Exhibit 10.1
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of July 28, 2000
among
IONICS, INCORPORATED
FLEET NATIONAL BANK
and the other lending institutions set forth
on Schedule 1 hereto
and
FLEET NATIONAL BANK, as Agent
16
TABLE OF CONTENTS
1. DEFINITIONS AND RULES OF INTERPRETATION.........................................................1
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1.1. Definitions..........................................................................1
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1.2. Rules of Interpretation..............................................................16
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2. THE REVOLVING CREDIT FACILITY...................................................................17
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2.1. Commitment to Lend...................................................................17
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2.2. Commitment Fee.......................................................................17
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2.3. Reduction of Total Commitment........................................................18
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2.4. The Revolving Credit Notes...........................................................18
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2.5. Interest on Revolving Credit Loans...................................................18
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2.6. Requests for Revolving Credit Loans..................................................19
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2.7. Conversion Options...................................................................19
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2.7.1. Conversion to Different Type of Revolving Credit Loan.....................19
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2.7.2. Continuation of Type of Revolving Credit Loan.............................20
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2.7.3. LIBOR Rate Loans..........................................................20
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2.8. Funds for Revolving Credit Loan......................................................20
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2.8.1. Funding Procedures........................................................20
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2.8.2. Advances by Agent.........................................................21
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3. REPAYMENT OF THE REVOLVING CREDIT LOANS.........................................................21
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3.1. Maturity.............................................................................21
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3.2. Mandatory Repayment of Revolving Credit Loans........................................21
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3.2.1. General...................................................................21
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3.2.2. Proceeds..................................................................22
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3.3. Optional Repayments of Revolving Credit Loans........................................22
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4. LETTERS OF CREDIT...............................................................................22
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4.1. Letter of Credit Commitments.........................................................22
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4.1.1. Commitment to Issue Letters of Credit.....................................22
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4.1.2. Letter of Credit Applications.............................................23
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4.1.3. Terms of Letters of Credit................................................23
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4.1.4. Reimbursement Obligations of Banks........................................23
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4.1.5. Participations of Banks...................................................24
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4.2. Reimbursement Obligation of the Borrower.............................................24
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4.3. Letter of Credit Payments............................................................24
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4.4. Obligations Absolute.................................................................25
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4.5. Reliance by Issuer...................................................................25
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4.6. Letter of Credit Fee.................................................................26
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5. CERTAIN GENERAL PROVISIONS......................................................................26
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5.1. Closing Fee..........................................................................26
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5.2. Agent's Fee..........................................................................26
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5.3. Funds for Payments...................................................................27
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5.3.1. Payments to Agent.........................................................27
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5.3.2. No Offset, etc............................................................27
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5.4. Computations.........................................................................27
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5.5. Inability to Determine LIBOR Rate....................................................27
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5.6. Illegality...........................................................................28
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5.7. Additional Costs, etc................................................................28
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5.8. Capital Adequacy.....................................................................29
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5.9. Certificate..........................................................................30
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5.10. Indemnity...........................................................................30
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5.11. Interest After Default; Late Fee....................................................30
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5.11.1. Overdue Amounts..........................................................30
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5.11.2. Amounts Not Overdue......................................................31
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5.11.3. Late Fee.................................................................31
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6. GUARANTIES.....................................................................................31
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18
7. REPRESENTATIONS AND WARRANTIES..................................................................31
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7.1. Corporate Authority..................................................................31
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7.1.1. Incorporation; Good Standing..............................................31
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7.1.2. Authorization.............................................................31
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7.1.3. Enforceability............................................................32
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7.2. Governmental Approvals...............................................................32
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7.3. Title to Properties; Leases..........................................................32
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7.4. Financial Statements, Projections and Solvency.......................................32
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7.4.1. Fiscal Year...............................................................32
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7.4.2. Financial Statements......................................................32
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7.4.3. Projections...............................................................33
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7.4.4. Solvency..................................................................33
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7.5. No Material Changes, etc.............................................................33
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7.6. Franchises, Patents, Copyrights, etc.................................................33
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7.7. Litigation...........................................................................33
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7.8. No Materially Adverse Contracts, etc.................................................34
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7.9. Compliance with Other Instruments, Laws, etc.........................................34
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7.10. Tax Status..........................................................................34
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7.11. No Event of Default.................................................................34
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7.12. Holding Company and Investment Company Acts.........................................34
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7.13. Absence of Financing Statements, etc................................................35
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7.14. Certain Transactions................................................................35
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7.15. Employee Benefit Plans..............................................................35
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7.15.1. In General...............................................................35
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7.15.2. Terminability of Welfare Plans...........................................35
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7.15.3. Guaranteed Pension Plans.................................................35
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7.15.4. Multiemployer Plans......................................................36
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7.16. Use of Proceeds.....................................................................36
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7.16.1. General..................................................................36
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7.16.2. Regulations U and X......................................................36
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7.16.3. Ineligible Securities....................................................36
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7.17. Environmental Compliance............................................................37
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7.18. Subsidiaries, etc...................................................................38
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7.19. Disclosure..........................................................................38
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19
8. AFFIRMATIVE COVENANTS OF THE BORROWER...........................................................39
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8.1. Punctual Payment.....................................................................39
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8.2. Maintenance of Office................................................................39
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8.3. Records and Accounts.................................................................39
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8.4. Financial Statements, Certificates and Information...................................39
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8.5. Notices..............................................................................41
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8.5.1. Defaults..................................................................41
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8.5.2. Environmental Events......................................................41
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8.5.3. Notification of Certain Claims............................................41
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8.5.4. Notice of Litigation and Judgments........................................42
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8.6. Corporate Existence; Maintenance of Properties.......................................42
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8.7. Insurance............................................................................42
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8.8. Taxes................................................................................42
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8.9. Inspection of Properties and Books, etc..............................................43
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8.9.1. General...................................................................43
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8.9.2. Communications with Accountants...........................................43
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8.10. Compliance with Laws, Contracts, Licenses, and Permits..............................43
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8.11. Employee Benefit Plans..............................................................44
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8.12. Use of Proceeds.....................................................................44
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8.13. New Guarantors. The................................................................44
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8.14. Additional Subsidiaries.............................................................44
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8.15. Replacement Instruments.............................................................44
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8.16. Further Assurances..................................................................44
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9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER......................................................44
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9.1. Restrictions on Indebtedness.........................................................45
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9.2. Restrictions on Liens................................................................46
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9.3. Restrictions on Investments..........................................................48
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9.4. Restricted Payments..................................................................49
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9.5. Merger, Consolidation and Disposition of Assets......................................49
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9.5.1. Mergers and Acquisitions..................................................49
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9.5.2. Disposition of Assets.....................................................49
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9.6. Sale and Leaseback...................................................................50
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9.7. Compliance with Environmental Laws...................................................50
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9.8. Subordinated Debt....................................................................50
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9.9. Upstream Limitations.................................................................50
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9.10. Negative Pledges....................................................................50
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9.11. Employee Benefit Plans..............................................................51
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9.12. Business Activities.................................................................51
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9.13. Fiscal Year.........................................................................51
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9.14. Transactions with Affiliates........................................................51
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9.15. Inconsistent Agreements.............................................................52
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9.16. Modification of Documents and Charter Documents.....................................52
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10. FINANCIAL COVENANTS OF THE BORROWER............................................................52
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10.1. Leverage Ratio......................................................................52
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10.2. Minimum EBITDA......................................................................52
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10.3. Minimum Net Worth...................................................................52
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10.4. Capital Expenditures................................................................52
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11. CLOSING CONDITIONS.............................................................................52
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11.1. Loan Documents......................................................................52
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11.2. Certified Copies of Charter Documents...............................................53
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11.3. Corporate Action....................................................................53
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11.4. Incumbency Certificate..............................................................53
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11.5. Information Certificates and UCC Search Results.....................................53
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11.6. Certificates of Insurance...........................................................53
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11.7. Solvency Certificate................................................................53
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11.8. Opinion of Counsel..................................................................53
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11.9. Payment of Fees.....................................................................53
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11.10. Compliance Certificate.............................................................54
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12. CONDITIONS TO ALL BORROWINGS...................................................................54
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12.1. Representations True; No Event of Default...........................................54
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12.2. No Legal Impediment.................................................................54
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12.3. Governmental Regulation.............................................................54
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12.4. Proceedings and Documents...........................................................54
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13. EVENTS OF DEFAULT; ACCELERATION; ETC...........................................................55
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13.1. Events of Default and Acceleration..................................................55
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13.2. Termination of Commitments..........................................................58
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13.3. Remedies............................................................................58
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14. SETOFF.........................................................................................59
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15. THE AGENT......................................................................................59
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15.1. Authorization.......................................................................59
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15.2. Employees and Agents................................................................60
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15.3. No Liability........................................................................60
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15.4. No Representations..................................................................60
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15.4.1. General..................................................................61
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15.4.2. Closing Documentation, etc...............................................61
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15.5. Payments............................................................................61
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15.5.1. Payments to Agent........................................................61
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15.5.2. Distribution by Agent....................................................62
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15.5.3. Delinquent Banks.........................................................62
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15.6. Holders of Notes....................................................................62
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15.7. Indemnity...........................................................................63
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15.8. Agent as Bank.......................................................................63
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15.9. Resignation.........................................................................63
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15.10. Notification of Defaults and Events of Default.....................................63
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16. EXPENSES AND INDEMNIFICATION...................................................................63
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16.1. Expenses............................................................................63
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16.2. Indemnification.....................................................................64
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16.3. Survival............................................................................65
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17. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION..................................................65
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17.1. Confidentiality.....................................................................65
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17.2. Prior Notification..................................................................66
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17.3. Other...............................................................................66
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18. SURVIVAL OF COVENANTS, ETC.....................................................................66
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19. ASSIGNMENT AND PARTICIPATION...................................................................66
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19.1. Conditions to Assignment by Banks...................................................66
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19.2. Certain Representations and Warranties; Limitations; Covenants......................67
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19.3. Register............................................................................68
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19.4. New Notes...........................................................................68
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19.5. Participations......................................................................69
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19.6. Disclosure..........................................................................69
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19.7. Assignee or Participant Affiliated with the Borrower................................69
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19.8. Miscellaneous Assignment Provisions.................................................70
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19.9. Assignment by Borrower..............................................................70
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20. NOTICES, ETC...................................................................................70
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21. GOVERNING LAW..................................................................................71
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22. HEADINGS.......................................................................................71
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23. COUNTERPARTS...................................................................................71
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24. ENTIRE AGREEMENT, ETC..........................................................................72
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25. WAIVER OF JURY TRIAL...........................................................................72
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26. CONSENTS, AMENDMENTS, WAIVERS, ETC.............................................................72
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27. USURY..........................................................................................73
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28. SEVERABILITY...................................................................................73
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29. TRANSITIONAL ARRANGEMENTS......................................................................73
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29.1. Prior Credit Agreement..............................................................73
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29.2. Return and Cancellation of Note.....................................................74
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29.3. Interest and Fees Under Prior Credit Agreement......................................74
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25
List of Schedules and Exhibits
SCHEDULES
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Schedule 1 Banks; Commitment
Schedule 1.1 Non-Consolidated Subsidiaries
Schedule 7.3 Title to Properties; Leases
Schedule 7.7 Litigation
Schedule 7.17 Environmental Compliance
Schedule 7.18(a) Subsidiaries, etc.
Schedule 7.18(b) Joint Ventures; Partnerships
Schedule 9.1 Existing Indebtedness
Schedule 9.2 Existing Liens
Schedule 9.3 Existing Investments
EXHIBITS
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Exhibit A Revolving Credit Note
Exhibit B Loan Request
Exhibit C Compliance Certificate
Exhibit D Information Certificate
Exhibit E Assignment and Acceptance
Exhibit F Intercompany Subordination Agreement
26
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as
of July 28, 2000May __, 2000, by and among IONICS, INCORPORATED (the
"Borrower"), a Massachusetts corporation having its principal place of business
at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and FLEET NATIONAL BANK, a national
banking association and the other lending institutions listed on Schedule 1 and
FLEET NATIONAL BANK as agent for itself and such other lending institutions.
WHEREAS, pursuant to an Amended and Restated Credit Agreement, dated as
of December 31, 1992 (the "Prior Credit Agreement"), among the Borrower, Fleet
(at such time known as The First National Bank of Boston) and the Agent (at such
time known as The First National Bank of Boston), Fleet made revolving credit
loans and other extensions of credit to the Borrower; and
WHEREAS, the Borrower has requested among other things, to amend and
restate the Prior Credit Agreement on the terms and conditions set forth herein
and Fleet and the Agent are willing to amend and restate the Prior Credit
Agreement on the terms and conditions set forth herein;
NOW THEREFORE, the Borrower, Fleet and the Agent agree that on the
Closing Date the Prior Credit Agreement shall hereby be amended and restated in
its entirety and shall remain in full force and effect only as set forth herein.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. Definitions. The following terms shall have the meanings set forth
in this ss.1 or elsewhere in the provisions of this Credit Agreement referred to
below:
Accounts Receivable. All rights of the Borrower or any of its
Subsidiaries to payment for goods sold, leased or otherwise marketed in the
ordinary course of business and all rights of the Borrower or any of its
Subsidiaries to payment for services rendered in the ordinary course of business
and all sums of money or other proceeds due thereon pursuant to transactions
with account debtors, except for that portion of the sum of money or other
proceeds due thereon that relate to sales, use or property taxes in conjunction
with such transactions, recorded on books of account in accordance with
generally accepted accounting principles.
Adjustment Date. The first Business Day which is five (5) Business Days
after receipt by the Agent of the most recent Compliance Certificate required to
be delivered by the Borrower pursuant to ss.8.4(c).
Affiliate. Any Person that would be considered to be an affiliate of
the Borrower under Rule 144(a) of the Rules and Regulations of the Securities
and Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
Agent. Fleet National Bank, acting as agent for the Banks.
Agent's Head Office. The Agent's office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location as the Agent may
designate from time to time.
Agent's Special Counsel. ▇▇▇▇▇▇▇ ▇▇▇▇ LLP or such other counsel
as may be approved by the Agent.
Applicable Margin. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the applicable margin set
forth below with respect to the Leverage Ratio as determined for the period
ending on the fiscal quarter ended immediately preceding the applicable Rate
Adjustment Period.
27
PRIME RATE LIBOR LETTER OF COMMITMENT
LEVEL LEVERAGE RATIO LOANS RATE LOANS CREDIT FEE FEE RATE
----- -------------- ----- ---------- ---------- --------
I Greater than or equal to
2.50:1.00 0% 1.75% 1.75% 0.375%
II Less than 2.50:1.00 but
greater than or equal to 0% 1.50% 1.50% 0.375%
2.00:1.00
III Less than 2.00:1.00 but
greater than or equal to
1.50:1.00 0% 1.25% 1.25% 0.250%
IV Less than 1.50:1.00 but
greater than or equal to
1.00:1.00 0% 1.00% 1.00% 0.250%
V Less than 1.00:1.00 0% 1.00% 0.75% 0.150%
28
Notwithstanding the foregoing, (a) until the delivery by the Borrower
to the Agent of the Compliance Certificate pursuant to ss.8.4(c) for the period
ending September 30, 2000, the Applicable Margin shall be the Applicable Margin
set forth above in Level III, and (b) if the Borrower fails to deliver any
Compliance Certificate pursuant to ss.8.4(c) hereof then, for the period
commencing on the next Adjustment Date to occur subsequent to such failure
through the date immediately following the date on which such Compliance
Certificate is delivered, the Applicable Margin shall be the highest Applicable
Margin set forth above.
Asset Sale. Any one of series of related transactions in which any
Person conveys, sells, transfers or otherwise disposes of, directly or
indirectly, any of its properties, business or assets (including the sale or
issuance of capital stock of any Subsidiary other than to the Borrower or any
Subsidiary) whether owned on the Closing Date or thereafter acquired.
Assignment and Acceptance. Seess.19.1.
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Balance Sheet Date. December 31, 1999December 31, 1999.
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Banks. Fleet and the other lending institutions listed on Schedule 1 hereto
and any other Person who becomes an assignee of any rights and obligations of a
Bank pursuant toss.19.
Borrower. As defined in the preamble hereto.
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Business Day. Any day other than a Saturday or Sunday on which banking
institutions in Boston, MA, are open for the transaction of banking business
and, in the case of LIBOR Rate Loans, also a day which is a LIBOR Business Day.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or Indebtedness incurred by the
Borrower or any of its Subsidiaries in connection with (a) the purchase or lease
by the Borrower or any of its Subsidiaries of Capital Assets that would be
required to be capitalized and shown on the balance sheet of such Person in
accordance with generally accepted accounting principles or (b) the lease of any
assets by the Borrower or any of its Subsidiaries as lessee under any Synthetic
Lease to the extent that such assets would have been Capital Assets had the
Synthetic Lease been treated for accounting purposes as a Capitalized Lease.
Capitalization Documents. Collectively, the formation documents (including,
without limitation, any certificate of incorporation and by-laws) of the
Borrower and its Subsidiaries.
Capitalized Leases. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. Seess.7.17(a).
29
Closing Date. The first date on which the conditions set forth in ss.12
have been satisfied and any Revolving Credit Loans are to be made or any Letter
of Credit is to be issued hereunder.
Code. The Internal Revenue Code of 1986.
Commitment. With respect to each Bank, the amount set forth on Schedule
1 hereto as the amount of such Bank's commitment to make Revolving Credit Loans
to, and to participate in the issuance, extension and renewal of Letters of
Credit for the account of, the Borrower, as the same may be reduced from time to
time; or if such commitment is terminated pursuant to the provisions hereof,
zero.
Commitment Fee. Seess.2.2.
Commitment Fee Rate. The applicable rate per annum set forth in the
chart contained in the definition of Applicable Margin under the heading
"Commitment Fee Rate".
Commitment Percentage. With respect to each Bank, the percentage set
forth on Schedule 1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
Compliance Certificate. Seess.8.4(c).
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and its
Consolidated Subsidiaries, consolidated in accordance with generally accepted
accounting principles.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of the Borrower and its Subsidiaries, after deduction of all expenses,
taxes, and other proper charges, determined in accordance with generally
accepted accounting principles, after eliminating therefrom all extraordinary
nonrecurring items of income and non-cash loss.
Consolidated Net Worth. The excess of Consolidated Total Assets over
Consolidated Total Liabilities less, to the extent otherwise includable in the
computation of Consolidated Net Worth, any subscriptions receivable.
Consolidated Subsidiaries. Any Subsidiary other than those
Subsidiaries listed on Schedule 1.1.
Consolidated Total Assets. The sum of (a) all assets ("consolidated
balance sheet assets") of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles,
plus (b) without duplication, all assets leased by the Borrower or any
Subsidiary as lessee under any synthetic lease referred to in clause (f) of the
definition of the term "Indebtedness" to the extent that such assets would have
been consolidated balance sheet assets had the synthetic lease been treated for
accounting purposes as a Capitalized Lease, plus (c) without duplication, all
sold receivables referred to in clause (g) of the definition of the term
"Indebtedness" to the extent that such receivables would have been consolidated
balance sheet assets had they not been sold.
30
Consolidated Total Interest Expense. For any period, the aggregate
amount of interest required to be paid or accrued by the Borrower and its
Subsidiaries during such period on all Indebtedness of the Borrower and its
Subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of any
Capitalized Lease, or any Synthetic Lease and including commitment fees, agency
fees, facility fees, balance deficiency fees and similar fees or expenses in
connection with the borrowing of money.
Consolidated Total Liabilities. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and classified as such on the consolidated
balance sheet of the Borrower and its Subsidiaries and all other Indebtedness of
the Borrower and its Subsidiaries, whether or not so classified.
Conversion Request. A notice given by the Borrower to the Agent of the
Borrower's election to convert or continue a Loan in accordance withss.2.7.
Credit Agreement. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto.
Default. Seess.13.1.
Delinquent Bank. Seess.15.5.3.
Distribution. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of the Borrower, other than
dividends payable solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its shareholders
as such; or any other distribution on or in respect of any shares of any class
of capital stock of the Borrower.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank designated
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
any, located within the United States that will be making or maintaining Prime
Rate Loans.
Drawdown Date. The date on which any Revolving Credit Loan is made or
is to be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with ss.2.7.
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EBITDA: With respect to any fiscal period, an amount equal to the sum
of (a) Consolidated Net Income of the Borrower and its Subsidiaries for such
fiscal period, plus (b) in each case to the extent deducted in the calculation
of such Person's Consolidated Net Income and without duplication, (i)
depreciation and amortization for such period, plus (ii) income tax expense for
such period, plus (iii) Consolidated Total Interest Expense paid or accrued
during such period, plus (iv) other noncash charges for such period, and minus,
to the extent added in computing Consolidated Net Income, and without
duplication, all noncash gains (including income tax benefits) for such period,
all as determined in accordance with generally accepted accounting principles.
Eligible Assignee. Any of (a) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (b) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (d) the central
bank of any country which is a member of the OECD; and (e) if, but only if, any
Event of Default has occurred and is continuing, any other bank, insurance
company, commercial finance company or other financial institution or other
Person approved by the Agent, such approval not to be unreasonably withheld.
Employee Benefit Plan. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Laws. Seess.7.17(a).
EPA. Seess.7.17(b).
32
Equity Issuance. The sale or issuance by the Borrower or any of its
Subsidiaries of any of its capital stock or equity interests or any warrants,
rights or options to acquire its capital stock or equity interests.
ERISA. The Employee Retirement Income Security Act of 1974.
-----
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower under ss.414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss.4043 of ERISA and the regulations
promulgated thereunder.
Eurocurrency Reserve Rate. For any day with respect to a LIBOR Rate
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Event of Default. Seess.13.1.
Fleet. Fleet National Bank, a national banking association, in its
individual capacity.
generally accepted accounting principles. (a) When used in ss.10,
whether directly or indirectly through reference to a capitalized term used
therein, means (i) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(ii) to the extent consistent with such principles, the accounting practice of
the Borrower reflected in its financial statements for the year ended on the
Balance Sheet Date, and (b) when used in general, other than as provided above,
means principles that are (i) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (ii) consistently applied with past financial
statements of the Borrower adopting the same principles, provided that in each
case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
33
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guarantors. Collectively, each domestic Subsidiary of the Borrower
(other than the Inactive Subsidiaries) existing on the Closing Date and each
other Person which is required to be or become a guarantor from time to time
pursuant to ss.8.13 hereof. Each such Person shall be a party to a Guaranty.
Guaranty. The Guaranty, dated or to be dated on or prior to the Closing
Date (or such later date as is required by ss.8.13 hereof), made by each
Guarantor in favor of the Banks and the Agent pursuant to which each Guarantor
guaranties to the Banks and the Agent the payment and performance of the
Obligations and in form and substance satisfactory to the Banks and the Agent.
Hazardous Substances. Seess.7.17(b).
Inactive Subsidiaries. Ionics Tampa Bay, Inc., a Florida corporation
and Springfield Elite Technologies, Inc., a Massachusetts corporation, so
long as such Subsidiaries do not engage in any business activities
whatsoever.
Indebtedness. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(a) every obligation of such Person for money borrowed,
(b) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses,
(c) every reimbursement obligation of such Person with respect
to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person,
(d) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith),
(e)every obligation of such Person under any Capitalized
Lease,
(f) every obligation of such Person under any lease (a "Synthetic
Lease") treated as an operating lease under generally accepted accounting
principles and as a loan or financing for U.S. income tax purposes,
34
(g) all sales by such Person of (i) accounts or general
intangibles for money due or to become due, (ii) chattel paper,
instruments or documents creating or evidencing a right to payment of
money or (iii) other receivables (collectively "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person relating
thereto or a disposition of defaulted receivables for collection and
not as a financing arrangement, and together with any obligation of
such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection therewith,
(h) every obligation of such Person (an "equity related
purchase obligation") to purchase, redeem, retire or otherwise acquire
for value any shares of capital stock of any class issued by such
Person, any warrants, options or other rights to acquire any such
shares, or any rights measured by the value of such shares, warrants,
options or other rights,
(i) every obligation of such Person under any forward
contract, futures contract, swap, option or other financing agreement
or arrangement (including, without limitation, caps, floors, collars
and similar agreements), the value of which is dependent upon interest
rates, currency exchange rates, commodities or other indices (a
"derivative contract"),
(j) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness
provide that such Person is not liable therefor and such terms are
enforceable under applicable law, and
(k) every obligation, contingent or otherwise, of such Person guaranteeing,
or having the economic effect of guarantying or otherwise acting as surety for,
any obligation of a type described in any of clauses (a) through (j) (the
"primary obligation") of another Person (the "primary obligor"), in any manner,
whether directly or indirectly, and including, without limitation, any
obligation of such Person (i) to purchase or pay (or advance or supply funds for
the purchase of) any security for the payment of such primary obligation, (ii)
to purchase property, securities or services for the purpose of assuring the
payment of such primary obligation, or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such primary obligation.
35
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, (x) any Synthetic Lease shall be the
stipulated loss value, termination value or other equivalent amount, (y) any
derivative contract shall be the maximum amount of any termination or loss
payment required to be paid by such Person if such derivative contract were, at
the time of determination, to be terminated by reason of any event of default or
early termination event thereunder, whether or not such event of default or
early termination event has in fact occurred and (z) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such redemption
or purchase price.
Ineligible Securities. Securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of
the Banking Act of 1933 (12 U.S.C.ss.24, Seventh), as amended.
Information Certificates. The Information Certificates, substantially
in the form of Exhibit D hereto.
Interest Payment Date. (a) As to any Prime Rate Loan, the last day of
the calendar month with respect to interest accrued during such calendar month,
including, without limitation, the calendar month which includes the Drawdown
Date of such Prime Rate Loan; and (b) as to any LIBOR Rate Loan in respect of
which the Interest Period is (i) three (3) months or less, the last day of such
Interest Period and (ii) more than three (3) months, the date that is three (3)
months from the first day of such Interest Period and, in addition, the last day
of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan, (a)
initially, the period commencing on the Drawdown Date of such Loan and ending on
the last day of one of the periods set forth below, as selected by the Borrower
in a Loan Request or as otherwise required by the terms of this Credit Agreement
(i) for any Prime Rate Loan, the last day of the calendar month; and (ii) for
any LIBOR Rate Loan, 1, 2, 3 or 6 months; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Revolving Credit Loan and ending on the last day of one of the periods set
forth above, as selected by the Borrower in a Conversion Request; provided that
all of the foregoing provisions relating to Interest Periods are subject to the
following:
36
(i) if any Interest Period with respect to a LIBOR Rate Loan
would otherwise end on a day that is not a LIBOR Business Day, that
Interest Period shall be extended to the next succeeding LIBOR Business
Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period
shall end on the immediately preceding LIBOR Business Day;
(ii) if any Interest Period with respect to a Prime Rate Loan
would end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(iii) if the Borrower shall fail to give notice as provided in
ss.2.7, the Borrower shall be deemed to have requested a conversion of
the affected LIBOR Rate Loan to a Prime Rate Loan and the continuance
of all Prime Rate Loans as Prime Rate Loans on the last day of the then
current Interest Period with respect thereto;
(iv) any Interest Period relating to any LIBOR Rate Loan that
begins on the last LIBOR Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last LIBOR
Business Day of a calendar month; and
(v) any Interest Period that would otherwise extend beyond the
Revolving Credit Loan Maturity Date shall end on the Revolving Credit
Loan Maturity Date.
International Standby Practices. With respect to any standby Letter of
Credit, International Standby Practices (ISP98), International Chamber of
Commerce Publication No. 590, or any successor code of standby letter of credit
practices among banks adopted by the Agent in the ordinary course of its
business as a standby letter of credit issuer and in effect at the time of
issuance of such Letter of Credit.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
37
Letter of Credit. Seess.4.1.1.
Letter of Credit Application. Seess.4.1.1.
Letter of Credit Fee. Seess.4.6.
Letter of Credit Participation. Seess.4.1.4.
Leverage Ratio. As of any date of determination, the ratio of (a) Total
Funded Indebtedness of the Borrower and its Subsidiaries outstanding on such
date to (b) the EBITDA of the Borrower and its Subsidiaries for the Reference
Period ended on such date.
LIBOR Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other LIBOR interbank market as may be selected by the Agent in its sole
discretion acting in good faith.
LIBOR Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
that shall be making or maintaining LIBOR Rate Loans.
LIBOR Rate. For any Interest Period with respect to a LIBOR Rate Loan,
the rate of interest equal to (i) the rate determined by the Agent at which
Dollar deposits for such Interest Period are offered based on information
presented on Telerate Page 3750 as of 11:00 a.m. London time on the second LIBOR
Business Day prior to the first day of such Interest Period divided by (ii) a
number equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable.
LIBOR Rate Loans. Revolving Credit Loans bearing interest calculated
by reference to the LIBOR Rate.
Loan Documents. This Credit Agreement, the Notes, the Letter of
Credit Applications and the Letters of Credit.
Loan Request. Seess.2.6.
Majority Banks. As of any date, the Banks holding at least sixty-seven
percent (67%) of the outstanding principal amount of the Notes on such date; and
if no such principal is outstanding, the Banks whose aggregate Commitments
constitutes at least sixty-seven percent (67%) of the Total Commitment.
38
Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
Multiemployer Plan. Any multiemployer plan within the meaning
of ss.3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
Net Cash Proceeds. With respect to any Equity Issuances, the excess of
the gross cash proceeds received by such Person for such Equity Issuance after
deduction of all reasonable and customary transaction expenses (including
without limitation, underwriting discounts and commissions) actually incurred in
connection with such a sale or other issuance.
Net Cash Sale Proceeds. The net cash proceeds received by a Person in
respect of any Asset Sale, less the sum of (a) all reasonable out-of-pocket
fees, commissions and other reasonably and customary expenses actually incurred
in connection with such Asset Sale, including the amount of income, franchise,
sales and other applicable taxes required to be paid by such Person in
connection with such Asset Sale, and (b) the aggregate amount of cash so
received by such Person which is required to be used to retire (in whole or in
part) any Indebtedness (other than under the Loan Documents) of such Person
permitted by this Credit Agreement that was secured by a lien or security
interest permitted by this Credit Agreement having priority over the liens and
security interests (if any) of the Agent (for the benefit of the Agent and the
Banks) with respect to such assets transferred and which is required to be
repaid in whole or in part (which repayment, in the case of any other revolving
credit arrangement or multiple advance arrangement, reduces the commitment
thereunder) in connection with such Asset Sale.
Obligations. All indebtedness, obligations and liabilities of any of
the Borrower and its Subsidiaries to any of the Banks and the Agent,
individually or collectively, existing on the date of this Credit Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents or in
respect of any of the Revolving Credit Loans made or Reimbursement Obligations
incurred or any of the Revolving Credit Notes, Letters of Credit Application,
Letters of Credit, any foreign exchange contracts between the Borrower and any
Bank, any interest rate protection arrangements between Borrower and any Bank,
any other financial accommodations provided by any Bank to the Borrower under or
in any manner related to or associated with any of the foregoing or other
instruments at any time evidencing any thereof.
39
outstanding. With respect to the Loans, the aggregate unpaid
principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created byss.4002
of ERISA and any successor entity or entities having similar responsibilities.
Permitted Acquisitions. Any acquisition by the Borrower, or any of its
domestic Subsidiaries of a material portion of the assets, a division or line of
business or capital stock of a Person, provided (a) such assets or capital stock
are related to the business of the Borrower or such Subsidiary, (b) no Default
or Event of Default exists prior to or immediately after such acquisition, (c)
the terms of such acquisition are on an arms length basis, (d) if as a result of
such acquisition a new domestic Subsidiary is acquired or formed, ss.8.14 is
complied with at the time of consummation of such acquisition (or concurrently
therewith), (e) if the purchase price for such acquisition or the aggregate
purchase price for all acquisitions made during any fiscal year shall exceed
$5,000,000 during such fiscal year, the Borrower has demonstrated to the
reasonable satisfaction of the Agent, set forth in a pro forma Compliance
Certificate, compliance with ss.10 on a pro forma basis immediately prior to and
after giving effect to any such acquisition, the calculation of which shall be
based upon the financial statements delivered for the twelve (12) calendar month
period immediately preceding such acquisition, (f) the board of directors and
(if required by applicable law) the shareholders, or the equivalent thereof, of
the business to be acquired has approved such acquisition, (g) if such
acquisition is made by a merger, the Borrower or the applicable Subsidiary as
the case may be, shall be the surviving entity, and (h) if the purchase price
for such acquisition or the aggregate purchase price for all acquisitions made
during any fiscal year shall exceed $5,000,000 during such fiscal year, all
other terms and conditions of, and documentation for, such acquisition are
reasonably satisfactory to the Agent and the Banks.
Permitted Liens. Liens, security interests and other encumbrances
permitted by ss.9.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
40
Prime Rate. The higher of (i) the annual rate of interest announced
from time to time by Fleet at its head office in Boston, MA, as its "prime rate"
or "base rate" and (ii) one-half of one percent (1/2%) above the Federal Funds
Effective Rate. For the purposes of this definition, "Federal Funds Effective
Rate" shall mean for any day, the rate per annum equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three funds brokers of recognized
standing selected by the Agent. In addition, the Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate charged to any
customer. Changes in the rate of interest resulting from any changes in the
"Prime Rate" shall take place immediately without notice or demand of any kind.
Prime Rate Loans. Revolving Credit Loans bearing interest calculated
by reference to the Prime Rate.
Rate Adjustment Period. See definition of Applicable Margin.
RCRA. Seess.7.17(a).
Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by any Bank with respect to any Revolving Credit Loan
referred to in such Revolving Credit Note.
Reference Bank. Fleet.
Reference Period. The period of four (4) consecutive fiscal quarters
of the Borrower ending on the relevant date.
Register. Seess.19.3.
Reimbursement Obligation. The Borrower's obligation to reimburse the
Agent and the Banks on account of any drawing under any Letter of Credit as
provided in ss.4.2.
Restricted Payment. In relation to the Borrower and its Subsidiaries,
any (a) Distribution or (b) payment or prepayment by the Borrower or its
Subsidiaries to the Borrower's or any Subsidiary's shareholders (or other equity
holders) or to any Affiliate of the Borrower or any Subsidiary or any Affiliate
of the Borrower's or such Subsidiary's shareholders.
Revolving Credit Loan Maturity Date. December 31, 2004.
Revolving Credit Loans. Revolving credit loans made or to be made by
the Banks to the Borrower pursuant to ss.2.
Revolving Credit Notes. See ss.2.4; provided, however, the Revolving
Credit Note issued by the Borrower to Fleet on the Closing Date, shall be the
Sixth Amended and Restated Revolving Credit Note.
41
▇▇▇▇. Seess.7.17(a).
Section 20 Subsidiary. A Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
Subordinated Debt. Unsecured Indebtedness of the Borrower or any of its
Subsidiaries that is expressly subordinated and made junior to the payment and
performance in full of the Obligations, and evidenced as such by a written
instrument containing subordination provisions in form and substance approved by
the Banks in writing.
Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
Synthetic Lease. As defined in paragraph (f) of the definition of
"Indebtedness".
Total Commitment. The sum of the Commitments of the Banks, as in effect
from time to time.
Total Funded Indebtedness. At anytime of determination, all funded
Indebtedness of the Borrower and its Subsidiaries, including, without limitation
the sum of (a) the aggregate outstanding amount of the Revolving Credit Loans,
(b) the Maximum Drawing Amount, the maximum amount which the beneficiary of any
other letters of credit issued for the account of the Borrower or any of its
Subsidiaries may draw under such letters of credit, (c) the aggregate
outstanding amount of all Subordinated Debt and (c) all other Indebtedness for
borrowed money, purchase money Indebtedness and with respect to Capitalized
Leases and Synthetic Leases, determined on a consolidated basis in accordance
with generally accepted accounting principles. For purposes of clarification,
Total Funded Indebtedness shall not include surety or other performance bonds.
Type. As to any Revolving Credit Loan, its nature as a Prime Rate
Loan, or a LIBOR Rate Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the Agent in the ordinary course of its business as a letter of credit issuer
and in effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for
which the Borrower does not reimburse the Agent and the Banks on the date
specified in, and in accordance with, ss.4.2.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
42
1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from
time to time in accordance with its terms and the terms of this Credit
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings assigned to them therein, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "ss." refers to that section
of this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to
any particular section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation
of periods of time from a specified date to a later specified date, the
word "from" means "from and including," the words "to" and "until" each
mean "to but excluding," and the word "through" means "to and
including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and measurements
are, however, cumulative and are to be performed in accordance with the
terms thereof.
(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel to,
among others, the Agent and the Borrower and are the product of
discussions and negotiations among all parties. Accordingly, this
Credit Agreement and the other Loan Documents are not intended to be
construed against the Agent or any of the Banks merely on account of
the Agent's or any Bank's involvement in the preparation of such
documents.
43
2. THE REVOLVING CREDIT FACILITY.
2.1. Commitment to Lend. Subject to the terms and conditions set forth
in this Credit Agreement, each of the Banks severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to time from
the Closing Date up to but not including the Revolving Credit Loan Maturity Date
upon notice by the Borrower to the Agent given in accordance with ss.2.6, such
sums as are requested by the Borrower up to a maximum aggregate amount
outstanding (after giving effect to all amounts requested) at any one time equal
to such Bank's Commitment minus such Bank's Commitment Percentage of the sum of
the Maximum Drawing Amount and all Unpaid Reimbursement Obligations, provided
that the sum of the outstanding amount of the Revolving Credit Loans (after
giving effect to all amounts requested) plus the Maximum Drawing Amount and all
Unpaid Reimbursement Obligations shall not at any time exceed the Total
Commitment. The Revolving Credit Loans shall be made pro rata in accordance with
each Bank's Commitment Percentage. Each request for a Revolving Credit Loan
hereunder shall constitute a representation and warranty by the Borrower that
the conditions set forth in ss.11 and ss.12, in the case of the initial
Revolving Credit Loans to be made on the Closing Date, and ss.12, in the case of
all other Revolving Credit Loans, have been satisfied on the date of such
request.
2.2. Commitment Fee. The Borrower agrees to pay to the Agent for the
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee (the "Commitment Fee") calculated at the rate of Commitment Fee
Rate per annum on the average daily amount during each calendar quarter or
portion thereof from the date hereof to the Revolving Credit Loan Maturity Date
by which the Total Commitment minus the sum of the Maximum Drawing Amount and
all Unpaid Reimbursement Obligations exceeds the outstanding amount of Revolving
Credit Loans during such calendar quarter. The Commitment Fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on the Revolving Credit Loan
Maturity Date or any earlier date on which the Commitments shall terminate.
2.3. Reduction of Total Commitment. On March 31, 2001, the Total
Commitment shall be automatically reduced to $50,000,000 (unless previously
reduced to such amount pursuant to the term of this Credit Agreement). In
addition the Borrower shall have the right at any time and from time to time
upon three (3) Business Days prior written notice to the Agent to reduce by
$100,000 or an integral multiple thereof or terminate entirely the Total
Commitment, whereupon the Commitments of the Banks shall be reduced pro rata in
accordance with their respective Commitment Percentages of the amount specified
in such notice or, as the case may be, terminated. Promptly after receiving any
notice of the Borrower delivered pursuant to this ss.2.3, the Agent will notify
the Banks of the substance thereof. Upon the effective date of any such
reduction or termination, the Borrower shall pay to the Agent for the respective
accounts of the Banks the full amount of any Commitment Fee then accrued on the
amount of the reduction. No reduction or termination of the Commitments may be
reinstated.
2.4. The Revolving Credit Notes. The Revolving Credit Loans shall be
evidenced by separate promissory notes of the Borrower in substantially the form
of Exhibit A hereto (each a "Revolving Credit Note"), dated as of the Closing
Date and completed with appropriate insertions. One Revolving Credit Note shall
be payable to the order of each Bank in a principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all Revolving Credit Loans
made by such Bank, plus interest accrued thereon, as set forth below. The
Borrower irrevocably authorizes each Bank to make or cause to be made, at or
about the time of the Drawdown Date of any Revolving Credit Loan or at the time
of receipt of any payment of principal on such Bank's Revolving Credit Note, an
appropriate notation on such Bank's Record reflecting the making of such
Revolving Credit Loan or (as the case may be) the receipt of such payment. The
outstanding amount of the Revolving Credit Loans set forth on such Bank's Record
shall be prima facie evidence of the principal amount thereof owing and unpaid
to such Bank, but the failure to record, or any error in so recording, any such
amount on such Bank's Record shall not limit or otherwise affect the obligations
of the Borrower hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.
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2.5. Interest on Revolving Credit Loans. Except as otherwise provided
in ss.5.11,
(a) Each Prime Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of
the Interest Period with respect thereto at the rate per annum equal to
the Prime Rate plus the Applicable Margin.
(b) Each LIBOR Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of
the Interest Period with respect thereto at the rate per annum equal to
the LIBOR Rate determined for such Interest Period plus the Applicable
Margin.
(c) The Borrower promises to pay interest on each Revolving
Credit Loan in arrears on each Interest Payment Date with respect
thereto.
2.6. Requests for Revolving Credit Loans.
The Borrower shall give to the Agent written notice in the
form of Exhibit B hereto (or telephonic notice confirmed in a writing
in the form of Exhibit B hereto) of each Revolving Credit Loan
requested hereunder (a "Loan Request") no less than (a) one (1)
Business Day prior to the proposed Drawdown Date of any Prime Rate Loan
and (b) three (3) LIBOR Business Days prior to the proposed Drawdown
Date of any LIBOR Rate Loan. Each such notice shall specify (i) the
principal amount of the Revolving Credit Loan requested, (ii) the
proposed Drawdown Date of such Revolving Credit Loan, (iii) the
Interest Period for any LIBOR Rate Loan and (iv) the Type of such
Revolving Credit Loan. Promptly upon receipt of any such notice, the
Agent shall notify each of the Banks thereof. Each Loan Request shall
be irrevocable and binding on the Borrower and shall obligate the
Borrower to accept the Revolving Credit Loan requested from the Banks
on the proposed Drawdown Date. Each Loan Request shall be in a minimum
aggregate amount of $250,000 or a whole multiple of $100,000 in excess
thereof.
2.7. Conversion Options.
2.7.1. Conversion to Different Type of Revolving Credit Loan.
The Borrower may elect from time to time to convert any outstanding
Revolving Credit Loan to a Revolving Credit Loan of another Type,
provided that (a) with respect to any such conversion of a Revolving
Credit Loan to a Prime Rate Loan, the Borrower shall give the Agent at
least one (1) Business Day prior written notice of such election; (b)
with respect to any such conversion of a Prime Rate Loan to a LIBOR
Rate Loan, the Borrower shall give the Agent at least three (3) LIBOR
Business Days prior written notice of such election; (c) with respect
to any such conversion of a LIBOR Rate Loan into a Prime Rate Loan,
such conversion shall only be made on the last day of the Interest
Period with respect thereto; and (d) no Revolving Credit Loan may be
converted into a LIBOR Rate Loan when any Default or Event of Default
has occurred and is continuing. On the date on which such conversion is
being made each Bank shall take such action as is necessary to transfer
its Commitment Percentage of such Revolving Credit Loans to its
Domestic Lending Office or its LIBOR Lending Office, as the case may
be. All or any part of outstanding Revolving Credit Loans of any Type
may be converted into a Revolving Credit Loan of another Type as
provided herein, provided that any partial conversion shall be in an
aggregate principal amount of $100,000 or a whole multiple thereof.
Each Conversion Request relating to the conversion of a Revolving
Credit Loan to a LIBOR Rate Loan shall be irrevocable by the Borrower.
2.7.2. Continuation of Type of Revolving Credit Loan. Any
Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest Period
with respect thereto by compliance by the Borrower with the notice
provisions contained in ss.2.7.1; provided that no LIBOR Rate Loan may
be continued as such when any Default or Event of Default has occurred
and is continuing, but shall be automatically converted to a Prime Rate
Loan on the last day of the first Interest Period relating thereto
ending during the continuance of any Default or Event of Default of
which officers of the Agent active upon the Borrower's account have
actual knowledge. In the event that the Borrower fails to provide any
such notice with respect to the continuation of any LIBOR Rate Loan as
such, then such LIBOR Rate Loan shall be automatically converted to a
Prime Rate Loan on the last day of the first Interest Period relating
thereto. The Agent shall notify the Banks promptly when any such
automatic conversion contemplated by this ss.2.7 is scheduled to occur.
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2.7.3. LIBOR Rate Loans. Any conversion to or from LIBOR Rate
Loans shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of
all LIBOR Rate Loans having the same Interest Period shall not be less
than $250,000 or a whole multiple of $100,000 in excess thereof. No
more than seven (7) LIBOR Rate Loans having different Interest Periods
may be outstanding at any time.
2.8. Funds for Revolving Credit Loan.
2.8.1. Funding Procedures. Not later than 11:00 a.m. (Boston
time) on the proposed Drawdown Date of any Revolving Credit Loans, each
of the Banks will make available to the Agent, at the Agent's Head
Office, in immediately available funds, the amount of such Bank's
Commitment Percentage of the amount of the requested Revolving Credit
Loans. Upon receipt from each Bank of such amount, and upon receipt of
the documents required by ss.ss.11 and 12 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the Agent
will make available to the Borrower the aggregate amount of such
Revolving Credit Loans made available to the Agent by the Banks. The
failure or refusal of any Bank to make available to the Agent at the
aforesaid time and place on any Drawdown Date the amount of its
Commitment Percentage of the requested Revolving Credit Loans shall not
relieve any other Bank from its several obligation hereunder to make
available to the Agent the amount of such other Bank's Commitment
Percentage of any requested Revolving Credit Loans.
2.8.2. Advances by Agent. The Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date, assume that such
Bank has made available to the Agent on such Drawdown Date the amount
of such Bank's Commitment Percentage of the Revolving Credit Loans to
be made on such Drawdown Date, and the Agent may (but it shall not be
required to), in reliance upon such assumption, make available to the
Borrower a corresponding amount. If any Bank makes available to the
Agent such amount on a date after such Drawdown Date, such Bank shall
pay to the Agent on demand an amount equal to the product of (a) the
average computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, times
(b) the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans, times (c) a fraction, the numerator of which is the
number of days that elapse from and including such Drawdown Date to the
date on which the amount of such Bank's Commitment Percentage of such
Revolving Credit Loans shall become immediately available to the Agent,
and the denominator of which is 365. A statement of the Agent submitted
to such Bank with respect to any amounts owing under this paragraph
shall be prima facie evidence of the amount due and owing to the Agent
by such Bank. If the amount of such Bank's Commitment Percentage of
such Revolving Credit Loans is not made available to the Agent by such
Bank within three (3) Business Days following such Drawdown Date, the
Agent shall be entitled to recover such amount from the Borrower on
demand, with interest thereon at the rate per annum applicable to the
Revolving Credit Loans made on such Drawdown Date.
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3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
3.1. Maturity. The Borrower promises to pay on the Revolving Credit
Loan Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
3.2. Mandatory Repayment of Revolving Credit Loans.
3.2.1. General. If at any time the sum of the outstanding
amount of the Revolving Credit Loans, the Maximum Drawing Amount and
all Unpaid Reimbursement Obligations exceeds the Total Commitment, then
the Borrower shall immediately pay the amount of such excess to the
Agent for the respective accounts of the Banks for application: first,
to any Unpaid Reimbursement Obligations; second, to the Revolving
Credit Loans; and third, to provide to the Agent cash collateral for
Reimbursement Obligations as contemplated by ss.4.2(b) and (c). Each
payment of any Unpaid Reimbursement Obligations or prepayment of
Revolving Credit Loans shall be allocated among the Banks, in
proportion, as nearly as practicable, to each Reimbursement Obligation
or (as the case may be) the respective unpaid principal amount of each
Bank's Revolving Credit Note, with adjustments to the extent
practicable to equalize any prior payments or repayments not exactly in
proportion.
3.2.2. Proceeds. Concurrently with the receipt by the Borrower
or any of its Subsidiaries of (a) Net Cash Sale Proceeds from Asset
Sales (other than the sale of inventory or the disposition of obsolete
assets, in each case in the ordinary course of business consistent with
past practices) or (b) Net Cash Proceeds from any Equity Issuances, the
Borrower shall pay to the Agent for the respective accounts of the
Banks an amount equal to (i) one hundred percent (100%) of such Net
Cash Sale Proceeds from any Asset Sale by the Borrower or any of its
domestic Subsidiaries in excess of $500,000 in the aggregate in any
fiscal year and from any Asset Sale by any foreign Subsidiary of the
Borrower in excess of $5,000,000 in the aggregate in any fiscal year,
and (ii) seventy-five percent (75%) of such Net Cash Proceeds, in each
case, to be applied against the outstanding amount of the Revolving
Credit Loans.
3.3. Optional Repayments of Revolving Credit Loans. The Borrower shall
have the right, at its election, to repay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, provided that any full or partial prepayment of the outstanding amount
of any LIBOR Rate Loans pursuant to this ss.3.3 may be made only on the last day
of the Interest Period relating thereto. The Borrower shall give the Agent, no
later than 10:00 a.m., Boston time, at least one (1) Business Days prior written
notice of any proposed prepayment pursuant to this ss.3.3 of Prime Rate Loans,
and three (3) LIBOR Business Days notice of any proposed prepayment pursuant to
this ss.3.3 of LIBOR Rate Loans, in each case specifying the proposed date of
prepayment of Revolving Credit Loans and the principal amount to be prepaid.
Each such partial prepayment of the Revolving Credit Loans shall be in an
integral multiple of $500,000 or a whole multiple of $100,000 in excess thereof,
shall be accompanied by the payment of accrued interest on the principal prepaid
to the date of prepayment and shall be applied, in the absence of instruction by
the Borrower, first to the principal of Prime Rate Loans and then to the
principal of LIBOR Rate Loans. Each partial prepayment shall be allocated among
the Banks, in proportion, as nearly as practicable, to the respective unpaid
principal amount of each Bank's Revolving Credit Note, with adjustments to the
extent practicable to equalize any prior repayments not exactly in proportion.
47
4. LETTERS OF CREDIT.
4.1. Letter of Credit Commitments.
4.1.1. Commitment to Issue Letters of Credit. Subject to the
terms and conditions hereof and the execution and delivery by the
Borrower of a letter of credit application on the Agent's customary
form (a "Letter of Credit Application"), the Agent on behalf of the
Banks and in reliance upon the agreement of the Banks set forth in
ss.4.1.4 and upon the representations and warranties of the Borrower
contained herein, agrees, in its individual capacity, to issue, extend
and renew for the account of the Borrower one or more standby or
documentary letters of credit (individually, a "Letter of Credit"), in
such form as may be requested from time to time by the Borrower and
agreed to by the Agent; provided, however, that, after giving effect to
such request, the sum of (a) the Maximum Drawing Amount on all Letters
of Credit, (b) all Unpaid Reimbursement Obligations, and (c) the amount
of all Revolving Credit Loans outstanding shall not exceed the Total
Commitment. Notwithstanding the foregoing, the Agent shall have no
obligation to issue any Letter of Credit to support or secure any
Indebtedness of the Borrower or any of its Subsidiaries to the extent
that such Indebtedness was incurred prior to the proposed issuance date
of such Letter of Credit, unless in any such case the Borrower
demonstrates to the satisfaction of the Agent that (x) such prior
incurred Indebtedness were then fully secured by a prior perfected and
unavoidable security interest in collateral provided by the Borrower or
such Subsidiary to the proposed beneficiary of such Letter of Credit or
(y) such prior incurred Indebtedness were then secured or supported by
a letter of credit issued for the account of the Borrower or such
Subsidiary and the reimbursement obligation with respect to such letter
of credit was fully secured by a prior perfected and unavoidable
security interest in collateral provided to the issuer of such letter
of credit by the Borrower or such Subsidiary.
4.1.2. Letter of Credit Applications. Each Letter of Credit
Application shall be completed to the reasonable satisfaction of the
Agent. In the event that any provision of any Letter of Credit
Application shall be inconsistent with any provision of this Credit
Agreement, then the provisions of this Credit Agreement shall, to the
extent of any such inconsistency, govern.
4.1.3. Terms of Letters of Credit. Each Letter of Credit
issued, extended or renewed hereunder shall, among other things, (a)
provide for the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when accompanied by
the documents described therein, and (b) have an expiry date no later
than the date which is fourteen (14) days (or, if the Letter of Credit
is confirmed by a confirmer or otherwise provides for one or more
nominated persons, forty-five (45) days) prior to the Revolving Credit
Loan Maturity Date. Each Letter of Credit so issued, extended or
renewed shall be subject to the Uniform Customs or, in the case of a
standby Letter of Credit, either the Uniform Customs or the
International Standby Practices.
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4.1.4. Reimbursement Obligations of Banks. Each Bank severally
agrees that it shall be absolutely liable, without regard to the
occurrence of any Default or Event of Default or any other condition
precedent whatsoever, to the extent of such Bank's Commitment
Percentage, to reimburse the Agent on demand for the amount of each
draft paid by the Agent under each Letter of Credit to the extent that
such amount is not reimbursed by the Borrower pursuant to ss.4.2 (such
agreement for a Bank being called herein the "Letter of Credit
Participation" of such Bank).
4.1.5. Participations of Banks. Each such payment made by a
Bank shall be treated as the purchase by such Bank of a participating
interest in the Borrower's Reimbursement Obligation under ss.4.2 in an
amount equal to such payment. Each Bank shall share in accordance with
its participating interest in any interest which accrues pursuant to
ss.4.2.
4.2. Reimbursement Obligation of the Borrower. In order to induce the
Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Borrower hereby agrees to reimburse or pay to the
Agent, for the account of the Agent or (as the case may be) the Banks, with
respect to each Letter of Credit issued, extended or renewed by the Agent
hereunder,
(a) except as otherwise expressly provided in ss.4.2(b) and
(c), on each date that any draft presented under such Letter of Credit
is honored by the Agent, or the Agent otherwise makes a payment with
respect thereto, (i) the amount paid by the Agent under or with respect
to such Letter of Credit, and (ii) the amount of any taxes, fees,
charges or other costs and expenses whatsoever incurred by the Agent or
any Bank in connection with any payment made by the Agent or any Bank
under, or with respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount, an amount
equal to such difference, which amount shall be held by the Agent for
the benefit of the Banks and the Agent as cash collateral for all
Reimbursement Obligations, and
(c) upon the termination of the Total Commitment, or the
acceleration of the Reimbursement Obligations with respect to all
Letters of Credit in accordance with ss.13, an amount equal to the then
Maximum Drawing Amount on all Letters of Credit, which amount shall be
held by the Agent for the benefit of the Banks and the Agent as cash
collateral for all Reimbursement Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid by
the Borrower under this ss.4.2 at any time from the date such amounts become due
and payable (whether as stated in this ss.4.2, by acceleration or otherwise)
until payment in full (whether before or after judgment) shall be payable to the
Agent on demand at the rate specified in ss.5.11 for overdue principal on the
Revolving Credit Loans.
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4.3. Letter of Credit Payments. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Agent
shall notify the Borrower of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. If the Borrower fails to reimburse the Agent as
provided in ss.4.2 on or before the date that such draft is paid or other
payment is made by the Agent, the Agent may at any time thereafter notify the
Banks of the amount of any such Unpaid Reimbursement Obligation. No later than
3:00 p.m. (Boston time) on the Business Day next following the receipt of such
notice, each Bank shall make available to the Agent, at the Agent's Head Office,
in immediately available funds, such Bank's Commitment Percentage of such Unpaid
Reimbursement Obligation, together with an amount equal to the product of (a)
the average, computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Agent for federal funds acquired by
the Agent during each day included in such period, times (b) the amount equal to
such Bank's Commitment Percentage of such Unpaid Reimbursement Obligation, times
(c) a fraction, the numerator of which is the number of days that elapse from
and including the date the Agent paid the draft presented for honor or otherwise
made payment to the date on which such Bank's Commitment Percentage of such
Unpaid Reimbursement obligation shall become immediately available to the Agent,
and the denominator of which is 360. The responsibility of the Agent to the
Borrower and the Banks shall be only to determine that the documents (including
each draft) delivered under each Letter of Credit in connection with such
presentment shall be in conformity in all material respects with such Letter of
Credit.
4.4. Obligations Absolute. The Borrower's obligations under this ss.4
shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Agent, any Bank or any
beneficiary of a Letter of Credit. The Borrower further agrees with the Agent
and the Banks that the Agent and the Banks shall not be responsible for, and the
Borrower's Reimbursement Obligations under ss.4.2 shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
the Borrower, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrower against the beneficiary of any
Letter of Credit or any such transferee. The Agent and the Banks shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit absent their gross negligence and willful misconduct. The
Borrower agrees that any action taken or omitted by the Agent or any Bank under
or in connection with each Letter of Credit and the related drafts and
documents, if done in good faith, shall be binding upon the Borrower and shall
not result in any liability on the part of the Agent or any Bank to the
Borrower.
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4.5. Reliance by Issuer. To the extent not inconsistent with ss.4.4,
the Agent shall be entitled to rely, and shall be fully protected in relying
upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document reasonably believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Credit Agreement
unless it shall first have received such advice or concurrence of the Majority
Banks as it reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Banks against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Credit Agreement in accordance with a request
of the Majority Banks (solely with respect to the Borrower, absent the Agent's
gross negligence and willful misconduct), and such request and any action taken
or failure to act pursuant thereto shall be binding upon the Banks and all
future holders of the Revolving Credit Notes or of a Letter of Credit
Participation.
4.6. Letter of Credit Fee. The Borrower shall pay a fee (in each case,
a "Letter of Credit Fee") to the Agent quarterly in arrears on the first day of
each calendar quarter for the immediately preceding calendar quarter commencing
on the first such date following the date hereof (a) in respect of each standby
Letter of Credit an amount equal to the Applicable Margin for Letter of Credit
Fees per annum of the face amount of such standby Letter of Credit, of which an
amount equal to one eighth of one percent (1/8%) per annum of the face amount of
such standby Letter of Credit shall be for the account of the Agent, as a
fronting fee, and the balance of which Letter of Credit Fee shall be for the
accounts of the Banks in accordance with their respective Commitment Percentages
and (b) in respect of each documentary Letter of Credit an amount equal to the
Applicable Margin for Letter of Credit Fees per annum of the face amount of such
documentary Letter of Credit, of which an amount equal to one eighth of one
percent (1/8%) per annum of the face amount of such documentary Letter of Credit
shall be for the account of the Agent, as a fronting fee, and the balance of
which Letter of Credit Fee shall be for the accounts of the Banks in accordance
with their respective Commitment Percentages. In respect of each Letter of
Credit, the Borrower shall also pay to the Agent for the Agent's own account, on
the date of issuance or any extension or renewal of any Letter of Credit and at
such other time or times as such charges are customarily made by the Agent, the
Agent's customary issuance, amendment, negotiation or document examination and
other administrative fees as in effect from time to time.
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5. CERTAIN GENERAL PROVISIONS.
5.1. Closing Fee. The Borrower agrees to pay to the Agent a closing fee
in accordance with the terms of the fee letter dated as of the date hereof.
5.2. Agent's Fee. The Borrower shall pay to the Agent annually in
advance, for the Agent's own account, commencing on the date on which any other
Bank (other than Fleet) becomes a party to this Agreement and on each
anniversary of such date, an Agent's fee in an amount to be mutually agreed upon
by the Agent and the Borrower at such time.
5.3. Funds for Payments.
5.3.1. Payments to Agent. All payments of principal, interest,
Reimbursement Obligations, Commitment Fees, Letter of Credit Fees and
any other amounts due hereunder or under any of the other Loan
Documents shall be made on the due date thereof to the Agent in
Dollars, for the respective accounts of the Banks and the Agent, at the
Agent's Head Office or at such other place that the Agent may from time
to time designate, in each case at or about 11:00 a.m. (Boston,
Massachusetts, time or other local time at the place of payment) and in
immediately available funds.
5.3.2. No Offset, etc. All payments by the Borrower hereunder
and under any of the other Loan Documents shall be made without
recoupment, setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions
of any nature now or hereafter imposed or levied by any jurisdiction or
any political subdivision thereof or taxing or other authority therein
unless the Borrower is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon the Borrower with
respect to any amount payable by it hereunder or under any of the other
Loan Documents, the Borrower will pay to the Agent, for the account of
the Banks or (as the case may be) the Agent, on the date on which such
amount is due and payable hereunder or under such other Loan Document,
such additional amount in Dollars as shall be necessary to enable the
Banks or the Agent to receive the same net amount which the Banks or
the Agent would have received on such due date had no such obligation
been imposed upon the Borrower. The Borrower will deliver promptly to
the Agent certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document.
5.4. Computations. All computations of interest on the Prime Rate Loans
and of Commitment Fees, Letter of Credit Fees or other fees shall, unless
otherwise expressly provided herein, be based on a 365-day year and paid for the
actual number of days elapsed, and all computations of interest on LIBOR Rate
Loans shall be based on a 360-day year and paid for the actual number of days
elapsed. Except as otherwise provided in the definition of the term "Interest
Period" with respect to LIBOR Rate Loans, whenever a payment hereunder or under
any of the other Loan Documents becomes due on a day that is not a Business Day,
the due date for such payment shall be extended to the next succeeding Business
Day, and interest shall accrue during such extension. The outstanding amount of
the Revolving Credit Loans as reflected on the Records from time to time shall
be considered prima facie evidence thereof and binding on the Borrower unless
within ten (10) Business Days after receipt of any notice by the Agent or any of
the Banks of such outstanding amount, the Agent or such Bank shall notify the
Borrower to the contrary.
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5.5. Inability to Determine LIBOR Rate. In the event, prior to the
commencement of any Interest Period relating to any LIBOR Rate Loan, the Agent
shall determine that adequate and reasonable methods do not exist for
ascertaining the LIBOR Rate that would otherwise determine the rate of interest
to be applicable to any LIBOR Rate Loan during any Interest Period, the Agent
shall forthwith give notice of such determination (which shall be conclusive and
binding on the Borrower and the Banks) to the Borrower and the Banks. In such
event (a) any Loan Request or Conversion Request with respect to LIBOR Rate
Loans shall be automatically withdrawn and shall be deemed a request for Prime
Rate Loans, (b) each LIBOR Rate Loan will automatically, on the last day of the
then current Interest Period relating thereto, become a Prime Rate Loan, and (c)
the obligations of the Banks to make LIBOR Rate Loans shall be suspended until
the Agent determines that the circumstances giving rise to such suspension no
longer exist, whereupon the Agent shall so notify the Borrower and the Banks.
5.6. Illegality. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Bank to make or maintain
LIBOR Rate Loans, such Bank shall forthwith give notice of such circumstances to
the Borrower and the other Banks and thereupon (a) the commitment of such Bank
to make LIBOR Rate Loans or convert Loans of another Type to LIBOR Rate Loans
shall forthwith be suspended and (b) such Bank's Revolving Credit Loans then
outstanding as LIBOR Rate Loans, if any, shall be converted automatically to
Prime Rate Loans on the last day of each Interest Period applicable to such
LIBOR Rate Loans or within such earlier period as may be required by law. The
Borrower hereby agrees promptly to pay the Agent for the account of such Bank,
upon demand by such Bank, any additional amounts necessary to compensate such
Bank for any costs incurred by such Bank in making any conversion in accordance
with this ss.5.6, including any interest or fees payable by such Bank to lenders
of funds obtained by it in order to make or maintain its LIBOR Rate Loans
hereunder.
5.7. Additional Costs, etc. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any bank by any central bank or other fiscal, monetary or
other authority (whether or not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect
to this Credit Agreement, the other Loan Documents, any Letters of
Credit, such Bank's Commitment or the Revolving Credit Loans (other
than taxes based upon or measured by the income or profits of such Bank
or the Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Revolving Credit Loans or any other
amounts payable to any Bank or the Agent under this Credit Agreement or
any of the other Loan Documents, or
53
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement)
any special deposit, reserve, assessment, liquidity, capital adequacy
or other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of an office of any
Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, the Revolving Credit Loans, such
Bank's Commitment, or any class of loans, letters of credit or
commitments of which any of the Revolving Credit Loans or such Bank's
Commitment forms a part, and the result of any of the foregoing is
(i) to increase the cost to any Bank of making,
funding, issuing, renewing, extending or maintaining any of
the Revolving Credit Loans or such Bank's Commitment or any
Letter of Credit, or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such Bank
or the Agent hereunder on account of such Bank's Commitment,
any Letter of Credit or any of the Revolving Credit Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or Reimbursement Obligation
or other sum payable hereunder, the amount of which payment or
foregone interest or Reimbursement Obligation or other sum is
calculated by reference to the gross amount of any sum
receivable or deemed received by such Bank or the Agent from
the Borrower hereunder,
then, and in each such case, the Borrower will, within thirty (30) days of any
demand made by such Bank or (as the case may be) the Agent, pay to such Bank or
the Agent such additional amounts as will be sufficient to compensate such Bank
or the Agent for such additional cost, reduction, payment or foregone interest
or Reimbursement Obligation or other sum.
5.8. Capital Adequacy. If after the date hereof any Bank or the Agent
determines that (a) the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (b) compliance by such Bank or the
Agent or any corporation controlling such Bank or the Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, has the
effect of reducing the return on such Bank's or the Agent's commitment with
respect to any Revolving Credit Loans to a level below that which such Bank or
the Agent could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's or the Agent's then existing policies
with respect to capital adequacy and assuming full utilization of such entity's
capital) by any amount deemed by such Bank or (as the case may be) the Agent to
be material, then such Bank or the Agent may notify the Borrower of such fact.
To the extent that the amount of such reduction in the return on capital is not
reflected in the Prime Rate, the Borrower and such Bank shall thereafter attempt
to negotiate in good faith, within thirty (30) days of the day on which the
Borrower receives such notice, an adjustment payable hereunder that will
adequately compensate such Bank in light of these circumstances. If the Borrower
and such Bank are unable to agree to such adjustment within thirty (30) days of
the date on which the Borrower receives such notice, then commencing on the date
of such notice (but not earlier than the effective date of any such increased
capital requirement), the fees payable hereunder shall increase by an amount
that will, in such Bank's reasonable determination, provide adequate
compensation. Each Bank shall allocate such cost increases among its customers
in good faith and on an equitable basis.
54
5.9. Certificate. A certificate setting forth any additional amounts
payable pursuant to ss.ss.5.7 or 5.8 and a brief explanation of such amounts
which are due, submitted by any Bank or the Agent to the Borrower, shall be
conclusive, absent manifest error, that such amounts are due and owing.
5.10. Indemnity. The Borrower agrees to indemnify each Bank and to hold
each Bank harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (a)
default by the Borrower in payment of the principal amount of or any interest on
any LIBOR Rate Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain its LIBOR Rate Loans, (b) default by the
Borrower in making a borrowing or conversion after the Borrower has given (or is
deemed to have given) a Loan Request or a Conversion Request relating thereto in
accordance with ss.2.6 or ss.2.7 or (c) the making of any payment of a LIBOR
Rate Loan or the making of any conversion of any such Revolving Credit Loan to a
Prime Rate Loan on a day that is not the last day of the applicable Interest
Period with respect thereto, including interest or fees payable by such Bank to
lenders of funds obtained by it in order to maintain any such Revolving Credit
Loans.
5.11. Interest After Default; Late Fee.
5.11.1. Overdue Amounts. Overdue principal and (to the extent
permitted by applicable law) interest on the Revolving Credit Loans and
all other overdue amounts payable hereunder or under any of the other
Loan Documents shall bear interest compounded monthly and payable on
demand at a rate per annum equal to four percent (4%) above the
interest rate otherwise applicable to such Revolving Credit Loans until
such amount shall be paid in full (after as well as before judgment).
5.11.2. Amounts Not Overdue. During the continuance of an
Event of Default the principal of the Revolving Credit Loans not
overdue shall, until such Event of Default has been cured or remedied
or such Event of Default has been waived by the Majority Banks pursuant
to ss.26, bear interest at a rate per annum equal to four percent (4%)
above the interest rate otherwise applicable to such Revolving Credit
Loans pursuant to ss.2.5.
5.11.3. Late Fee. If the entire amount of any required
principal and/or interest is not paid in full within ten (10) days
after the same is due, the Borrower shall pay to the Agent for the
account of the Banks a late fee equal to five percent (5%) of the
required payment.
6. GUARANTIES.
The Obligations shall also be guaranteed pursuant to the terms of the
Guaranty.
7. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and the Agent as
follows:
7.1. Corporate Authority.
7.1.1. Incorporation; Good Standing. Each of the Borrower and
the Guarantors (a) is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation, (b)
has all requisite corporate power to own its property and conduct its
business as now conducted and as presently contemplated, and (c) is in
good standing as a foreign corporation and is duly authorized to do
business in each jurisdiction where such qualification is necessary
except where a failure to be so qualified would not have a materially
adverse effect on the business, assets or financial condition of the
Borrower and the Guarantors, taken as a whole.
55
7.1.2. Authorization. The execution, delivery and performance
of this Credit Agreement and the other Loan Documents to which the
Borrower or any of the Guarantors is or is to become a party and the
transactions contemplated hereby and thereby (a) are within the
corporate authority of such Person, (b) have been duly authorized by
all necessary corporate proceedings, (c) to the best of the Borrower's
knowledge, do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to
which the Borrower or any of the Guarantors is subject or any judgment,
order, writ, injunction, license or permit applicable to the Borrower
or any of the Guarantors and (d) do not conflict with any provision of
the corporate charter or bylaws of, or, in any material respect, any
agreement or other instrument binding upon, the Borrower or any of the
Guarantors.
7.1.3. Enforceability. The execution and delivery of this
Credit Agreement and the other Loan Documents to which the Borrower or
any of the Guarantors is or is to become a party will result in valid
and legally binding obligations of such Person enforceable against it
in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and except to the extent
that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
7.2. Governmental Approvals. The execution, delivery and performance by
the Borrower and any of the Guarantors of this Credit Agreement and the other
Loan Documents to which the Borrower or any of the Guarantors is or is to become
a party and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained.
7.3. Title to Properties; Leases. Except as indicated on Schedule 7.3
hereto, the Borrower and its Consolidated Subsidiaries own all of the assets
reflected in the consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at the Balance Sheet Date or acquired since that date (except
property and assets sold or otherwise disposed of in the ordinary course of
business since that date), subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.
7.4. Financial Statements, Projections and Solvency.
7.4.1. Fiscal Year. The Borrower and each of its Subsidiaries
has a fiscal year which is the twelve months ending on December 31 of
each calendar year.
7.4.2. Financial Statements. There has been furnished to each
of the Banks a consolidated balance sheet of the Borrower and its
Subsidiaries as at the Balance Sheet Date, and a consolidated statement
of income of the Borrower and its Subsidiaries for the fiscal year then
ended, certified by PricewaterhouseCoopers LLP and an unaudited
consolidated balance sheet of the Borrower and its Subsidiaries, and an
unaudited consolidated statement of income of the Borrower and its
Subsidiaries for the calendar quarter ended March 31, 2000. Such
balance sheets and statements of income have been prepared in
accordance with generally accepted accounting principles and fairly
present the financial condition of the Borrower as at the close of
business on the date thereof and the results of operations for the
fiscal year then ended. There are no contingent liabilities of the
Borrower or any of its Subsidiaries as of such date involving material
amounts, known to the officers of the Borrower, which were not
disclosed in such balance sheet and the notes related thereto.
56
7.4.3. Projections. The projections of the annual operating
budgets of the Borrower and its Subsidiaries on a consolidated basis,
balance sheets and cash flow statements for the 2000 fiscal year,
copies of which have been delivered to each Bank, disclose all material
assumptions made with respect to general economic, financial and market
conditions used in formulating such projections. To the knowledge of
the Borrower or any of its Subsidiaries, no facts exist that
(individually or in the aggregate) would result in any material change
in any of such projections. The projections are based upon reasonable
estimates and assumptions, have been prepared on the basis of the
assumptions stated therein and reflect the reasonable estimates of the
Borrower and its Subsidiaries of the results of operations and other
information projected therein.
7.4.4. Solvency. The Borrower and its Subsidiaries, on a
consolidated and consolidating basis, both before and after giving
effect to the transactions contemplated by this Credit Agreement and
the other Loan Documents (a) are solvent; (b) have assets having a fair
value in excess of their liabilities; (c) have assets having a fair
value in excess of the amount required to pay their liabilities on
existing debts as such debts become due and payable, and (d) have, and
expect to continue to have, access to adequate capital for the conduct
of their business and the ability to pay their debts from time to time
incurred in connection with the operation of their business as such
debts mature.
7.5. No Material Changes, etc. Since the Balance Sheet Date there has
occurred no materially adverse change in the financial condition or business of
the Borrower and its Subsidiaries as shown on or reflected in the consolidated
balance sheet of the Borrower and its Subsidiaries as at the Balance Sheet Date,
or the consolidated statement of income for the fiscal year then ended, other
than changes in the ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the business or
financial condition of the Borrower or any of its Subsidiaries. Since the
Balance Sheet Date, the Borrower has not made any Distribution.
7.6. Franchises, Patents, Copyrights, etc. Each of the Borrower and its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others.
7.7. Litigation. Except as set forth in Schedule 7.7 hereto, there are
no actions, suits, proceedings or investigations of any kind pending or
threatened against the Borrower or any of its Subsidiaries before any court,
tribunal or administrative agency or board that, if adversely determined, might,
either in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of the Borrower and its
Subsidiaries or materially impair the right of the Borrower and its
Subsidiaries, considered as a whole, to carry on business substantially as now
conducted by them, or result in any substantial liability not adequately covered
by insurance, or for which adequate reserves are not maintained on the
consolidated balance sheet of the Borrower and its Subsidiaries, or which
question the validity of this Credit Agreement or any of the other Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.
7.8. No Materially Adverse Contracts, etc. Neither the Borrower nor any
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Borrower or any of its Subsidiaries.
Neither the Borrower nor any of its Subsidiaries is a party to any contract or
agreement that has or is expected, in the judgment of the Borrower's officers,
to have any materially adverse effect on the business of the Borrower and its
Subsidiaries, taken as a whole.
57
7.9. Compliance with Other Instruments, Laws, etc. Neither the Borrower
nor any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases in
a manner that could result in the imposition of substantial penalties or
materially and adversely affect the financial condition, properties or business
of the Borrower and any of its Subsidiaries, taken as a whole.
7.10. Tax Status. The Borrower and the Guarantors (a) have made or
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which any of them is subject or
have obtained a lawful extension for the making or filing of any such tax
returns, reports or declarations, (b) have paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and by appropriate
proceedings and (c) have set aside on their books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Borrower know of no basis for any such claim.
7.11. No Event of Default. No Default or Event of Default has
occurred and is continuing.
7.12. Holding Company and Investment Company Acts. Neither the Borrower
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a "holding company", or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
7.13. Absence of Financing Statements, etc. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or any of its Subsidiaries or any
rights relating thereto.
7.14. Certain Transactions. Except for arm's length transactions
pursuant to which the Borrower or any of its Subsidiaries makes payments in the
ordinary course of business upon terms no less favorable than the Borrower or
such Subsidiary could obtain from third parties, none of the officers,
directors, or employees of the Borrower or any of its Subsidiaries is presently
a party to any transaction with the Borrower or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.
58
7.15. Employee Benefit Plans.
7.15.1. In General. Each Employee Benefit Plan and each
Guaranteed Pension Plan has been maintained and operated in compliance
in all material respects with the provisions of ERISA and, to the
extent applicable, the Code, including but not limited to the
provisions thereunder respecting prohibited transactions and the
bonding of fiduciaries and other persons handling plan funds as
required by ss.412 of ERISA. The Borrower has heretofore delivered to
the Agent the most recently completed annual report, Form 5500, with
all required attachments, and actuarial statement required to be
submitted under ss.103(d) of ERISA, with respect to each Guaranteed
Pension Plan.
7.15.2. Terminability of Welfare Plans. No Employee Benefit
Plan, which is an employee welfare benefit plan within the meaning of
ss.3(1) or ss.3(2)(B) of ERISA, provides benefit coverage subsequent to
termination of employment, except as required by Title I, Part 6 of
ERISA or the applicable state insurance laws. The Borrower may
terminate each such Plan at any time (or at any time subsequent to the
expiration of any applicable bargaining agreement) in the discretion of
the Borrower without liability to any Person other than for claims
arising prior to termination.
7.15.3. Guaranteed Pension Plans. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding deficiency, the notice
or lien provisions of ss.302(f) of ERISA, or otherwise, has been timely
made. No waiver of an accumulated funding deficiency or extension of
amortization periods has been received with respect to any Guaranteed
Pension Plan, and neither the Borrower nor any ERISA Affiliate is
obligated to or has posted security in connection with an amendment to
a Guaranteed Pension Plan pursuant to ss.307 of ERISA or ss.401(a)(29)
of the Code. No liability to the PBGC (other than required insurance
premiums, all of which have been paid) has been incurred by the
Borrower or any ERISA Affiliate with respect to any Guaranteed Pension
Plan and there has not been any ERISA Reportable Event (other than an
ERISA Reportable Event as to which the requirement of thirty (30) days
notice has been waived), or any other event or condition which presents
a material risk of termination of any Guaranteed Pension Plan by the
PBGC. Based on the latest valuation of each Guaranteed Pension Plan
(which in each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions employed
for that valuation, the aggregate benefit liabilities of all such
Guaranteed Pension Plans within the meaning of ss.4001 of ERISA did not
exceed the aggregate value of the assets of all such Guaranteed Pension
Plans, disregarding for this purpose the benefit liabilities and assets
of any Guaranteed Pension Plan with assets in excess of benefit
liabilities, by more than $100,000.
7.15.4. Multiemployer Plans. Neither the Borrower nor any
ERISA Affiliate has incurred any material liability (including
secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan under
ss.4201 of ERISA or as a result of a sale of assets described in
ss.4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has been
notified that any Multiemployer Plan is in reorganization or insolvent
under and within the meaning of ss.4241 or ss.4245 of ERISA or is at
risk of entering reorganization or becoming insolvent, or that any
Multiemployer Plan intends to terminate or has been terminated under
ss.4041A of ERISA.
59
7.16. Use of Proceeds.
7.16.1. General. The proceeds of the Revolving Credit Loans
shall be used to refinance existing Indebtedness, for working capital,
and general corporate purposes. The Borrower will obtain Letters of
Credit solely for working capital and other corporate purposes.
7.16.2. Regulations U and X. No portion of any Revolving
Credit Loan is to be used, and no portion of any Letter of Credit is to
be obtained, for the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in Regulations U and
X of the Board of Governors of the Federal Reserve System, 12 C.F.R.
Parts 221 and 224.
7.16.3. Ineligible Securities. No portion of the proceeds of
any Revolving Credit Loans is to be used, and no portion of any Letter
of Credit is to be obtained, for the purpose of knowingly purchasing,
or providing credit support for the purchase of, during the
underwriting or placement period or within thirty (30) days thereafter,
any Ineligible Securities underwritten or privately placed by a Section
20 Subsidiary.
7.17. Environmental Compliance. To the best of the Borrower's knowledge
(which for the purposes of this ss.7.17, shall not require the Borrower or any
of its Subsidiaries to make any further investigation of the condition or useage
of any of the Real Estate or operations thereon unless the Borrower or any of
its Subsidiaries becomes aware of or is notified of an environmental condition
which could reasonably be expected to require further investigation):
(a) none of the Borrower, its Subsidiaries or any operator of
the Real Estate or any operations thereon is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("▇▇▇▇"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act,
or any state or local statute, regulation, ordinance, order or decree
relating to health, safety or the environment (hereinafter
"Environmental Laws"), which violation would have a material adverse
effect on the environment or the business, assets or financial
condition of the Borrower or any of its Subsidiaries;
(b) neither the Borrower nor any of its Subsidiaries has
received written notice from any third party including, without
limitation, any federal, state or local governmental authority, (i)
that any one of them has been identified by the United States
Environmental Protection Agency ("EPA") as a potentially responsible
party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇; (ii) that any hazardous
waste, as defined by 42 U.S.C. ss.6903(5), any hazardous substances as
defined by 42 U.S.C. ss.9601(14), any pollutant or contaminant as
defined by 42 U.S.C. ss.9601(33) and any toxic substances, oil or
hazardous materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which any one of them has
generated, transported or disposed of has been found at any site at
which a federal, state or local agency or other third party has
conducted or has ordered that any Borrower or any of its Subsidiaries
conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal
or administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses
or damages of any kind whatsoever in connection with the release of
Hazardous Substances;
60
(c) except as set forth on Schedule 7.17 attached hereto: (i)
no portion of the Real Estate has been used by the Borrrower, any of
its Subsidiaries or operators of their properties for the handling,
processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws; and no underground tank
or other underground storage receptacle for Hazardous Substances is
located on any portion of the Real Estate; (ii) in the course of any
activities conducted by the Borrower, its Subsidiaries or operators of
its properties, no Hazardous Substances have been generated or are
being used on the Real Estate except in accordance with applicable
Environmental Laws; (iii) there have been no releases by the Borrrower,
any of its Subsidiaries or operators of their properties (i.e. any past
or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Substances on, upon, into or from the
properties of the Borrower or its Subsidiaries, which releases would
have a material adverse effect on the value of any of the Real Estate
or adjacent properties or the environment; (iv) to the best of the
Borrower's knowledge, there have been no releases on, upon, from or
into any real property in the vicinity of any of the Real Estate which,
through soil or groundwater contamination, may have come to be located
on, and which would have a material adverse effect on the value of, the
Real Estate; and (v) in addition, any Hazardous Substances that have
been generated on any of the Real Estate have been transported offsite
only by carriers having an identification number issued by the EPA,
treated or disposed of only by treatment or disposal facilities
maintaining valid permits as required under applicable Environmental
Laws, which transporters and facilities have been and are, to the best
of the Borrower's knowledge, operating in compliance with such permits
and applicable Environmental Laws; and
(d) none of the Borrower and its Subsidiaries or any of the
Real Estate is subject to any applicable environmental law requiring
the performance of Hazardous Substances site assessments, or the
removal or remediation of Hazardous Substances, or the giving of notice
to any governmental agency or the recording or delivery to other
Persons of an environmental disclosure document or statement by virtue
of the transactions set forth herein and contemplated hereby, or as a
condition to the effectiveness of any other transactions contemplated
hereby.
7.18. Subsidiaries, etc. Schedule 7.18(a) sets forth the Subsidiaries
of the Borrower. Except as set forth on Schedule 7.18(b) hereto, neither the
Borrower nor any Subsidiary of the Borrower is engaged in any joint venture or
partnership with any other Person.
7.19. Disclosure. None of this Credit Agreement or any of the other
Loan Documents contains any untrue statement of a material fact or omits to
state a material fact (known to the Borrower or any of its Subsidiaries in the
case of any document or information not furnished by it or any of its
Subsidiaries) necessary in order to make the statements herein or therein not
misleading. There is no fact known to the Borrower or any of its Subsidiaries
which materially adversely affects, or which is reasonably likely in the future
to materially adversely affect, the business, assets, financial condition or
prospects of the Borrower or any of its Subsidiaries, exclusive of effects
resulting from changes in general economic conditions, legal standards or
regulatory conditions.
8. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Unpaid Reimbursement Obligation, Letter of Credit or Revolving Credit Note
is outstanding or any Bank has any obligation to make any Revolving Credit Loans
or the Agent has any obligation to issue, extend or renew any Letters of Credit:
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8.1. Punctual Payment. The Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Revolving Credit Loans, all
Reimbursement Obligations, the Letter of Credit Fees, the Commitment Fees, the
Agent's fee and all other amounts provided for in this Credit Agreement and the
other Loan Documents to which the Borrower or any of its Subsidiaries is a
party, all in accordance with the terms of this Credit Agreement and such other
Loan Documents.
8.2. Maintenance of Office. The Borrower will maintain its chief
executive office in Watertown, MA, or at such other place in the United States
of America as the Borrower shall designate upon written notice to the Agent,
where notices, presentations and demands to or upon the Borrower in respect of
the Loan Documents to which the Borrower is a party may be given or made.
8.3. Records and Accounts. The Borrower will (a) keep, and cause each
of its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles, (b) maintain adequate accounts and reserves for
all taxes (including income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves, and (c) at all times engage
PricewaterhouseCoopers LLP or other independent certified public accountants
reasonably satisfactory to the Agent as the independent certified public
accountants of the Borrower and its Subsidiaries and will not permit more than
thirty (30) days to elapse between the cessation of such firm's (or any
successor firm's) engagement as the independent certified public accountants of
the Borrower and its Subsidiaries and the appointment in such capacity of a
successor firm as shall be satisfactory to the Agent.
8.4. Financial Statements, Certificates and Information. The
Borrower will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than
one ninety (90) days after the end of each fiscal year of the Borrower,
the consolidated balance sheet of the Borrower and its Subsidiaries and
the consolidating balance sheet of the Borrower and its Subsidiaries,
each as at the end of such year, and the related consolidated statement
of income and consolidated statement of cash flow and consolidating
statement of income and consolidating statement of cash flow for such
year, each setting forth in comparative form the figures for the
previous fiscal year and all such consolidated and consolidating
statements to be in reasonable detail, prepared in accordance with
generally accepted accounting principles, and certified, without
qualification and without an expression of uncertainty as to the
ability of the Borrower or any of its Subsidiaries to continue as going
concerns, by PricewaterhouseCoopers LLP or by other independent
certified public accountants satisfactory to the Agent, together with a
written statement from such accountants to the effect that they have
read a copy of this Credit Agreement, and that, in making the
examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default, or, if such accountants
shall have obtained knowledge of any then existing Default or Event of
Default they shall disclose in such statement any such Default or Event
of Default; provided that such accountants shall not be liable to the
Banks for failure to obtain knowledge of any Default or Event of
Default;
(b) as soon as practicable, but in any event not later than
(i) forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, copies of the
unaudited consolidated balance sheet of the Borrower and its
Subsidiaries and the unaudited consolidating balance sheet of the
Borrower and its Subsidiaries, each as at the end of such quarter, and
the related consolidated statement of income and consolidated statement
of cash flow and consolidating statement of income and consolidating
statement of cash flow for the portion of the Borrower's fiscal year
then elapsed, and (ii) sixty (60) days after the end of the fourth
fiscal quarter of each fiscal year of the Borrower, copies of the
unaudited consolidated balance sheet of the Borrower and its
Subsidiaries and the unaudited consolidating balance sheet of the
Borrower and its Subsidiaries, each as at the end of such quarter, and
the related consolidated and consolidating statement of income for the
portion of the Borrower's fiscal year then elapsed, all in reasonable
detail and prepared in accordance with generally accepted accounting
principles, together with a certification by the principal financial or
accounting officer of the Borrower that the information contained in
such financial statements fairly presents the financial position of the
Borrower and its Subsidiaries on the date thereof (subject to year-end
adjustments);
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(c) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement
certified by the principal financial or accounting officer of the
Borrower in substantially the form of Exhibit C hereto and setting
forth in reasonable detail computations evidencing compliance with the
covenants contained in ss.10 and (if applicable) reconciliations to
reflect changes in generally accepted accounting principles since the
Balance Sheet Date;
(d) contemporaneously with the filing or mailing thereof,
copies of all material of a financial nature filed with the Securities
and Exchange Commission or sent to the stockholders of the Borrower;
(e) as soon as practicable, but in any event not later than
sixty (60) days after the end of each fiscal year, the Borrower's
annual budget for then current fiscal year;
(f) from time to time upon the request of the Agent, copies
of any accountants' management letter that may have been issued;
(g) from time to time upon the request of the Agent, a backlog
breakdown by Subsidiary as of the end of any fiscal period;
(h) from time to time upon request of the Agent, projections
of the Borrower and its Subsidiaries updating those projections
delivered to the Banks and referred to in ss.7.4.3 or, if applicable,
updating any later such projections delivered in response to a request
pursuant to this ss.8.4(h); and
(i) from time to time such other financial data and
information (including accountants' management letters) as the Agent or
any Bank may reasonably request.
8.5. Notices.
8.5.1. Defaults. The Borrower will promptly notify the Agent
in writing of the occurrence of any Default or Event of Default of
which it has knowledge. If any Person shall give any notice or take any
other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Credit Agreement or any
other note, evidence of indebtedness, indenture or other obligation to
which or with respect to which the Borrower or any of its Subsidiaries
is a party or obligor, whether as principal, guarantor, surety or
otherwise, the Borrower shall forthwith give written notice thereof to
the Agent, describing the notice or action and the nature of the
claimed default.
8.5.2. Environmental Events. The Borrower will promptly give
notice to the Agent (a) of any violation of any Environmental Law that
the Borrower or any of its Subsidiaries reports in writing or is
reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any federal, state or local
environmental agency and (b) upon becoming aware thereof, of any
inquiry, proceeding, investigation, or other action, including a notice
from any agency of potential environmental liability, of any federal,
state or local environmental agency or board, that has the potential to
materially affect the assets, liabilities, financial conditions or
operations of the Borrower or any of its Subsidiaries.
8.5.3. Notification of Certain Claims. The Borrower will,
immediately upon becoming aware thereof, notify the Agent in writing of
any setoff, claims (including, with respect to the Real Estate,
environmental claims), withholdings or other defenses to which any
material portion of the Borrower's assets or the assets of its
Subsidiaries, are subject.
8.5.4. Notice of Litigation and Judgments. The Borrower will,
and will cause each of its Subsidiaries to, give notice to the Agent in
writing within fifteen (15) days of becoming aware of any litigation or
proceedings threatened in writing or any pending litigation and
proceedings affecting the Borrower or any of its Subsidiaries or to
which the Borrower or any of its Subsidiaries is or becomes a party
involving an uninsured claim against the Borrower or any of its
Subsidiaries that could reasonably be expected to have a materially
adverse effect on the Borrower and its Subsidiaries, taken as a whole,
and stating the nature and status of such litigation or proceedings.
The Borrower will, and will cause each of its Subsidiaries to, give
notice to the Agent, in writing, in form and detail satisfactory to the
Agent, within ten (10) days of any judgment not covered by insurance,
final or otherwise, against the Borrower or any of its Subsidiaries in
an amount in excess of $500,000.
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8.6. Corporate Existence; Maintenance of Properties. The Borrower will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and those of its
Subsidiaries and will not, and will not cause or permit any of its Subsidiaries
to, convert to a limited liability company unless the Borrower has provided at
least thirty (30) days prior written notice thereof to the Agent and executed
and delivered all such documents and instruments as the Agent may reasonable
request in light of such conversion on or prior to the effective date of such
conversion. It (a) will cause all of its properties and those of its
Subsidiaries used or useful in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment, (b) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Borrower may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times, and (c) will, and will cause each of its Subsidiaries to, continue
to engage primarily in the businesses now conducted by them and in related
businesses; provided that nothing in this ss.8.6 shall prevent the Borrower from
discontinuing the operation and maintenance of any of its properties or any of
those of its Subsidiaries if such discontinuance is, in the judgment of the
Borrower, desirable in the conduct of its or their business and that do not in
the aggregate materially adversely affect the business of the Borrower and its
Subsidiaries on a consolidated basis.
8.7. Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent.
8.8. Taxes. The Borrower will, and will cause each of its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property; provided that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall currently
be contested in good faith by appropriate proceedings and if the Borrower or
such Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and provided further that the Borrower and each Subsidiary of the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor.
8.9. Inspection of Properties and Books, etc.
8.9.1. General. The Borrower shall permit the Banks, through
the Agent or any of the Banks' other designated representatives, to
visit and inspect any of the properties of the Borrower or any of its
Subsidiaries, to examine the books of account of the Borrower and its
Subsidiaries (and to make copies thereof and extracts therefrom), and
to discuss the affairs, finances and accounts of the Borrower and its
Subsidiaries with, and to be advised as to the same by, its and their
officers, all at such reasonable times and intervals as the Agent or
any Bank may reasonably request.
8.9.2. Communications with Accountants. The Borrower
authorizes the Agent and, if accompanied by the Agent, the Banks and,
so long as no Default or Event of Default has occurred and is
continuing, upon at least ten (10) days prior written notice to the
Borrower, to communicate directly with the Borrower's independent
certified public accountants and authorizes such accountants to
disclose to the Agent and the Banks any and all financial statements
and other supporting financial documents and schedules including copies
of any management letter with respect to the business, financial
condition and other affairs of the Borrower or any of its Subsidiaries;
provided, however, prior to the occurrence of an Event of Default such
communications shall be limited to conversations with such accountants
and receipt by the Agent and the Banks of all financial statements and
copies of all management letters. At the request of the Agent, the
Borrower shall deliver a letter addressed to such accountants
instructing them to comply with the provisions of this ss.8.9.2.
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8.10. Compliance with Laws, Contracts, Licenses, and Permits. The
Borrower will, and will cause each of its Subsidiaries to, comply with (a) in
all material respects, the applicable laws and regulations wherever its business
is conducted, including all Environmental Laws, (b) the provisions of its
charter documents and by-laws, (c) in all material respects, all agreements and
instruments by which it or any of its properties may be bound and (d) in all
material respects, all applicable decrees, orders, and judgments. If any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower or any of its Subsidiaries may fulfill any of its obligations
hereunder or any of the other Loan Documents to which the Borrower or such
Subsidiary is a party, the Borrower will, or (as the case may be) will cause
such Subsidiary to, immediately take or cause to be taken all reasonable steps
within the power of the Borrower or such Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the Agent and
the Banks with evidence thereof.
8.11. Employee Benefit Plans. The Borrower will (a) promptly upon the
request of the Agent furnish to the Agent a copy of the most recent actuarial
statement required to be submitted under ss.103(d) of ERISA and Annual Report,
Form 5500, with all required attachments, in respect of each Guaranteed Pension
Plan and (b) promptly upon receipt or dispatch, furnish to the Agent any notice,
report or demand sent or received in respect of a Guaranteed Pension Plan under
ss.ss.302, 4041, 4042, 4043, 4063, 4066 and 4068 of ERISA, or in respect of a
Multiemployer Plan, under ss.ss.4041A, 4202, 4219, 4242, or 4245 of ERISA.
8.12. Use of Proceeds. The Borrower will use the proceeds of the
Revolving Credit Loans solely to refinance existing Indebtedness and for working
capital, and general corporate purposes. The Borrower will obtain Letters of
Credit solely for working capital purposes and other corporate purposes.
8.13. New Guarantors. The Borrower will cause each Subsidiary created,
acquired or otherwise existing, on or after the Closing Date to immediately
become a Guarantor and shall cause such Subsidiary to execute and deliver to the
Agent, for the benefit of the Agent and the Banks, a Guaranty.
8.14. Additional Subsidiaries. If, after the Closing Date, the Borrower
or any of its Subsidiaries creates or acquires, either directly or indirectly,
any Subsidiary, it will immediately notify the Agent of such creation or
acquisition, as the case may be, and provide the Agent with an updated Schedule
7.18(a) and take all other actions required by ss.8.13 hereof.
8.15. Replacement Instruments. Upon receipt of an affidavit and
statement of indemnification of an officer of the Agent or any Bank as to the
loss, theft, destruction or mutilation of any Revolving Credit Note, and, in the
case of any such loss, theft, destruction or mutilation, upon cancellation of
such Revolving Credit Note, the Borrower shall issue, in lieu thereof, a
replacement Revolving Credit Note in the same principal amount thereof and
otherwise of like tenor.
8.16. Further Assurances. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Banks and the Agent and execute such further
instruments and documents as the Banks or the Agent shall reasonably request to
carry out to their satisfaction the transactions contemplated by this Credit
Agreement and the other Loan Documents.
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9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Unpaid Reimbursement Obligation, Letter of Credit or Revolving Credit Note
is outstanding or any Bank has any obligation to make any Revolving Credit Loans
or the Agent has any obligations to issue, extend or renew any Letters of
Credit:
9.1. Restrictions on Indebtedness. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Banks and the Agent arising under
any of the Loan Documents;
(b) endorsements for collection, deposit or negotiation
and warranties of products or services, in each case incurred in the ordinary
course of business;
(c) Subordinated Debt;
(d) Purchase money Indebtedness incurred in connection with
the acquisition after the date hereof of any real or personal property
by the Borrower or such Subsidiary, provided that the aggregate
principal amount at any one time outstanding shall not exceed
$5,000,000;
(e) Indebtedness existing on the date hereof and listed and
described on Schedule 9.1 hereto and any renewals, extensions or refinancings
thereof;
(f) Indebtedness of any Guarantor to or of the Borrower to any
Guarantor so long as such Guarantor remains a Guarantor hereunder, has
otherwise complied with the provisions of ss.8.13 hereof and remains a
Subsidiary of the Borrower;
(g) Indebtedness of the Borrower or any Guarantor incurred in
connection with the guaranty of the obligations of any other Person
other than a Subsidiary of the Borrower or any of its Subsidiaries,
provided that the aggregate principal amount, including all
Indebtedness of the Borrower and its Subsidiaries of the same type
listed on Schedule 9.1, at any one time outstanding shall not exceed
$20,000,000;
(h) Indebtedness of the Borrower or any Guarantor to any
foreign Subsidiary so long as such Indebtedness is subordinated to the
prior payment in full of the Obligations pursuant to terms of the
Intercompany Subordination Agreement substantially in the form of
Exhibit F hereto;
(i) Indebtedness arising from the Borrower's financing of
consumer credit sales of its water softeners and related products not
exceeding in the aggregate at any one time outstanding, the lesser of
$2,000,000 and seventy-five percent (75%) of the total unpaid amount
due on customers' notes given in such sales transactions;
(j) Indebtedness arising from the Borrower's financing
(whether by sale or by lease) of its water coolers;
(k) other Indebtedness (including Indebtedness listed on
Schedule 9.1 other than such Indebtedness included in subsection (g)
above and otherwise without duplication) of the Borrower or any of its
Consolidated Subsidiaries owed to any other Person not exceeding in the
aggregate principal amount at any one time outstanding $60,000,000;
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(l) Indebtedness in respect of surety and other performance
bonds;
(m) Indebtedness incurred in connection with the guaranty of
obligations under project financing arrangements entered into by the
Borrower or any of its Subsidiaries so long as such guaranty is
non-recourse to the Borrower and its Subsidiaries; and
(n) Indebtedness incurred after the Closing Date on an
unsecured, subordinated basis in connection with a private debt
offering, the terms and conditions of which shall in all respects be
reasonably satisfactory to the Banks.
9.2. Restrictions on Liens. The Borrower will not, and will not permit
any of its Subsidiaries to, (a) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (d) suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; (e) sell, assign, pledge or otherwise
transfer any "receivables" as defined in clause (g) of the definition of the
term "Indebtedness," with or without recourse; or (f) enter into or permit to
exist any arrangement or agreement, enforceable under applicable law, which
directly or indirectly prohibits the Borrower or any of its Subsidiaries from
creating or incurring any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest other than in favor of the Agent for the
benefit of the Banks and the Agent under the Loan Documents and other than
customary anti-assignment provisions in leases and licensing agreements entered
into by the Borrower or such Subsidiary in the ordinary course of its business,
provided that the Borrower or any of its Subsidiaries may create or incur or
suffer to be created or incurred or to exist:
(i) liens in favor of the Borrower on all or part of the
assets of Subsidiaries of the Borrower securing Indebtedness owing
by Subsidiaries of the Borrower to the Borrower;
(ii) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens to secure claims
for labor, material or supplies in respect of obligations not overdue;
(iii) deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old
age pensions or other social security obligations;
(iv) liens on properties in respect of judgments or awards
that have been in force for less than the applicable period for taking
an appeal so long as execution is not levied thereunder or in respect
of which the Borrower or such Subsidiary shall at the time in good
faith be prosecuting an appeal or proceedings for review and in respect
of which a stay of execution shall have been obtained pending such
appeal or review;
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(v) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties in existence less than
120 days from the date of creation thereof in respect of obligations
not overdue;
(vi) encumbrances on Real Estate consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which the Borrower or a
Subsidiary of the Borrower is a party, and other minor liens or
encumbrances none of which in the opinion of the Borrower interferes
materially with the use of the property affected in the ordinary
conduct of the business of the Borrower and its Subsidiaries, which
defects do not individually or in the aggregate have a materially
adverse effect on the business of the Borrower individually or of the
Borrower and its Subsidiaries on a consolidated basis;
(vii) liens existing on the date hereof and listed on Schedule
9.2 hereto;
(viii) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the date hereof
to secure purchase money Indebtedness of the type and amount permitted
by ss.9.1(d), incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or
personal property so acquired;
(ix) liens to secure Indebtedness of the type and amount
permitted by ss.9.1(d), provided that the aggregate principal amount of
Indebtedness secured by such lien shall not exceed the purchase price
of the property so acquired;
(x) notes receivable arising from the financing of water
softener sales described in ss.9.1(j), which may be pledged as
collateral;
(xi) liens securing Indebtedness permitted byss.9.1(m);
provided that such liens shall at all times be limited to the assets
of the related project;
(xii) liens on the real property or other assets of any Person
acquired by the Borrower, provided that the aggregate principal amount
of Indebtedness secured by such liens shall not exceed $5,000,000 at
any one time outstanding;
(xiii) liens securing the same real property or other assets
described in subsections (xi) and (xii) above in connection with the
renewal, extension or replacement of the underlying Indebtedness; and
(xiv) liens in favor of the Agent for the benefit of the Banks
and the Agent under the Loan Documents.
9.3. Restrictions on Investments. The Borrower will not, and will not
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except:
(a) Investments in marketable direct or guaranteed obligations
of the United States of America or any OECD country that mature within
one (1) year from the date of purchase by the Borrower;
(b) Investments in demand deposits, certificates of deposit,
bankers acceptances and time deposits of United States banks having
total assets in excess of $1,000,000,000 or banks organized under the
laws of any OECD country having total assets in excess of
$10,000,000,000;
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(c) Investments in securities commonly known as "commercial
paper" issued by a corporation organized and existing under the laws of
the United States of America or any state thereof or any OECD country
that at the time of purchase have been rated and the ratings for which
are not less than "P 1" if rated by ▇▇▇▇▇'▇ Investors Service, Inc.,
and not less than "A 1" if rated by Standard and Poor's Rating Group;
(d) Investments existing on the date hereof and listed on
Schedule 9.3 hereto;
(e) Investments with respect to Indebtedness permitted by
ss.9.1(f) so long as such entities remain Subsidiaries of the Borrower
and remain a Guarantor hereunder;
(f) Investments with respect to Indebtedness permitted by
ss.ss.9.1(g) and (h);
(g) Investments consisting of the Guaranty or Investments by
the Borrower in any Guarantor, so long as such Guarantor remains a
Guarantor hereunder and a Subsidiary of the Borrower and the Borrower
and the Guarantor shall have otherwise complied with the provision of
ss.6 hereof;
(h) Investments consisting of loans and advances to employees
for moving, entertainment, travel and other similar expenses in the
ordinary course of business not to exceed $400,000 in the aggregate at
any time outstanding;
(i) Investments made after the Closing Date in joint ventures
and partnerships (other than Subsidiaries) and other minority
investments in any Person, provided that the aggregate amount of all
such Investments made in any fiscal year shall not exceed $20,000,000;
(j) Investments made after the Closing Date in any foreign
Subsidiary of the Borrower by the Borrower or any Guarantor, provided
that the aggregate principal amount of all such Investments made in any
fiscal shall not exceed $10,000,000; and
(k) Investments made solely from cash flow generated by the
operations of Ionics Iberica, S.A. in Persons doing business outside
of the United States.
9.4. Restricted Payments. Neither the Borrower nor any Subsidiary will
make any Restricted Payment, provided, however, notwithstanding anything to
the contrary contained in this Credit Agreement, so long as no Default or
Event of Default has occurred and is continuing or would exist as a result
thereof, any Subsidiary of the Borrower shall be permitted to make
Restricted Payments to the Borrower or a Guarantor.
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9.5. Merger, Consolidation and Disposition of Assets.
9.5.1. Mergers and Acquisitions. The Borrower will not, and
will not permit any of its Subsidiaries to, become a party to any
merger or consolidation, or agree to or effect any asset acquisition or
stock acquisition (other than the acquisition of assets in the ordinary
course of business consistent with past practices) except (a) the
merger or consolidation of one or more of the Subsidiaries of the
Borrower with and into the Borrower, (b) the merger or consolidation of
two or more domestic Subsidiaries of the Borrower, (c) the merger or
consolidation of two or more foreign Subsidiaries of the Borrower, (d)
Permitted Acquisitions by the Borrower or any domestic Subsidiary and
(e) subject to the provisions of ss.9.3(k), acquisitions by Ionics
Iberica, S.A.
9.5.2. Disposition of Assets. The Borrower will not, and will
not permit any of its Subsidiaries to, become a party to or agree to or
effect any disposition of assets, other than (a) the sale of inventory
and the disposition of obsolete assets, in each case in the ordinary
course of business consistent with past practices, (b) the disposition
of the stock of or other equity interests in foreign Subsidiaries of
the Borrower the aggregate fair market value of which shall not exceed
$1,000,000 per single transaction or $5,000,000 in any fiscal year and
(c) the disposition of other assets of the Borrower and its
Subsidiaries (including assets which are no longer necessary to the
business of the Borrower or any of its Subsidiaries) the aggregate fair
market value of which shall not exceed $1,000,000 in any fiscal year.
9.6. Sale and Leaseback. The Borrower will not, and will not permit any
of its Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby the Borrower or any Subsidiary of the Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property that the Borrower or any Subsidiary of the Borrower intends
to use for substantially the same purpose as the property being sold or
transferred other than sale and leaseback arrangements, so long as the aggregate
net book value of all property sold or transferred pursuant thereto does not
exceed $3,000,000 in any fiscal year.
9.7. Compliance with Environmental Laws. The Borrower will not, and
will not permit any of its Subsidiaries to, (a) use any of the Real Estate or
any portion thereof for the handling, processing, storage or disposal of
Hazardous Substances, (b) cause or permit to be located on any of the Real
Estate any underground tank or other underground storage receptacle for
Hazardous Substances, (c) generate any Hazardous Substances on any of the Real
Estate, (d) conduct any activity at any Real Estate or use any Real Estate in
any manner so as to cause a release (i.e. releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping) or threatened release of Hazardous Substances on, upon or
into the Real Estate or (e) otherwise conduct any activity at any Real Estate or
use any Real Estate, in each case, in any manner that would violate any
Environmental Law or bring such Real Estate in violation of any Environmental
Law.
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9.8. Subordinated Debt. The Borrower will not, and will not permit any
of its Subsidiaries to, amend, supplement or otherwise modify the terms of any
of the Subordinated Debt or prepay, redeem or repurchase any of the Subordinated
Debt.
9.9. Upstream Limitations. The Borrower will not, and will not permit
any of its Subsidiaries to, enter into any agreement, contract or arrangement
(other than the Credit Agreement and the other Loan Documents) restricting the
ability of any Subsidiary to pay or make dividends or distributions in cash or
kind to the Borrower, to make loans, advances or other payments of whatsoever
nature to the Borrower, or to make transfer or distributions of all or any part
of its assets to the Borrower.
9.10. Negative Pledges. Neither the Borrower nor any of the Guarantors
will enter into any agreement (other than this Credit Agreement and the other
Loan Document) prohibiting the creation or assumption of any lien upon its
properties, revenues or assets or those of any of its Subsidiaries, whether now
owned or hereafter acquired to secure any of the Obligations (or any
refinancings thereof) other than agreements with Persons prohibiting any such
lien on assets in which such Person has a prior security interest which is
permitted by ss.9.2.
9.11. Employee Benefit Plans. Neither the Borrower nor any ERISA
Affiliate will
(a) engage in any "prohibited transaction" within the meaning ofss.406
of ERISA orss.4975 of the Code which could result in a material liability
for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in ss.302 of
ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of the Borrower or any of its Subsidiaries pursuant to ss.302(f)
or ss.4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances requiring the
posting of security pursuant toss.307 of ERISA orss.401(a)(29) of the Code;
or
(e) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of ss.4001 of ERISA) of
all Guaranteed Pension Plans exceeding the value of the aggregate
assets of such Plans, disregarding for this purpose the benefit
liabilities and assets of any such Plan with assets in excess of
benefit liabilities, by more than the amount set forth in ss.7.15.3.
9.12. Business Activities. The Borrower will not, and will not permit
any of its Subsidiaries to, engage directly or indirectly (whether through
Subsidiaries or otherwise) in any type of business other than the businesses
conducted by them on the Closing Date and in related businesses.
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9.13. Fiscal Year. The Borrower will not, and will not permit any of it
Subsidiaries to, change the date of the end of its fiscal year from that set
forth in ss.7.4.1.
9.14. Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any transaction with any Affiliate
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such Affiliate or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any such Affiliate has a substantial interest or is an officer,
director, trustee or partner, on terms more favorable to such Person than would
have been obtainable on an arm's-length basis in the ordinary course of
business.
9.15. Inconsistent Agreements. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any agreement containing any
provision which would be violated or breached by the performance by the Borrower
or any of its Subsidiaries of their respective obligations hereunder or under
any of the Loan Documents.
9.16. Modification of Documents and Charter Documents. The Borrower
will not, nor will it permit any of its Subsidiaries to, consent to or agree to
any amendment, supplement or other modification to the Capitalization Documents
without the prior written consent of the Agent unless such amendment, supplement
or modification would not have any material adverse effect on the Agent's or the
Bank's rights under the Loan Documents or the Borrower's or any of its
Subsidiaries' obligations under the Loan Documents.
10. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Unpaid Reimbursement Obligation, Letter of Credit or Revolving Credit Note
is outstanding or any Bank has any obligation to make any Revolving Credit Loans
or the Agent has any obligation to issue, extend or renew any Letters of Credit:
10.1. Leverage Ratio. The Borrower will not, as of the end of any
fiscal quarter, permit the Leverage Ratio for such fiscal quarter to exceed
3.00:1.00.
10.2. Minimum EBITDA. The Borrower will not, as of the end of any
Reference Period, permit the consolidated EBITDA of the Borrower and its
Subsidiaries for such Reference Period to be less than $50,000,000.
10.3. Minimum Net Worth. The Borrower will not permit Consolidated Net
Worth at any time to be less than the sum of (a) $300,000,000 plus (b) on a
cumulative basis, 50% of positive Consolidated Net Income for each fiscal year
beginning with the fiscal year ended December 31, 2000 plus (c) 100% of Net Cash
Proceeds received by the Borrower.
10.4. Capital Expenditures. The Borrower will not make, or permit any
Consolidated Subsidiary to make, Capital Expenditures in any fiscal year that
exceed, in the aggregate, $60,000,000 for such fiscal year.
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11. CLOSING CONDITIONS.
The obligations of the Banks to make the initial Revolving Credit Loans
and the Term Loan and of the Agent to issue any initial Letters of Credit shall
be subject to the satisfaction of the following conditions precedent:
11.1. Loan Documents. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the Banks.
Each Bank shall have received a fully executed copy of each such document.
11.2. Certified Copies of Charter Documents. Each of the Banks shall
have received from the Borrower and each of its domestic Subsidiaries a copy,
certified by a duly authorized officer of such Person to be true and complete on
the Closing Date, of each of (a) its charter or other incorporation documents as
in effect on such date of certification, and (b) its by-laws as in effect on
such date.
11.3. Corporate Action. All corporate action necessary for the valid
execution, delivery and performance by the Borrower and each of the Guarantors
of this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Banks shall have been provided to each of the Banks.
11.4. Incumbency Certificate. Each of the Banks shall have received
from the Borrower and each Guarantor an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of the Borrower or such
Guarantor, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on behalf of
each of the Borrower or such Guarantor, each of the Loan Documents to which the
Borrower or such Guarantor is or is to become a party; (b) in the case of the
Borrower, to make Loan Requests and Conversion Requests and to apply for Letters
of Credit; and (c) to give notices and to take other action on its behalf under
the Loan Documents.
11.5. Information Certificates and UCC Search Results. The Agent shall
have received from the Borrower and each Guarantor a completed and fully
executed Information Certificate and the results of UCC searches, indicating no
liens other than Permitted Liens and otherwise in form and substance
satisfactory to the Agent.
11.6. Certificates of Insurance. The Agent shall have received a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained.
11.7. Solvency Certificate. Each of the Banks shall have received an
officer's certificate of the Borrower dated as of the Closing Date as to the
solvency of the Borrower and its Subsidiaries following the consummation of the
transactions contemplated herein and in form and substance satisfactory to the
Banks.
11.8. Opinion of Counsel. Each of the Banks and the Agent shall have
received a favorable legal opinion addressed to the Banks and the Agent, dated
as of the Closing Date, in form and substance satisfactory to the Banks and the
Agent, from ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, counsel to the Borrower and its
Subsidiaries.
11.9. Payment of Fees. The Borrower shall have paid to the Banks or the
Agent, as appropriate, the closing fee pursuant to ss.5.1.
11.10. Compliance Certificate. The Agent shall have received a
certificate of compliance with respect to the financial covenants set forth in
the Prior Credit Agreement for the period ended March 31, 2000, in form and
substance satisfactory to the Agent.
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12. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Revolving Credit Loan,
including the Revolving Credit Loan, and of the Agent to issue, extend or renew
any Letter of Credit, in each case whether on or after the Closing Date, shall
also be subject to the satisfaction of the following conditions precedent:
12.1. Representations True; No Event of Default. Each of the
representations and warranties of any of the Borrower and its Subsidiaries
contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Revolving Credit Loan or the
issuance, extension or renewal of such Letter of Credit, with the same effect as
if made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and to the extent that
such representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing.
12.2. No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Revolving Credit
Loan or to participate in the issuance, extension or renewal of such Letter of
Credit or in the reasonable opinion of the Agent would make it illegal for the
Agent to issue, extend or renew such Letter of Credit.
12.3. Governmental Regulation. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
12.4. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agent and the Agent's Special Counsel, and the
Banks, the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agent may reasonably request.
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13. EVENTS OF DEFAULT; ACCELERATION; ETC.
13.1. Events of Default and Acceleration. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Borrower shall fail to pay any principal of the
Revolving Credit Loans or any Reimbursement Obligation when the same
shall become due and payable, whether at the stated date of maturity or
any accelerated date of maturity or at any other date fixed for
payment;
(b) the Borrower or any of its Subsidiaries shall fail to pay
any interest on the Revolving Credit Loans, the Commitment Fee, any
Letter of Credit Fee, the Agent's fee, or other sums due hereunder or
under any of the other Loan Documents, when the same shall become due
and payable, whether at the stated date of maturity or any accelerated
date of maturity or at any other date fixed for payment;
(c) the Borrower shall fail to comply with any of its
covenants contained in ss.ss.8.1, 8.4, 8.5, the first sentence of 8.6,
8.7-8.10, 8.12-8.15, 8.18, 9 or 10;
(d) the Borrower or any of its Subsidiaries shall fail to
perform any term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified elsewhere in this
ss.13.1) for thirty (30) days after written notice of such failure has
been given to the Borrower by the Agent;
(e) any representation or warranty of the Borrower or any of
its Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with this Credit Agreement shall prove to have been
false in any material respect upon the date when made or deemed to have
been made or repeated;
(f) the Borrower or any of its Subsidiaries shall fail to pay
at maturity, or within any applicable period of grace, any obligation
for borrowed money or credit received or in respect of any Capitalized
Leases or Synthetic Leases in excess of $500,000, or fail to observe or
perform any material term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing borrowed money
or credit received or in respect of any Capitalized Leases or Synthetic
Leases for such period of time as would permit (assuming the giving of
appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof, or
any such holder or holders shall rescind or shall have a right to
rescind the purchase of any such obligations;
(g) the Borrower or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of the Borrower or any of
its Subsidiaries or of any substantial part of the assets of the
Borrower or any of its Subsidiaries or shall commence any case or other
proceeding relating to the Borrower or any of its Subsidiaries under
any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law of any jurisdiction,
now or hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall
be commenced against the Borrower or any of its Subsidiaries and the
Borrower or any of its Subsidiaries shall indicate its approval
thereof, consent thereto or acquiescence therein or such petition or
application shall not have been dismissed within forty-five (45) days
following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any
of its Subsidiaries bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of the Borrower or any Subsidiary of the Borrower in
an involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
final judgment against the Borrower or any of its Subsidiaries that,
with other outstanding final judgments, undischarged, against the
Borrower or any of its Subsidiaries exceeds in the aggregate
$1,000,000;
75
(j) the holders of all or any part of the Subordinated Debt
shall accelerate the maturity of all or any part of the Subordinated
Debt or the Subordinated Debt shall be prepaid, redeemed or repurchased
in whole or in part;
(k) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded, in each case otherwise than in
accordance with the terms thereof or with the express prior written
agreement, consent or approval of the Banks, or any action at law, suit
or in equity or other legal proceeding to cancel, revoke or rescind any
of the Loan Documents shall be commenced by or on behalf of the
Borrower or any of its Subsidiaries party thereto or any of their
respective stockholders, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid
or unenforceable in accordance with the terms thereof;
(l) the Borrower or any ERISA Affiliate incurs any liability
to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA
in an aggregate amount exceeding $500,000, or the Borrower or any ERISA
Affiliate is assessed withdrawal liability pursuant to Title IV of
ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $500,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to
make a required installment or other payment (within the meaning of
ss.302(f)(1) of ERISA), provided that the Agent determines in its
reasonable discretion that such event (A) could be expected to result
in liability of the Borrower or any of its Subsidiaries to the PBGC or
such Guaranteed Pension Plan in an aggregate amount exceeding $500,000
and (B) could constitute grounds for the termination of such Guaranteed
Pension Plan by the PBGC, for the appointment by the appropriate United
States District Court of a trustee to administer such Guaranteed
Pension Plan or for the imposition of a lien in favor of such
Guaranteed Pension Plan; or (ii) the appointment by a United States
District Court of a trustee to administer such Guaranteed Pension Plan;
or (iii) the institution by the PBGC of proceedings to terminate such
Guaranteed Pension Plan;
(m) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part
of its business and such order shall continue in effect for more than
thirty (30) days;
(n) there shall occur any material damage to, or loss, theft
or destruction of, a material portion of the assets of the Borrower or
any of its Subsidiaries, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty, which in any such case causes, for more than
fifteen (15) consecutive days, the cessation or substantial curtailment
of revenue producing activities at any facility of the Borrower or any
of its Subsidiaries if such event or circumstance is not covered by
business interruption insurance and would have a material adverse
effect on the business or financial condition of the Borrower or such
Subsidiary;
(o) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by the Borrower or any of its Subsidiaries if such loss,
suspension, revocation or failure to renew would have a material
adverse effect on the business or financial condition of the Borrower
and its Subsidiaries;
(p) the Borrower or any of its Subsidiaries shall be indicted
for a state or federal crime, or any civil or criminal action shall
otherwise have been brought against the Borrower or any of its
Subsidiaries, a punishment for which in any such case could include the
forfeiture of any assets of the Borrower or such Subsidiary included
having a fair market value in excess of $1,000,000; or
(q) the Borrower shall at any time, legally or beneficially
own less than (i) 100% of the shares (on a fully diluted basis) of the
common stock and other equity interests of each of its domestic
Subsidiaries or (ii) the percentage of shares (on a fully diluted
basis) of the common stock and other equity interests of each of its
foreign Subsidiaries which it legally or beneficially owned as of the
Closing Date except as otherwise permitted by ss.9.5.2(b);
76
(r) any person or group of persons (within the meaning of Section 13 or 14
of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of twenty percent (20%) or
more of the outstanding shares of common stock of the Borrower; or, during any
period of twelve consecutive calendar months, individuals who were directors of
the Borrower on the first day of such period shall cease to constitute a
majority of the board of directors of the Borrower; then, and in any such event,
so long as the same may be continuing, the Agent may, and upon the request of
the Majority Banks shall, by notice in writing to the Borrower declare all
amounts owing with respect to this Credit Agreement, the Revolving Credit Notes
and the other Loan Documents and all Reimbursement Obligations to be, and they
shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; provided that in the event of any Event
of Default specified in ss.ss.13.1(g), 13.1(h) or 13.1(j), all such amounts
shall become immediately due and payable automatically and without any
requirement of notice from the Agent or any Bank.
13.2. Termination of Commitments. If any one or more of the Events of
Default specified in ss.13.1(g), ss.13.1(h) or ss.13.1(j) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and each of the
Banks shall be relieved of all further obligations to make Revolving Credit
Loans to the Borrower and the Agent shall be relieved of all further obligations
to issue, extend or renew Letters of Credit. If any other Event of Default shall
have occurred and be continuing, the Agent may and, upon the request of the
Majority Banks, shall, by notice to the Borrower, terminate the unused portion
of the credit hereunder, and upon such notice being given such unused portion of
the credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Loans and the Agent shall be
relieved of all further obligations to issue, extend or renew Letters of Credit.
No termination of the credit hereunder shall relieve the Borrower or any of its
Subsidiaries of any of the Obligations.
13.3. Remedies. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Revolving Credit Loans pursuant to ss.13.1, each
Bank, if owed any amount with respect to the Revolving Credit Loans or the
Reimbursement Obligations, may, with the consent of the Majority Banks but not
otherwise, proceed to protect and enforce its rights by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Bank are
evidenced, including as permitted by applicable law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Revolving Credit Note or purchaser of any
Letter of Credit Participation is intended to be exclusive of any other remedy
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or any other provision of law.
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14. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrower and any securities or other property of the Borrower
in the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Revolving Credit Notes held by such Bank or constituting Reimbursement
Obligations owed to such Bank, such amount shall be applied ratably to such
other Indebtedness and to the Indebtedness evidenced by all such Revolving
Credit Notes held by such Bank or constituting Reimbursement Obligations owed to
such Bank, and (b) if such Bank shall receive from the Borrower, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Revolving Credit Notes held by, or
constituting Reimbursement Obligations owed to, such Bank by proceedings against
the Borrower at law or in equity or by proof thereof in bankruptcy,
reorganization, liquidation, receivership or similar proceedings, or otherwise,
and shall retain and apply to the payment of the Revolving Credit Note or Notes
held by, or Reimbursement Obligations owed to, such Bank any amount in excess of
its ratable portion of the payments received by all of the Banks with respect to
the Revolving Credit Notes held by, and Reimbursement Obligations owed to, all
of the Banks, such Bank will make such disposition and arrangements with the
other Banks with respect to such excess, either by way of distribution, pro
tanto assignment of claims, subrogation or otherwise as shall result in each
Bank receiving in respect of the Revolving Credit Notes held by it or
Reimbursement Obligations owed it, its proportionate payment as contemplated by
this Credit Agreement; provided that if all or any part of such excess payment
is thereafter recovered from such Bank, such disposition and arrangements shall
be rescinded and the amount restored to the extent of such recovery, but without
interest.
15. THE AGENT.
15.1. Authorization.
(a) The Agent is authorized to take such action on behalf of
each of the Banks and to exercise all such powers as are hereunder and
under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably
incident thereto, provided that no duties or responsibilities not
expressly assumed herein or therein shall be implied to have been
assumed by the Agent.
(b) The relationship between the Agent and each of the Banks
is that of an independent contractor. The use of the term "Agent" is
for convenience only and is used to describe, as a form of convention,
the independent contractual relationship between the Agent and each of
the Banks. Nothing contained in this Credit Agreement nor the other
Loan Documents shall be construed to create an agency, trust or other
fiduciary relationship between the Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Agent is nevertheless
a "representative" of the Banks, as that term is defined in Article 1
of the Uniform Commercial Code, for purposes of actions for the benefit
of the Banks and the Agent with respect to all collateral security, if
any, and guaranties contemplated by the Loan Documents. Such actions
include the designation of the Agent as "secured party", "mortgagee" or
the like on all financing statements and other documents and
instruments, whether recorded or otherwise, relating to the attachment,
perfection, priority or enforcement of any security interests,
mortgages or deeds of trust in collateral security intended to secure
the payment or performance of any of the Obligations, all for the
benefit of the Banks and the Agent.
15.2. Employees and Agents. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrower.
15.3. No Liability. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
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15.4. No Representations.
15.4.1. General. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the
Revolving Credit Notes, the Letters of Credit, any of the other Loan
Documents or any instrument at any time constituting, or intended to
constitute, collateral security for the Revolving Credit Notes, or for
the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect
to the Revolving Credit Notes, or for any recitals or statements,
warranties or representations made herein or in any of the other Loan
Documents or in any certificate or instrument hereafter furnished to it
by or on behalf of the Borrower or any of its Subsidiaries, or be bound
to ascertain or inquire as to the performance or observance of any of
the terms, conditions, covenants or agreements herein or in any
instrument at any time constituting, or intended to constitute,
collateral security for the Revolving Credit Notes or to inspect any of
the properties, books or records of the Borrower or any of its
Subsidiaries. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the Borrower or
any holder of any of the Revolving Credit Notes shall have been duly
authorized or is true, accurate and complete. The Agent has not made
nor does it now make any representations or warranties, express or
implied, nor does it assume any liability to the Banks, with respect to
the credit worthiness or financial conditions of the Borrower or any of
its Subsidiaries. Each Bank acknowledges that it has, independently and
without reliance upon the Agent or any other Bank, and based upon such
information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Credit Agreement.
15.4.2. Closing Documentation, etc. For purposes of
determining compliance with the conditions set forth in ss.11, each
Bank that has executed this Credit Agreement shall be deemed to have
consented to, approved or accepted, or to be satisfied with, each
document and matter either sent, or made available, by the Agent to
such Bank for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to such Bank, unless an officer of the Agent active upon
the Borrower's account shall have received notice from such Bank prior
to the Closing Date specifying such Bank's objection thereto and such
objection shall not have been withdrawn by notice to the Agent to such
effect on or prior to the Closing Date.
15.5. Payments.
15.5.1. Payments to Agent. A payment by the Borrower to the
Agent hereunder or under any of the other Loan Documents for the
account of any Bank shall constitute a payment to such Bank. The Agent
agrees promptly to distribute to each Bank such Bank's pro rata share
of payments received by the Agent for the account of the Banks except
as otherwise expressly provided herein or in any of the other Loan
Documents.
15.5.2. Distribution by Agent. If in the opinion of the Agent
the distribution of any amount received by it in such capacity
hereunder, under the Revolving Credit Notes or under any of the other
Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have
been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined
by such court.
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15.5.3. Delinquent Banks. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (a) to make available to the Agent its
pro rata share of any Revolving Credit Loan or to purchase any Letter
of Credit Participation or (b) to comply with the provisions of ss.14
with respect to making dispositions and arrangements with the other
Banks, where such Bank's share of any payment received, whether by
setoff or otherwise, is in excess of its pro rata share of such
payments due and payable to all of the Banks, in each case as, when and
to the full extent required by the provisions of this Credit Agreement,
shall be deemed delinquent (a "Delinquent Bank") and shall be deemed a
Delinquent Bank until such time as such delinquency is satisfied. A
Delinquent Bank shall be deemed to have assigned any and all payments
due to it from the Borrower, whether on account of outstanding
Revolving Credit Loans, Unpaid Reimbursement Obligations, interest,
fees or otherwise, to the remaining nondelinquent Banks for application
to, and reduction of, their respective pro rata shares of all
outstanding Revolving Credit Loans and Unpaid Reimbursement
Obligations. The Delinquent Bank hereby authorizes the Agent to
distribute such payments to the nondelinquent Banks in proportion to
their respective pro rata shares of all outstanding Revolving Credit
Loans and Unpaid Reimbursement Obligations. A Delinquent Bank shall be
deemed to have satisfied in full a delinquency when and if, as a result
of application of the assigned payments to all outstanding Revolving
Credit Loans and Unpaid Reimbursement Obligations of the nondelinquent
Banks, the Banks' respective pro rata shares of all outstanding
Revolving Credit Loans and Unpaid Reimbursement Obligations have
returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.
15.6. Holders of Notes. The Agent may deem and treat the payee of any
Revolving Credit Note or the purchaser of any Letter of Credit Participation as
the absolute owner or purchaser thereof for all purposes hereof until it shall
have been furnished in writing with a different name by such payee or by a
subsequent holder, assignee or transferee.
15.7. Indemnity. The Banks ratably agree hereby to indemnify and hold
harmless the Agent and its affiliates from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent or such affiliate has not
been reimbursed by the Borrower as required by ss.16), and liabilities of every
nature and character arising out of or related to this Credit Agreement, the
Revolving Credit Notes, or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Agent's actions taken
hereunder or thereunder, except to the extent that any of the same shall be
directly caused by the Agent's willful misconduct or gross negligence.
15.8. Agent as Bank. In its individual capacity, Fleet shall have the
same obligations and the same rights, powers and privileges in respect to its
Commitment and the Revolving Credit Loans made by it, and as the holder of any
of the Revolving Credit Notes and as the purchaser of any Letter of Credit
Participations, as it would have were it not also the Agent.
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15.9. Resignation. The Agent may resign at any time by giving sixty
(60) days prior written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
15.10. Notification of Defaults and Events of Default. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this ss.15.10 it shall promptly notify the other
Banks of the existence of such Default or Event of Default.
16. EXPENSES AND INDEMNIFICATION.
16.1. Expenses. The Borrower agrees to pay (a) the reasonable costs of
producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein, (b) any taxes (including
any interest and penalties in respect thereto) payable by the Agent or any of
the Banks (other than taxes based upon the Agent's or any Bank's net income) on
or with respect to the transactions contemplated by this Credit Agreement (the
Borrower hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (c) the reasonable fees, expenses and disbursements of the Agent's
Special Counsel or any local counsel to the Agent incurred in connection with
the preparation, syndication, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, any
amendments, modifications, approvals, consents or waivers hereto or hereunder,
or the cancellation of any Loan Document upon payment in full in cash of all of
the Obligations or pursuant to any terms of such Loan Document for providing for
such cancellation, (d) the fees, expenses and disbursements of the Agent or any
of its affiliates incurred by the Agent or such affiliate in connection with any
commercial finance examination or the preparation, syndication, administration
or interpretation of the Loan Documents and other instruments mentioned herein,
including all title insurance premiums and surveyor, engineering and appraisal
charges, if applicable, (e) any fees, costs, expenses and bank charges,
including bank charges for returned checks, incurred by the Agent in
establishing, maintaining or handling agency accounts, lock box accounts and
other accounts; (f) all reasonable out-of-pocket expenses (including without
limitation reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or the Agent, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Bank or the Agent in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
any of its Subsidiaries or the administration thereof after the occurrence of a
Default or Event of Default and (ii) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related to any Bank's or the
Agent's relationship with the Borrower or any of its Subsidiaries and (g) all
reasonable fees, expenses and disbursements of any Bank or the Agent incurred in
connection with UCC and intellectual property searches, UCC and intellectual
property filings or mortgage recordings.
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16.2. Indemnification. The Borrower agrees to indemnify and hold
harmless the Agent, its affiliates and the Banks from and against any and all
claims, actions and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, damages and expenses of every nature and
character arising out of this Credit Agreement or any of the other Loan
Documents or the transactions contemplated hereby including, without limitation,
(a) any actual or proposed use by the Borrower or any of its Subsidiaries of the
proceeds of any of the Revolving Credit Loans or Letters of Credit, (b) the
reversal or withdrawal of any provisional credits granted by the Agent upon the
transfer of funds from lock box, bank agency or concentration accounts or in
connection with the provisional honoring of checks or other items, (c) any
actual or alleged infringement of any patent, copyright, trademark, service ▇▇▇▇
or similar right of the Borrower or any of its Subsidiaries comprised in the
Collateral, (d) the Borrower or any of its Subsidiaries entering into or
performing this Credit Agreement or any of the other Loan Documents or (e) with
respect to the Borrower and its Subsidiaries and their respective properties and
assets, the violation of any Environmental Law, the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release or threatened release
of any Hazardous Substances or any action, suit, proceeding or investigation
brought or threatened with respect to any Hazardous Substances (including, but
not limited to, claims with respect to wrongful death, personal injury or damage
to property), in each case including, without limitation, the reasonable fees
and disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding except to
the extent that any of the foregoing are directly caused by the gross negligence
or willful misconduct of the otherwise indemnified party. In litigation, or the
preparation therefor, the Banks and the Agent and its affiliates shall be
entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrower
under this ss.16.2 are unenforceable for any reason, the Borrower hereby agrees
to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law.
16.3. Survival. The covenants contained in this ss.16 shall survive
payment or satisfaction in full of all other Obligations.
17. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
17.1. Confidentiality. Each of the Banks and the Agent agrees, on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any of its Subsidiaries
pursuant to this Credit Agreement that is identified by such Person as being
confidential at the time the same is delivered to the Banks or the Agent,
provided that nothing herein shall limit the disclosure of any such information
(a) after such information shall have become public other than through a
violation of this ss.17, (b) to the extent required by statute, rule, regulation
or judicial process, (c) to counsel for any of the Banks or the Agent, (d) to
bank examiners or any other regulatory authority having jurisdiction over any
Bank or the Agent, or to auditors or accountants, (e) to the Agent, any Bank or
any affiliate of the foregoing, (f) in connection with any litigation to which
any one or more of the Banks, the Agent or any affiliate of the Agent or any
Bank is a party, or in connection with the enforcement of rights or remedies
hereunder or under any other Loan Document, (g) to a Subsidiary or affiliate of
such Bank or (h) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant agrees to be bound by the
provisions of ss.19.6. Moreover, each of the Agent, the Banks and any affiliate
of the Agent or any Bank is hereby expressly permitted by the Borrower to refer
to any of the Borrower and its Subsidiaries in connection with any advertising,
promotion or marketing undertaken by the Agent, such Bank or such affiliate and,
for such purpose, the Agent, such Bank or such affiliate may utilize any trade
name, trademark, logo or other distinctive symbol associated with the Borrower
or any of its Subsidiaries or any of their businesses.
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17.2. Prior Notification. Unless specifically prohibited by applicable
law or court order, each of the Banks and the Agent shall, prior to disclosure
thereof, notify the Borrower of any request for disclosure of any such
non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or pursuant to legal
process.
17.3. Other. In no event shall any Bank or the Agent be obligated or
required to return any materials furnished to it or any affiliate thereof by the
Borrower or any of its Subsidiaries. The obligations of each Bank under this
ss.17 shall supersede and replace the obligations of such Bank under any
confidentiality letter in respect of this financing signed and delivered by such
Bank to the Borrower prior to the date hereof and shall be binding upon any
assignee of, or purchaser of any participation in, any interest in any of the
Revolving Credit Loans or Reimbursement Obligations from any Bank.
18. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Revolving Credit Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of the Borrower or any of
its Subsidiaries pursuant hereto shall be deemed to have been relied upon by the
Banks and the Agent, notwithstanding any investigation heretofore or hereafter
made by any of them, and shall survive the making by the Banks of any of the
Revolving Credit Loans and the issuance, extension or renewal of any Letters of
Credit, as herein contemplated, and shall continue in full force and effect so
long as any Letter of Credit or any amount due under this Credit Agreement or
the Notes or any of the other Loan Documents remains outstanding or any Bank has
any obligation to make any Revolving Credit Loans or the Agent has any
obligation to issue, extend or renew any Letter of Credit, and for such further
time as may be otherwise expressly specified in this Credit Agreement. All
statements contained in any certificate or other paper delivered to any Bank or
the Agent at any time by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower or such Subsidiary
hereunder.
19. ASSIGNMENT AND PARTICIPATION.
19.1. Conditions to Assignment by Banks. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Revolving Credit Loans at the time owing to it, the Revolving Credit Notes
held by it and its participating interest in the risk relating to any Letters of
Credit); provided that (a) the Agent shall have given its prior written consent
to such assignment, (b) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Bank's rights and obligations under
this Credit Agreement, (c) each assignment shall be in an amount that is a whole
multiple of $5,000,000 (or such smaller amount which represents the assigning
Bank's entire Commitment) and (d) the parties to such assignment shall execute
and deliver to the Agent, for recording in the Register (as hereinafter
defined), an Assignment and Acceptance, substantially in the form of Exhibit E
hereto (an "Assignment and Acceptance"), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, (i) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Bank hereunder, and (ii) the assigning Bank shall, to the extent provided in
such assignment and upon payment to the Agent of the registration fee referred
to in ss.19.3, be released from its obligations under this Credit Agreement.
19.2. Certain Representations and Warranties; Limitations; Covenants.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or
mortgage, if any;
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(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
the Borrower and its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the
performance or observance by the Borrower and its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations of any of their obligations under this Credit Agreement or
any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in ss.7.4 and ss.8.4 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance
upon the assigning Bank, the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Credit Agreement;
(e such assignee represents and warrants that it is an
Eligible Assignee;
(f) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Credit Agreement and the other Loan Documents as are delegated to
the Agent by the terms hereof or thereof, together with such powers as
are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Credit Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements
with the assigning Bank satisfactory to such assignee with respect to
its pro rata share of Letter of Credit Fees in respect of outstanding
Letters of Credit.
19.3. Register. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to and
Letter of Credit Participations purchased by, the Banks from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this Credit
Agreement. The Register shall be available for inspection by the Borrower and
the Banks at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Bank agrees to pay to the
Agent a registration fee in the sum of $3,500.
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19.4. New Notes. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Revolving Credit
Note subject to such assignment, the Agent shall (a) record the information
contained therein in the Register, and (b) give prompt notice thereof to the
Borrower and the Banks (other than the assigning Bank). Within five (5) Business
Days after receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent, in exchange for each surrendered Revolving
Credit Note, a new Revolving Credit Note to the order of such Eligible Assignee
in an amount equal to the amount assumed by such Eligible Assignee pursuant to
such Assignment and Acceptance and, if the assigning Bank has retained some
portion of its obligations hereunder, a new Revolving Credit Note to the order
of the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Revolving Credit Notes shall provide that they are replacements for the
surrendered Revolving Credit Notes, shall be in an aggregate principal amount
equal to the aggregate principal amount of the surrendered Revolving Credit
Notes, shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of the assigned Revolving Credit
Notes. Within five (5) days of issuance of any new Revolving Credit Notes
pursuant to this ss.19.4, the Borrower shall deliver an opinion of counsel,
addressed to the Banks and the Agent, relating to the due authorization,
execution and delivery of such new Revolving Credit Notes and the legality,
validity and binding effect thereof, in form and substance satisfactory to the
Banks. The surrendered Revolving Credit Notes shall be cancelled and returned to
the Borrower.
19.5. Participations. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (a) any such sale or participation shall not affect the rights and duties
of the selling Bank hereunder to the Borrower and (b) the only rights granted to
the participant pursuant to such participation arrangements with respect to
waivers, amendments or modifications of the Loan Documents shall be the rights
to approve waivers, amendments or modifications that would reduce the principal
of or the interest rate on any Revolving Credit Loans, extend the term or
increase the amount of the Commitment of such Bank as it relates to such
participant, reduce the amount of any Commitment Fees or Letter of Credit Fees
to which such participant is entitled or extend any regularly scheduled payment
date for principal or interest.
19.6. Disclosure. The Borrower agrees that in addition to disclosures
made in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
participants shall agree (a) to treat in confidence such information unless such
information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process and (c)
not to make use of such information for purposes of transactions unrelated to
such contemplated assignment or participation. For purposes of this ss.19.6 an
assignee or participant or potential assignee or participant may include a
counterparty with whom such Bank has entered into or potentially might enter
into a derivative contract referenced to credit or other risks or events arising
under this Credit Agreement or any other Loan Document.
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19.7. Assignee or Participant Affiliated with the Borrower. If any
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to ss.13.1 or ss.13.2, and
the determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Revolving Credit Loans or Reimbursement
Obligations. If any Bank sells a participating interest in any of the Revolving
Credit Loans or Reimbursement Obligations to a participant, and such participant
is the Borrower or an Affiliate of the Borrower, then such transferor Bank shall
promptly notify the Agent of the sale of such participation. A transferor Bank
shall have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Agent pursuant to ss.13.1 or ss.13.2 to the
extent that such participation is beneficially owned by the Borrower or any
Affiliate of the Borrower, and the determination of the Majority Banks shall for
all purposes of this Credit Agreement and the other Loan Documents be made
without regard to the interest of such transferor Bank in the Revolving Credit
Loans or Reimbursement Obligations to the extent of such participation.
19.8. Miscellaneous Assignment Provisions. Any assigning Bank shall
retain its rights to be indemnified pursuant to ss.16 with respect to any claims
or actions arising prior to the date of such assignment. If any assignee Bank is
not incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes. Anything contained in
this ss.19 to the contrary notwithstanding, any Bank may at any time pledge all
or any portion of its interest and rights under this Credit Agreement (including
all or any portion of its Revolving Credit Notes) to any of the twelve Federal
Reserve Banks organized under ss.4 of the Federal Reserve Act, 12 U.S.C. ss.341.
No such pledge or the enforcement thereof shall release the pledgor Bank from
its obligations hereunder or under any of the other Loan Documents.
19.9. Assignment by Borrower. The Borrower shall not assign or transfer
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
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20. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Revolving Credit Notes or any Letter of Credit
Applications shall be in writing and shall be delivered in hand, mailed by
United States registered or certified first class mail, postage prepaid, sent by
overnight courier, or sent by telegraph, telecopy, facsimile or telex and
confirmed by delivery via courier or postal service, addressed as follows:
(a) if to the Borrower, at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President and
Chief Financial Officer, or at such other address for notice as the
Borrower shall last have furnished in writing to the Person giving the
notice;
(b) if to the Agent, at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Director, or such other address for
notice as the Agent shall last have furnished in writing to the Person
giving the notice; and
(c) if to any Bank, at such Bank's address set forth on
Schedule 1 hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
21. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN ss.20. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
22. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
23. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
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24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in ss.27.
25. WAIVER OF JURY TRIAL.
Each of Borrower, the Agent and the Banks hereby waives its right to a
jury trial with respect to any action or claim arising out of any dispute in
connection with this Credit Agreement, the Revolving Credit Notes or any of the
other Loan Documents, any rights or obligations hereunder or thereunder or the
performance of such rights and obligations. Except as prohibited by law, the
Borrower hereby waives any right it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Borrower (a) certifies that no representative, agent or
attorney of any Bank or the Agent has represented, expressly or otherwise, that
such Bank or the Agent would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledges that the Agent and the Banks have
been induced to enter into this Credit Agreement, and the other Loan Documents
to which it is a party by, among other things, the waivers and certifications
contained herein.
26. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement
to be given by the Banks may be given, and any term of this Credit Agreement,
the other Loan Documents or any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by the Borrower or any
of its Subsidiaries of any terms of this Credit Agreement, the other Loan
Documents or such other instrument or the continuance of any Default or Event of
Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Borrower and the written consent of the Majority Banks. Notwithstanding the
foregoing, the rate of interest on the Revolving Credit Notes (other than
interest accruing pursuant to ss.5.11 following the effective date of any waiver
by the Majority Banks of the Default or Event of Default relating thereto) or
the amount of the Commitment Fee or Letter of Credit Fees may not be decreased
without the written consent of each Bank affected thereby; the amount of the
Commitments may not be increased without the written consent of the Borrower and
of each Bank affected thereby; the Revolving Credit Loan Maturity Date may not
be postponed without the written consent of each Bank affected thereby; this
ss.26 and the definition of Majority Banks may not be amended, without the
written consent of all of the Banks; and the amount of the Agent's Fee or any
Letter of Credit Fees payable for the Agent's account and ss.15 may not be
amended without the written consent of the Agent. No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the Agent or
any Bank in exercising any right shall operate as a waiver thereof or otherwise
be prejudicial thereto. No notice to or demand upon the Borrower shall entitle
the Borrower to other or further notice or demand in similar or other
circumstances.
27. USURY.
All agreements between the Borrower and the Agent and the Banks are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of the maturity of the Revolving Credit Notes or
otherwise, shall the amount paid or agreed to be paid to the Agent or any Bank
for the use or the forbearance of the Indebtedness represented by any Revolving
Credit Note exceed the maximum permissible under applicable law. In this regard,
it is expressly agreed that it is the intent of the Borrower, the Agent and the
Banks, in the execution, delivery and acceptance of the Revolving Credit Notes,
to contract in strict compliance with the laws of the Commonwealth of
Massachusetts. If, under any circumstances whatsoever, performance or
fulfillment of any provision of any of the Revolving Credit Notes or any of the
other Loan Documents at the time such provision is to be performed or fulfilled
shall involve exceeding the limit of validity prescribed by applicable law, then
the obligation so to be performed or fulfilled shall be reduced automatically to
the limits of such validity, and if under any circumstances whatsoever the Agent
or any Banks should ever receive as interest an amount which would exceed the
highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal balance evidenced by the Revolving
Credit Notes and not to the payment of interest. The provisions of this ss.27
shall control every other provision of this Credit Agreement and each of the
Revolving Credit Notes.
88
28. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
29. TRANSITIONAL ARRANGEMENTS
29.1. Prior Credit Agreement. Except as provided in this ss.29, on the
Closing Date, this Credit Agreement shall amend and restate, and shall supersede
the Prior Credit Agreement. On the Closing Date, the rights and obligations of
the parties under the Prior Credit Agreement shall be subsumed within and be
governed by this Credit Agreement and the Revolving Credit Note. Each of the
"Loans" (as such term is used in the Prior Credit Agreement) advanced by Fleet
and outstanding under the Prior Credit Agreement on the Closing Date including,
without limitation, any outstanding LIBOR Rate Loans shall, for purposes of this
Credit Agreement, be Revolving Credit Loans advanced hereunder and shall remain
outstanding and shall not be deemed to be repaid and each "Letter of Credit"
issued by Fleet for the account of the Borrower prior to the Closing Date and
outstanding on the Closing Date shall, for purposes of this Credit Agreement, be
a Letter of Credit issued hereunder.
29.2. Return and Cancellation of Note. As soon as reasonably
practicable after Fleet's receipt of its Revolving Credit Note hereunder on the
Closing Date, Fleet will promptly return to the Borrower, marked "Substituted",
any note held by Fleet pursuant to the Prior Credit Agreement. Nothing herein
shall be deemed to be an acknowledgment by Fleet that the obligations evidenced
by such note have been paid.
29.3. Interest and Fees Under Prior Credit Agreement. All interest,
fees and expenses due and owing under or in respect of the Prior Credit
Agreement as of the Closing Date shall be paid on such date and all interest,
fees and expenses accruing under or in respect of the Prior Credit Agreement as
of the Closing (and not then due) shall continue to accrue under the Credit
Agreement as if incurred thereunder and shall be paid on the date(s) when such
like payments under the Credit Agreement would next become due after the Closing
Date.
89
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
IONICS, INCORPORATED
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President and
Chief Financial Officer
FLEET NATIONAL BANK, individually and as Agent
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
90
SCHEDULE 1
Bank Commitment
Bank Commitment
Fleet National Bank $70,000,000 through 3/30/01
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $50,000,000 as of 3/31/01
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice
President
Percentage: 100%
91
FLEET NATIONAL BANK
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
July 28, 2000
Ionics, Incorporated
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re:______Fee Letter
Ladies and Gentlemen:
Reference is hereby made to the Second Amended and Restated Revolving
Credit Agreement dated as of July 28, 2000, (as amended and in effect from time
to time, the "Credit Agreement"), among Ionics, Incorporated, a Massachusetts
corporation (the "Company"), Fleet National Bank, a national banking
association, as agent (hereinafter, in such capacity, the "Agent") for itself
and the other banking institutions which are or may become parties thereto
(hereinafter, collectively, the "Banks"), and the Banks. Terms defined in the
Credit Agreement and used without definition herein shall have the same
respective meanings herein as in the Credit Agreement.
Pursuant to ss.5.1 of the Credit Agreement, and as a condition to the
effectiveness of the Credit Agreement, the Borrower has agreed to pay to the
Agent for its own account a closing fee of $210,000 which shall be fully earned
as of the date hereof (i) $80,000 of which shall be paid on the Closing Date,
and (ii) the remaining $130,000 of which shall be paid on March 31, 2001;
provided, however, that if between the Closing Date and March 31, 2001, a
private placement is arranged by Fleet which reduces the Commitment by an amount
equal to or greater than $20,000,000, the remaining $130,000 fee will be waived.
This letter agreement is subject to the confidentiality provisions
contained in the Credit Agreement.
This letter agreement is the Fee Letter referred to in the Credit
Agreement. This letter agreement may be executed in any number of counterparts,
which shall together constitute but one and the same agreement. THIS LETTER
AGREEMENT SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. This letter
agreement shall take effect as a sealed instrument as of the date first
hereinabove written. This letter agreement shall be binding on the parties
hereto and their respective successors and assigns.
Please indicate your agreement with the foregoing by signing this
letter agreement where indicated below and returning it with the arrangement fee
to ▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President, Fleet National Bank, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. This letter supersedes all of our prior
letters and communications to you regarding the subject matter of this letter,
if any.
Very truly yours,
FLEET NATIONAL BANK,
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
ACKNOWLEDGED AND AGREED TO:
Ionics, Incorporated,
as Borrower
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Executive Vice President
92
EXHIBIT A
SIXTH AMENDED AND RESTATED REVOLVING CREDIT NOTE
$70,000,000 July 28, 2000
FOR VALUE RECEIVED, the undersigned IONICS, INCORPORATED (the
"Borrower"), hereby promises to pay to the order of FLEET NATIONAL BANK, a
national banking association (the "Bank") at the Agent's head office at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
(a) prior to or on December 31, 2004, the principal amount of
Seventy Million Dollars ($70,000,000) or, if less, the aggregate unpaid
principal amount of the Revolving Credit Loans advanced by the Bank to
the Borrower pursuant to the Second Amended and Restated Credit
Agreement, dated as of July 28, 2000 (as amended and in effect from
time to time, the "Credit Agreement"), among the Borrower, the Bank and
the other parties thereto;
(b) the principal outstanding hereunder from time to time
at the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through
and including the maturity date hereof at the times and at the rate
provided in the Credit Agreement.
This Note is an amendment and restatement in its entirety of the Fifth
Amended and Restated Loan Note issued by the Borrower to the Bank in the
original principal amount of $45,000,000, dated June 6, 2000 (the "Amended
Note"). The Note is issued in substitution for, and not in payment of, the
Amended Note.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Bank and any
holder hereof is entitled to the benefits of the Credit Agreement and the other
Loan Documents, and may enforce the agreements of the Borrower contained
therein, and any holder hereof may exercise the respective remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
respective terms thereof. All capitalized terms used in this Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the drawdown date of any Loan or at the time of
receipt of any payment of principal of this Note, an appropriate notation on the
grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, reflecting the making of such Loan
or (as the case may be) the receipt of such payment. The outstanding amount of
the Revolving Credit Loans set forth on the grid attached to this Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by the Bank with respect to any Revolving Credit Loans shall
be prima facie evidence of the principal amount thereof owing and unpaid to the
Bank, but the failure to record, or any error in so recording, any such amount
on any such grid, continuation or other record shall not limit or otherwise
affect the obligation of the Borrower hereunder or under the Credit Agreement to
make payments of principal of and interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
93
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN ss.* OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
in its corporate name and its corporate seal to be impressed thereon by its duly
authorized officer as of the day and year first above written.
[Corporate Seal]
IONICS, INCORPORATED
By: _______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice
President and Chief Financial Officer
94
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made By:
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95
EXHIBIT B
Form of Loan Request
[insert date]
Fleet National Bank, as Agent
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Loan Request
Ladies and Gentlemen:
Reference is hereby made to that certain Second Amended and Restated
Revolving Credit Agreement, dated as of July 28, 2000 (as the same may be
amended and in effect from time to time, the "Credit Agreement"), among Ionics,
Incorporated (the "Borrower"), the lending institutions which are or may become
parties thereto from time to time (collectively, the "Banks"), and Fleet
National., as agent (the "Agent") for the Banks. Capitalized terms which are
used herein without definition and which are defined in the Credit Agreement
shall have the same meanings herein as in the Credit Agreement.
Pursuant to ss.2.6 of the Credit Agreement, we hereby request that a
Revolving Credit Loan consisting of [a Prime Rate Loan in the principal amount
of $__________, or a LIBOR Rate Loan in the principal amount of $__________ with
an Interest Period of _________] be made on __________ __, __. We understand
that this request is irrevocable and binding on us and obligates us to accept
the requested Revolving Credit Loan on such date.
We hereby certify (a) that the aggregate outstanding principal amount
of the Revolving Credit Loans on today's date is $_______, (b) that we will use
the proceeds of the requested Revolving Credit Loan in accordance with the
provisions of the Credit Agreement, (c) that each of the representations and
warranties contained in the Credit Agreement or in any document or instrument
delivered pursuant to or in connection therewith was true as of the date as of
which it was made and is true at and as of the date hereof (except to the extent
of changes resulting from transactions contemplated or permitted by the Credit
Agreement and changes occurring in the ordinary course of business that singly
or in the aggregate do not have a material adverse effect, and to the extent
that such representations and warranties related expressly to an earlier date)
and (d) that no Default or Event of Default has occurred and is continuing.
Very truly yours,
IONICS, INCORPORATED
By:
Title:
96
EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
_______, 200_
Fleet National Bank, as Agent
for the Banks
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Director
Ladies and Gentlemen:
Reference is hereby made to that certain Second Amended and Restated
Revolving Credit Agreement, dated as of July 28, 2000 (as amended and in effect
from time to time, the "Credit Agreement"), by and among IONICS, INCORPORATED
(the "Borrower"), FLEET NATIONAL BANK and the other lending institutions listed
on Schedule 1 thereto (collectively, the "Banks"), and FLEET NATIONAL BANK as
agent for the Banks (in such capacity, the "Agent"). Capitalized terms which are
used herein and not otherwise defined shall have the same meanings assigned to
such terms in the Credit Agreement.
Pursuant to ss.9.4(c) of the Credit Agreement, the principal financial
or accounting officer of the Borrower hereby certifies to you as follows: (a)
the information furnished in the calculations attached hereto was true and
correct as of the last day of the fiscal [quarter/year] ended ______________, 20
; (b) as of the date of this certificate, there exists no Default or Event of
Default , or if there is a Default or an Event of Default, such Default or Event
of Default is listed on an Exhibit attached hereto; and (c) the financial
statements delivered herewith were prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
except as disclosed therein.
IN WITNESS WHEREOF, the undersigned officer has duly executed this
Compliance Certificate as of the date first written above.
IONICS, INCORPORATED
By:____________________________________
Name:
Title:
97
Compliance Certificate Worksheet
IONICS, INCORPORATED
As of
1. Leverage Ratio (ss.10.1)
(a) Total Funded Indebtedness as of the fiscal quarter then ended
(i) Indebtedness for borrowed money (including all $__________
Subordinated Debt)
(ii) purchase money Indebtedness $__________
(iii) Indebtedness in respect of Capitalized Leases and $__________
Synthetic Leases
(iv) Indebtedness in respect of Letters of Credit $__________
(v) Indebtedness in respect of other letters of credit $__________
(vi) Total Funded Indebtedness (sum of Items 1(a)(i) $__________
through 1(a)(v))
(b) EBITDA for the prior twelve (12) calendar months ending as
of the last day of the fiscal quarter then ended
(i) Consolidated Net Income (or Deficit) $__________
(ii) depreciation $__________
(iii) amortization $__________
(iv) income tax expense $__________
(v) Consolidated Total Interest Expense $__________
(vi) other non-cash charges $__________
(vii) non-cash gains $__________
(viii) Consolidated EBITDA (Item 1(b)(i) plus the sum of $__________
----
Items 1(b)(ii) through 1(b)(vi)) minus Item
1(b)(vii)
(c) Ratio of Item 1(a)(vi) to Item 1(b)(viii) ____ :1.00
(d) Maximum Leverage Ratio 3.00 :1.00
(e) Compliance
yes/no
2. Minimum EBITDA (ss.10.2)
(a) See Item 1(b)(viii) $__________
(b) Minimum EBITDA $50,000,000
(c) Compliance
yes/no
3. Consolidated Net Worth (ss.10.3)
(a) Consolidated Net Worth as of fiscal quarter then ended
(i) Consolidated Total Assets $__________
(ii) Consolidated Total Liabilities $__________
(iii) subscriptions receivable $__________
(iv) Consolidated Net Worth: Item 3(a)(i) minus Items $__________
-----
3(a)(ii) minus Item 3(a)(iii)
-----
(b) Minimum Required Consolidated Net Worth
(i) $300,000,000 $__________
(ii) (positive) Consolidated Net Income (beginning with $__________
FY 2000)
(iii) Item 3(b)(ii) x 50% $__________
(iv) Net Cash Proceeds (100%) $__________
(v) Item 3(b)(i) plus Item (3)(b)(iii) plus Item $__________
---- ----
(3)(b)(iv)
(c) Compliance (Item 3(a)(iv) greater than or equal to Item
3(b)(v)) yes/no
4. Capital Expenditures (ss.10.4) for fiscal year 200
--------------------
(a) Capital Expenditures $__________
(b) Maximum Capital Expenditures $60,000,000
(c) Compliance
yes/no
98
EXHIBIT D
FORM OF INFORMATION CERTIFICATE
The undersigned, the _______________ of IONICS, INCORPORATED/[DOMESTIC
SUBSIDIARY], a Massachusetts/ __________ corporation (the "Company"), hereby
certifies, with reference to a certain Second Amended and Restated Revolving
Credit Agreement, dated as of July 28, 2000May ___, 2000 (terms defined in such
Credit Agreement having the same meanings herein as specified therein), among
the [Company/Ionics, Incorporated], FLEET NATIONAL BANK, as agent (the "Agent")
for itself and other lending institutions party to the Credit Agreement (the
"Banks") and the Banks, to the Agent as follows:
30. Names.
(a) The exact corporate name of the Company as that name
appears on its [Articles of Organization/Certificate of Incorporation] is as
follows:
(b) The following is a list of all other names (including trade names
or similar appellations) used by the Company, or any other business or
organization to which the Company became the successor by merger, consolidation,
acquisition, change in form, nature or jurisdiction of organization or
otherwise, now or at any time during the past five years:
31. Other Identifying Factors.
(a) The following is the type of organization of the Company:
(b) The following is the jurisdiction of the Company's organization
(c) The following is the information required above in this ss.2 for
any other business or organization to which the Company became the successor by
merger, consolidation, acquisition, change in form, nature or jurisdiction of
organization or otherwise, now or at any time during the past five years:
32. Chief Executive Office.
(a) The chief executive office of the Company is located at the
following address:
Address County State
(b) The principal mailing address of the Company is the following
address, if different from the chief executive office address:
Mailing Address County State
33. Other Current Locations.
(a) The following are all other locations in the United States of
America in which the Company maintains any books or records or carries on its
business or at which any of its significant assets are located:
Address County State
34. Prior Locations.
(a) Set forth below is the information required by ss.3 and by
subparagraph (a) of ss.4 with respect to each location or place of business
previously maintained by the Company at any time during the past five years in a
state in which the Company has previously maintained a location or place of
business at any time during the past four months:
Address County State
IN WITNESS WHEREOF, we have hereunto signed this Certificate on
July ___, 2000.
IONICS, INCORPORATED
/DOMESTIC SUBSIDIARY
By: ________________________________
Name:
Title:
99
EXHIBIT E
ASSIGNMENT AND ACCEPTANCE
Dated as of __________, 20__
Reference is made to the Second Amended and Resated Revolving Credit
Agreement, dated as of July 28, 2000 (as from time to time amended and in
effect, the "Credit Agreement"), by and among IONICS, INCORPORATED, a
Massachusetts corporation (the "Borrower"), the banking institutions referred to
therein as Banks (collectively, the "Banks"), and FLEET NATIONAL BANK, a
national banking association, as agent (in such capacity, the "Agent") for the
Banks. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Credit Agreement.
________________ (the "Assignor") and _______________ (the "Assignee")
hereby agree as follows:
35. Assignment. Subject to the terms and conditions of this Assignment and
Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a
$__________ interest in and to the rights, benefits, indemnities and obligations
of the Assignor under the Credit Agreement equal to _____.00% in respect of the
Total Commitment immediately prior to the Effective Date (as hereinafter
defined).
36. Assignor's Representations. The Assignor (i) represents and warrants that
(A) it is legally authorized to enter into this Assignment and Acceptance, (B)
as of the date hereof, its Commitment is $__________, its Commitment Percentage
is _____.00%, the aggregate outstanding principal balance of its Revolving
Credit Loans equals $__________, and the aggregate amount of its Letter of
Credit Participations equals $__________ (in each case after giving effect to
the assignment contemplated hereby but without giving effect to any contemplated
assignments which have not yet become effective), and (C) immediately after
giving effect to all assignments which have not yet become effective, the
Assignor's Commitment Percentage will be sufficient to give effect to this
Assignment and Acceptance, (ii) makes no representation or warranty, express or
implied, and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or any of the other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, the
other Loan Documents or any other instrument or document furnished pursuant
thereto or the attachment, perfection or priority of any security interest or
mortgage, other than that it is the legal and beneficial owner of the interest
being assigned by it hereunder free and clear of any claim or encumbrance; (iii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any of its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by the Borrower or any of its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of its obligations under the Credit Agreement or
any of the other Loan Documents or any other instrument or document delivered or
executed pursuant thereto; and (iv) attaches hereto the Revolving Credit Note
delivered to it under the Credit Agreement.
100
The Assignor requests that the Borrower exchange the Assignor's
Revolving Credit Note for new Revolving Credit Notes payable to the Assignor and
the Assignee as follows:
Notes Payable to Amount of Revolving
the Order of: Credit Note
Assignor $__________
Assignee $__________
37. Assignee's Representations. The Assignee (i) represents and warrants that
(A) it is duly and legally authorized to enter into this Assignment and
Acceptance, (B) the execution, delivery and performance of this Assignment and
Acceptance do not conflict with any provision of law or of the charter or
by-laws of the Assignee, or of any agreement binding on the Assignee, (C) all
acts, conditions and things required to be done and performed and to have
occurred prior to the execution, delivery and performance of this Assignment and
Acceptance, and to render the same the legal, valid and binding obligation of
the Assignee, enforceable against it in accordance with its terms, have been
done and performed and have occurred in due and strict compliance with all
applicable laws; (ii) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to ss.8.4 thereof and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (iii) agrees that it will, independently
and without reliance upon the Assignor, the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iv) represents and warrants that it is an Eligible
Assignee; (v) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other
Loan Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (vi) agrees that it will
perform in accordance with their terms all the obligations which by the terms of
the Credit Agreement are required to be performed by it as a Bank; and (vii)
acknowledges that it has made arrangements with the Assignor satisfactory to the
Assignee with respect to its pro rata share of Letter of Credit Fees in respect
of outstanding Letters of Credit.
38. Effective Date. The effective date for this Assignment and Acceptance shall
be ______________________________ (the "Effective Date"). Following the
execution of this Assignment and Acceptance[ and the consent of the Borrower
hereto having been obtained], each party hereto shall deliver its duly executed
counterpart hereof to the Agent for acceptance by the Agent and recording in the
Register by the Agent. Schedule 1 to the Credit Agreement shall thereupon be
replaced as of the Effective Date by the Schedule 1 annexed hereto.
39. Rights Under Credit Agreement. Upon such acceptance and recording, from and
after the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Bank thereunder, and (ii) the Assignor shall,
with respect to that portion of its interest under the Credit Agreement assigned
hereunder, relinquish its rights and be released from its obligations under the
Credit Agreement; provided, however, that the Assignor shall retain its rights
to be indemnified pursuant to ss.16 of the Credit Agreement with respect to any
claims or actions arising prior to the Effective Date.
101
40. Payments. Upon such acceptance of this Assignment and Acceptance by the
Agent and such recording, from and after the Effective Date, the Agent shall
make all payments in respect of the rights and interests assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and the Assignee shall make any appropriate adjustments
in payments for periods prior to the Effective Date by the Agent or with respect
to the making of this assignment directly between themselves.
41. Governing Law. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE EFFECT AS
A SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF
LAWS).
42. Counterparts. This Assignment and Acceptance may be executed in any number
of counterparts which shall together constitute but one and the same agreement.
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
[ASSIGNOR]
By:_________________________________________
Title:
[ASSIGNEE]
By:_________________________________________
Title:
CONSENTED TO:
FLEET NATIONAL BANK, as Agent
By:________________________________________
Title:
[IONICS, INCORPORATED.]
By:________________________________________
Title:
102
EXHIBIT F
INTERCOMPANY
SUBORDINATION AGREEMENT
INTERCOMPANY SUBORDINATION AGREEMENT, dated as of ______ __, 2000, by
and among IONICS, INCORPORATED, a Massachusetts corporation (the "Borrower"),
and ________________, a company organized under the laws of the ________________
and such other Persons which may become parties hereto by executing a joinder
agreement in form and substance reasonably satisfactory to the Agent (each, a
"Company" and collectively, the "Companies"), and FLEET NATIONAL BANK, as agent
(hereinafter, in such capacity, the "Agent") for itself and other lending
institutions (hereinafter, collectively, the "Banks") which are or may become
parties to the Second Amended and Restated Revolving Credit Agreement, dated as
of July 28, 2000 (as amended and in effect from time to time, the "Credit
Agreement"), by and among the Borrower, the Agent and the Banks.
WHEREAS, pursuant to the Credit Agreement the Banks have agreed, upon
the terms and subject to the conditions contained therein, to make loans and
otherwise to extend credit to the Borrower;
WHEREAS, the Borrower is the direct owner of all of the capital stock
of Ionics U.K.;
WHEREAS, the financial success of each Company is dependent in whole
or in part on the financial success of the Borrower;
WHEREAS, each Company expects to receive substantial direct and
indirect benefits as a result of the loans and extensions of credit made to the
Borrower pursuant to the Credit Agreement;
WHEREAS, it is a condition precedent to the Banks' making of the loans
and otherwise extending credit to the Borrower pursuant to the Credit Agreement
that each Company enter into this Agreement with the Agent; and
WHEREAS, in order to induce the Banks to make loans and otherwise
extend credit to the Borrower pursuant to the Credit Agreement, each Company has
agreed to enter into this Agreement with the Agent;
NOW, THEREFORE, in consideration of the foregoing, the mutual
agreements herein contained and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Definitions. Terms not otherwise defined herein have the same
respective meanings given to them in the Credit Agreement. In addition, the
following terms shall have the following meanings:
Senior Debt. All principal, interest, fees, costs, enforcement expenses
(including reasonable legal fees and disbursements), collateral protection
expenses and other reimbursement or indemnity obligations created or evidenced
by the Credit Agreement or any of the other Loan Documents and any other
Obligations. Senior Debt shall expressly include any and all interest at the
rate determined in the Credit Agreement accruing or out of pocket costs or
expenses incurred after the date of any filing by or against the Borrower of any
petition under the Federal Bankruptcy Code or any other bankruptcy, insolvency
or reorganization act regardless of whether the Agent's or any Bank's claim
therefor is allowed or allowable in the case or proceeding relating thereto.
Subordinated Debt. All Indebtedness of any Company (a "Debtor Company")
to any other Company or to any subsidiary of such other Company (a "Subordinated
Company"), direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and interest and premium, if any, thereon and
other amounts payable in respect thereof, including without limitation, that
which is evidenced by an intercompany note in form and substance satisfactory to
the Agent (the "Intercompany Note(s)"); provided however that debt of any
foreign Subsidiary of the Borrower, which is owed to the Borrower or any
domestic Subsidiary, shall be excluded from the definition of Subordinated Debt.
103
Subordinated Documents. Collectively, the Intercompany Notes, if any,
and any and all other documents or instruments evidencing or further guarantying
or securing directly or indirectly any of the Subordinated Debt, whether now
existing or hereafter created.
2. General. The Subordinated Debt and any and all Subordinated
Documents shall be and hereby are subordinated and the payment thereof is
deferred until the full and final payment in cash of the Senior Debt, whether
now or hereafter incurred or owed by a Debtor Company. Notwithstanding the
immediately preceding sentence, each Debtor Company shall be permitted to pay,
and each Subordinated Company shall be permitted to receive, any payments of
interest or principal on the Subordinated Debt, provided that at the time of
such payment, or after giving effect thereto, no Default or Event of Default has
occurred and is continuing under the Credit Agreement or would occur after
giving effect thereto, and provided further that even if a Default or an Event
of Default has occurred and is continuing or would occur after giving effect
thereto, each Debtor Company shall be permitted to pay to the Borrower, and the
Borrower shall be permitted to receive from such Debtor Company, any payments of
interest or principal on the Subordinated Debt owing to the Borrower.
3. Enforcement. No Subordinated Company will take or omit to take any
action or assert any claim with respect to the Subordinated Debt or otherwise
which is inconsistent with the provisions of this Agreement. Without limiting
the foregoing, no Subordinated Company will assert, collect or enforce the
Subordinated Debt or any part thereof or take any action to foreclose or realize
upon the Subordinated Debt or any part thereof or enforce any of the
Subordinated Documents except (a) in each such case as necessary, so long as no
Default or Event of Default has occurred and is then continuing under the Credit
Agreement or would occur after giving effect thereto, to collect any sums
expressly permitted to be paid by a Debtor Company pursuant to ss.2, or (b) to
the extent (but only to such extent) that the commencement of a legal action may
be required to toll the running of any applicable statute of limitation. Until
the Senior Debt has been finally paid in full in cash, no Subordinated Company
shall exercise any right of subrogation, reimbursement, restitution,
contribution or indemnity whatsoever from any assets of any Debtor Company, or
any guarantor of or provider of collateral security for the Senior Debt. Each
Subordinated Company further waives any and all rights with respect to
marshalling.
4. Payments Held in Trust. Each Subordinated Company will hold in trust
and immediately pay over to the Agent for the account of the Banks and the
Agent, in the same form of payment received, with appropriate endorsements, for
application to the Senior Debt any cash amount that any Debtor Company pays to
the Subordinated Company with respect to the Subordinated Debt, or as collateral
for the Senior Debt any other assets of any Debtor Company that the Subordinated
Company may receive with respect to the Subordinated Debt, in each case except
with respect to payments expressly permitted pursuant to ss.2.
5. Defense to Enforcement. If any Subordinated Company, in
contravention of the terms of this Agreement, shall commence, prosecute or
participate in any suit, action or proceeding against any Debtor Company, then
such Debtor Company may interpose as a defense or plea the making of this
Agreement, and the Agent or any Bank may intervene and interpose such defense or
plea in its name or in the name of such Debtor Company. If any Subordinated
Company, in contravention of the terms of this Agreement, shall attempt to
collect any of the Subordinated Debt or enforce any of the Subordinated
Documents, then the Agent, any Bank or such Debtor Company may, by virtue of
this Agreement, restrain the enforcement thereof in the name of the Agent or
such Bank or in the name of such Debtor Company. If the Subordinated Company, in
contravention of the terms of this Agreement, obtains any cash or other assets
of any Debtor Company as a result of any administrative, legal or equitable
actions, or otherwise, the Subordinated Company agrees forthwith to pay, deliver
and assign to the Agent, for the account of the Banks and the Agent, with
appropriate endorsements, any such cash for application to the Senior Debt and
any such other assets as collateral for the Senior Debt.
104
6. Bankruptcy, etc.
6.1. Payments relating to Subordinated Debt. At any meeting of
creditors of any Debtor Company or in the event of any case or proceeding,
voluntary or involuntary, for the distribution, division or application of all
or part of the assets of any Debtor Company or the proceeds thereof, whether
such case or proceeding be for the liquidation, dissolution or winding up of any
Debtor Company or its business, a receivership, insolvency or bankruptcy case or
proceeding, an assignment for the benefit of creditors or a proceeding by or
against any Debtor Company for relief under the federal Bankruptcy Code or any
other bankruptcy, reorganization or insolvency law or any other law relating to
the relief of debtors, readjustment of indebtedness, reorganization,
arrangement, composition or extension or marshalling of assets or otherwise, the
Agent is hereby irrevocably authorized at any such meeting or in any such
proceeding to receive or collect for the benefit of the Banks and the Agent any
cash or other assets of any Debtor Company distributed, divided or applied by
way of dividend or payment, or any securities issued on account of any
Subordinated Debt, and apply such cash to or to hold such other assets or
securities as collateral for the Senior Debt, and to apply to the Senior Debt
any cash proceeds of any realization upon such other assets or securities that
the Agent in its discretion elects to effect, until all of the Senior Debt shall
have been paid in full in cash, rendering to the applicable Subordinated Company
any surplus to which such Subordinated Company is then entitled.
6.2. Subordinated Debt Voting Rights. At any such meeting of
creditors or in the event of any such case or proceeding, each Subordinated
Company shall retain the right to vote and otherwise act with respect to the
Subordinated Debt (including, without limitation, the right to vote to accept or
reject any plan of partial or complete liquidation, reorganization, arrangement,
composition or extension), provided that no Subordinated Company shall vote with
respect to any such plan or take any other action in any way so as to contest
(i) the validity of any Senior Debt or any collateral therefor or guaranties
thereof, (ii) the relative rights and duties of any holders of any Senior Debt
established in any instruments or agreements creating or evidencing any of the
Senior Debt with respect to any of such collateral or guaranties or (iii) such
Subordinated Company's obligations and agreements set forth in this Agreement.
7. Security. Each Subordinated Company hereby acknowledges and agrees
that the Subordinated Debt is unsecured.
7.1. Further Assurances. Each Subordinated Company hereby
agrees, upon request of the Agent at any time and from time to time, to execute
such other documents or instruments as may be reasonably requested by the Agent
further to evidence of public record or otherwise the senior priority of the
Senior Debt as contemplated hereby.
7.2. Books and Records. Each Subordinated Company further
agrees to maintain on its books and records such notations as the Agent may
reasonably request to reflect the subordination contemplated hereby and to
perfect or preserve the rights of the Agent hereunder. A copy of this Agreement
may be filed as a financing statement in any Uniform Commercial Code recording
office.
8. Banks' Freedom of Dealing. Each Subordinated Company agrees, with
respect to the Senior Debt and any and all collateral therefor or guaranties
thereof, that any Debtor Company and the Banks may agree to increase the amount
of the Senior Debt or otherwise modify the terms of any of the Senior Debt, and
the Banks may grant extensions of the time of payment or performance to and make
compromises, including releases of collateral or guaranties, and settlements
with any Debtor Company or other persons, in each case without the consent of
any Subordinated Company, or a Debtor Company and without affecting the
agreements of the Subordinated Company, or a Debtor Company contained in this
Agreement; provided, however, that nothing contained in this ss.8 shall
constitute a waiver of a Debtor Company itself to agree or consent to a
settlement or compromise of a claim which the Agent or any Bank may have against
such Debtor Company, as applicable.
105
9. Modification or Sale of the Subordinated Debt. No Subordinated
Company will at any time while this Agreement is in effect, modify any of the
terms of any of the Subordinated Debt or any of the Subordinated Documents
unless such modification would diminish and of the rights and remedies of the
Agent hereunder; nor will any Subordinated Company sell, transfer, pledge,
assign, hypothecate or otherwise dispose of any or all of the Subordinated Debt
to any person other than a person who agrees in a writing, satisfactory in form
and substance to the Agent, to become a party hereto and to succeed to the
rights and to bound by all of the obligations of such Subordinated Company
hereunder. In the case of any such disposition by any Subordinated Company, such
Subordinated Company will notify the Agent at least ten (10) days prior to the
date of any of such intended disposition.
10. Obligations Absolute. Nothing contained in this Agreement shall
impair, as between either a Debtor Company and any Subordinated Company, the
obligation of a Debtor Company to pay to the Subordinated Company all amounts
payable in respect of the Subordinated Debt as and when the same shall become
due and payable in accordance with the terms thereof, or prevent such
Subordinated Company (except as expressly otherwise provided in ss.3 or ss.6)
from exercising all rights, powers and remedies otherwise permitted by
Subordinated Documents and by applicable law upon a default in the payment of
the Subordinated Debt or under any Subordinated Document, all, however, subject
to the rights of the Agent and the Banks as set forth in this Agreement.
11. Termination of Subordination. This Agreement shall continue in full
force and effect, and the obligations and agreements of the Subordinated
Companies, and the Debtor Companies hereunder shall continue to be fully
operative, until all of the Senior Debt shall have been paid and satisfied in
full in cash and such full payment and satisfaction shall be final and not
avoidable. To the extent that a Debtor Company or any guarantor of or provider
of collateral for the Senior Debt makes any payment on the Senior Debt that is
subsequently invalidated, declared to be fraudulent or preferential or set aside
or is required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or reorganization act, state or federal law, common law
or equitable cause (such payment being hereinafter referred to as a "Voided
Payment"), then to the extent of such Voided Payment, that portion of the Senior
Debt that had been previously satisfied by such Voided Payment shall be revived
and continue in full force and effect as if such Voided Payment had never been
made. In the event that a Voided Payment is recovered from the Agent or any
Bank, an Event of Default shall be deemed to have existed and to be continuing
under the Credit Agreement from the date of the Agent's or such Bank's initial
receipt of such Voided Payment until the full amount of such Voided Payment is
restored to the Agent or such Bank. During any continuance of any such Event of
Default, this Agreement shall be in full force and effect with respect to the
Subordinated Debt. To the extent that a Subordinated Company has received any
payments with respect to the Subordinated Debt subsequent to the date of the
Agent's or any Bank's initial receipt of such Voided Payment and such payments
have not been invalidated, declared to be fraudulent or preferential or set
aside or are required to be repaid to a trustee, receiver, or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
such Subordinated Company shall be obligated and hereby agrees that any such
payment so made or received shall be deemed to have been received in trust for
the benefit of the Agent or Bank, and such Subordinated Company hereby agrees to
pay to the Agent for the benefit of the Agent or (as the case may be) such Bank,
upon demand, the full amount so received by such Subordinated Company during
such period of time to the extent necessary fully to restore to the Agent or
such Bank the amount of such Voided Payment. Upon the payment and satisfaction
in full in cash of all of the Senior Debt, which payment shall be final and not
avoidable, this Agreement will automatically terminate without any additional
action by any party hereto.
106
13. Notices. All notices and other communications called for hereunder shall be
made in writing and, unless otherwise specifically provided herein, shall be
deemed to have been duly made or given when delivered by hand or mailed first
class, postage prepaid, or, in the case of telegraphic or telexed notice, when
transmitted, answer back received, addressed as follows: if to a Subordinated
Company or a Debtor Company, at c/o the Borrower, at the address for notices to
the Borrower set forth in ss.21 of the Credit Agreement, and if to the Agent, at
the address for notices to the Agent set forth in ss.21 of the Credit Agreement,
or at such address as either party may designate in writing to the other.
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE
LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW) AND SHALL BE A SEALED INSTRUMENT
UNDER SUCH LAWS.
15. Waiver of Jury Trial. EACH OF THE SUBORDINATED COMPANIES, AND THE
DEBTOR COMPANIES HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF, UNDER OR IN CONNECTION WITH ANY DISPUTE WITH
RESPECT TO THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. Except
as prohibited by law, each of the Subordinated Companies and each of the Debtor
Companies hereby waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each of the Subordinated Companies and the Debtor Companies (a)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
either the Agent or any Bank would not, in the event of litigation, seek to
enforce the foregoing waivers and (ii) acknowledges that, in entering into the
Credit Agreement and the other Loan Documents to which the Agent or any Bank is
a party, the Agent and the Banks are relying upon, among other things, the
waivers and certifications contained in this ss.15.
16. Miscellaneous. This Agreement may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Agreement, it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against which enforcement is sought. The Agent, acting upon the instructions of
the requisite Banks, may, in its sole and absolute discretion, waive any
provisions of this Agreement benefiting the Agent and the Banks; provided,
however, that such waiver shall be effective only if in writing and signed by
the Agent and shall be limited to the specific provision or provisions expressly
so waived. This Agreement shall be binding upon the successors and assigns of
any Subordinated Company and each of the Debtor Companies and shall inure to the
benefit of the Agent and the Banks, the Agent's and the Banks' respective
successors and assigns. Upon receipt of an affidavit of an officer of the Agent
or any of the Banks as to the loss, theft, destruction or mutilation of this
Agreement, any Intercompany Note or any other security document which is not of
public record, and, in the case of any such loss, theft, destruction or
mutilation, upon cancellation of this Agreement, any Intercompany Note or other
security document, the Company receiving such notice will issue or cause to be
issued, in lieu thereof, a replacement Intercompany Note or other security
document in the same principal amount thereof and otherwise of like tenor. The
Agent hereby agrees to indemnify, defend and hold harmless such Company, its
successors and assigns, from and against any and all cost, expense (including,
without limitation, reasonable attorneys' fees), loss, liability or damage
incurred as a result of the Agent's failure to deliver such original
Intercompany Note, properly endorsed, to such Compan
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
107
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
a contract under seal as of the date first above written.
FLEET NATIONAL BANK, as Agent
By: ____________________________________
Name:
Title:
IONICS, INCORPORATED
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
108
Exhibit 10.2
SHAREHOLDERS' AGREEMENT
among
Ionics, Incorporated, executed in trust for an affiliate
and
The Desalination Company of Trinidad and Tobago Limited
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Engineering Services Limited
12 May 2000
109
TABLE OF CONTENTS
PRELIMINARY STATEMENTS
CLAUSE I
DEFINITIONS
1.1 Definitions
1.2 Additional Definitions
1.3 Terms Generally
CLAUSE I
FORMATION AND BUSINESS OF THE COMPANY
2.1 Effective Date and Capitalization Date
2.2 Interim Period
2.3 Authorizations by the Company
2.4 Project Business
2.5 Independent Organization
2.6 Exercise of Voting Rights
CLAUSE III
INITIAL CAPITALIZATION
3.1 Conditions Precedent
3.2 Initial Capital Structure
3.3 Purchase of Shares and Shareholder Capital Contributions
3.4 Capitalization Date
3.5 Additional Capital Contributions
3.6 Default in Making Capital Contributions
CLAUSE IV
MANAGEMENT OF THE COMPANY
4.1 Shareholders
4.2 Board
4.3 Election of Officers
4.4 Deadlock
110
CLAUSE V
FINANCIAL CONSIDERATIONS; STRUCTURE;
RECORDKEEPING; AUDITS
5.1 Distributions
5.2 Investment Structure
5.3 Reports and Plans
5.4 Maintaining Records and Books
5.5 Year-End Statements
5.6 Quarterly Statements
5.7 Special Audits
5.8 Accountants' Reports
CLAUSE VI
TRANSFER OF COMPANY SHARES
6.1 Transfer Restriction
6.2 Transfers to Affiliates
6.3 Right of First Refusal
6.4 Buy-Sell Mechanics for Triggering Events
6.5 Encumbrances
6.6 Legend on Share Certificates
CLAUSE VII
TERMINATION
7.1 Reasons
7.2 Satisfaction of Obligations
CLAUSE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Shareholder and Company Representations
Existence
Capacity
Binding Effect
Finders Fee
Governmental Approvals
No Default
No Litigation or Arbitration
Company Liabilities
Ethical Business Practices
Commercial Transaction
8.2. ▇▇▇▇▇▇▇▇ Representations
111
CLAUSE IX
CONFIDENTIAL INFORMATION
9.1 Scope of Duty
9.2 Survival
9.3 Publicity
CLAUSE X
DISPUTE RESOLUTION
10.1 Mediation
10.2 Arbitration
CLAUSE XI
MISCELLANEOUS
11.1 Notices
11.2 Expenses
11.3 Assignment; Continuing Obligations
11.4 No Rights Given to Third Parties
11.5 Amendments and Waivers
11.6 Severability
11.7 Headings
11.8 Joint Preparation
11.9 Governing Law
11.10 Merger
11.11 Project Finance
11.12 Execution in Counterparts
Annexures
Annex 1 Articles of Incorporation
Annex 2 By Laws of the Company
Annex 3 Ionics/Carillion EPC Term Sheet
Annex 4 Water Supply Agreement
Annex 5 ▇▇▇▇▇▇▇▇ Loan Term Sheet
112
Shareholders' Agreement
This Agreement is dated as of 12 May, 2000 among:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Engineering Services Limited, a corporation duly organized and
existing under the laws of Trinidad, West Indies, with its principal place of
business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, W.I.
("▇▇▇▇▇▇▇▇"); and
Ionics, Incorporated, a corporation organized and existing under the laws of the
Commonwealth of Massachusetts, U.S.A. ("Ionics"), executed in trust for an
affiliate of Ionics to be organized by Ionics ("Ionics Desalination
Investments") and which will assume all rights and obligations of Ionics
hereunder, as if it were the original name party hereto in full substitution for
Ionics.
Desalination Company of Trinidad and Tobago Limited, a limited liability company
duly organized and existing under the laws of Trinidad, West Indies, with its
principal place of business at 56 Cyrus Trace, El ▇▇▇▇▇▇▇ Extension, San ▇▇▇▇,
Trinidad (the "Company").
PRELIMINARY STATEMENTS
WHEREAS, The Water and Sewer Authority of Trinidad and Tobago ("WASA") solicited
and obtained proposals from prospective contractors to build, own and operate a
seawater reverse osmosis desalination plant with a capacity of approximately
109,090 cubic meters per day to provide desalinated water for use by industrial
clients in the Point Lisas area of Trinidad (the "Project"); and
WHEREAS, ▇▇▇▇▇▇▇▇ has devoted considerable time and resources to the development
of the Project and with the participation and assistance of Ionics submitted a
proposal to WASA;
WHEREAS, WASA awarded the Project to the Joint Venture Team of ▇▇▇▇▇▇▇▇ and
Ionics Incorporated by notice of acceptance dated August 13, 1999; and
WHEREAS, the Company entered into an agreement, dated August 25, 1999, with WASA
for the construction, ownership and operation of the Project, and the sale of
the output of the Project to WASA (the "Water Supply Agreement"); and
WHEREAS, ▇▇▇▇▇▇▇▇ and Ionics (the "Shareholders") previously executed a Teaming
Agreement dated July 14, 1998, and an Interim Joint Venture Agreement dated
September 16, 1999, and are executing this Agreement and the other Venture
Agreements to provide for the structure, ownership and operation of the Company
and to arrange construction, operation and maintenance of the Project over the
term of the Water Supply Agreement; and
WHEREAS, ▇▇▇▇▇▇▇▇ is the owner of and in control of the entire capital of the
Company and has decided to cause the Company to sell and issue ordinary shares
to Ionics representing forty percent (40%) of the total outstanding equity
interest in the Company on the terms and conditions of this Agreement; and
WHEREAS, ▇▇▇▇▇▇▇▇ and Ionics wish to set forth the terms of their relationship
with respect to the ownership, financing, construction and operation of the
Project;
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NOW, THEREFORE, the Shareholders agree as follows:
CLAUSE I
DEFINITIONS
1.1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" means, a body corporate, limited liability company, limited
partnership or other legal entity which is a subsidiary of another or both are
subsidiaries of the same body corporate or each of them is controlled by the
same person. For this purpose, "control" or "controlled" has the meaning
described in Section 4 of the Companies Act of 1995, as in effect on the date
this Agreement is executed.
"Applicable Law" means all laws, rules, regulations and Government
authorizations that currently are applicable to the building, ownership,
operation and maintenance of the Project including, but not limited to, the
constitution of the Republic or any statute, regulation, rule, order, ordinance,
license or subordinate legislation enacted, issued or made by the Parliament,
the Government or any judicial authority of the Republic or any international
treaty having the force of law in the Republic.
"Articles of Incorporation" means the Articles of Incorporation of the Company
attached as Annex 1 to this Agreement.
"Board" means the Board of Directors of the Company.
"Business Day" means any day of the year other than Saturday, Sunday or a day on
which banks in Trinidad or the United States are authorized or required to
close. If any action is to be taken by a particular calendar day and that
calendar day is not a Business Day, then the action shall be deferred until the
next Business Day.
"Business Plan" means the business plan for the Company approved by the Board
pursuant to Clause 5.3(c).
"By Laws" means the bylaws of the Company attached as Annex 2 to this Agreement.
"Capital Investment Program" means the annual capital investment program for the
Company as approved by the Board pursuant to Clause 5.3(e).
"Capitalization Date" means the date on which the Company issues to Ionics
ordinary shares representing forty percent (40%) of the total outstanding equity
interests in the Company, which date shall not be more than three months after
the satisfaction of the conditions precedent set forth in Clause 3.1.
"Companies Act" means the Companies Act of 1955 of the Republic of Trinidad and
Tobago, West Indies.
"Confidential Information" means all confidential or proprietary information
provided to a Shareholder or any of its Representatives as defined in Clause 9
by or on behalf of either Shareholder or any of its Representatives (including
any confidential information furnished in connection with the tender process for
the Project).
"Construction Budget" means the initial budget for engineering, procuring the
equipment for and constructing the Facility, as approved by the Board pursuant
to Clause 5.3(a).
"Contractual Structure" means the contractual relationships between the
Shareholders and the Company pursuant to this Agreement and the other Venture
Agreements.
"Credit Agreement" means the non-recourse construction, bridge (if applicable)
and permanent loans for the Project to be entered between the Company and the
Lender(s).
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"Day" shall mean a period of twenty-four consecutive hours from 12:00 a.m.,
Trinidad local time.
"Desalcott Operating Budget" means the budget for administering the Company as
approved by the Board pursuant to Clause 5.3(b).
"Entity" means any corporation, partnership, limited liability company,
association, trust or any other organization, including a government or
political subdivision or an agency or instrumentality thereof.
"EPC Agreement" has the meaning set forth in Section 3.1(a).
"Facility" means the desalination installation and appurtenant buildings and
equipment proposed to be constructed, owned and operated by the Company at Point
Lisas as that facility is more fully described in the Project Description
described in the Water Supply Agreement.
"Governmental Action" means the imposition of any executive, legislative,
administrative or judicial decree, law, regulation or order which requires that
Ionics reduce its shareholding, impairs the return of the joint venture, has the
effect of making Trinidadian taxes not creditable for United States income tax
purposes, effectively excludes Ionics from or materially reduces Ionics'
permitted level of participation in the management or control of the Company,
Facility or Project, or reduces the value or restricts the convertibility or
repatriation of funds from the Republic.
"Interim Period" has the meaning set forth in Clause 2.2 below.
"Ionics Constructors" has the meaning set forth in Clause 3.1(a) below.
"Lenders" means any financial institution or multilateral agency providing
bridge, construction or permanent financing to the Company on a project finance
basis.
"O & M Agreement" has the meaning set forth in Clause 3.1(b) below.
"Operation & Maintenance Budget" has the meaning set forth in Clause 5.3(d)
below.
"Project" means the formation of the Company pursuant to this Agreement and the
execution of and performance of the obligations under each Venture Agreement.
"Republic" means the Republic of Trinidad and Tobago.
"Shareholder" or "Shareholders" means either or both of ▇▇▇▇▇▇▇▇ and Ionics.
"Transfer" means sell, assign, lease, pledge, mortgage or otherwise convey any
interest in property.
"U.S. Dollars" and the symbol "US$" mean lawful currency in dollars of the
United States of America.
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"Venture Agreement" or "Venture Agreements" means each or all of the following,
as the case may be:
(1) this Agreement;
(2) the Articles of Incorporation of the Company;
(3) By Laws of the Company;
(4) EPC Agreement;
(5) O & M Agreement;
(6) Water Supply Agreement;
(7) Credit Agreement;
(8) each other agreement which the Shareholders designate in writing as a
Venture Agreement;
Clause 1.2 Additional Definitions
(a) The following terms are defined elsewhere in this Agreement:
Defined Term Clause Defined in
Auditors Clause 5.5
Capitalization Date Clause 2.1
Contribution Loan Clause 3.6
Non-Paid Contribution Clause 3.6
Non-Contributing Shareholder Clause 3.6
Effective Date Clause 2.1
Representatives Clause 9.1
Selling Shareholder Clause 6.3(a)
Transfer Notice Clause 6.3(a)
Triggering Event Clause 6.4(a)
Valuation Firm Clauses 6.3(b)
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(b) The following terms are defined elsewhere in the Venture Agreements:
Defined Term Clause Defined in
Project Description Water Supply Agreement
WASA Water Supply Agreement
Water Supply Agreement Water Supply Agreement
1.3 Terms Generally.
(a) The definitions in Clauses 1.1 and 1.2 apply equally to both the singular
and plural forms of the terms defined.
(b) The word "include" shall be deemed to be followed by the phrase "without
limitation."
(c) All references to Clauses and Annexes refer to this Agreement unless the
context requires otherwise.
(d) The headings of the Clauses are for convenience of reference and are not
intended to affect the interpretation of this Agreement.
(e) Unless the context requires otherwise any reference to a Venture Agreement,
other instrument, statute or regulation is to it as amended from time to
time.
CLAUSE II
FORMATION AND BUSINESS OF THE COMPANY
2.1 Effective Date and Capitalization Date. This Agreement will become effective
upon the date of its execution by the Shareholders and the Company (the
"Effective Date"). The Capitalization Date shall occur upon the (i) purchase by
▇▇▇▇▇▇▇▇ from and the sale and issuance by the Company to ▇▇▇▇▇▇▇▇ of two
hundred (200) ordinary shares in the Company, representing forty percent (40%)
of the issued and outstanding ordinary shares (which together with the one
hundred (100) ordinary shares currently owned by ▇▇▇▇▇▇▇▇, will give ▇▇▇▇▇▇▇▇
sixty percent (60%) of the total issued and outstanding ordinary shares), and
(ii) purchase by Ionics from and the sale and issuance by the Company to Ionics
of two hundred (200) ordinary shares in the Company, representing forty percent
(40%) of the issued and outstanding ordinary shares, each of which is to occur
within ten Days after the last of the conditions precedent identified in Clause
3.1 is satisfied, which shall be not more than three months Days after the
Effective Date. If the Capitalization Date is not achieved within three months
after the Effective Date, then either Shareholder may terminate this Agreement,
provided that if the parties are diligently pursuing the satisfaction of the
conditions precedent at the end of the three month period and it appears likely
that the conditions precedent can be satisfied within a reasonable period, the
parties will negotiate in good faith an extension of the three month period to
permit the satisfaction of the conditions precedent and the occurrence of the
Capitalization Date. In the event of termination under this Clause, each
Shareholder shall be responsible for and bear all internal and third party costs
and expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby.
2.2 Interim Period. The parties acknowledge that during the interim period
between the Effective Date and Capitalization Date (the "Interim Period"),
Ionics will not yet own shares in the Company, pending satisfaction of the
conditions precedent set forth Clause 3.1 below. The parties agree, however,
that in anticipation of the purchase by Ionics of shares in the Company and the
issuance of those shares by the Company to Ionics, certain rights and
obligations will apply among the parties during the Interim Period
notwithstanding Ionics' lack of capacity as a shareholder in the Company, which
rights and obligations are as follows.
(a) Information. The Company and ▇▇▇▇▇▇▇▇ agree that the Company will
provide Ionics all reports and information to which a Shareholder is
entitled under Clauses 5.3 through 5.8 and Ionics will be entitled to
all rights given to a Shareholder therein to inspect and examine the
Company's books and records.
(b) Consent by Ionics. All actions requiring the unanimous consent of the
Shareholders pursuant to Clause 4.2(h) below must be approved by
Ionics, such approval not to be unreasonably withheld.
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(c) Operations. ▇▇▇▇▇▇▇▇ will cause the Company to operate in such a manner
so as to minimize its operating costs and commitments so that there
will be no material adverse change to the Company's financial condition
or prospects during the Interim Period.
2.3 Authorizations by the Company. The Company has been established as a
private company limited by shares in the Republic. The Company will
take all steps to effect resolutions of the Board and approval of all
documents evidencing all necessary corporate or other organizational
action authorizing the Company to execute this Agreement, each Venture
Agreement and each other agreement to which it is or will be a
Shareholder.
2.4 Project Business.
----------------
(a) Single Purpose. Subject to modification by the Shareholders
pursuant to Section 4.2(h), the sole business of the Company is the
ownership, financing, construction and operation of the Project.
(b) Interpretation. In the case of any conflict between the terms of
this Agreement and those of the Articles of Incorporation, By Laws or
any other Venture Agreement, the terms of this Agreement shall control.
2.5 Independent Organization. The Company shall be operated by its own
management as an independent legal and economic Entity. None of the
provisions of this Agreement shall be deemed to constitute a
partnership or any kind of fiduciary relationship between the
Shareholders. Neither of the Shareholders shall have the authority to
bind the other in any way. Any agreement entered into by a Shareholder
that violates any provision of this Agreement or is otherwise outside
the scope of this Agreement shall not be binding on the Company or the
other Shareholder; only the Shareholder entering into such an agreement
shall be subject to any liability arising from it. The relationship of
the Shareholders to the Company shall be that of shareholders. No
Shareholder shall act as an agent for or on behalf of the Company,
except as might be provided expressly in any other written agreement
between the Company and that Shareholder. Each Shareholder shall
conduct its affairs with regard to other Shareholders so as to avoid
the appearance or creation of any other or greater relationship among
the Shareholders and the Company. It is the intent of the Shareholders
to limit their joint operations expressly as specified in this
Agreement. This Agreement has no relation to any operations conducted
by either Shareholder individually or as a joint shareholder or partner
with others.
2.6 Exercise of Voting Rights. Each Shareholder agrees to exercise all
voting rights and powers of control available to it in relation to the
Company to give full effect to the terms and provisions of this
Agreement. The Shareholders shall take any other action required by
them to implement the terms and provisions of this Agreement, and will
cause the Articles of Incorporation and By-laws of the company to
reflect the terms and conditions of this Agreement as required by
Applicable law to give full effect to this Agreement.
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CLAUSE III
CAPITALIZATION
3.1 Conditions Precedent. The obligation of Ionics to purchase forty percent
(40%) of the ordinary shares of common stock of the Company from the
Company is subject to the prior fulfillment of the following conditions
precedent:
(a) EPC Agreement. The Company, Carillion (Caribbean) Ltd. ("Carillion") and
Ionics Constructors Trinidad, Ltd., ("Ionics Constructors") shall have
executed one or more agreements providing for the engineering, construction
and procurement of the Plant and defining their relative scopes of
responsibility and compensation in respect thereof, in a form reasonably
acceptable to Ionics (these one or more agreements are referred to as the
"EPC Agreement"). A term sheet setting forth the agreed on basis for the
essential terms of these agreements is attached as Annex 3. The Company
will use its best efforts to include provisions in the Credit Agreement
permitting direct disbursements to Ionics Constructors and Carillion
pursuant to the payment provisions of the EPC Agreement.
(b) O&M Agreement. The Company and Ionics, on its own behalf or on behalf of a
subsidiary to be designated, shall have entered into an agreement for
providing operation and maintenance for the Plant substantially based on
the financial and other terms referenced in paragraph 9 of the letter
agreement executed on May 10, 2000 among the Shareholders and the Company.
The Company will use its best efforts to include provisions in the Credit
Agreements which collectively will authorize disbursements directly to
Ionics pursuant to the payment provisions of the above described agreement.
(c) Water Supply Agreement. The Water Supply Agreement as set forth in Annex 4
as it may have been amended with the consent of the Shareholders) shall be
in full force and effect, and those changes reflected in the letter dated
May 5, 2000, from the Overseas Private Investment Corporation to WASA shall
have been substantially incorporated into the Water Supply Agreement or
agreed to by WASA on a binding commitment basis.
(d) Bridge or Construction Project Financing. Republic Bank will have entered
into a loan agreement with the Company to provide bridge or construction
financing to the Company in the amount of at least US$60,000,000 on terms
and conditions acceptable to Ionics, provided that Ionics agrees that the
loan agreement may be conditioned on Ionics posting security for its
funding of the required equity contributions under this Agreement.
(e) Shareholder Loan Documentation. The terms and conditions of the "Note" (as
defined in Section 3.4(d) below) and the pledge agreements providing for
security for payment of the Note will have been agreed to by the
Shareholders and executed in a form acceptable to Ionics.
(f) Other Venture Agreements. The Company and the Shareholders shall have
executed each of the other Venture Agreements.
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(g) No Material Adverse Change. Ionics will be satisfied, in its reasonable
discretion, that there has been no material adverse change in the financial
condition or prospects of the Company occurring during the Interim Period.
(h) Annexes. The Shareholders shall complete all Annexes to this Agreement.
3.2 Initial Capital Structure. The capital structure of the Company shall
be composed of one class of ordinary shares of common stock consisting
of five hundred (500) shares, of which ▇▇▇▇▇▇▇▇ will hold three hundred
(200) shares and Ionics will hold two hundred (200) shares upon the
Capitalization Date. Each ordinary share shall have the same rights and
obligations including rights with respect to voting, the receipt of
dividends and other distributions and additional capital contributions.
Subject to the provisions of the Companies Act and this Agreement, the
Company will have the power to increase or reduce share capital or
redeem or purchase shares.
3.3.1Purchase of Shares and Shareholder Capital Contributions. At the
Capitalization Date, the Company will issue and sell to each of ▇▇▇▇▇▇▇▇
and Ionics two hundred (200) of the ordinary shares of common stock of the
Company, constituting in each case forty percent (40%) of the total
ordinary shares of common stock of the Company, for a purchase price of
US$10,000,000 for each block of two hundred (200) shares, which ordinary
shares will be issued to ▇▇▇▇▇▇▇▇ and Ionics free and clear of any liens,
encumbrances, claims or agreements other than this Agreement. In respect of
the purchase price to be paid by ▇▇▇▇▇▇▇▇ for its two hundred (200) shares,
Ionics will cause an additional US$10,000,000 to be contributed directly to
the capital of the Company, which will be effected as a loan by Ionics to
▇▇▇▇▇▇▇▇ in accordance with the terms of the Note and secured by a pledge
of Karamath's shares in the Company and will reflect Karamath's capital
contribution for the two hundred (200) shares issued by the Company to
▇▇▇▇▇▇▇▇ on the Capitalization Date.
3.4 Capitalization Date. On the Capitalization Date each of the following shall
occur:
(a) Each other Venture Agreement shall be or have been executed by the
respective Shareholders and the Company as applicable.
(b) The Company shall deliver to Ionics two hundred (200) ordinary shares of
common stock in the Company, representing forty percent (40%) of the total
outstanding ordinary shares of common stock in the Company, upon payment to
the Company by Ionics of US$10,000,000. The Company shall deliver the
number of shares specified in Clause 3.2 as subscribed for by each
Shareholder.
(c) The Company will deliver to ▇▇▇▇▇▇▇▇ two hundred (200) ordinary shares of
common stock of the Company, representing forty percent (40%) of the total
outstanding ordinary shares of common stock in the Company, and Ionics will
pay to the Company an additional US$10,000,000, reflecting the capital
contribution by ▇▇▇▇▇▇▇▇ for the two hundred (200) ordinary shares issued
to it on the Capitalization Date, which payment to the Company by Ionics on
behalf of ▇▇▇▇▇▇▇▇ will be effected as a loan from Ionics to ▇▇▇▇▇▇▇▇ (the
"Loan").
(d) ▇▇▇▇▇▇▇▇ will enter into a promissory note (the "Note") for repayment of
the Loan with interest at the six-month U.S.$ London Inter-Bank Offered
Rate (LIBOR), as published by the Wall Street Journal from time to time,
re-set semi-annually, plus two percentage points (2%) by ▇▇▇▇▇▇▇▇ to
Ionics, to be paid out of the dividends and other distributions from the
Company to ▇▇▇▇▇▇▇▇. The Note will provide for payments on a mortgage style
amortization schedule and shall be based on the terms and conditions
contained in the Term Sheet attached as Annex 5. The Company, ▇▇▇▇▇▇▇▇ and
Ionics will also enter into a pledge agreement pursuant to which ▇▇▇▇▇▇▇▇
will grant to Ionics a perfected security interest (subordinate only to the
security interest that may be granted to Republic Bank and to the Overseas
Private Investment Corporation or any other permanent project finance
Lender to secure its loan to the Company) in the three hundred (300) shares
owned by it in the Company as security for the repayment of the Loan, and
which pledge agreement will provide that until the Loan is repaid in full,
all dividends and other distributions to which ▇▇▇▇▇▇▇▇ is entitled from
the Company, up to the amount of all accrued interest and principal
amortization currently due on the Note as of the date of any such dividend
or other distribution, will be paid by the Company directly to Ionics to be
applied against accrued interest and principal owed on the Loan.
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3.5 Additional Capital Contributions. Prior to the time at which the
Company is able to obtain permanent financing to satisfy the bridge or
construction loan to the Company, the Shareholders may be required,
either by the bridge or construction Lenders or to enable the Company
to meet its obligations, to advance additional money to the Company. In
either such case, the Shareholders agree that they will provide to the
Company their pro-rata share (based on the percentage of shares each
Shareholder has in the Company) of the funds required by the Company in
the form of either an additional capital contribution or a loan, as
agreed to by the Shareholders.
3.6 Default in Making Capital Contributions.
(a) Contribution Loan. If either Shareholder (the "Non-Contributing
Shareholder") fails to make a loan or capital contribution as provided in
Clause 3.5 above (the "Non-Paid Contribution") at the time required or
agreed to by the Shareholders (the "Contribution Date"), then the other
Shareholder (the "Contributing Shareholder") at any time up to ten Days
following the time specified for the loan or contribution may elect to
advance to the Company an amount equal to all or any portion of the
Non-Paid Contribution (a "Contribution Loan") and the amount that the
Contributing Shareholder had agreed to fund as part of its initially
required loan or contribution shall also be treated as a Contribution Loan.
The election by the Contributing Shareholder to make a Contribution Loan
must be made by written notice delivered to the Non-Contributing
Shareholder. The Contribution Loan shall be made within ten Days of the
notice.
(b) Interest. The Company shall pay interest on the unpaid principal amount of
each Contribution Loan at a rate per annum equal to the rate applicable on
the bridge or construction financing obtained by the Company, as adjusted
from time to time, payable on the last day of each calendar quarter.
(c) Repayment. Each Contribution Loan will be repaid on the second anniversary
thereof, unless the Contribution Loan is converted into shares pursuant to
Clause 3.6(d).
(d) Conversion of Contribution Loans into Shares. Upon notice to the
Non-Contributing Shareholder and the Board delivered during the period
within 30 Days before the repayment date for any Contribution Loan(s), the
Contributing Shareholder may elect to convert the unpaid principal amount
and all accrued interest of the Contribution Loans into shares on the
repayment date unless during this 30 day period the Company pays in full
all Contribution Loans held by the Contributing Shareholder. If at the end
of the 30 day period the Company has not paid in full all Contribution
Loans held by the Contributing Shareholder, the Company will issue to the
Shareholder making the Contribution Loan(s) and electing to convert into
shares the principal amount and all accrued interest of the Contribution
Loan(s) a certificate representing the number of shares that the
Contributing Shareholder would have received on the Contribution Date if
the full principal amount and accrued interest on the Contribution Loans
would have been contributed as capital in exchange for shares in the
Company on the Contribution Date. The Shareholders agree that they will
vote their shares in the Company and cause the Directors elected by them to
vote as Board members as required to implement the provisions of this
Section 3.6 and Section 3.5 above.
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CLAUSE IV
MANAGEMENT OF THE COMPANY
4.1 Shareholders.
(a) Vote. Each Share shall have one vote on all matters presented for a vote of
the shareholders.
(b) Quorum and Attendance. The representation in person or by proxy of the
holders of all outstanding shares shall constitute a quorum for the
transaction of business at any shareholders' meeting.
(c) Action. Action of the shareholders at any meeting shall require the
affirmative vote of all of the shares represented at the meeting.
4.2 Board.
(a) Composition. The Board shall have general supervision of the business and
operations of the Company as set forth in the Articles of Incorporation and
By Laws. It shall be composed of no fewer than two (2) and no more than six
(6) directors who shall be selected in the manner prescribed below. Except
as provided in Clause 4.2(i) below, each of Ionics and ▇▇▇▇▇▇▇▇ shall be
entitled to nominate and elect an equal number of the members of the Board.
A director shall serve until replaced except in the event of earlier
resignation or removal in accordance with this Agreement, the Articles of
Incorporation or the By Laws.
(b) Alternate Directors. The Shareholders may nominate alternate directors for
each of the Board seats for which it is entitled to nominate the director.
In the absence of the director for whom the alternate holds a proxy, the
alternate may exercise all of the rights of a director of the Company.
(c) Voting Agreement. Each Shareholder agrees to vote for the nominees of the
other Shareholder and elect all such nominees at the annual general meeting
and all extraordinary general meetings of shareholders.
(d) Removal. Except for vacancies as described in Clause 4.2(e) and as provided
in Clause 4.2(i), any director may be removed from office only upon the
initiative of the Shareholder which originally nominated the director. In
that event the other Shareholder agrees to vote for the removal of the
director, and to vote in favor of the replacement director nominated by the
shareholder proposing the removal.
(e) Vacancies. If there is a vacancy on the Board arising out of death,
disability, removal, resignation or otherwise, the Shareholder which
originally nominated the director vacating his or her office shall nominate
a new director to the Board. The Shareholders agree to elect all
replacement nominees to the Board at the first Board meeting after an
individual is nominated.
(f) Quorum and Attendance. The presence in person of at least four of the
directors (unless the full number of directors then constituting the Board
is fewer, in which event a quorum shall be the full Board) shall be
required to constitute a quorum for the transaction of business by the
Board. The Bylaws of the Company will provide that Board members may attend
and vote at Board meetings by telephone, which will be considered presence
in person at the meeting for purposes of this Section 4.1(b).
(g) Voting Requirements. Board action will require the consent of a majority of
all the Directors, except that unanimous consent of all the Directors will
be required on the matters referred to in Clause 4.2(h) below. The Chairman
of the Board of Directors shall have one vote, except that on matters in
which there is a tie vote and which do not require unanimity, the Chairman
shall have the casting vote.
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(h) Unanimity. The following matters or actions must be approved unanimously by
the Board:
(i) A merger or consolidation of the Company or the sale, transfer, assignment
or other disposition of 25 per cent of the book value of the assets of the
Company;
(ii) A material change in the corporate purpose or business of the
Company;
(iii) The making of any advance or loan to a Shareholder or Affiliate
of a Shareholder or the entry into or modification of any agreement or
transaction with a Shareholder or Affiliate of a Shareholder;
(iv) An amendment of the Articles of Incorporation or By Laws;
(v) An election to terminate, liquidate, dissolve or wind up the
Company;
(vi) The commencing of or permitting to occur of a proceeding in bankruptcy by
or against the Company or the making of an assignment for the benefit of
creditors or any other arrangement to restructure the Company's obligations
under applicable bankruptcy laws.
(vii)The execution or modification of any other material agreement of the
Company outside the ordinary course of business or not in accordance with
the Capital Investment Program or Business Plan.
(viii) Approval of and any variations in the Construction Budget, Operation and
Maintenance Budget, Capital Investment Program, Desalcott Operating Budget
and Business Plan pursuant to Clause 5.3 below, as well as the making of
any expenditures not approved as within the Construction Budget, Desalcott
Operating Budget, Operation and Maintenance Budget or Capital Investment
Program.
(ix) The issuance by the Company of any additional shares in the Company, unless
first offered for purchase by the Shareholders on a pro-rata basis.
(x) Approval of the terms and conditions on which the permanent financing or
additional bridge financing will be obtained by the Company.
(i) Termination of Right to Elect Directors. If either Shareholder ceases to
own at least thirty percent (30%) of the outstanding ordinary shares in the
Company, such Shareholder will thereafter lose the rights granted to it in
this Clause 4.2 to elect directors (but retaining all rights granted to
shareholders generally under the Companies Act, including the right to vote
for the election of directors generally).
4.3 Election of Officers.
(a) Subject to sub-Clauses 4.3(b) below, the Board of Directors
shall appoint the officers of the Company. The Managing
Director shall have overall responsibility for the day-to-day
operations and management of the Company. All salaries, wages,
bonuses, allowances, travelling and accommodation expenses and
other benefits to which the Company's officers may be entitled
and all necessary employer's pension and national insurance
contributions shall be paid by the Company.
123
(b) The Board members appointed by ▇▇▇▇▇▇▇▇ will have the right to
appoint the Chairman of the Board of Directors, the Managing
Director and Chief Financial Officer, and the initial Chairman
of the Board of Directors so appointed will be ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇. The Shareholders further agree that the initial
Secretary shall be ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, attorney-at-law.
4.4 Deadlock. If the Board fails to reach agreement on any matter before it
after deliberating upon the matter during two consecutive Board
meetings, upon notice to the other directors any director may refer the
matter to the Shareholders for resolution. The director's notice shall
be accompanied by a statement setting out the director's position on
the matter in dispute and the director's recommendation for resolution
of the dispute. The other directors each may distribute a statement
setting out that director's position on the matter in dispute and that
director's recommendation for resolution of the dispute. If a dispute
is referred to the Shareholders, within 30 Business Days from the date
of the director's notice they shall confer in good faith with a view
toward resolving the matter by mutual agreement. If the matter is not
resolved by the Shareholders by mutual agreement within 60 Business
Days from the date of the notice, the failure to resolve the matter
shall constitute a Triggering Event subject to the mechanisms set forth
in Clause 6.4 below.
CLAUSE V
FINANCIAL CONSIDERATIONS; STRUCTURE;
RECORDKEEPING; AUDITS
5.1 Distributions. The Company will make annually the maximum available
distribution of dividends after debt service, the payment of all
operating expenses and establishment of prudent and legally required
reserves.
5.2 Investment Structure. The Shareholders agree to work together in good
faith to determine the appropriate form of holding company structure
for the investment taking into consideration, among other things, the
domicile of each Shareholder and any tax liabilities or burdens
affecting them. It is agreed that Ionics' United States tax liabilities
shall be taken into account.
5.3 Reports and Plans. The Board shall cause the management of the Company
to submit to the Board for approval forty-five Days prior to the
commencement of each fiscal year, and shall deliver to each of the
Shareholders within thirty days after the end of each fiscal year, each
of the following:
(a) During the construction phase of the Project a construction
budget reflecting the funds needed to complete construction of
the Project for the succeeding fiscal year. The initial
construction budget and each subsequent construction budget as
approved by the Board will be the Construction Budget.
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(b) During the operations phase of the Project a budget reflecting
the funds needed for the administration of the Company for the
succeeding fiscal year. The initial budget so established and
each such subsequent budget as approved by the Board will be
the Desalcott Operating Budget.
(c) An operations and maintenance budget reflecting the funds
needed for the operation and maintenance of the Plant for the
succeeding fiscal year. The initial operation and maintenance
budget and each subsequent operation and maintenance budget as
approved by the Board will be the Operation and Maintenance
Budget.
(d) A business plan ("Business Plan") reflecting the proposed
operations of the Company which plan shall be prepared on an
annual basis for the five succeeding years.
(e) A capital investment program ("Capital Investment Program")
reflecting the proposed capital investments of the Company
which program shall be prepared on an annual basis for the
five succeeding years.
5.4 Maintaining Records and Books. The Company shall maintain complete and
accurate records and books of account utilizing International
Accounting Standards ("IAS"), unless the Credit Agreement requires
maintenance of records and books of account utilizing another set of
accounting standards, in which case the accounting standards required
by the Credit Agreement will be substituted for IAS and be the
accounting standards pursuant to which the Company will adhere for
purposes of this Agreement. These records and books of account shall be
maintained by the Company at its principal business office. Each
Shareholder may examine and make copies of any books and records at any
reasonable time during normal business hours. These records and books
together with the accounting controls shall be sufficient to provide
reasonable assurance that:
(a) transactions are executed in accordance with the general or
specific authorization of the Board where necessary;
(b) transactions are recorded so as to permit the preparation of the
Company's financial statements in accordance with IAS and to maintain
accountability for its assets; and
(c) compliance with the U.S. Foreign Corrupt Practices Act, Trinidad
anti-corruption laws and any treaty or multilateral anti-corruption
regimes may be verified.
5.5 Year-End Statements. The Auditors shall conduct an annual audit of the
Company's accounting books and records at the expense of the Company
within 120 Days after the end of each fiscal year. The Auditors shall
be independent public accountants of recognized international standing
as selected by the Board. The Board shall instruct the management to
deliver to the Auditors the information required for the annual audit
not later than thirty Days after the end of the relevant fiscal year.
In addition, the Board shall cause the Auditors to prepare and deliver
to the Shareholders: (a) the reports described in Clauses 5.4(a)
through (c) inclusive; (b) upon reasonable request by a Shareholder any
other report which it requires; and (c) any report required by the
Lender(s) under the Credit Agreement. The provisions of this Clause
shall be amended, without the need for any further action by the
Shareholders, to be consistent with any reporting requirements under
the Credit Agreement.
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5.6 Quarterly Statements. Within 60 Days after the end of each of the first
three fiscal quarters of each fiscal year, the Auditors shall prepare
quarterly financial statements which present fairly in all material
respects the financial condition and results of operations of the
Company, subject to normal year-end audit adjustments and the absence
of footnotes, in accordance with IAS consistently applied. The
provisions of this Clause shall be amended, without the need for any
further action by the Shareholders, to be consistent with any reporting
requirements under the Credit Agreement.
5.7 Special Audits. Either Shareholder may designate its own independent
auditors (in addition to the Auditors) for the purpose of conducting
audits of the records and books of the Company on behalf of the
Shareholder, including an independent audit to verify the sharing of
costs or the sharing of savings occurring pursuant to any agreement
between the Company and any Shareholder, or an Affiliate of any
Shareholder. The Shareholder causing the inspection by the independent
auditor will be responsible for the fees and costs of the independent
auditor conducting the special audit, unless the results of the
independent audit show a material discrepancy in the financial records
of the Company, in which case the fees and costs will be borne and paid
by the Company. Reasonable access to the records and books of account
of the Company will be afforded to the independent auditors. Any
special audits shall not be conducted at any time or in such manner as
would be reasonably likely to interfere with the business of the
Company or the annual audit by the Auditors. The results of any special
audit shall be furnished to the Board and the other Shareholders
promptly upon completion.
5.8 Accountant's Reports. The Board shall instruct management to deliver to
each Shareholder promptly upon receipt all other reports submitted to
the Company by Auditors in connection with each annual, quarterly or
special audit of the books of the Company including any management
letter commenting on the Company's internal controls.
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CLAUSE VI
TRANSFER OF COMPANY SHARES
6.1 Transfer Restriction. No Shareholder shall Transfer any shares
owned by it in the Company, except as expressly permitted by this
Agreement.
6.2 Transfers to Affiliates.
(a) Upon Thirty Days, advance notice in writing either Shareholder may Transfer
all, but not less than all, of the shares held by it to any of its
Affiliates. However, (i) the Affiliate must agree in writing to bound by
all of the provisions of this Agreement; (ii) the Affiliate must agree in
writing to re-Transfer all such shares to the original Shareholder if at
any time the Affiliate should cease to be an Affiliate of the Shareholder;
and (iii) the Affiliate must not be in receivership, bankruptcy,
insolvency, dissolution, liquidation or any similar proceeding.
(b) If either Shareholder has made a Transfer of Company shares to an Affiliate
and the transferee ceases to be an Affiliate of the transferring
Shareholder, then the transferor shall be required to re-acquire all
transferred shares no later than sixty Days after the transferee ceases to
be an Affiliate of the transferring Shareholder. If the transferor does not
choose to make a re-Transfer, then the Transferor shall cause another of
its Affiliates immediately to acquire all of the shares. In either case,
the transferor or Affiliate re-acquiring the shares will agree to be bound
by the continued applicability of this Agreement. Until all shares are
re-Transferred to the Shareholder or Transferred to another of its
Affiliates, the Company shall withhold payment of any dividend,
distribution or repayment of capital to the Shareholder and its transferees
and the presence, consent or vote of shares of the Shareholder or any
members of the Board of Directors nominated by the Shareholder and its
transferees shall not be required for any action by the Board or the
Shareholders.
6.3 Right of First Refusal.
(a) Transfer Notice. If either Shareholder (the "Selling Shareholder ") desires
to make any other Transfer of any or all of its shares to any Entity which
is not an Affiliate of the Selling Shareholder, that Shareholder first
shall offer to sell the shares to the other Shareholder. The Selling
Shareholder shall deliver to the other Shareholder a notice (the "Transfer
Notice") of its intention to Transfer its shares. The Transfer Notice shall
identify the number of shares to be transferred, the name(s) of the
proposed third party purchaser(s), the price per share, the method of
payment of the purchase price, the date or dates of payment, the conditions
to which the offer is subject, the scheduled date of consummation of the
proposed sale, and all other terms and conditions of the transaction. The
Transfer Notice shall be accompanied by a copy of the written offer from
the third party.
(b) Cash Equivalent Pricing. If all or any portion of the price per share
consists of property or other non-cash consideration (including a
promissory note or other deferred payment), the then-current fair market
value of that property or other non-cash consideration shall be determined
conclusively by an internationally recognized independent public accounting
firm agreed upon by the Shareholders, or such other valuation firm agreed
upon by the Shareholders (the "Valuation Firm"). The cost of retaining the
Valuation Firm shall be borne by the Selling Shareholder. The decision of
the Valuation Firm shall be final and binding on the Shareholders and shall
be enforceable as an award under Clause 10.2 for resolution of disputes.
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(c) Option Period; Reply Notice. For a period of 90 Business Days following
delivery of the Transfer Notice or decision of the Valuation Firm, the
other Shareholder shall have the option to purchase the shares. The other
Shareholder shall deliver a notice within that time period stating whether
it elects to purchase the shares. The failure of the other Shareholder to
deliver such notice within the 90 Business Day period shall be deemed to be
notice of its intention not to purchase the shares.
(d) Purchase by Shareholder; Purchase by Transferee. If the other Shareholder
elects to purchase the shares, it: (i) must purchase all of the shares
identified in the Transfer Notice and (ii) may include the cash equivalent
value of any property or other non-cash consideration comprising part of
the purchase price. If the other Shareholder does not exercise its option,
then for a period of thirty Business Days the Selling Shareholder shall be
free to Transfer its shares to the proposed transferee identified in the
Transfer Notice at the price and on the terms and conditions specified. If
the Transfer to the transferee is not effected within thirty Days, the
Selling Shareholder must again follow the procedures set forth in this
Clause in order to Transfer the shares.
(e) Transferee Acknowledgement. The transferee must agree in writing to accede
to this Agreement and assume all of the obligations of a Shareholder as if
it were an original, named Shareholder and provide an address and facsimile
number for the purposes of notice under Clause 11.1.
(f) Obligations under Note. ▇▇▇▇▇▇▇▇ agrees that it may not Transfer the shares
owned by it unless prior to or simultaneously with the Transfer all of its
obligations under the Loan have been or are satisfied.
(g) Closing on Transfer. The closing on the sale of the Offered shares for a
purchase by the other Shareholders shall take place within ten Business
Days after expiration of the time periods recited in Clause 6.3(d) at the
offices of the Company at 10:00 A.M. Trinidad time or at such other place
and time as agreed to by the Shareholders. The Board nominees of the
selling Shareholder shall resign effective on that date.
6.4 Buy-Sell Mechanics for Triggering Events.
(a) If a Triggering Event described in the succeeding paragraphs (1)
through (4) of this Clause 6.4(a) shall occur and be continuing, the
shares of the Company shall be subject to the buy-sell mechanics set
forth in Clause 6.4(b):
(1) Either Shareholder is in material breach of any of the provisions of this
Agreement and the breach continues for thirty (30) days after notice in
writing from the other Shareholder demanding cure (or if a longer period is
reasonably required for cure, the breaching Shareholder has not begun
during such thirty (30) day period diligently to cure such breach and does
not thereafter diligently complete such cure), or ▇▇▇▇▇▇▇▇ is in breach of
the Note or of the pledge agreement providing for security for the Note, or
if there is an attempted foreclosure by the Lenders on Karamath's shares at
any time before the Loan is completely satisfied.
(2) A court of competent jurisdiction enters an order appointing a trustee,
receiver or equivalent for either Shareholder or any substantial part of
its property, approves a petition effecting an arrangement in bankruptcy, a
reorganization pursuant to a bankruptcy act, or other judicial alteration
of the rights of creditors or comparable legal proceeding, or adjudicates
Shareholder as bankrupt, insolvent or equivalent status;
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(3) A Shareholder files a petition or consents to any other action seeking a
judicial decree, makes an assignment for the benefit of creditors or admits
in writing its inability to pay its debts generally as they become due; or
(4) A deadlock exists between the Shareholders as described in Clause 4.4.
(b) The buy-sell mechanics are as follows:
(1) In the case of a Triggering Event described in paragraphs (1) through
(4) of Clause 6.4(a), the non-breaching Shareholder in the case of
paragraph (1), the Shareholder not subject to an order, petition or
adjudication in the case of paragraph (2), the non-filing Shareholder
in the case of paragraph (3), and either Shareholder in the case of
paragraph (4) (in each case, the "Offeror") will make to the other
Shareholder (the "Offeree") a written offer in the alternative (i) to
sell all (but not less than all) of the shares held by the Offeror to
the Offeree or (ii) to purchase all (but not less than all) of the
shares held by the Offeree. The offer shall specify the per share
purchase or sales prices and the purchase or sales price shall be
payable in cash (except that Ionics may bid any amount owed by
▇▇▇▇▇▇▇▇ to it under the Note and Loan and apply it to the payment of
the purchase price, and such bid amount will be deemed a cash payment
for purposes of this Clause 6.4).
(2) The offer shall be irrevocable for a period of forty-five Business
Days from the date made. In the absence of a notice in writing
declining the offer before the expiration of the forty-five Day period
the Offeree shall be deemed to have accepted the offer to purchase all
of its shares or to buy all of the shares offered by the Offeror.
(3) Within the forty-five Day period rather than accept the offer to
purchase or sell its shares to or from the Offeror, the Offeree may
counteroffer to purchase or sell its shares at a higher per share cash
price. This offer shall be irrevocable for a period of thirty Business
Days from the date made.
(4) Within the thirty-Day period rather than accept the offer to purchase
or sell its shares the recipient of the counteroffer (the original
Offeror) may itself offer a further counterproposal to purchase or
sell its shares at a higher per share cash price. This offer shall be
irrevocable for a period of ten Business Days from the date made.
(5) Subject to the right of a Shareholder to decline any offer as set out
in Clause 6.4 (b)(2) this process shall continue until there as been
no further offer by either Shareholder for a period of ten Days. At
that time the last offer will be deemed to have been accepted.
(6) The sale of shares shall take place within thirty Business Days after
the date of acceptance of the last offer made pursuant to Clause
6.4(b) at the offices of the Company at 10:00 A.M. Trinidad time or at
such other place and time as agreed by the Shareholders.
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(7) If a Triggering Event ceases to exist after a written offer is made
pursuant to Clause 6.4(a), but prior to the completion of any sale of
shares pursuant to this Clause, the provisions of this Clause shall
cease to apply and unless otherwise agreed by the Shareholders, all
offers and acceptance made will be considered null and void.
6.5 Encumbrances. Neither Shareholder shall create or permit to exist any
security interest, lien, claim, pledge, option, right of first refusal,
agreement, limitation on the voting rights, charge or other encumbrance
of any nature whatsoever in respect of the shares of the Company,
except for a pledge of the shares to secure non-recourse financing
under the Credit Agreement to construct and operate the Facility and
the pledge by ▇▇▇▇▇▇▇▇ of its shares to Ionics to secure the Loan and
the pledge by the Shareholders of their shares to secure the bridge,
construction and/or permanent financing.
6.6 Legend on Share Certificates. The certificates evidencing the shares
shall bear a legend as follows:
The shares evidenced by this certificate are subject to, and may be
sold, assigned, pledged or otherwise transferred only in compliance
with, the provisions of a Shareholders' Agreement dated as of
__________ 2000 among Ionics, Incorporated (ITF an affiliate of
Ionics, Incorporated), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Engineering Services Limited
and The Desalination Company of Trinidad and Tobago Limited. A copy of
that Agreement is on file at the principal office of the Company. Any
sale, assignment, pledge or other transfer of these shares in
contravention of that Agreement is void.
CLAUSE VII
TERMINATION
7.1 Reasons. This Agreement shall terminate on the earliest to occur of:
(a) a written agreement of the Shareholders to terminate this Agreement;
(b) the dissolution, insolvency or bankruptcy of the Company in accordance with
the laws of the Republic;
(c) all of the shares of the Company being transferred
to one Shareholder; or
(d) the failure to satisfy the conditions precedent set
forth in Clause 3.1 by the Capitalization Date.
7.2 Satisfaction of Obligations. Upon termination of the Water Supply
Agreement or a termination of this Agreement in accordance with Clause
7.1(a) above, the Board shall proceed to cause the liquidation of the
Company. On dissolution of the Company, to the extent permitted by
Applicable Law, the assets of the Company shall be sold and
distributed, first, to the creditors of the Company which do not own
shares, ratably in accordance with their claims as creditors; second,
to the Shareholders to this Agreement who are creditors of the Company,
ratably in accordance with their claims as creditors; and, third, to
the Shareholders to this Agreement, ratably in accordance with their
ownership of shares of the Company at the time of dissolution.
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CLAUSE VIII
REPRESENTATIONS AND WARRANTIES.
8.1 Shareholder and Company Representations and Warranties. Each
Shareholder and the Company represent and warrant to each other that as to
itself the following are true and binding.
(a) Existence. It is incorporated and validly existing under the law of
its jurisdiction of incorporation. It has full power and legal right
to execute and deliver this Agreement and to perform the provisions of
this Agreement.
(b) Capacity. The execution, delivery and performance by it of this
Agreement have been authorized by all necessary corporate action and
do not (a) contravene its Articles of Incorporation, By Laws or any
other organizational document, (b) contravene law or any contractual
restriction binding on it or (c) require any governmental
authorization which has not been obtained.
(c) Binding Effect. This Agreement is its legal, valid and binding
obligation, enforceable against it in accordance with its terms except
as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and with regard to equitable remedies subject to the
discretion of the court or arbitration panel before which proceedings
to obtain such remedies may be pending.
(d) Finders Fee. No broker or finder is entitled to any fee or commission
in connection with the transactions contemplated by this Agreement.
(e) Governmental Approvals. Each Shareholder possesses all Governmental
Approvals required to own its shares in the Company, to execute and
deliver this Agreement and any Venture Agreements to which it is a
party, and to perform its obligations.
(f) No Default. It is not in default under any term or condition of any
instrument evidencing, creating or securing any indebtedness of the
Shareholder. There has been no default in any obligation to be
performed by it under any other agreement to which the Shareholder is
a party or by which it or its properties are bound which would have a
material adverse affect upon the Shareholder's ability to perform any
of its obligations under this Agreement or any Venture Agreement.
(g) No Litigation or Arbitration. There is no litigation, proceeding,
investigation or arbitration before or any court, administrative
agency or governmental body pending or to the knowledge of the
Shareholder affecting the Shareholder, its properties, its business,
or the transactions contemplated in this Agreement and the Venture
Agreements which would have a material adverse affect upon the
Shareholder's ability to perform its obligations under this Agreement
or any Venture Agreement to which it is a party. There are no
judgments, orders, writs, injunctions, decrees or awards affecting the
Shareholder or its properties or business, which would have a material
adverse affect upon the Shareholder's ability to perform any of its
obligations under this Agreement or any Venture Agreement to which it
is a party.
(h) Company Liabilities. As of the Execution Date Ionics will have no
liabilities for any obligations of the Company existing prior to the
Execution Date.
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(i) Ethical Business Practices. In connection with the Project each
Shareholder and its Affiliates, officers, directors, agents, and
employees will comply strictly with all requirements of Applicable Law
and the highest ethical standards. Certain laws of the United States,
including the U.S. Foreign Corrupt Practices Act of 1977 ("FCPA"),
prohibit unethical business practices including the giving or offering
to give any payment or other thing of value to (i) any foreign
government official (including employees of government-owned
corporations or public international organizations), (ii) a foreign
political party or party official, or (iii) any candidate for foreign
political office. Similarly, certain laws of the Republic, including
Articles 138 and 139 of the Constitution of Trinidad and Tobago, 1976
and the Integrity in Public Life Act, discourage unethical business
practices, by requiring financial disclosure by persons in public
life. ▇▇▇▇▇▇▇▇ acknowledges that Ionics is subject to the provisions
of the FCPA, and that actions taken by ▇▇▇▇▇▇▇▇ or the Company,
directly or indirectly through officers, agents, directors, employees
or affiliates, could result in liability or penalties to Ionics.
Accordingly, the Shareholders and the Company each represent and
warrant that in connection with the Project they have not taken and
will not take any action proscribed by any law regulating ethical
business practices including: (a) by not directly or indirectly
making, promising to make, or authorizing any payment of money or the
giving of anything of value to a government or party official, or any
foreign political party or official thereof, or any third person or
Entity that in turn will make a payment to a government or party
official, or undertaking other actions which would violate the FCPA;
and (b) by not making any payment which would be reportable as a
payment to a government official or public person under Applicable
Law.
(j) Commercial Transactions. Each party is executing this Agreement and
the other Venture Agreements to which it is a party as a commercial
transaction. To the extent that any Shareholder has or may acquire any
immunity from jurisdiction of any court or arbitral forum from any
legal process with respect to itself or its property, each Shareholder
irrevocably waives all claims of immunity in respect of its
obligations under this Agreement. Each Shareholder affirms that this
waiver is intended to have the fullest scope permitted under
Applicable Law and is intended to be irrevocable for all purposes.
8.2 ▇▇▇▇▇▇▇▇ Representations and Warranties. ▇▇▇▇▇▇▇▇ represents and
warrants as follows:
(a) Shares. That prior to the sale of ordinary shares to Ionics,
▇▇▇▇▇▇▇▇ is and has at all times from the date of
incorporation of the Company been the Company's sole
shareholder.
(b) No Previous Business. Other than entering into the Water
Supply Agreement or as disclosed in writing to Ionics, prior
to the execution of this Agreement and the sale and transfer
of shares by the Company to Ionics, the Company has not
engaged in any business activities, incurred any obligations
or liabilities, entered into any contracts, employed or
retained as a consultant any person, or acquired any assets.
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CLAUSE IX
CONFIDENTIAL INFORMATION
9.1 Scope of Duty. The parties will share with each other all relevant
information, data and records available with respect to the Project and
the Company. Each Shareholder and the Company shall hold and shall
cause its Affiliates and subsidiaries and their respective officers,
directors, employees, agents, auditors and financial and legal advisors
(the "Representatives") to hold in strict confidence all Confidential
Information. Each Shareholder and the Company shall not use and shall
cause its Representatives not to use any Confidential Information other
than in connection with the business of the Company. Each Shareholder
and the Company shall not disclose and shall cause its Representatives
not to disclose any Confidential Information to any other person or
entity, except:
(a) to the extent the information was known when received by the
Shareholder or the Company and was not received by the Shareholder or
the Company directly or indirectly from the other Shareholder or its
Representatives or the Company;
(b) as it is or as it becomes public information or otherwise available to
the public through no act or fault of the Shareholder or the Company;
(c) to the extent it is received by a Shareholder or the Company from a
third party who, to the Shareholder's or Company's best knowledge, did
not receive the Confidential Information directly or indirectly from
the other Shareholder or the Company;
(d) to the extent any duty as to confidentiality is waived in writing by
the other Shareholder (or both Shareholders in the case of disclosures
by the Company);
(e) as may be required by court order, law or governmental authority (in
which case, if legally permissible, the disclosing Shareholder or
Company must first provide the other Shareholder (or both Shareholders
in the case of disclosures by the Company) with as much advance notice
of the intended disclosure as reasonably possible and seek to limit
the disclosure as much as legally permissible); or
(f) to a Shareholder's or to the Company's auditors, consultants and
financial and legal advisors, who shall be advised of and agree to
uphold this confidentiality obligation.
9.2 Survival. The provisions of this Clause 9 shall survive termination of
this Agreement for a period equal to the greater of (i) one year or
(ii) such longer period during which the confidentiality provisions of
the EPC Agreement. In the event of termination each Shareholder shall
return and shall use its best efforts to cause its Representatives to
return to the other Shareholder or the Company all documents (and all
reproductions made of such documents) received from the other
Shareholder, its Representatives or the Company that include
Confidential Information not within the exceptions.
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9.3 Publicity. No public statements shall be issued by either Shareholder
or the Company relating to the Company or the terms of the Venture
Agreements without prior approval of all of the non-disclosing parties.
However, nothing shall prevent a Shareholder or the Company from
supplying information or making statements relating to the Company or
the Venture Agreements as may be required by any governmental authority
or to satisfy its legal obligations. Each Shareholder or the Company
shall furnish prior written notice of any such disclosure to the other
parties.
CLAUSE X
DISPUTE RESOLUTION
10.1 Mediation. In the event of a dispute (including any alleged breach
giving rise to a dispute) between the Shareholders, as a mandatory
pre-condition to arbitration, they will enter into non-binding
mediation in Miami, Florida, U.S.A., under the Rules of the
International Chamber of Commerce ("ICC") with a person trained and
experienced in the mediation process. The mediation shall be conducted
and concluded within sixty Days of the written request by either
Shareholder. In the event the dispute is not resolved by mediation, the
Shareholders will enter into binding arbitration under the Rules of the
International Chamber of Commerce as set forth below.
10.2 Arbitration
(a) Jurisdiction. All disputes (including any alleged breach giving rise
to a dispute) arising in connection with this Agreement shall be
finally settled under the Rules of Arbitration of the International
Chamber of Commerce by an arbitral tribunal of one member if the
amount in dispute is less than US$1,000,000, and three arbitrators if
the amount in dispute is US$1,000,000, or more. Notwithstanding the
preceding sentence the final and binding authority for disputes under
Clause 6.3(b) shall be the Valuation Firm.
(b) Appointment. If one arbitrator is to be appointed, the Shareholders
shall agree jointly on that appointment. If no agreement is reached
within Thirty Days, the appointment shall be made by the ICC from its
panel of arbitrators in the Caribbean and the eastern United States.
If three arbitrators are to be appointed, each Shareholder shall
nominate one arbitrator. If a Shareholder fails to nominate an
arbitrator within Thirty Days from the date when the claimant's
request for arbitration was communicated to the other Shareholder, the
appointment shall be made by the ICC from its panel of arbitrators in
the Caribbean and the eastern United States. The two arbitrators so
appointed shall agree upon the third arbitrator who shall act as the
chairperson of the arbitration tribunal. If the two arbitrators fail
to nominate a chairperson within thirty Days from the date of the
second of the two appointments, the chairperson shall be selected by
ICC from its panel of arbitrators in the Caribbean and the eastern
United States.
(c) Language. The language of the arbitration shall be English.
(d) Place. The place of the arbitration shall be Miami, Florida, USA.
(e) Appeal. The Shareholders and the Company agree to exclude all right of
appeal to any court on the merits of the dispute.
(f) Enforcement. Judgment on the award or decision by the Valuation Firm,
as the case may be, may be entered in any court having jurisdiction
over the award or either of the Shareholders, the Company or their
assets.
(g) Choice of Law. The arbitrator(s) shall apply Canadian (Ontario)
substantive law in accordance with the Shareholders' intent as
expressed in Clause 11.9. Any dispute relating to this arbitration
agreement shall be governed by the arbitration law of Florida, U.S.A.
The arbitral panel shall not decide in amiable composition.
(h) Interim Relief and Award. The Shareholders shall be entitled to seek
interim measures of protection in the form of pre-award attachment of
assets or injunctive relief. The award may grant any relief
appropriate under the Applicable Law including declaratory relief
and/or specific performance. As part of their award the panel may
award attorneys fees and costs to the prevailing Shareholder. Any
award of money damages shall bear interest from thirty Days after the
award at the lesser of fifteen percent (15%) per annum or the maximum
rate under Applicable Law. If the prevailing Shareholder is required
to retain counsel to enforce the arbitral award, the Shareholder
against which the award is made shall reimburse the prevailing
Shareholder for all reasonable attorney fees and expenses incurred for
the services, together with interest at the lesser of fifteen percent
(15%) per annum or the maximum rate under Applicable Law.
(i) Consolidation. In the event that disputes arise under this Agreement
and any other related agreements which also are subject to
arbitration, including any agreement between either Shareholder and
any Affiliate of either Shareholder, these disputes may be resolved in
a consolidated arbitral proceeding. Any applicable consolidation
provisions of law shall apply, notwithstanding the reference to the
governing law provisions in Clause 10.2(g).
(j) Effect. The Shareholders rights and obligations shall remain in full
force and effect pending the outcome of any dispute resolution
procedure.
(k) Limitation on Damages. Neither Shareholder will be liable to the other
or to the Company for incidental, consequential (including lost
profits), exemplary or punitive damages, under, arising out of, due to
or in connection with this Agreement or the transactions contemplated
herein.
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CLAUSE XI
MISCELLANEOUS
11.1 Notices.
(a) Addresses All notices and other communications to a
Shareholder under this Agreement and the other Venture
Agreements shall be in writing sent by overnight courier or
facsimile to the address and to the attention of the
Shareholder's representative as follows:
(1) if to Ionics, to:
Ionics, Incorporated
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(2) if Karamath, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Engineering Services Ltd.
Cyrus Trace, El ▇▇▇▇▇▇▇ Ext.
San Juan, Trinidad, W.I.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(3) if to the Company, to:
Desalination Company of Trinidad and Tobago Ltd.
Cyrus Trace, El ▇▇▇▇▇▇▇ Ext.
San Juan, Trinidad, W.I.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The air courier and facsimile numbers for notifications may be
changed by a written notice given to the other Shareholder prior
to the effective date of the change. Each Shareholder will use
reasonable efforts to arrange to transmit all documentation by
electronic, paperless means.
(b) Effectiveness. Any notice or communication delivered pursuant to
Clause 11.3(a) shall be deemed to have been given on receipt.
Communication by e-mail or facsimile will be deemed effective
only if a message confirming receipt of the notice is sent to
the originating Shareholder by e-mail or facsimile.
11.2 Expenses
(a) All costs, legal fees and other expenses incurred by each Shareholder
in connection with the preparation, execution and enforcement of this
Agreement and each other Venture Agreement shall be paid by the
Shareholder which incurs the costs, legal fees and other expenses,
except with regard to an award of costs and attorney fees to a
prevailing Shareholder as described in Clause 10.2(h).
(b) All costs, legal fees and other expenses incurred in the formation,
dissolution or liquidation of the Company shall be paid by the
Company.
(c) The provisions of this Clause 11.2 shall survive the termination of
this Agreement.
11.3 Assignment; Continuing Obligations. This Agreement shall be binding
upon and inure to the benefit of the Shareholders and their respective
permitted successors and assigns.
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11.4 No Rights Given to Third Parties. Nothing expressed or implied in this
Agreement is intended to confer any rights under this Agreement upon
any third person or Entity other than the Shareholders.
11.5 Amendments and Waivers. This Agreement may be amended or modified, and
compliance with the terms of this Agreement may be waived, only by
means of a written instrument signed by all Shareholders. No waiver by
any Shareholder of any breach of this Agreement shall be construed as a
waiver of any other breach of this Agreement.
11.6 Severability. Any provision of this Agreement which is void or
unenforceable in any jurisdiction shall be ineffective only to the
extent of such prohibition or unenforceability in that jurisdiction
without affecting the validity or enforceability of that or any other
provision in any other jurisdiction. If an arbitration panel or court
of competent jurisdiction declares that any provision of this Agreement
is void or unenforceable, then that provision shall be severed from
this Agreement; this Agreement then shall be construed as if it did not
contain the severed provision and otherwise shall remain in full force
and effect.
11.7 Headings. The headings in this Agreement are for convenience of
reference and shall not affect the interpretation of this Agreement.
11.8 Joint Preparation. This Agreement was prepared and negotiated by both
Shareholders with the advice of counsel to the extent deemed necessary
by each Shareholder. It was not prepared by either Shareholder to the
exclusion of the other. Accordingly, it should not be construed against
either Shareholder by reason of its preparation.
11.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of Canada (Ontario), without
regard its conflict of laws rules.
11.10 Merger. This Agreement (including the attached exhibits) constitutes a
complete statement of the terms and conditions of the understanding
between the Shareholders relating to the Project concept as provided in
this Clause 12.10. It supersedes all prior negotiations, understandings
and agreements, whether oral or written, between the Shareholders.
11.11 Expenses. The Shareholders have incurred or may incur certain
development costs in connection with the Project. The Shareholders
agree that these costs will be treated as follows:
A. Costs Incurred Prior to May 10, 2000. The Shareholders agree that
development costs incurred by them prior to May 10, 2000 will be
divided into the following three categories and treated as follows:
1. Costs jointly agreed to by the Shareholders, such as for financing and
legal fees in connection with financing, shall be borne by the
Shareholders on the basis of their agreed on share percentages for
ownership of the Company, and the Shareholders agree to "true up"
these expenses at the Capitalization Date, such that if one
Shareholder has paid more than its pro-rata share of these costs, the
other Shareholder having a deficit balance will pay the amount of the
deficit to the other Shareholder on such date.
2. Costs incurred by a Shareholder to perform the EPC Contract shall be
considered acceptable costs under the EPC Contract and re-paid by the
Company to the Shareholder in accordance with the terms of the EPC
Contract, as revised.
3. Other development costs will be borne by the Shareholder which
incurred such cost.
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B. Costs Incurred After May 9, 2000. The Shareholders agree that the
incurring and re-payment of any costs incurred by a Shareholder on
behalf of or for the Company after May 9, 2000 will be based on mutual
agreement of the Shareholders prior to the time that the expenditure
is incurred.
11.12 Project Finance. With the prior written agreement of the Shareholders
and without the necessity of formally amending this Agreement
additional or different terms may be incorporated in this Agreement, as
are required by the Lender(s) to the Project.
11.13 Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and
all of which taken together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page of
this Agreement by facsimile shall be effective as delivery of a
manually executed counterpart of this Agreement.
IN WITNESS WHEREOF, the Shareholders and the Company have caused this Agreement
to be executed and delivered as of the date first written above.
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Ionics, Incorporated, in trust for an affiliate
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Engineering Services Limited
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
The Desalination Company of Trinidad and Tobago Limited
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman
138
AMENDMENT TO SHAREHOLDERS' AGREEMENT
This Amendment (the "Amendment") to Agreement is entered into this 16th day of
June 2000 by and among Ionics, Incorporated, a corporation duly organized and
existing under the laws of the Commonwealth of Massachusetts, United States of
America, executed in trust for an affiliate ("Ionics"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Engineering Services Limited, a corporation duly organized and existing under
the laws of the Republic of Trinidad and Tobago, Ltd., ("Karamath"), and
Desalination Company of Trinidad and Tobago Ltd, a limited liability Company
duly organized and existing under the laws of Trinidad and Tobago (the
"Company").
WHEREAS, Ionics, ▇▇▇▇▇▇▇▇ and the Company entered into a Shareholders' Agreement
dated May 12, 2000 to provide for the purchase and ownership of shares in the
Company and other matters related thereto (the "Shareholders' Agreement"); and
WHEREAS, the Parties have agreed to amend the Shareholders' Agreement in the
manner set forth herein in order to provide such additional assurances to
potential Lenders.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein and in the Shareholders' Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Ionics, ▇▇▇▇▇▇▇▇ and the Company agree as follows:
1. This Amendment is executed in connection with, and is deemed to be
a part of, the Shareholders' Agreement. Upon the execution of this
Agreement, this Amendment shall thereafter automatically become a part
of the Shareholders Agreement. Wherever the terms of this Amendment
and the terms of the Shareholders' Agreement are in conflict, the
terms of this Amendment shall govern and control. The initial
capitalized terms used herein, unless otherwise defined in this
Agreement, shall have the meanings ascribed to them in the
Shareholders' Agreement. The definition of "Plant" is added in the
Shareholders' Agreement to be the seawater reverse osmosis
desalination plant with a capacity of approximately 109,090 cubic
metres per day to provide desalinated water for use by industrial
clients in the Point Lisas area of Trinidad.
2. Section 11.13 of the Shareholders' Agreement is amended to read as
11.14. A new section, 11.13, is added to provide that if prior to the
time that the Company is able to obtain permanent financing to satisfy
the bridge or construction loan to the Company, (i), the Company needs
funds over and above the capital contributions made by the
Shareholders and the bridge or construction loan funds available to
the Company under the terms of the bridge or construction loan in
order to meet the Company's obligations under the EPC Agreement, as
amended, and (ii) the Shareholders of Desalcott are unable to fund
their pro-rata share (based on percentages of shares they have in the
Company) of the additionally required funds, Ionics will make
available to the Company the full amount of the additionally required
funds, up to a maximum amount of US $10,000,000.00 (Ten Million US
Dollars) in the form of a commercial loan to the Company. The loan
will be repayable in US Dollars and will be documented by a loan
agreement and promissory note incorporating customary terms and
conditions. Interest on the unpaid principal amount of the loan shall
be at a rate equal to the rate applicable on the bridge or
construction financing obtained by the Company. Amounts due and
payable under the commercial loan will be paid free and clear and net
of all withholdings and taxes, other than Ionics' obligations to pay
US income taxes with respect to interest on the commercial loan, and
all costs including reasonable legal fees and documentary, stamp or
other taxes incurred or payable in connection with the commercial loan
will be for the account of the Company. Fifty percent of available
cash from the Company's cash flows after servicing other debts and
obligations will be used each year to service the principal and
interest due on the commercial loan, until the loan is fully
extinguished. Such payment would take priority over any distribution
to the Shareholders.
139
3. The Shareholders' Agreement is amended to provide that if permanent
financing for the Company is closed before the third anniversary of
the commercial loan, the commercial loan will be due and payable on
the date of permanent loan funding provided that such permanent loan
funding is adequate to repay the outstanding balance of the commercial
loan. Such a payment is subordinated to the repayment of the bridge or
construction loan.
4. The Parties acknowledge and agree that this Amendment may be
executed in multiple counterparts, and transmitted via telecopy, each
such counterpart (whether transmitted via telecopy or otherwise) when
executed, shall constitute an integral part of one and the same
Agreement between the Parties.
5. Except as expressly modified by this Amendment, the provisions of
the Shareholders' Agreement are hereby ratified and confirmed.
IN WITNESS WHEREOF, the Parties have affixed their signatures, effective on the
date first written above.
IONICS INCORPORATED, in trust for an affiliate
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENGINEERING SERVICES LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
DESALINATION COMPANY OF TRINIDAD AND TOBAGO LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman
140