II) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, INTENT TO
ACCELERATE, ACCELERATION, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION
OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT OR LENDERS
ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER AGENT OR ANY LENDER MAY DO IN THIS REGARD; (III) NOTICE PRIOR TO TAKING
POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE
REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT OR ANY LENDER TO EXERCISE ANY OF
AGENT'S OR ANY LENDER'S REMEDIES; (IV) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS; AND (V) NOTICE OF ACCEPTANCE HEREOF. BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND
LENDERS' ENTERING INTO THIS AGREEMENT AND THAT AGENT AND EACH LENDER IS RELYING
UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS
LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
12.15 WAIVER OF CONSUMER RIGHTS. BORROWER HEREBY WAIVES ITS RIGHTS
UNDER THE DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT SECTION 17.41 ET.
SEQ. BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER
63
CONSULTATION WITH AN ATTORNEY OF BORROWER'S OWN SELECTION, BORROWER VOLUNTARILY
CONSENTS TO THIS WAIVER. BORROWER EXPRESSLY WARRANTS AND REPRESENTS THAT
BORROWER (I) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO
AGENT AND LENDERS, AND (II) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
12.16 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
12.17 Nonapplicability of Chapter 346 of the Texas Finance Code.
Borrower, Agent and Lenders hereby agree that, except for Section 346.004
thereof, the provisions of Chapter 346 of the Texas Finance Code (regulating
certain revolving credit loans and revolving tri-party accounts) shall not apply
to this Agreement or any of the other Loan Documents.
12.18 Certain Matters of Construction. All references to statutes
and related regulations in this Agreement and the Other Agreements shall include
any amendments of same and any successor statutes and regulations. All
references in this Agreement and the Other Agreements to any of the Loan
Documents shall include any and all modifications thereto and any and all
extensions or renewals thereof.
12.19 Confidentiality. Agent and Lenders shall hold all nonpublic
information obtained pursuant to the requirements hereof and identified as such
by Borrower in accordance with such Person's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
business practices and in any event may make disclosure to such of its
respective Affiliates, officers, directors, employees, agents and
representatives as need to know such information in connection with the Loans.
If any Lender is otherwise a creditor of a Borrower, such Lender may use the
information in connection with its other credits. Agent and Lenders may also
make disclosures reasonably required by a bona fide offeree or assignee (or
participation), or as required or requested by any governmental authority or
representative thereof, or pursuant to legal process, or to its accountants,
lawyers and other advisors, and shall require any such offeree or assignee (or
participant) to agree (and require any of its offerees, assignees or
participants to agree) to comply with this Section 12.19. In no event shall
Agent or any Lender be obligated or required to return any materials furnished
by Borrower; provided, however, each offeree shall be required to agree that if
it does not become a assignee (or participant) it shall return all materials
furnished to it by Borrower in connection herewith.
12.20 Amendment and Restatement. This Agreement is an amendment,
modification, extension and restatement, and not an extinguishment or novation,
of the Original Loan
64
Agreement and the liens, the security interests and other obligations arising
thereunder or evidenced thereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
65
IN WITNESS WHEREOF, this Agreement has been duly executed in Dallas, Texas, on
the day and year specified at the beginning of this Agreement.
BORROWER:
IDS ENGINEERING, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
THERMAIRE, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
CONSTANT POWER MANUFACTURING, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
INDUSTRIAL DATA SYSTEMS, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
IDS ENGINEERING MANAGEMENT, LC
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
66
PETROCON ENGINEERING, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
TRIANGLE ENGINEERS AND CONSTRUCTORS, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
PETROCON SYSTEMS, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
PETROCON ENGINEERING OF LOUISIANA, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
R.P.M. ENGINEERING, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
PETROCON CONSTRUCTION RESOURCES, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
67
PETROCON TECHNOLOGIES, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
ALLIANCE ENGINEERING ASSOCIATES, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
Accepted in Dallas, Dallas County, Texas:
AGENT:
FLEET CAPITAL CORPORATION
By:
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
LENDERS:
FLEET CAPITAL CORPORATION
By:
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Revolving Loan Commitment: $15,000,000
Term Loan Commitment: $522,285.70
68
APPENDIX A
GENERAL DEFINITIONS
When used in the Second Amended and Restated Loan and Security
Agreement dated December 21, 2001, by and among IDS Engineering, Inc.,
Thermaire, Inc., Constant Power Manufacturing, Inc., Industrial Data Systems,
Inc., IDS Engineering Management, LC, Petrocon Engineering, Inc., Triangle
Engineers and Constructors, Inc., Petrocon Systems, Inc., Petrocon Engineering
of Louisiana, Inc., R.P.M. Engineering, Inc., Petrocon Construction Resources,
Inc., Petrocon Technologies, Inc., and Alliance Engineering Associates, Inc., as
Borrower, Fleet Capital Corporation, as Agent, and the financial institutions
from time to time listed on the signature pages thereto, as Lenders, the
following terms shall have the following meanings (terms defined in the singular
to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under
or on account of an Account.
Accounts - has the meaning thereto under the UCC.
Adjusted Net Earnings From Operations - with respect to any
fiscal period, means the net earnings (or loss) after provision for income
taxes for such fiscal period of Borrower, as reflected on the financial
statement of Borrower supplied to Agent and Lenders pursuant to Section
8.1.3 of the Agreement, but excluding:
(i) any gain or loss arising from the sale of capital assets;
(ii) any gain or loss arising from any write-up of assets
(provided that any such loss is (a) determined in accordance with GAAP
and (b) approved by Agent);
(iii) earnings of any Subsidiary of a Borrower accrued prior to
the date it becomes a Subsidiary;
(iv) earnings of any corporation, substantially all the assets of
which have been acquired in any manner by a Borrower, realized by such
corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a Subsidiary
of a Borrower) in which such Borrower has an ownership interest,
unless such net earnings shall have actually been received by Borrower
in the form of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of a
Borrower which for any reason is unavailable for payment of dividends
to such Borrower;
(vii) the earnings of any Person to which any assets of a
Borrower shall have been sold, transferred or disposed of, or into
which such Borrower shall have
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merged, or been a party to any consolidation or other form of
reorganization, prior to the date of such transactions;
(viii) any gain arising from the acquisition of any Securities of
a Borrower; and
(ix) any gain arising from extraordinary or non-recurring items.
Affected Lender - as defined in Section 3.14 of the Agreement.
Affiliate - means, as to any specified Person, any other Person
who, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with the
specified Person. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through
ownership of capital stock of the Person, by contract, or otherwise).
Agreement - the Second Amended and Restated Loan and Security
Agreement referred to in the first sentence of this Appendix A, all
Exhibits and Schedules thereto and this Appendix A, as amended, renewed,
extended and restated from time to time.
Applicable Annual Rate - as defined in Section 2.1.1 of the
Agreement.
Applicable Law - all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant or Loan Documents in question,
including all applicable common law and equitable principles; all
provisions of all applicable state and federal constitutions, statutes,
rules, regulations and orders of governmental bodies; and orders, judgments
and decrees of all courts and arbitrators.
Availability - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving Credit
Loans then outstanding (including any amounts which Agent and/or any Lender
may have paid for the account of Borrower pursuant to any of the Loan
Documents and which have not been reimbursed by Borrower) and the LC Amount
is subtracted from the Borrowing Base. If the amount outstanding is equal
to or greater than the Borrowing Base, Availability is zero (0).
Average Daily Availability - means the amount determined by
adding the Availability at the end of each Business Day for each Business
Day during the period in question and by dividing such sum by the number of
Business Days in such period.
Average Monthly Revolving Credit Loan Balance - the amount
obtained by adding the aggregate unpaid principal amount of Revolving
Credit Loans plus the LC Amount at the end of each day during the month in
question and by dividing such sum by the number of days in such month.
Bank - Fleet National Bank, and its successors or assigns.
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Base Rate - the rate of interest announced or quoted by Bank from
time to time as its prime rate for commercial loans, whether or not such
rate is the lowest rate charged by Bank to its most preferred borrowers;
and, if such prime rate for commercial loans is discontinued by Bank as a
standard, a comparable reference rate designated by Bank as a substitute
therefor shall be the Base Rate.
Base Rate Loan - a Loan which bears interest based upon the Base Rate.
▇▇▇▇▇ - as defined in the recitals to the Agreement.
Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(a) Total Revolving Credit Facility; or
(b) an amount equal to the sum of (i) up to eighty-five percent (85%)
of the net amount of Eligible Accounts that are not Performance Accounts
outstanding at such date and (ii) the lesser of (A) $3,500,000 or (B) up to
eighty-five percent (85%) of the net amount of Eligible Accounts that are
Performance Accounts outstanding at such date;
MINUS (subtract from each of clauses (a) and (b) above)
(c) the LC Amount; and
(d) the amount of any reserves established by Agent pursuant to
Section 1.1.1 at such date.
For purposes of clause (b) hereof, the net amount of Eligible Accounts at
any time shall be the face amount of such Eligible Accounts less any and
all returns, rebates, discounts (which may, at Agent's option, be
calculated on shortest terms), credits, allowances or sales, excise or
withholding taxes of any nature at any time issued, owing, claimed by
Account Debtors, granted, outstanding or payable in connection with such
Accounts at such time.
Borrowing Notice - as defined in Section 3.1.1 of this Agreement.
Business Day - any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of Texas or is a day on which
banking institutions located in such state are closed; provided, however,
if any determination of a "Business Day" shall relate to a Eurodollar Loan,
the term "Business Day" shall in addition exclude any day on which banks
are not open for dealings in dollar deposits in the London interbank
market.
Capex Limit - as defined in Section 8.2.8 of this Agreement.
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Capital Expenditures - expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than
one year, including the total principal portion of Capitalized Lease
Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Cash Flow - for any fiscal period of Borrower, means an amount equal
to (a) the sum of (i) Adjusted Net Earnings from Operations for such
period, plus (ii) income tax expense for such period, plus (iii) Interest
Expense for such period, plus (iv) depreciation and amortization for such
period, minus (b) Capital Expenditures incurred during such period.
Certificate of Exemption - as defined in Section 3.9(C) of the
Agreement.
Certificated Security - has the meaning assigned thereto under the
UCC.
Chase - The Chase Manhattan Bank.
Chase Term Note - that certain promissory note dated February 28,
1997, in the original principal amount of $450,000.00, payable to the order
of Texas Commerce Bank National Association, and executed by Thermaire.
Chattel Paper - has the meaning assigned thereto under the UCC.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made or
the initial Letter of Credit or LC Guaranty is issued under the Agreement
and the Transactions are consummated.
Code - the Uniform Commercial Code as adopted and in force in the
State of Texas, as from time to time in effect.
Collateral - all of the Property and interests in Property described
in Section 5 of the Agreement, and all other Property and interests in
Property, that now or hereafter secure the payment and performance of any
of the Obligations.
Commercial Tort Claim - has the meaning assigned thereto in the UCC
Revisions.
Commitment or Commitments - means the commitment or commitments of
Lenders to make Loans as set forth in Sections 1.1 and/or 1.2 and to
participate in any Letters of Credit issued by Agent as set forth in
Section 1.4.
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Computer Hardware and Software - all of Borrower's rights (including
rights as licensee and lessee) with respect to (i) computer and other
electronic data processing hardware, including all integrated computer
systems, central processing units, memory units, display terminals,
printers, computer elements, card readers, tape drives, hard and soft disk
drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer hardware; (ii)
all Software and all software programs designed for use on the computers
and electronic data processing hardware described in clause (i) above,
including all operating system software, utilities and application programs
in any form (source code and object code in magnetic tape, disk or hard
copy format or any other listings whatsoever); (iii) any firmware
associated with any of the foregoing; and (iv) any documentation for
hardware, Software and firmware described in clauses (i), (ii) and (iii)
above, including flow charts, logic diagrams, manuals, specifications,
training materials, charts and pseudo codes.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Contract Right - any right of Borrower to payment under a contract for
the sale or lease of goods or the rendering of services, which right is at
the time not yet earned by performance.
Continuing Director - means (i) as to Petrocon, at any date, any
individual who (a) was a member of the Board of Directors of Petrocon on
the Closing Date or (b) was nominated for election or elected to the Board
of Directors of Petrocon with the affirmative vote of a majority of the
Continuing Directors who were members of the Board of Directors at the time
of such nomination or election, and (ii) as to IDSC, at any date, any
individual who (a) was a member of the Board of Directors of IDSC on the
Closing Date, or (b) was nominated for election or elected to the Board of
Directors of IDSC with the affirmative vote of a majority of the Continuing
Directors who were members of the Board of Directors at the time of such
nomination or election.
Costs in Excess of ▇▇▇▇▇▇▇▇ Amount - means the total amount of costs
in excess of the ▇▇▇▇▇▇▇▇ of Borrower in respect of fixed-price contracts.
▇▇▇▇▇ - as defined in the recitals to the Agreement.
▇▇▇▇▇/▇▇▇▇▇ Settlement - as defined in the recitals to the Agreement.
▇▇▇▇▇/▇▇▇▇▇ Settlement Agreements - as defined in the recitals to the
Agreement.
▇▇▇▇▇/▇▇▇▇▇ Distribution - as defined in the recitals to the
Agreement.
▇▇▇▇▇/▇▇▇▇▇ Stock Purchase - as defined in the recitals to the
Agreement.
▇▇▇▇▇ Subordinated Debt Redemption - as defined in the recitals to the
Agreement.
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Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets
shown on a balance sheet at such date in accordance with GAAP except that
amounts due from Affiliates and investments in Affiliates shall be excluded
therefrom.
Default - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - as defined in Section 2.1.2 of the Agreement.
Deposit Account - has the meaning assigned thereto under the UCC.
Distribution - in respect of any corporation means and includes: (i)
the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net
proceeds of the sale of Securities.
Document - has the meaning assigned thereto under the UCC.
Dollars and the sign "$"- lawful money of the United States of
America.
Dominion Account - a special account of Agent established by Borrower
pursuant to the Agreement at a bank selected by Borrower, but acceptable to
Agent in its reasonable discretion, and over which Agent shall have sole
and exclusive access and control for withdrawal purposes.
EBIT - for any fiscal period of Borrower, means an amount equal to (a)
the sum of (i) Adjusted Net Earnings From Operations for such period, plus
(ii) Interest Expense for such period, plus (iii) income tax expense for
such period.
EBITDA - for any fiscal period of Borrower, means an amount equal to
(a) the sum of (i) Adjusted Net Earnings From Operations for such period,
plus (ii) Interest Expense for such period, plus (iii) income tax expense
for such period, plus, (iv) depreciation and amortization for such period.
Electronic Chattel Paper - has the meaning assigned thereto in the UCC
Revisions.
Eligible Account - an Account or Performance Account arising in the
ordinary course of Borrower's business from the sale of goods or rendition
of services which is payable in Dollars and which Agent, in its sole
discretion, deems to be an Eligible Account. Without limiting the
generality of the foregoing, no Account or Performance Account shall be an
Eligible Account if: (i) it arises out of a sale made by Borrower to a
Subsidiary or an Affiliate of Borrower or to a Person controlled by an
Affiliate of Borrower; (ii) with respect to any Account, it is due or
unpaid more than 90 days after the original invoice date; (iii) fifty
percent (50%) or more of the Accounts and/or Performance Accounts from the
Account Debtor are not deemed Eligible Accounts
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hereunder; (iv) the total unpaid Accounts and/or Performance Accounts of
the Account Debtor exceed twenty percent (20%) of the net amount of all
Eligible Accounts, to the extent of such excess; (v) any covenant,
representation or warranty contained in the Agreement with respect to such
Account or such Performance Account has been breached; (vi) the Account
Debtor is also Borrower's creditor or supplier, or the Account Debtor has
disputed liability with respect to such Account or such Performance
Account, or the Account Debtor has made any claim with respect to any other
Account due from such Account Debtor to Borrower, or the Account otherwise
is or may become subject to any right of setoff, counterclaim, reserve,
retention or chargeback, provided that, in any event, the Accounts and/or
Performance Accounts of such Account Debtor shall be ineligible only to the
extent of the amount owing by Borrower to such creditor or supplier or to
the extent of such offset, counterclaim, disputed amount, reserve,
retention or chargeback; (vii) the Account Debtor has commenced a voluntary
case under the federal bankruptcy laws or made an assignment for the
benefit of creditors, or a decree or order for relief has been entered by a
court having jurisdiction in the proceedings in respect of the Account
Debtor in an involuntary case under the federal bankruptcy laws or any
other petition or other application for relief under the federal bankruptcy
laws has been filed against the Account Debtor, or if the Account Debtor
has failed, suspended business, ceased to be Solvent, or consented to or
suffered a receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or affairs; (viii) it
arises from a sale to an Account Debtor with its principal office, assets
or place of business outside the United States, unless the sale (a) is
backed by an irrevocable letter of credit issued or confirmed by Bank and
is in form and substance acceptable to Agent, payable in the full amount of
the Account and/or Performance Account in freely convertible Dollars at a
place of payment within the United States or (b) is covered by foreign
credit insurance in form and substance acceptable to Agent; (ix) with
respect to any Account, it arises from a sale to the Account Debtor on a
▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; (x) (a) the Account
Debtor is the United States of America or any department, agency or
instrumentality thereof, unless Borrower assigns its right to payment of
such Account or Performance Account to Agent, in a manner satisfactory to
Agent, so as to comply with the Assignment of Claims Act of 1940 (31 U.S.C.
(S)203 et seq.) or (b) the Account Debtor is a state, county or
municipality, or a political subdivision or agency thereof, which is
subject to any Applicable Law that would disallow an assignment of Accounts
on which it is the Account Debtor; (xi) the Account Debtor is located in
New Jersey, Minnesota, Indiana, West Virginia or any other state imposing
similar conditions on the right of a creditor to collect accounts
receivable unless Borrower has either qualified to transact business in
such state as a foreign corporation or filed a Notice of Business
Activities Report or other required report with the appropriate officials
in those states for the then current year; (xii) the Account or Performance
Account is subject to a Lien other than a Permitted Lien; (xiii) the goods
giving rise to such Account or Performance Account have not been delivered
to and accepted by the Account Debtor or the services giving rise to such
Account or Performance Account have not been performed by Borrower and
accepted by the Account Debtor or the Account and/or Performance Account
otherwise does not represent a final sale; (xiv) with respect to any
Performance Account, it remains uninvoiced for more than 30 days; (xv) the
Account or Performance Account is evidenced by chattel paper or an
instrument of any kind, or has
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been reduced to judgment; (xvi) Borrower has made any agreement with the
Account Debtor for any deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business for prompt
payment and which discounts or allowances are reflected in the calculation
of the face value of each invoice related to such Account and/or
Performance Account; (xvii) Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof to any date that is more than
90 days after the original invoice date; or (xviii) with respect to any
Accounts and/or Performance Accounts arising out of fixed cost contracts,
the total unpaid amount of all such Accounts and/or Performance Accounts
exceeds $2,352,941, to the extent of such excess.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety or environmental matters applicable to
Borrower or its Subsidiaries.
Equipment - has the meaning assigned thereto under the UCC.
Equus - as defined in the recitals to the Agreement.
Equus Intercreditor Agreement - that certain Intercreditor Agreement
executed on or about the Closing Date by Equus, Agent and Lenders.
Equus Settlement Agreement - as defined in the recitals to the
Agreement.
Equus Subordinated Debt Restructuring - as defined in the recitals to
the Agreement.
Equus Term Note - as defined in the recitals to the Agreement.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
Eurodollar Loan - a Loan which bears interest based upon LIBOR.
Event of Default - as defined in Section 10.1 of the Agreement.
Excess Cash Flow - with respect to any fiscal period of Borrower, the
amount derived by subtracting regularly scheduled payments of principal on
Indebtedness for Money Borrowed and Capital Expenditures which are not
financed for such fiscal period from Borrower's consolidated net earnings
(or loss) before depreciation, amortization and other non-cash charges for
said period (but excluding any extraordinary items for such fiscal period)
as determined in accordance with GAAP.
Excess Interest - as defined in Section 2.1.3(B) of the Agreement.
Existing Equus Subordinated Debt - as defined in the recitals to the
Agreement.
Financial Asset - has the meaning assigned thereto under the UCC.
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Fixed Charge Ratio - means, with respect to Borrower, the ratio of (a)
EBITDA, to (b) the sum of (i) all scheduled principal and interest payments
due in respect of the Loans during such period, (ii) all scheduled payments
due in respect of the Trade Creditor Term Debt (as hereinafter defined)
during such period (excluding any payments made in respect of such Trade
Creditor Term Debt from monies received from ARAMCO Services Company to the
extent that such monies relate to change orders associated with ARAMCO
Services Company's Saudi Arabian project), (iii) any payments actually made
in cash on any Senior Debt (other than the Loans) or Subordinated Debt
during such period, (iv) any payments made in respect of the PAL Note
during such period, if and to the extent permitted by Agent, (v) the amount
of any unfinanced Capital Expenditures incurred by Borrower and its
Subsidiaries during such period, and (vi) payments made in cash during such
period with respect to the income tax expense of Borrower and/or its
Subsidiaries.
Fixture - has the meaning assigned thereto under the UCC.
Foreign Lender - as defined in Section 3.9(C) of the Agreement.
GAAP - generally accepted accounting principles in the United States
of America in effect from time to time.
General Intangibles - has the meaning assigned thereto under the UCC.
Goods - has the meaning assigned thereto under the UCC.
Guarantor - individually and collectively, IDSC, each of the New
Borrowers and any other Person who may hereafter guarantee payment or
performance of the whole or any part of the Obligations.
Guaranty Agreement - those certain Guaranty Agreements, each dated as
of the date hereof, executed by IDSC and each of the New Borrowers, in form
and substance satisfactory to Lenders.
Hedging Agreement - any interest rate or currency swap, rate cap, rate
floor, rate collar, forward agreement or other exchange or rate protection
agreement or any option with respect to such transaction.
IDSC - as defined in the recitals to the Agreement.
IDSC Merger - as defined in the recitals to the Agreement.
IDSC Merger Agreement - as defined in the recitals to the Agreement.
IDSC Houston Real Property - real estate and building situated at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, presently used as a
manufacturing facility for Thermaire.
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Indebtedness - as applied to a Person means, without duplication: (i)
all items which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person as at the date as of which Indebtedness is to be determined,
including Capitalized Lease Obligations; (ii) all obligations of other
Persons which such Person has guaranteed; (iii) all reimbursement
obligations in connection with letters of credit or letter of credit
guaranties issued for the account of such Person; and (iv) in the case of
Borrower (without duplication), the Obligations.
Indemnified Persons - as defined in Section 11.2 of the Agreement.
Instrument - has the meaning assigned thereto under the UCC.
Intellectual Property - all past, present and future: trade secrets,
know-how and other proprietary information; trademarks, internet domain
names, service marks, trade dress, trade names, business names, designs,
logos, slogans (and all translations, adaptations, derivations and
combinations of the foregoing) indicia and other source and/or business
identifiers, and the goodwill of the business relating thereto and all
registrations or applications for registrations which have heretofore been
or may hereafter be issued thereon throughout the world; copyrights
(including copyrights for computer programs) and copyright registrations or
applications for registrations which have heretofore been or may hereafter
be issued throughout the world and all tangible property embodying the
copyrights, unpatented inventions (whether or not patentable); patent
applications and patents; industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, computer software, source codes, object
codes, executable code, data, databases and other physical manifestations,
embodiments or incorporations of any of the foregoing; the right to ▇▇▇ for
all past, present and future infringements of any of the foregoing; all
other intellectual property; and all common law and other rights throughout
the world in and to all of the foregoing.
Interest Expense - with respect to any fiscal period, the interest
expense incurred for such period as determined in accordance with GAAP plus
Letter of Credit and LC Guaranty fees owing for such period.
Inventory - has the meaning assigned thereto under the UCC.
Investment Property - has the meaning assigned thereto under the UCC.
LC Amount - at any time, the aggregate undrawn face amount of all
Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Agent or any Affiliate of
Agent shall guaranty the payment or performance by Borrower of its
reimbursement obligation under any letter of credit.
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Lender Addition Agreement - means an agreement among Agent, a Lender
and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans, the Commitments and
other interests under this Agreement and the other Loan Documents
substantially in the form of Exhibit S hereto.
Letter of Credit - any letter of credit issued by Agent or any of
Agent's Affiliates for the account of Borrower.
Letter of Credit Rights - has the meaning assigned thereto under the
UCC Revisions.
Letter of Non-Exemption - as defined in Section 3.9(C) of the
Agreement.
LIBOR - with respect to a Eurodollar Loan for the relevant LIBOR
Interest Period, a rate per annum equal to the quotient of the following:
(i) the rate at which deposits in U.S. dollars in immediately available
funds are offered by Agent or Bank to first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of such LIBOR Interest Period, in the
approximate amount of the Eurodollar Loan and having a maturity
approximately equal to the LIBOR Interest Period, divided by (ii) the
difference of one (1) minus the Reserve Requirement.
LIBOR Interest Period - with respect to a Eurodollar Loan, a period of
one (1), two (2), or three (3) months commencing on a Business Day selected
by Borrower pursuant to this Agreement; provided, that (i) any LIBOR
Interest Period which would otherwise end on a day which is not a Business
Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such LIBOR
Interest Period shall end on the immediately preceding Business Day; and
(ii) any LIBOR Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such LIBOR Interest Period) shall,
subject to clauses (iii) below and (i) above, end on the last Business Day
of a calendar month; and (iii) any LIBOR Interest Period which would
otherwise end after the termination of the Agreement, shall end on the
termination of the Agreement. No LIBOR Interest Period for the Term Loan
shall extend beyond a date on which Borrower is required to make a
scheduled payment of principal on the Term Note unless the sum of the
aggregate Revolving Credit Loans consisting of Base Rate Loans equals or
exceeds the principal amount required to be paid on the Term Note on such
date.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien"
shall also include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purpose of the
Agreement, Borrower shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to
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which title to the Property has been retained by or vested in some other
Person for security purposes.
Loan Account - the loan account established on the books of Agent
pursuant to Section 3.5 of the Agreement.
Loan Documents - the Agreement and the Other Agreements.
Loan Party - Borrower and Guarantor and each other Person (other than
Agent or any Lender) who is (i) at any time a party to any Loan Document,
and (ii) obligated with respect to payment of the Obligations.
Loans - all loans and advances of any kind made by Lenders pursuant to
the Agreement.
Losses - as defined in Section 11.2 of the Agreement.
Material Adverse Effect - the effect of any event or condition which,
alone or when taken together with other events or conditions occurring or
existing concurrently therewith, (a) has a material adverse effect upon the
business, operations, Properties, condition (financial or otherwise) or
business prospects of IDSC and its Subsidiaries taken as a whole; (b) has
any material adverse effect whatsoever upon the validity or enforceability
of the Agreement or any of the other Loan Documents; (c) has or may be
reasonably expected to have any material adverse effect upon the value of
the whole or any material part of the Collateral, the Liens of Agent with
respect to the Collateral or any material part thereof or the priority of
such Liens; (d) materially impairs the ability of IDSC or any Subsidiary of
IDSC or any other Loan Party to perform its obligations under this
Agreement or any of the other Loan Documents, including repayment of the
Obligations when due; or (e) materially impairs the ability of Agent or any
Lender to enforce or collect the Obligations or realize upon any of the
Collateral in accordance with the Loan Documents and Applicable Law.
Maximum Legal Rate - as defined in Section 2.1.3(A) of the Agreement.
Money Borrowed - means (i) Indebtedness arising from the lending of
money by any Person to Borrower; (ii) Indebtedness, whether or not in any
such case arising from the lending by any Person of money to Borrower, (A)
which is represented by notes payable or drafts accepted that evidence
extensions of credit, (B) which constitutes obligations evidenced by bonds,
debentures, notes or similar instruments, or (C) upon which interest
charges are customarily paid (other than accounts payable) or that was
issued or assumed as full or partial payment for Property; (iii)
Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of Borrower under any guaranty of
obligations that would constitute Indebtedness for Money Borrowed under
clauses (i) through (iii) hereof, if owed directly by Borrower.
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Mortgages - each respective mortgage or deed of trust executed or to
be executed by Borrower in favor of Agent, and by which Borrower shall
grant and convey to Agent, as security for the Obligations, a Lien upon all
real Property owned in fee by Borrower, including, without limitation, the
real Property owned in fee by Borrower and located in Beaumont, Texas,
Houston, Texas and Baton Rouge, Louisiana.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3)
of ERISA.
New Mortgages - has the meaning set forth in Section 5.4 of this
Agreement.
Notes collectively, the Term Notes and the Revolving Notes.
Obligations - all Loans, and all other advances, debts, liabilities,
obligations, covenants and duties (including, without limitation, amounts
owing by any Loan Party to Fleet or to Agent or to Bank or any other
Affiliate of Agent under or otherwise in connection with any Hedging
Agreement or in relation to or otherwise arising in connection with cash
management services and related functions provided by such Person to such
Loan Party), together with all interest, fees and other charges thereon,
owing, arising, due or payable from any Loan Party to Agent or any Lender
or Bank or any other Affiliate of Agent or Lender of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, arising under the Agreement or any of the other Loan Documents,
and whether direct or indirect (including those acquired by assignment),
absolute or contingent, primary or secondary, due or to become due, now
existing or hereafter arising and however acquired.
Organizational ID Number - with respect to IDSC and each Subsidiary of
IDSC, the organizational identification number assigned to such Person by
the applicable governmental unit or agency of the jurisdiction of
organization of such Person.
Original Borrower Obligations - as defined in Section 1.7 of the
Agreement.
Original Loan Agreement - as defined in the recitals to the Agreement.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and documents
(other than this Agreement), heretofore, now or hereafter executed by
Borrower, any Subsidiary of Borrower or any other third party and delivered
to Agent or any Lender in respect of the transactions contemplated by the
Agreement.
Out-of-Formula Condition - at any date of determination thereof, a
condition such that the outstanding principal amount of Revolving Credit
Loans plus the LC Amount on such date exceeds the Borrowing Base on such
date.
PAL - Petrocon Arabia Ltd., a limited liability company organized
under the laws of Saudi Arabia.
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PAL Note - the Non-Negotiable Subordinated Promissory Note, dated
March 9, 2000, in the original principal amount of $937,230, executed by
Petrocon in favor of PAL, as in effect on the Closing Date.
Participant - each Person who shall be granted the right by any Lender
to participate in any of the Loans described in the Agreement and who shall
have entered into a participation agreement in form and substance
satisfactory to Agent and such Lender.
Payment Intangibles - has the meaning assigned thereto under the UCC
Revisions.
PEI Acquisition - as defined in the recitals to the Agreement.
Performance Accounts - means the amount to be payable to Borrower,
without duplication, with respect to unbilled accrued time of Borrowers'
employees which, but for the presentment of a billing statement, is
absolutely and unconditionally due and payable to Borrower. A Performance
Account shall be deemed converted to an Account upon the invoicing thereof.
Permitted Lien - a Lien of a kind specified in Section 8.2.5 of the
Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase
Money Lien and 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 Two Hundred Thousand Dollars
($200,000). 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.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
Pro Rata Share - means (a) with respect to matters relating to a
particular Commitment of a Lender, the percentage obtained by dividing (i)
such Commitment of that Lender by (ii) all such Commitments of all Lenders
and (b) with respect to all other matters, the percentage obtained by
dividing (i) the Total Loan Commitment of a Lender by (ii) the Total Loan
Commitments of all Lenders, in either case as such percentage may be
adjusted by assignments permitted pursuant to Section 11.1; provided,
however, if any Commitment is terminated pursuant to the terms hereof, then
"Pro Rata Share" means the percentage obtained by dividing (x) the
aggregate amount of such Lender's outstanding Loans related to such
Commitment by (y) the aggregate amount of all outstanding Loans related to
such Commitment.
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Proceeds - has the meaning assigned thereto under the UCC.
Properly Contested - in the case of any Indebtedness of a Loan Party
(including any Taxes) that is not paid as and when due or payable by reason
of such Loan Party's bona fide dispute concerning its liability to pay same
or concerning the amount thereof, that (i) such Indebtedness and any Liens
securing same are being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, (ii) such Loan
Party has established appropriate reserves as shall be required in
conformity with GAAP, (iii) the non-payment of such Indebtedness will not
have a Material Adverse Effect and will not result in a forfeiture of any
assets of such Loan Party; (iv) no Lien is imposed upon any of such Loan
Party's assets with respect to such Indebtedness unless such Lien is at all
times junior and subordinate in priority to the Liens in favor of Lender
(except only with respect to property taxes that have priority as a matter
of applicable state law); (v) if the Indebtedness results from the entry,
rendition or issuance against a Loan Party or any of its assets of a
judgment, writ, order or decree, such judgment, writ, order or decree is
stayed or bonded pending a timely appeal or other judicial review; and (vi)
if such contest is abandoned, settled or determined adversely to such Loan
Party, such Loan Party forthwith pays such Indebtedness and all penalties
and interest in connection therewith.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within ten (10) days prior to or
after the acquisition of any fixed assets for the purpose of financing all
or any part of the purchase price thereof, and (iii) any renewals,
extensions or refinancings thereof, but not any increases in the principal
amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined
solely to the fixed assets the purchase price of which was financed through
the incurrence of the Purchase Money Indebtedness secured by such Lien.
Rentals - as defined in Section 8.2.13 of the Agreement.
Replacement Lender - as defined in Section 3.14(A) of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.
Requisite Lenders - means Lenders holding or being responsible for
sixty-six and two-thirds percent (66.66%) or more of the sum of (a) all
outstanding Loans (b) the outstanding LC Amount and (c) all unutilized
Commitments.
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Reserve Requirement - at any date of determination, that percentage
(expressed as a decimal fraction), if any, which is in effect on such day,
as provided by the Board of Governors of the Federal Reserve System (or any
successor governmental body) applied for determining the maximum reserve
requirements (including without limitation, basic, supplemental, marginal
and emergency reserves) under Regulation D with respect to "eurocurrency
liabilities" as currently defined in Regulation D, or under any similar or
successor regulation with respect to eurocurrency liabilities or
eurocurrency funding. Each determination by Lender of the Reserve
Requirement shall be provided to Borrower and, in the absence of manifest
error, be conclusive and binding. Any Reserve Requirement shall be
determined in accordance with Lender's customary practice and applied on a
consistent basis.
Restricted Investment - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or
other obligation or Security, or by loan, advance or capital contribution,
or otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of IDSC to the extent
existing on the Closing Date;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and services in
the ordinary course of business of Borrower and its Subsidiaries;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the United
States of America, provided that such obligations mature within one
year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within one year
from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof
having capital surplus and undivided profits aggregating at least
$100,000,000; and
(vi) investments in commercial paper given the highest rating by a
national credit rating agency and maturing not more than 270 days from
the date of creation thereof.
Revolving Credit Loan - a Loan made by Lenders as provided in Section
1.1 of the Agreement.
Revolving Loan Commitment - means (a) as to any Lender, the commitment
of such Lender to make Revolving Credit Loans pursuant to Section 1.1.1,
and to purchase participations in Letters of Credit pursuant to Section 1.4
in the aggregate amount set forth on the signature page of this Agreement
opposite such Lender's signature or in the most recent Lender Addition
Agreement, if any, executed by such Lender and (b) as to all
A-1-16
Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Loans and to purchase participations in Letters of Credit.
Revolving Note - the Amended and Restated Secured Promissory Note(s)
(Revolving Credit Loan) to be executed by Borrower on or about the Closing
Date in favor of Lenders to evidence the Revolving Credit Loans, which
shall be in the form of Exhibit A-1 to the Agreement.
RPM Earnout Payment - means those certain earnout payments to be made
by Petrocon to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ A,. Marks pursuant to (i)
Section 1.6 of the Stock Purchase Agreement or (ii) as otherwise agreed by
the parties; provided, that (x) the principal amount of the earnout
payments are not increased above the principal amount set forth in Section
1.6 of the Stock Purchase Agreement and (y) the scheduled date of such
earnout payments are not accelerated as compared to the payment dates set
forth in Section 1.6 of the Stock Purchase Agreement.
RPM Stock Purchase Agreement - means that certain Stock Purchase
Agreement, dated as of October 17, 1996, by and among Petrocon, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as in effect on the Closing Date.
Schedule of Accounts - as defined in Section 6.2.1 of the Agreement.
Scheduled Accounts Payable - means those certain accounts payable of
Borrower listed on Exhibit T attached hereto and made a part hereof.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Entitlement - has the meaning assigned thereto under the UCC.
Senior Debt - all Indebtedness for Money Borrowed, excluding any
Subordinated Debt.
Software - has the meaning assigned thereto under the UCC Revisions.
Solvent - as to any Person, such Person (i) owns Property whose fair
salable value is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts), (ii) is able to pay all
of its Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
Stock Pledge Agreements - Collectively, (i) the Stock Pledge Agreement
which is to be executed by Petrocon on the Closing Date, in favor of Agent,
for the benefit of Lenders, in form and substance satisfactory to Agent,
pursuant to which Petrocon shall pledge all of its right, title and
interest in and to the capital stock of each of its Subsidiaries (whether
wholly or partially owned), and (ii) the Stock Pledge Agreement which is to
be executed by Petrocon on the Closing Date, in favor of Agent, for the
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benefit of Lenders, in form and substance satisfactory to Agent, pursuant
to which Petrocon shall pledge all of its right, title and interest in and
to its equity interest in PAL (whether wholly or partially owned), and
(iii) the Stock Pledge Agreement which is to be executed by IDSC on the
Closing Date, in favor of Agent, for the benefit of Lenders, in form and
substance satisfactory to Agent, pursuant to which IDSC shall pledge all of
its right, title and interest in and to the capital stock of each of IDS
Engineering, Thermaire, Data, and Constant Power and (iv) the Stock Pledge
Agreement, or equivalent document, which is to be executed by IDSC on the
Closing Date, in favor of Agent, for the benefit of Lenders, in form and
substance satisfactory to Agent, pursuant to which IDSC shall pledge all
its right, title and interest in and to the equity ownership of Management,
and (v) the Stock Pledge Agreement, which is to be executed by Management
on the Closing Date, in favor of Agent, for the benefit of Lenders, in form
and substance satisfactory to Agent, pursuant to which Management shall
pledge all of its right, title and interest in and to all capital stock of
Petrocon.
Subordinated Debt - Indebtedness of Borrower that is subordinated to
the Obligations in a manner satisfactory to Agent, including without
limitation, any Indebtedness owing to Equus which is covered by the
provisions of the Equus Intercreditor Agreement.
Subordination Agreements - means, collectively, (a) the Equus
Intercreditor Agreement, and (b) a subordination agreement in form and
substance satisfactory to Agent and its counsel in connection with any and
all Indebtedness now or hereafter owing by Borrower to any officer or
shareholder of Borrower.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, 50% or more of the Voting
Stock at the time of determination. For purposes of this Agreement, PAL
and Petrocon FSC, Ltd. shall not be deemed to be Subsidiaries of any
Borrower.
Supporting Obligation - has the meaning assigned thereto under the UCC
Revisions.
Taxes - any present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including, without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise
taxes now or hereafter imposed or levied by the United States, or any
state, local or foreign government or by any department, agency or other
political subdivision or taxing authority thereof or therein and all
interest, penalties, additions to tax and similar liabilities with respect
thereto.
Tax Liabilities - as defined in Section 3.9(A) of the Agreement.
Term Loan - the Loan described in Section 1.2 of the Agreement.
Term Loan Commitment - means (a) as to any Lender, such Lender's Pro
Rata share of the Term Loan in the amount set forth on the signature page
of this Agreement
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opposite such Lender's signature or in the most recent Lender Addition
Agreement, if any, executed by such Lender and (b) as to all Lenders, the
aggregate amount of the Term Loan.
Term Note - that certain Term Note, dated June 15, 1999, in the
original principal amount of $5,000,000, executed by the Original
Borrowers, in favor of Lenders, as renewed, modified, supplemented and
restated from time to time.
Total Credit Facility - on any date, $15,522,285.70, less the amount
of any principal payments made from time to time after the Closing Date in
respect of the Term Loan.
Total Loan Commitment - means as to any Lender the aggregate
commitments of such Lender with respect to its Revolving Loan Commitment
and Term Loan Commitment.
Total Revolving Credit Facility - Fifteen Million Dollars
($15,000,000).
Trade Creditor Term Debt - means any trade credit that has been
converted into term Indebtedness and which provides for payment terms of
twelve (12) months or more.
Transactions - as defined in the recitals to the Agreement.
Type of Organization - with respect to IDSC or any Subsidiary of IDSC,
the kind or type or type of entity by which such Person is organized, such
as a corporation or limited liability company.
UCC - the Uniform Commercial Code as in effect in the State of Texas
on the date of this Agreement, as the UCC may be amended or otherwise
modified, including by the UCC Revisions.
UCC Revisions - the revisions to Article 9 and other Articles of the
Uniform Commercial Code, as adopted by the State of Texas, effective July
1, 2001.
Uncertificated Security - has the meaning assigned thereto under the
UCC.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing
similar functions).
Voting Stock Equivalents - Any option, warrant, right or similar
security immediately exercisable into, exchangeable for, or convertible
into Voting Stock.
OTHER TERMS. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to the
extent the same are used or defined therein.
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CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time
from a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any of the
Loan Documents shall include any and all modifications thereto and any and all
extensions or renewals thereof. Wherever the phrase "including" shall appear in
the Agreement, such word shall be understood to mean "including, without
limitation."
THE TERM "BORROWER" OR "BORROWERS". All references to "Borrower" or
"Borrowers" herein shall refer to and include each of IDS Engineering,
Thermaire, Constant Power, Data, Management, Petrocon, Triangle, Petrocon
Systems, Petrocon Louisiana, RPM, Petrocon Construction, Petrocon Technologies
and Alliance separately and all representations contained in the Agreement shall
be deemed to be separately made by each of them, and each of the covenants,
agreements and obligations set forth in the Agreement shall be deemed to be the
joint and several covenants, agreements and obligations of them. Any notice,
request, consent, report or other information or agreement delivered to Agent
and/or Lenders by any Borrower shall be deemed to be ratified by, consented to
and also delivered by the other Borrower. Each Borrower recognizes and agrees
that each covenant and agreement of "Borrower" or "Borrowers" under the
Agreement and the other Loan Documents shall create a joint and several
obligation of the Borrowers, which may be enforced against Borrowers, jointly,
or against each Borrower separately. Without limiting the terms of the
Agreement and the other Loan Documents, security interests granted under the
Agreement and other Loan Documents in properties, interests, assets and
collateral shall extend to the properties, interests, assets and collateral of
each Borrower. Similarly, the term "Obligations" shall include, without
limitation, all obligations, liabilities and indebtedness of such Persons, or
any one of them, to Agent and/or Lenders, whether such obligations, liabilities
and indebtedness shall be joint, several, joint and several or individual.
Also, without limiting the terms of the Agreement and for clarification, unless
the context indicates otherwise, all obligations for the payment of fees,
principal and interest, and the requirements to make deliveries to Agent and
Lenders, shall apply to the Borrowers collectively without duplication, and all
financial covenants under the Agreement, amounts set forth in the Agreement, and
financial statements delivered pursuant to the Agreement shall apply to the
Borrowers on a consolidated basis. Furthermore, with respect to any reference
to an agreement or document to which Borrower is a party, "Borrower" shall mean
any one of the Borrowers under the Agreement and shall not be deemed an
inaccurate reference because another Borrower fails to be a party thereto.
Notwithstanding the foregoing, the provisions of this paragraph are subject to
and limited by the provisions of Section 1.7 of the Agreement.
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LIST OF EXHIBITS
Exhibit A-1 Revolving Note
Exhibit B IDSC's and each Subsidiary's Business Locations
Exhibit C Jurisdictions in which IDSC and Its Subsidiaries are Authorized to
do Business
Exhibit D Capital Structure of IDSC
Exhibit E Names
Exhibit F Tax Identification Numbers of IDSC and IDSC's Subsidiaries
Exhibit G Patents, Trademarks, Copyrights and Licenses
Exhibit H Contracts Restricting IDSC's and its Subsidiaries Right to Incur
Debts
Exhibit I Litigation
Exhibit J Capitalized Leases
Exhibit K Operating Leases
Exhibit L Pension Plans
Exhibit M Collective Bargaining Agreements; Labor Controversies
Exhibit N Compliance Certificate
Exhibit O Permitted Indebtedness
Exhibit P Permitted Liens
Exhibit Q Borrowing Notice
Exhibit R Compliance with Laws
Exhibit S Lender Addition Agreement
Exhibit T Scheduled Accounts Payable
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