Exhibit 10.14 CREDIT AGREEMENT
This Credit Agreement, dated as of May 12, 2000, is between NESCO, Inc., an
Oklahoma corporation, and Bank One, Oklahoma, NA, a national banking
association.
The parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
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1.1. Certain Definitions. As used in this Agreement:
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"Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any firm, corporation or limited liability company, or division
thereof, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the outstanding ownership interests of a partnership or limited
liability company.
"Acquisition Document" means, with respect to any Acquisition or proposed
Acquisition, each asset purchase agreement, stock purchase agreement, merger
agreement or other similar transaction document pertaining thereto.
"Acquisition Loan" means any loan made by the Lender pursuant to Section
2.1.3(a) (or any continuation or conversion thereof pursuant to Section 2.9),
but does not include the principal balance of any loans made under Section
2.1.3(a) which have been converted to an Acquisition Term Loan pursuant to
Section 2.1.3(b).
"Acquisition Loan Commitment" means the sum of $4,000,000, as such amount
may be modified from time to time pursuant to the terms hereof. As the context
requires, "Acquisition Loan Commitment" also refers to the obligation of the
Lender to make Acquisition Loans to the Borrower under the Acquisition Loan
Facility.
"Acquisition Loan Facility" means the credit facility established by the
Lender pursuant to Section 2.1.3.
"Acquisition Loan Facility Conversion Balance" means the aggregate
principal amount of Acquisition Loans outstanding on any Acquisition Loan
Facility Conversion Date, after giving effect to any Acquisition Loans made or
repaid on such date.
"Acquisition Loan Facility Conversion Date" means April 30, 2001, and each
April 30 thereafter during the term of the Acquisition Loan Facility.
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"Acquisition Loan Facility Termination Date" means April 30, 2002, or any
earlier date on which the Aggregate Acquisition Loan Commitment is reduced to
zero or otherwise terminated pursuant to the terms hereof.
"Acquisition Note" means the promissory note to be issued by the Borrower
pursuant to Section 2.14 to evidence the outstanding Acquisition Loans,
substantially in the form of Exhibit D-4.
"Acquisition Term Loan" means the loan made by the Lender upon conversion
of its Acquisition Loans outstanding on any Acquisition Loan Facility Conversion
Date pursuant to Section 2.1.3(b) (or any continuation or conversion thereof
pursuant to Section 2.9).
"Acquisition Term Note" means a promissory note to be issued by the
Borrower pursuant to Section 2.14 to evidence an outstanding Acquisition Term
Loan, each substantially in the form of Exhibit D-5.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agreement" means this Credit Agreement, as it may be amended or modified
and in effect from time to time.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the
Federal Funds Effective Rate for such day plus 1/2% per annum.
"Applicable Fee Rate" means, at any time, the percentage rate per annum at
which the Commitment Fee is accruing on the unused portion of the Working
Capital Revolving Credit Facility Commitment and the Acquisition Loan Commitment
at such time as set forth in the Pricing Schedule.
"Applicable Margin" means, with respect to Loans of any Type at any time,
the percentage rate per annum which is applicable at such time with respect to
Loans of such Type as set forth in the Pricing Schedule.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, acting singly.
"Borrower" means NESCO, Inc., an Oklahoma corporation, and its successors
and assigns.
"Borrowing Date" means a date (including the Closing Date) on which a Loan
is made hereunder.
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"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Loans, a day (other than a Saturday or Sunday) on which
banks generally are open in New York and Tulsa for the conduct of substantially
all of their commercial lending activities, interbank wire transfers can be made
on the Fedwire system and dealings in United States dollars are carried on in
the London interbank market and (ii) for all other purposes, a day (other than a
Saturday or Sunday) on which banks generally are open in Tulsa for the conduct
of substantially all of their commercial lending activities and interbank wire
transfers can be made on the Fedwire system.
"Capital Expenditures" means, without duplication, any expenditures for any
purchase or other acquisition of any asset which would be classified as a fixed
or capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with GAAP, excluding (i) the cost of assets
acquired with Capitalized Lease Obligations, (ii) expenditures of insurance
proceeds to rebuild or replace any asset after a casualty loss and (iii)
leasehold improvement expenditures for which the Borrower or any of its
Subsidiaries is reimbursed promptly by the lessor.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in conformity with GAAP.
"Cash Equivalent Investments" means (i) short-term obligations of, or fully
guaranteed by, the United States of America, (ii) commercial paper rated A-1 or
better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts
maintained in the ordinary course of business, and (iv) certificates of deposit
issued by and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000; provided, in each case
that the same provides for payment of both principal and interest (and not
principal alone or interest alone) and is not subject to any contingency
regarding the payment of principal or interest.
"Change in Control" means (i) the acquisition by any Person (other than
▇▇▇▇▇▇▇▇▇), or two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the SEC under the Securities Exchange Act
of 1934) of 20% or more of the outstanding shares of voting stock of the
Borrower, or (ii) the existence of any circumstance or the occurrence of any
event whereby the individuals who comprise the Incumbent Board shall cease for
any reason to constitute at least a majority of the voting members of the Board
of Directors of the Borrower. For purposes of this definition; the "Incumbent
Board" means the individuals who are members of the Board of Directors of the
Borrower as of the date of this Agreement and any individual who is hereafter
elected to the Board of Directors by the Borrower's common stockholders after
his or her nomination for election as a new director is approved by a vote of at
least a majority of the Incumbent Board, provided, however, that no individual
shall be considered a member of the Incumbent Board if such individual initially
assumes office as a result of either an actual or threatened "election contest"
(as described in Rule 14A-11 of the SEC promulgated under the Securities
Exchange Act of 1934) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of Directors,
including an
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individual elected by reason of any agreement intended to avoid or settle any
election contest or proxy contest.
"Closing Date" means the date on or before May 12, 2000, on which the
conditions precedent set forth in Section 4.1 are satisfied or waived by the
Lender.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral Documents" means, collectively, the Security Agreement, the
Mortgages and all other agreements and instruments now or hereafter securing all
or any part of the Obligations, and all UCC-1 financing statements, fixture
filings, lien entry forms and other documents, instruments, agreements and
certificates executed and delivered by the Borrower or any of its Subsidiaries
in connection with the foregoing.
"Commitment" means each of the Term Loan Commitment, the Working Capital
Revolving Credit Commitment and the Acquisition Loan Commitment.
"Commitment Fee" means the commitment fee payable by the Borrower pursuant
to Section 2.12(i).
"Compliance Certificate" means a certificate delivered by the Borrower
pursuant to this Agreement, substantially in the form of Exhibit B attached
hereto.
"Consolidated Capital Expenditures" means, with reference to any period,
the Capital Expenditures of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated EBIDA" means Consolidated Net Income plus, to the extent
deducted from revenues in determining Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) depreciation, and (iii) amortization, all calculated for
the Borrower and its Subsidiaries on a consolidated basis. The calculation of
Consolidated EBIDA for the four fiscal quarters ending June 30, 2000, and
September 30, 2000, respectively, shall be subject to the following special
provisions: (i) Consolidated EBIDA for the four fiscal quarters ending June 30,
2000, shall be determined by making the applicable calculation for the two
fiscal quarters ending June 30, 2000, and then multiplying that amount by 180%;
and (ii) Consolidated EBIDA for the four fiscal quarters ending September 30,
2000, shall be determined by making the applicable calculation for the three
fiscal quarters ending September 30, 2000, and then multiplying that amount by
133-1/3%. In calculating Consolidated EBIDA (and any other financial ratios or
determinations which refer to Consolidated EBIDA) following the closing of any
Acquisition, such calculation shall be adjusted to take into account the
financial impact of such Acquisition (as if such Acquisition had occurred prior
to, and the Subsidiary or Property acquired pursuant to such Acquisition had
been owned by the Borrower throughout, the entire calculation period prior to
the date as of which such calculation is being made), but the manner of making
such adjustment shall be determined by the Lender in its sole discretion as the
Lender deems appropriate under the circumstances; provided, however, that such
determination shall be based upon and shall take into account the pro forma
financial information prepared in connection with such Acquisition pursuant to
Regulation S-X or Regulation S-B (whichever is applicable at the time).
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"Consolidated EBITDA" means Consolidated Net Income plus, to the extent
deducted from revenues in determining Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) expense for taxes paid or accrued, (iii) depreciation,
and (iv) amortization, all calculated for the Borrower and its Subsidiaries on a
consolidated basis. The calculation of Consolidated EBITDA for the four fiscal
quarters ending June 30, 2000, and September 30, 2000, respectively, shall be
subject to the following special provisions: (i) Consolidated EBITDA for the
four fiscal quarters ending June 30, 2000, shall be determined by making the
applicable calculation for the two fiscal quarters ending June 30, 2000, and
then multiplying that amount by 180%; and (ii) Consolidated EBITDA for the four
fiscal quarters ending September 30, 2000, shall be determined by making the
applicable calculation for the three fiscal quarters ending September 30, 2000,
and then multiplying that amount by 133-1/3%. In calculating Consolidated
EBITDA (and any other financial ratios or determinations which refer to
Consolidated EBITDA) following the closing of any Acquisition, such calculation
shall be adjusted to take into account the financial impact of such Acquisition
(as if such Acquisition had occurred prior to, and the Subsidiary or Property
acquired pursuant to such Acquisition had been owned by the Borrower throughout,
the entire calculation period prior to the date as of which such calculation is
being made), but the manner of making such adjustment shall be determined by the
Lender in its sole discretion as the Lender deems appropriate under the
circumstances; provided, however, that such determination shall be based upon
and shall take into account the pro forma financial information prepared in
connection with such Acquisition pursuant to Regulation S-X or Regulation S-B
(whichever is applicable at the time).
"Consolidated Funded Indebtedness" means at any time the aggregate dollar
amount of Consolidated Indebtedness which has actually been funded and is
outstanding at such time, whether or not such amount is due or payable at such
time.
"Consolidated Indebtedness" means at any time the Indebtedness of the
Borrower and its Subsidiaries calculated on a consolidated basis as of such
time.
"Consolidated Interest Expense" means, with reference to any period, the
interest expense of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Worth" means at any time the consolidated stockholders'
equity of the Borrower and its Subsidiaries calculated on a consolidated basis
as of such time.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or the obligations of any such Person as general
partner of a partnership with respect to the liabilities of the partnership.
"Conversion/Continuation Notice" is defined in Section 2.9.
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"Controlled Group" means all members of a controlled group of corporations
or other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Default" means an event described in Article VII.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of Hazardous Substances into
surface water, ground water or land, or (iv) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Base Rate" means, with respect to a Eurodollar Loan for the
relevant Interest Period, the applicable British Bankers' Association Interest
Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as
of 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, and having a maturity equal to such Interest Period, provided
that, (i) if Reuters Screen FRBD is not available to the Lender for any reason,
the applicable Eurodollar Base Rate for the relevant Interest Period shall
instead be the applicable British Bankers' Association Interest Settlement Rate
for deposits in U.S. dollars as reported by any other generally recognized
financial information service as of 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, and having a maturity equal to
such Interest Period, and (ii) if no such British Bankers' Association Interest
Settlement Rate is available to the Lender, the applicable Eurodollar Base Rate
for the relevant Interest Period shall instead be the rate determined by the
Lender to be the rate at which the Lender or one of its Affiliates offers to
place deposits in U.S. dollars with first-class banks in the London interbank
market at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period, in the approximate amount of the Lender's
relevant Eurodollar Loan and having a maturity equal to such Interest Period.
"Eurodollar Loan" means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the applicable Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Loan for the relevant
Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base Rate
applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable Margin.
"Excluded Taxes" means taxes imposed on the Lender's overall net income and
franchise taxes imposed on it by the jurisdiction in which the Lender's
principal executive office or is located.
"Exhibit" refers to an exhibit to this Agreement, unless another document
is specifically referenced.
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"Facility" means any of the Working Capital Revolving Credit Facility, the
Term Loan Facility or the Acquisition Loan Facility.
"Federal Funds Effective Rate" means, for any day, an interest 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 on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (local
time) on such day on such transactions received by the Lender from three Federal
funds brokers of recognized standing selected by the Lender in its sole
discretion.
"Financial Contract" of a Person means (i) any exchange-traded or over-the-
counter futures, forward, swap or option contract or other financial instrument
with similar characteristics, or (ii) any Rate Management Transaction.
"Floating Rate" means, for any day, a rate per annum equal to (i) the
Alternate Base Rate for such day plus (ii) the Applicable Margin, in each case
changing when and as the Alternate Base Rate changes.
"Floating Rate Loan" means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the Floating Rate.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied in a manner consistent with that used in preparing the
financial statements referred to in Section 5.4.
"Guaranty" means the Subsidiary Guaranty to be executed by each of the
Subsidiaries, whether now existing or hereafter formed or acquired by the
Borrower, in favor of the Lender, as the same may be amended, modified or
supplemented from time to time.
"Hazardous Substance" means any pollutant, contaminant, hazardous or toxic
substance or waste, or other substance, whether solid, liquid or gaseous, which
is listed, defined or regulated as a "hazardous substance", "hazardous waste" or
"solid waste", or otherwise classified as hazardous or toxic, in or pursuant to
any Environmental Law, or which is or contains asbestos, radon, any
polychlorinated biphenyl, urea formaldehyde foam insulation, or explosive or
radioactive material.
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, or other instruments, (v)
obligations of such Person to purchase securities or other Property arising out
of or in connection with the sale of the same or substantially similar
securities or Property, (vi) Capitalized Lease Obligations, (vii) any other
obligation for borrowed money or other financial accommodation which in
accordance with GAAP would be shown as a liability on the consolidated balance
sheet of such Person, and (viii) Off-Balance Sheet Liabilities.
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"Initial Acquisitions" means the ▇▇▇ Acquisition and the WSSI Acquisition.
"Initial Acquisition Agreements" means the ▇▇▇ Acquisition Agreement and
the WSSI Acquisition Agreement.
"Interest Period" means, with respect to a Eurodollar Loan, a period of
one, three or six months commencing on a Business Day selected by the Borrower
pursuant to this Agreement. Such Interest Period shall end on the day which
corresponds numerically to such date one, three or six months thereafter,
provided, however, that if there is no such numerically corresponding day in
such next, third or sixth succeeding month, such Interest Period shall end on
the last Business Day of such next, third or sixth succeeding month. If an
Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new calendar
month, such Interest Period shall end on the immediately preceding Business Day.
"Investment" of a Person means: (i) any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade) or contribution of capital by such Person; (ii) any stocks, bonds, mutual
funds, partnership interests, notes, debentures or other securities owned by
such Person; (iii) any deposit accounts and certificate of deposit owned by such
Person; and (iv) any structured notes, derivative financial instruments and
other similar instruments or contracts owned by such Person.
"▇▇▇" means Kentucky Environmental Network, a Kentucky corporation.
"▇▇▇ Acquisition" means the Acquisition by the Borrower of certain assets
of ▇▇▇.
"▇▇▇ Acquisition Agreement" means the definitive agreement to be negotiated
and entered into between the Borrower, as purchaser, and ▇▇▇, as seller, as
contemplated by the Letter of Intent and Memorandum of Understanding dated April
19, 2000, between the Borrower and ▇▇▇.
"Lender" means Bank One, Oklahoma, NA, a national banking association, and
its successors.
"Lending Installation" means the office, branch, subsidiary or affiliate of
the Lender listed on the signature pages hereof or otherwise selected by the
Lender pursuant to Section 2.17.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Leverage Ratio" means, as of any date of calculation, the ratio of (i)
Consolidated Funded Indebtedness outstanding on such date to (ii) Consolidated
EBITDA for the Borrower's then most-recently ended four fiscal quarters.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential
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arrangement of any kind or nature whatsoever (including, without limitation, the
interest of a vendor or lessor under any conditional sale, Capitalized Lease or
other title retention agreement).
"Loan" means any loan made by the Lender pursuant to Article II (or any
conversion or continuation thereof). A "Loan" may be a Working Capital
Revolving Loan, a Working Capital Term Loan, a Term Loan, an Acquisition Loan or
an Acquisition Term Loan.
"Loan Documents" means this Agreement, the Notes, the Collateral Documents,
the Guaranties, the Environmental Indemnity Agreement, and any other documents,
agreements, instruments and writings executed by the Borrower or any of its
Subsidiaries in connection with this Agreement or the Facilities.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents to
which it is a party, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Lender thereunder.
"Material Indebtedness" is defined in Section 7.5.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgages" means, collectively, the real estate mortgages, deeds of trust
and other instruments, each in form and substance satisfactory to the Lender,
covering the real property of the Borrower and its Subsidiaries, as the same may
be amended, modified or supplemented from time to time.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"NAC" means NESCO Acceptance Corporation, an Oklahoma corporation and a
Subsidiary of the Borrower.
"NAC Project" means any project undertaken by NAC to construct a retail
convenience store and/or gas station on behalf of a prospective owner.
"NAC Project Loan" means a Working Capital Revolving Loan made under the
Working Capital Revolving Credit Facility for the purpose of providing
construction financing to NAC for a specific NAC Project.
"Note" means any promissory note issued by the Borrower pursuant to Section
2.14 (whether the Working Capital Revolving Note, a Working Capital Term Note,
the Term Note, the Acquisition Note or an Acquisition Term Note).
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"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lender or any
indemnified party arising under the Loan Documents.
"Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any Sale and Leaseback
Transaction which is not a Capitalized Lease, (iii) any liability under any so-
called "synthetic lease" transaction entered into by such Person, or (iv) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheets of such Person, but excluding from this clause
(iv) Operating Leases.
"Operating Lease" of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.
"Other Taxes" is defined in Section 3.5(ii).
"Participants" is defined in Section 10.2.1.
"▇▇▇▇▇▇▇▇▇" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
"Payment Date" means the last day of each calendar month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"Pricing Schedule" means the Schedule attached hereto identified as such.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by the Lender or its parent, Bank One Corporation
(which rate is not necessarily the lowest rate charged to any customer),
changing when and as said prime rate changes.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Purchasers" is defined in Section 10.3.
"Rate Management Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent, now existing or hereafter created,
arising or acquired (including all
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renewals, extensions and modifications thereof and substitutions therefor),
under (i) any and all Rate Management Transactions, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any Rate
Management Transactions.
"Rate Management Transaction" means any transaction (including an agreement
with respect thereto) now existing or hereafter entered into between the
Borrower and the Lender or Affiliate thereof which is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions) or any combination
thereof, whether linked to one or more interest rates, foreign currencies,
commodity prices, equity prices or other financial measures.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Rentals" of a Person means the aggregate fixed amounts payable by such
Person under any Operating Lease.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"S&P" means Standard and Poor's Ratings Services, a division of The McGraw
Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission of the United States of
America, or any successor agency to its functions.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
11
"Schedule" refers to a specific schedule to this Agreement, unless another
document is specifically referenced.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Secured Obligations" means, collectively, (i) the Obligations and (ii) all
Rate Management Obligations owing to the Lender.
"Security Agreement" means the Pledge and Security Agreement, in form
satisfactory to the Lender, to be executed by the Borrower and each of its
Subsidiaries, whether now existing or hereafter formed or acquired by the
Borrower, in favor of the Lender, as the same may be amended, modified or
supplemented from time to time.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which (i) represents more than 5% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as at
the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 5% of the
consolidated net sales or of the consolidated net income of the Borrower and its
Subsidiaries as reflected in the financial statements referred to in clause (i)
above.
"Target" is defined in Section 6.12.2.
"Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes and Other Taxes.
"Term Loan" means any loan to be made by the Lender pursuant to Section
2.1.2 (and any conversion or continuation thereof pursuant to Section 2.9).
"Term Loan Commitment" means the sum of $13,300,000. As the context
requires, "Term Loan Commitment" also refers to the obligation of the Lender to
make Term Loans to the Borrower under the Term Loan Facility.
12
"Term Loan Facility" means the term loan facility established by the Lender
pursuant to Section 2.1.2.
"Term Loan Facility Termination Date" means May 31, 2000, or any earlier
date on which the Term Loan Commitment is reduced to zero or otherwise
terminated pursuant to the terms hereof.
"Term Note" means the promissory note to be issued by the Borrower pursuant
to Section 2.14 to evidence the outstanding Term Loans, substantially in the
form of Exhibit D-3.
"Type" means, with respect to any Loan, its nature as a Floating Rate Loan
or a Eurodollar Loan.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization 100% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.
"Working Capital Revolving Credit Commitment" means the sum of $8,000,000,
as such amount may be modified from time to time pursuant to the terms hereof.
As the context requires, "Working Capital Revolving Credit Commitment" also
refers to the obligation of the Lender to make Working Capital Revolving Loans
to the Borrower under the Working Capital Revolving Loan Facility.
"Working Capital Revolving Credit Facility" means the Working Capital
Revolving Credit Facility established by the Lender pursuant to Section 2.1.1.
"Working Capital Revolving Credit Facility Termination Date" means April
30, 2002, or any earlier date on which the Working Capital Revolving Credit
Commitment is reduced to zero or otherwise terminated pursuant to the terms
hereof or any later date to which the Lender may, in its sole discretion, extend
the Working Capital Credit Facility and its obligation to make Working Capital
Revolving Loans to the Borrower.
"Working Capital Revolving Loan" means any loan made by the Lender pursuant
to Section 2.1.1(a) (or any continuation or conversion thereof pursuant to
Section 2.9), but does not include the principal balance of any loan made under
Section 2.1.1(a) which has been converted to a Working Capital Term Loan
pursuant to Section 2.1.1(b).
13
"Working Capital Revolving Note" means the promissory note to be issued by
the Borrower pursuant to Section 2.14 to evidence the outstanding Working
Capital Revolving Loans, substantially in the form of Exhibit D-1.
"Working Capital Term Loan" means any term loan made by the Lender upon
conversion of a NAC Project Loan pursuant to Section 2.1.1(b) (or any
continuation or conversion thereof pursuant to Section 2.9).
"Working Capital Term Note" means a promissory note to be issued by the
Borrower pursuant to Section 2.14 to evidence an outstanding Working Capital
Term Loan, each substantially in the form of Exhibit D-2.
"WWSI" means Well Water Systems, Inc., a Florida corporation.
"WWSI Acquisition" means the Acquisition by the Borrower of certain assets
of WWSI.
"WWSI Acquisition Agreement" means the definitive agreement to be
negotiated and entered into between the Borrower, as purchaser, and WWSI, as
seller, as contemplated by the letter of intent dated April 7, 2000, between the
Borrower and WWSI.
1.2. Plural Terms. The definitions set forth in Section 1.2 shall be
------------
equally applicable to both the singular and plural forms of the defined terms.
1.3. References to Subsidiaries. Reference in this Agreement to
--------------------------
Subsidiaries of the Borrower shall be applicable only during such periods of
time that the Borrower has one or more Subsidiaries.
1.4. Accounting. Except as provided to the contrary herein, all
----------
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP. References
herein to the "consolidated" financial statements of the Borrower and to
accounting or financial determinations which are to be made hereunder on a
"consolidated" basis shall apply only during such periods of time that the
Borrower has one or more consolidated Subsidiaries.
1.5. Headings. Section headings in the Loan Documents are for convenience
--------
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
ARTICLE II
THE CREDITS
-----------
2.1. The Credit Facilities.
---------------------
2.1.1. Working Capital Revolving Credit Facility.
-----------------------------------------
(a) From and including the Closing Date and prior to
the Working Capital Revolving Credit Facility Termination Date, the
Lender agrees, on the terms and conditions set forth in this
Agreement, to make Working Capital Revolving Loans to
14
the Borrower from time to time (each individually a "Working Capital
Revolving Loan" and, collectively, the "Working Capital Revolving
Loans") in amounts not to exceed in the aggregate at any one time
outstanding the amount equal to (i) the Working Capital Revolving
Credit Commitment minus (ii) the principal balance of all
outstanding Working Capital Term Loans. Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow Working
Capital Revolving Loans at any time prior to the Working Capital
Revolving Credit Facility Termination Date. The obligation of the
Lender to make Working Capital Revolving Loans under the Working
Capital Revolving Credit Facility shall expire on the Working
Capital Revolving Credit Facility Termination Date.
(b) As to each individual NAC Project Loan, if the
principal balance of such Loan has not been repaid in full on or
before the last day of the 18th full calendar month following the
date on which such Loan was made., the remaining unpaid principal
balance of such Loan shall then be converted into a Working Capital
Term Loan.
2.1.2. Term Loan Facility. From and including the Closing Date and
------------------
prior to the Term Loan Facility Termination Date, the Lender agrees, on the
terms and conditions set forth in this Agreement, to make term loans to the
Borrower from time to time (each individually a "Term Loan" and,
collectively, the "Term Loans") in amounts not to exceed in the aggregate
at any one time outstanding the amount of the Term Loan Commitment. No
portion of any Term Loan may be reborrowed once it is repaid. The
obligation of the Lender to make Term Loans under the Term Loan Facility
shall expire on the Term Loan Facility Termination Date.
2.1.3. Acquisition Loan Facility.
-------------------------
(a) After the Closing Date and prior to the
Acquisition Loan Facility Termination Date, the Lender agrees, on
the terms and conditions set forth in this Agreement, to make
acquisition loans to the Borrower from time to time (each
individually an "Acquisition Loan" and, collectively, the
"Acquisition Loans") in amounts not to exceed in the aggregate the
amount of the Acquisition Loan Commitment. No portion of any
Acquisition Loan may be reborrowed once it is repaid. The obligation
of the Lender to make Acquisition Loans under the Acquisition Loan
Facility shall expire on the Acquisition Loan Facility Termination
Date.
(b) On each Acquisition Loan Facility Conversion Date
(including the Acquisition Loan Facility Termination Date), the
Acquisition Loan Facility Conversion Balance then outstanding shall
be converted into an Acquisition Term Loan.
2.2. Purpose; Use of Proceeds.
------------------------
2.2.1 Working Capital Revolving Credit Facility. Proceeds of each
-----------------------------------------
Working Capital Revolving Loan shall be used by the Borrower for one of the
following purposes:
15
(i) for general corporate working capital purposes
(including the refinancing of the Indebtedness outstanding under the
Borrower's existing working capital facility);
(ii) to finance Capital Expenditures;
(iii) to provide construction financing to NAC for NAC
Projects ("NAC Project Loans"); or
(iv) to finance the Borrower's purchase of shares of
its capital stock from ▇▇▇▇▇▇▇▇▇ at a purchase price not to exceed
$1,000,000.
Notwithstanding the foregoing, (a) the aggregate principal balance at any
time outstanding of all NAC Project Loans (including NAC Project Loans
converted to Working Capital Term Loans) may not exceed $4,000,000, and
(ii) not more than $2,000,000 may be borrowed under the Working Capital
Revolving Credit Facility for any individual NAC Project.
2.2.2. Term Loan Facility. Proceeds of the Term Loans shall be used
------------------
by the Borrower to refinance existing Indebtedness in the approximate
amount of $10,000,000, to finance the consideration payable by it under the
terms of the ▇▇▇ Acquisition Agreement and the WSSI Acquisition Agreement,
respectively, and to finance the construction of an office/warehouse
facility to be built in Oklahoma City, Oklahoma.
2.2.3. Acquisition Loan Facility. Proceeds of each Acquisition Loan
-------------------------
shall be used by the Borrower to finance an Acquisition which is permitted
to be made without the consent of the Lender under the provisions of
Section 6.12.2(ii) or which has been approved by the Lender in accordance
with the provisions of Section 6.12.2(iii).
2.3. Required Principal Payments; Termination.
----------------------------------------
2.3.1. Working Capital Revolving Credit Facility.
-----------------------------------------
(a) All outstanding Working Capital Revolving Loans,
other than NAC Project Loans which have been converted to Working
Capital Term Loans, and all other unpaid Obligations arising under
or relating to the Working Capital Revolving Credit Facility shall
be due and payable in full on the Working Capital Revolving Credit
Facility Termination Date.
(b) Each Working Capital Term Loan shall be payable as
to principal in thirty-six (36) consecutive monthly payments, which
shall be due on each Payment Date commencing on the first Payment
Date occurring after the date such Working Capital Term Loan is made
and continuing on each Payment Date thereafter, with each
installment (except the final installment due at maturity) to be in
the aggregate principal amount equal to one thirty-sixth (1/36th) of
the original principal amount of such Working Capital Term Loan and
with the final installment due at maturity to be equal to the then
outstanding principal balance of such Working Capital Term Loan.
16
2.3.2. Term Loan Facility. The aggregate principal balance of the
------------------
Term Loans outstanding on the Term Loan Facility Termination Date shall be
payable as to principal in thirty-six (36) consecutive monthly payments,
which shall be due on each Payment Date commencing on the first Payment
Date occurring after the Term Loan Facility Termination Date and continuing
on each Payment Date thereafter, with each installment (except the final
installment due at maturity) to be in the aggregate principal amount equal
to one-sixtieth (1/60th) of the aggregate principal balance of the Term
Loans outstanding at the close of business on the Term Loan Facility
Termination Date and with the final installment due at maturity to be equal
to the then outstanding principal balance of the Term Loans and all other
unpaid Obligations arising under or relating to the Term Loan Facility. If
the Term Loan Facility is fully funded at the Term Loan Facility
Termination Date, the amount of each installment (except the final
installment due at maturity) will be $221,666.67.
2.3.3. Acquisition Loan Facility. The Acquisition Term Loan made on
-------------------------
each of the Acquisition Loan Facility Conversion Dates shall be payable as
to principal in thirty-six (36) consecutive monthly payments, which shall
be due on each Payment Date commencing on the first Payment Date occurring
after the applicable Acquisition Loan Facility Conversion Date and
continuing on each Payment Date thereafter, with each installment (except
the final installment due at maturity) to be in the aggregate principal
amount equal to one-sixtieth (1/60th) of the applicable Acquisition Loan
Facility Conversion Balance and with the final installment due at maturity
to be equal to the then outstanding principal balance of such Acquisition
Term Loan.
2.3.4. Mandatory Prepayments. Within three (3) Business Days after
---------------------
receipt thereof, the Borrower shall make a mandatory prepayment on the
Loans in an amount equal to the net proceeds received by the Borrower from
(i) the creation or incurrence of additional Indebtedness (other than Loans
and additional Indebtedness permitted under Section 6.11) or (ii) the sale
of a Substantial Portion of its Properties. Any mandatory prepayment made
pursuant to clause (i) or (ii) preceding shall be applied as follows (to
the extent of available proceeds): first, to the principal installments
payable under Section 2.3.2 with respect to the Term Loans in the inverse
order of maturity; then, to the principal installments payable under
Section 2.3.3 with respect to the Acquisition Term Loans in the inverse
order of maturity; then, to any outstanding Acquisition Loans; then to the
principal installments payable under Section 2.3.1(b) with respect to the
Working Capital Term Loans in the inverse order of
17
maturity; and finally, to any outstanding Working Capital Revolving Loans.
To the extent any mandatory prepayment is applied to the outstanding
Working Capital Revolving Loans, the Working Capital Revolving Credit
Commitment shall be permanently reduced by a like amount. Nothing contained
in this Section 2.3.4 shall nullify the requirements, as set forth in
Section 6.11 and 6.13, respectively, for consent of the Lender to the
creation or incurrence of additional Indebtedness or any sale by the
Borrower of a Substantial Portion of its Properties.
2.4. Types of Loans. The Loans under the Working Capital Revolving Credit
--------------
Facility, the Term Loan Facility and the Acquisition Loan Facility may be
Floating Rate Loans or Eurodollar Loans, or a combination thereof, selected by
the Borrower in accordance with Sections 2.8 and 2.9. Not more than four (4)
Eurodollar Loans may be outstanding at any time under any Facility.
2.5. Reductions in Commitments. The Borrower may permanently reduce the
-------------------------
Working Capital Revolving Credit Commitment or the Acquisition Loan Commitment,
in whole or in part, in integral multiples of $1,000,000, upon at least three
Business Days' written notice to the Lender, which notice shall specify the
amount of any such reduction; provided, however, that the amount of the Working
Capital Revolving Credit Commitment and/or the Acquisition Loan Commitment may
not be reduced below the aggregate principal amount of the Loans outstanding
under the Working Capital Revolving Credit Facility or the Acquisition Loan
Facility, as applicable.
2.6. Minimum Amount of Each Loan. Each Loan shall be in the minimum
---------------------------
amount of $100,000 (and in multiples of $100,000 if in excess thereof);
provided, however, that any Floating Rate Loan under the Working Capital
Revolving Credit Facility or the Acquisition Loan Facility may be in the amount
of the unused Working Capital Revolving Credit Commitment or unused Acquisition
Loan Commitment, as the case may be.
2.7. Optional Principal Payments. The Borrower may from time to time pay,
---------------------------
without penalty or premium, all outstanding Floating Rate Loans, or, in a
minimum aggregate amount of $100,000 or any integral multiple of $100,000 in
excess thereof, any portion of the outstanding Floating Rate Loans upon one
Business Day's prior notice to the Lender. The Borrower may pay, without premium
or penalty, any Eurodollar Loan at the end of the applicable Interest Period,
but no Eurodollar Loan may be prepaid prior to the end of the applicable
Interest Period. Principal prepayments made on the Working Capital Term Loans,
the Term Loans or the Acquisition Term Loans shall be applied to the principal
installments payable under Section 2.3.1(b), 2.3.2 or 2.3.3, as applicable, in
the inverse order of maturity.
2.8. Method of Selecting Types and Interest Periods for New Loans. The
------------------------------------------------------------
Borrower shall select the Type of Loan and, in the case of each Eurodollar Loan,
the Interest Period applicable thereto from time to time. The Borrower shall
give the Lender irrevocable notice (a "Borrowing Notice") not later than 10:00
a.m. (local time) at least one Business Day before the Borrowing Date of each
Floating Rate Loan and three Business Days before the Borrowing Date for each
Eurodollar Loan, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Loan,
(ii) the aggregate amount of such Loan,
(iii) the applicable Facility and the purpose of the Loan,
18
(iv) the Type of Loan selected, and
(v) in the case of each Eurodollar Loan, the Interest Period
applicable thereto.
Not later than noon (local time) on each Borrowing Date, the Lender shall make
funds available to the Borrower for the requested Loan amount.
2.9. Conversion and Continuation of Outstanding Loans. Floating Rate
------------------------------------------------
Loans shall continue as Floating Rate Loans unless and until such Floating Rate
Loans are converted into Eurodollar Loans pursuant to this Section 2.9 or are
repaid in accordance with Section 2.3 or 2.7. Each Eurodollar Loan shall
continue as a Eurodollar Loan until the end of the then applicable Interest
Period therefor, at which time such Eurodollar Loan shall be automatically
converted into a Floating Rate Loan unless the Borrower shall have given the
Lender a Conversion/Continuation Notice (as defined below) requesting that, at
the end of such Interest Period, such Eurodollar Loan continue as a Eurodollar
Loan for the same or another Interest Period or unless such Eurodollar Loan is
repaid in accordance with Section 2.3. Subject to the terms of Section 2.6, the
Borrower may elect from time to time to convert all or any part of a Floating
Rate Loan into a Eurodollar Loan. The Borrower shall give the Lender irrevocable
notice (a "Conversion/Continuation Notice") of each conversion of a Floating
Rate Loan into a Eurodollar Loan or continuation of a Eurodollar Loan not later
than 10:00 a.m. (local time) at least three Business Days prior to the date of
the requested conversion or continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and Type of the Loan which is to be
converted or continued, and
(iii) the amount of such Loan which is to be converted into or
continued as a Eurodollar Loan and the duration of the Interest Period
applicable thereto.
2.10. Interest; Changes in Interest Rate. Each Floating Rate Loan shall
----------------------------------
bear interest on the outstanding principal amount thereof, for each day from and
including the date such Loan is made or is automatically converted from a
Eurodollar Loan into a Floating Rate Loan pursuant to Section 2.9, to but
excluding the date it is paid or is converted into a Eurodollar Loan pursuant to
Section 2.9 hereof, at a rate per annum equal to the Floating Rate for such day.
Changes in the rate of interest on that portion of any Loan maintained as a
Floating Rate Loan will take effect simultaneously with each change in the
Alternate Base Rate. Each Eurodollar Loan shall bear interest on the outstanding
principal amount thereof from and including the first day of the Interest Period
applicable thereto to (but not including) the last day of such Interest Period
at the interest rate determined by the Lender as applicable to such Eurodollar
Loan based upon the Borrower's selections under Sections 2.8 and 2.9 and
otherwise in accordance with the terms hereof. No Interest Period with respect
to any Loan under any Facility may end after the maturity or termination of such
Facility. The Borrower shall select Interest Periods so that it is not necessary
to repay any portion of a Eurodollar Loan prior to the last day of the
applicable Interest Period in order to make a payment (including a mandatory
prepayment) required pursuant to Section 2.3.
2.11. Rates Applicable After Default. Notwithstanding anything to the
------------------------------
contrary contained in Section 2.8 or 2.9, during the continuance of a Default or
Unmatured Default the Lender may, at
19
its option, by notice to the Borrower, declare that no Loan may be made as,
converted into or continued as a Eurodollar Loan. During the continuation of a
Default, the Lender may, at its option, by notice to the Borrower, declare that
(i) each Eurodollar Loan shall bear interest for the remainder of the applicable
Interest Period at the rate otherwise applicable to such Interest Period plus 2%
per annum and (ii) each Floating Rate Loan shall bear interest at a rate per
annum equal to the Floating Rate in effect from time to time plus 2% per annum,
provided that, during the continuance of a Default under Section 7.6 or 7.7, the
interest rates set forth in clauses (i) and (ii) above shall be applicable to
all Loans without any election or action on the part of the Lender.
2.12 Fees.
----
(i) The Borrower agrees to pay to the Lender a commitment fee
(the "Commitment Fee") at a per annum rate equal to the Applicable Fee Rate
on the daily unused portion of the Lender's Working Capital Revolving
Credit Commitment and Acquisition Loan Commitment from the date hereof to
and including the latter to occur of the Working Capital Revolving Credit
Facility Termination Date or the Acquisition Loan Facility Termination
Date, payable on each Payment Date commencing May 31, 2000. For purposes of
this Section 2.12, both Working Capital Revolving Loans and Working Capital
Term Loans shall be regarded as usages of the Working Capital Revolving
Credit Commitment, and both Acquisition Loans and Acquisition Term Loans
shall be regarded as usages of the Acquisition Loan Commitment. Any accrued
Commitment Fee shall be payable on the effective date of any termination of
the obligations of the Lender to make Working Capital Revolving Loans
and/or Acquisition Loans hereunder.
(ii) The Borrower further agrees to pay the Lender an up-front
facility fee of $30,000, of which $15,000 has previously been paid to the
Lender and the remainder shall be due and payable on the Closing Date.
2.13. Method of Payment. All payments of the Obligations hereunder shall
-----------------
be made, without setoff, deduction, or counterclaim, in immediately available
funds to the Lender at the Lender's address specified pursuant to Article XI, by
noon (local time) on the date when due. The Lender is hereby authorized to
charge any account of the Borrower or any of its Subsidiaries maintained with
the Lender for each payment of principal, interest and fees as it becomes due
hereunder.
2.14. Notes; Evidence of Indebtedness. In order to evidence the Borrower's
-------------------------------
obligation for payment of principal and interest on the Loans from time to time
outstanding under each of the Facilities, the Borrower shall (i) make, execute
and deliver the Working Capital Revolving Note, the Term Note and the
Acquisition Note on the Closing Date, (ii) make, execute and deliver an
Acquisition Term Note (with appropriate insertions) on each Acquisition Loan
Facility Conversion Date in the principal amount of the applicable Acquisition
Loan Facility Conversion Balance, and (iii) make, execute and deliver a Working
Capital Term Note (with appropriate insertions) on the date the unpaid balance
of any Working Capital Revolving Loan used to finance a NAC Project is converted
to a Working Capital Term Loan. The Lender shall also maintain accounts or
records in which it will enter (a) the amount of each Loan made hereunder, the
Type thereof and the Interest Period with respect thereto, (b) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to the Lender hereunder, and (c) the amount of any sum received by the
Lender. The entries made in such accounts and records shall be prima facie
evidence of the existence and amounts of the Obligations therein recorded;
provided, however, that the failure of the
20
Lender to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Obligations in accordance
with their terms.
2.15. Telephonic Notices. The Borrower hereby authorizes the Lender to
------------------
extend, convert or continue Loans, effect selections of Types of Loans and to
transfer funds based on telephonic notices made by any person or persons the
Lender in good faith believes to be acting on behalf of the Borrower, it being
understood that the foregoing authorization is specifically intended to allow
Borrowing Notices and Conversion/Continuation Notices to be given
telephonically. The Borrower agrees to deliver promptly to the Lender a written
confirmation, if such confirmation is requested by the Lender, of each
telephonic notice signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the Lender, the records
of the Lender shall govern, absent manifest error.
2.16. Interest Payment Dates; Interest and Fee Basis. Interest accrued on
----------------------------------------------
each Floating Rate Loan shall be payable on each Payment Date, commencing with
the first such date to occur after the date hereof and at maturity. Interest
accrued on that portion of the outstanding principal amount of any Floating Rate
Loan converted into a Eurodollar Loan on a day other than a Payment Date shall
be payable on the date of conversion. Interest accrued on each Eurodollar Loan
shall be payable on the last day of its applicable Interest Period, on any date
on which the Eurodollar Loan is prepaid, whether by mandatory prepayment, upon
acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar
Loan having an Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest Period. Interest
and the Commitment Fee shall be calculated for actual days elapsed on the basis
of a 360-day year. Interest shall be payable for the day a Loan is made but not
for the day of any payment on the amount paid if payment is received prior to
noon (local time) at the place of payment. If any payment of principal of or
interest on a Loan shall become due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.
2.17. Lending Installations. The Lender may book the Loans at any Lending
---------------------
Installation selected by the Lender and may change its Lending Installation from
time to time. All terms of this Agreement shall apply to any such Lending
Installation, and the Notes issued hereunder shall be deemed held by the Lender
for the benefit of any such Lending Installation. The Lender may, by written
notice to the Borrower in accordance with Article XI, designate replacement or
additional Lending Installations through which Loans will be made by it and for
whose account Loan payments are to be made.
2.18 Collateral. To secure the Secured Obligations, the Borrower shall
----------
grant and convey, and cause each of its Subsidiaries (whether now existing or
hereafter formed or acquired by the Borrower) to grant and convey, to the
Lender, and further, shall maintain and cause to be maintained in favor of the
Lender at all times during the term of this Agreement and until the Secured
Obligations are paid and satisfied in full, valid and perfected first priority
security interests and mortgage liens in all of the now existing and after-
acquired tangible and intangible Property of the Borrower and each of its
Subsidiaries, whether real, personal or mixed, subject only to Permitted Liens,
including, without limitation, all accounts, inventory, equipment, fixtures
(including trade fixtures), real estate, buildings and improvements, leaseholds,
general intangibles, patents, trademarks, trade names, franchises, investment
property (including all shares of capital stock or other equity securities of
each of the Borrower's Subsidiaries) and deposit accounts of the Borrower and
each of its Subsidiaries, and all proceeds of any thereof. In order to provide
the Lender with
21
such first priority perfected security interests and mortgage liens, the
Borrower shall, from time to time, execute and deliver, or cause to be executed
and delivered, such instruments, agreements, assignments, financing statements
and other documents, and take or cause to be taken such actions as may be
necessary in the opinion of the Lender and the Lender's counsel to provide such
valid and perfected first priority security interests and mortgage liens,
including, without limitation, the Collateral Documents. Notwithstanding the
foregoing, neither the Borrower nor NAC shall be required to grant the Lender a
mortgage lien on any NAC Project unless and until such time as the related NAC
Project Loan is converted to a Working Capital Term Loan.
2.19 Guaranties. The Borrower shall further cause each of its
----------
Subsidiaries (whether now existing or hereafter formed or acquired by the
Borrower) to guarantee to the Lender the prompt payment and performance of the
Secured Obligations and to maintain such guarantee in full force and effect at
all times during the term of this Agreement and until the Secured Obligations
are paid and satisfied in full. In order to provide the Lender with such
guarantees, the Borrower shall cause each of its Subsidiaries (whether now
existing or hereafter formed or acquired by the Borrower) to execute and deliver
the Guaranty.
ARTICLE III
YIELD PROTECTION; TAXES
-----------------------
3.1. Yield Protection. If, on or after the date of this Agreement, the
----------------
adoption of any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
change in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency:
(i) subjects the Lender or any applicable Lending Installation
to any Taxes, or changes the basis of taxation of payments (other than with
respect to Excluded Taxes) to the Lender in respect of its Eurodollar
Loans, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, the Lender or any applicable Lending Installation (other than reserves
and assessments taken into account in determining the interest rate
applicable to Eurodollar Loans), or
(iii) imposes any other condition the result of which is to
increase the cost to the Lender or any applicable Lending Installation of
making, funding or maintaining its Eurodollar Loans or reduces any amount
receivable by the Lender or any applicable Lending Installation in
connection with its Eurodollar Loans, or requires the Lender or any
applicable Lending Installation to make any payment calculated by reference
to the amount of Eurodollar Loans held or interest received by it, by an
amount deemed material by the Lender,
and the result of any of the foregoing is to increase the cost to the Lender or
applicable Lending Installation of making or maintaining the Eurodollar Loans or
Commitment or to reduce the return received by the Lender or applicable Lending
Installation in connection with its Eurodollar Loans or
22
Commitment, then, within 15 days of demand by the Lender, the Borrower shall pay
the Lender such additional amount or amounts as will compensate the Lender for
such increased cost or reduction in amount received.
3.2. Changes in Capital Adequacy Regulations. If the Lender determines
---------------------------------------
the amount of capital required or expected to be maintained by the Lender, any
Lending Installation of the Lender or any corporation controlling the Lender is
increased as a result of a Change, then, within 15 days of demand by the Lender,
the Borrower shall pay the Lender the amount necessary to compensate for any
shortfall in the rate of return on the portion of such increased capital which
the Lender determines is attributable to this Agreement, the Loans or its
Commitment to make Loans hereunder (after taking into account the Lender's
policies as to capital adequacy). "Change" means (i) any change after the date
of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by the Lender or any corporation
controlling the Lender. "Risk-Based Capital Guidelines" means (i) the risk-based
capital guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
3.3. Availability of Types of Loans. If the Lender determines that
------------------------------
maintenance of Eurodollar Loans at a suitable Lending Installation would violate
any applicable law, rule, regulation, or directive, whether or not having the
force of law, or if the Lender determines that (i) deposits of a type and
maturity appropriate to match fund Eurodollar Loans are not available or (ii)
the interest rate applicable to Eurodollar Loans does not accurately reflect the
cost of making or maintaining Eurodollar Loans, then the Lender shall suspend
the availability of Eurodollar Loans and require any affected Eurodollar Loans
to be converted to Floating Rate Loans.
3.4. Funding Indemnification. If any payment of a Eurodollar Loan occurs
-----------------------
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Loan is not
made on the date specified by the Borrower for any reason other than default by
the Lender, the Borrower will indemnify the Lender for any loss or cost incurred
by it resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain such Eurodollar
Loan.
3.5. Taxes.
-----
(i) All payments by the Borrower to or for the account of the
Lender hereunder or under any Note shall be made free and clear of and
without deduction for Taxes. If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to the
Lender, (a) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 3.5) the Lender receives an
amount equal to the sum it would have received had no such deductions been
made, (b) the Borrower shall make such deductions, (c) the Borrower shall
pay the full amount deducted to the relevant authority in accordance
23
with applicable law, and (d) the Borrower shall furnish to the Lender the
original copy of a receipt evidencing payment thereof within 30 days after
such payment is made.
(ii) The Borrower agrees to pay any present or future stamp or
documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any
Note or from the execution or delivery of, or otherwise with respect to,
this Agreement, any Note or any of the Collateral Documents, except for any
mortgage or similar tax paid or payable in connection with the recording of
any of the Collateral Documents which by law must be paid by a lender and
cannot be paid or passed on to a borrower (the taxes and other charges
referred to in Section 3.5(ii), subject to the foregoing exclusion, are
herein collectively referred to as "Other Taxes").
(iii) The Borrower hereby agrees to indemnify the Lender for the
full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed on amounts payable under this Section 3.5)
paid by the Lender and any liability (including penalties, interest and
expenses, other than penalties, interest and expenses proximately arising
from the gross negligence of the party seeking to be indemnified) arising
therefrom or with respect thereto. Payments due under this indemnification
shall be made within 30 days of the date the Lender makes demand therefor
pursuant to Section 3.6.
3.6. Lender Statements; Survival of Indemnity. To the extent reasonably
----------------------------------------
possible, the Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrower to the
Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of
Eurodollar Loans under Section 3.3, so long as such designation is not, in the
judgment of the Lender, disadvantageous to the Lender. The Lender shall deliver
a written statement of the Lender to the Borrower as to the amount due, if any,
under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in
reasonable detail the calculations upon which the Lender determined such amount
and shall be final, conclusive and binding on the Borrower in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Loan shall be calculated as though the Lender
funded its Eurodollar Loan through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the case or
not. Unless otherwise provided herein, the amount specified in the written
statement of the Lender shall be payable on demand after receipt by the Borrower
of such written statement. The obligations of the Borrower under Sections 3.1,
3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of
this Agreement.
24
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1. Conditions to Closing. The obligation of the Lender to establish the
---------------------
Facilities, to make the initial Loan under the Working Capital Revolving Credit
Facility and the Term Loan Facility is subject to the Borrower's satisfaction of
the following conditions precedent at or as of the Closing Date:
4.1.1 Execution and Delivery of Loan Documents. The Borrower shall
----------------------------------------
have executed and delivered to the Lender, and (as applicable) caused each
of its Subsidiaries to execute and deliver to the Lender, the following
Loan Documents:
(i) This Agreement.
(ii) The Term Note, the Working Capital Revolving Note
and the Acquisition Note.
(iii) The Security Agreement, together with appropriate
UCC-1 financing statements.
(iv) Mortgages covering the Borrower's real property
located in Tulsa, Oklahoma, Oklahoma City, Oklahoma, San Antonio,
Texas, and Columbia, South Carolina (provided, however, that the
Mortgage covering the Borrower's proposed office/warehouse facility
to be located in Oklahoma City, Oklahoma, need not be delivered
until such time as the Borrower has acquired title to the site of
such facility).
(v) Guaranties from each of the Subsidiaries existing
on the Closing Date.
(vi) The Environmental Indemnity Agreement.
4.1.2. Delivery of Documents. The Borrower shall have executed
---------------------
(where necessary) and delivered to the Lender:
(i) Copies of the articles or certificate of
incorporation of each of the Borrower and each of its Subsidiaries,
together with all amendments thereto, and a certificate of good
standing for the Borrower and each of its Subsidiaries, each
certified by the appropriate governmental officer in its
jurisdiction of incorporation, and copies of a certificate of good
standing issued by the appropriate governmental officer in each
other jurisdiction in which the Borrower and/or any of its
Subsidiaries has any offices or conducts any significant business
operations.
(ii) Copies of the bylaws of the Borrower and each of
its Subsidiaries, each certified by its Secretary or Assistant
Secretary.
25
(iii) Copies of the resolutions or other actions of the
Board of Directors or other governing body of the Borrower and each
of its Subsidiaries, authorizing the execution of the Loan Documents
to which it is a party.
(iv) An incumbency certificate, executed by the
Secretary or Assistant Secretary of the Borrower, which shall
identify by name and title and bear the signatures of the Authorized
Officers and any other officers of the Borrower authorized to sign
the Loan Documents to which the Borrower is a party, upon which
certificate the Lender shall be entitled to rely until informed of
any change in writing by the Borrower, and an incumbency
certificate, executed by the Secretary or Assistant Secretary of
each of its Subsidiaries, which shall identify by name and title and
bear the signatures of the officers of each of its Subsidiaries
authorized to sign the Loan Documents to which such Subsidiary is a
party, upon which certificate the Lender shall be entitled to rely
until informed of any change in writing by such Subsidiary.
(v) A certificate, signed by the chief financial
officer of the Borrower, stating that, to the best of such officer's
knowledge, after diligent inquiry, on or as of the Closing Date, (A)
no Default or Unmatured Default has occurred and is continuing, (B)
the representations and warranties continued in Article V of this
Agreement are true and correct, and (C) the Borrower has experienced
no material adverse change in its financial condition since March
31, 2000.
(vi) A written opinion of the Borrower's counsel,
addressed to the Lender, in substantially the form of Exhibit A
(with such exceptions, qualifications and limitations as shall be
acceptable to counsel to the Lender).
(vii) Written money transfer instructions, in
substantially the form of Exhibit C, addressed to the Lender and
signed by an Authorized Officer, together with such other related
money transfer authorizations as the Lender may have re asonably
requested.
(viii) Evidence of compliance with applicable federal
regulations governing loans in areas having special flood hazards.
(ix) The insurance certificate described in
Section 5.20.
(x) Satisfactory payoff letters from the holders of
all Indebtedness to be refinanced with the proceeds of the initial
Loans to be made under the Working Capital Revolving Credit Facility
and the Term Loan Facility. The payoff letter from each holder of
Indebtedness to be refinanced on the Closing Date shall (i) state
the amount necessary to pay off the principal balance of and accrued
interest on the Indebtedness held by such holder, (ii) set forth
payment instructions for remitting the payoff amount, (iii) state
that, immediately upon receipt of the payoff amount, such holder
will release of record any Liens which it may have on any Properties
of the Borrower or any of its Subsidiaries, and (iv) acknowledge
that, upon its receipt of the payoff amount, such holder will no
longer have any Lien on any Properties of the Borrower or any of its
Subsidiaries.
26
(xi) Certified responses to UCC lien search requests
reflecting that there are no effective UCC financing statements on
file in any filing offices in the State of Oklahoma or any other
states or jurisdictions in which the Borrower or any of its
Subsidiaries maintains any place of business or owns any Properties
which name the Borrower or any of its Subsidiaries as debtor, other
than (i) financing statements to be terminated and released on the
Closing Date, and (ii) financing statements relating to Liens which
are permitted to exist under Section 6.15.
(xii) Such other documents as the Lender or its counsel
may have reasonably requested.
4.1.3. Other Conditions. The Borrower shall have satisfied the
----------------
following additional conditions precedent at or as of the Closing Date:
(i) The Borrower shall have paid all fees set forth in
this Agreement, to the extent such fees are dues and payable at or
as of the Closing Date.
(ii) There shall not have occurred any material adverse
change in the business, Property, prospects, condition (financial or
otherwise) or results of operations of the Borrower or any of its
Subsidiaries.
4.2 Repurchase of Stock. The Lender shall not be required to make the
-------------------
proposed Working Capital Revolving Loan to finance the Borrower's purchase of
shares of its capital stock from ▇▇▇▇▇▇▇▇▇ unless on or as of the applicable
Borrowing Date the Borrower shall have provided satisfactory evidence to the
Lender that the purchase of such shares has been approved by the Board of
Directors of the Borrower and that such shares have been repurchased free and
clear of any Liens at a purchase price not exceeding $1,000,000.
4.3 Initial Acquisitions. The Lender shall not be required to make any
--------------------
Term Loan under the Term Loan Facility to finance either or both of the Initial
Acquisitions unless on or as of the applicable Borrowing Date:
(i) The Borrower shall have delivered to the Lender fully
executed copies of each of the Initial Acquisition Agreements (in final
form) and all other Acquisition Documents relating to the Initial
Acquisitions, and the terms and provisions of the same shall be
satisfactory to the Lender.
(ii) The Lender shall have completed a due diligence review of
the financial condition, operations and prospects of the Borrower and the
businesses to be acquired in connection with the Initial Acquisitions
(including a review of the due diligence conducted by the Borrower in
connection with the Initial Acquisition Agreements), and the results of
such due diligence review shall be satisfactory to the Lender.
(iii) The closings of the transactions contemplated by the Initial
Acquisition Agreements shall have occurred in accordance with the terms and
provisions of the respective Initial Acquisition Agreements.
(iv) The Borrower, ▇▇▇ and WSSI (as applicable) shall have
satisfied or performed all obligations required under the terms of the
Initial Acquisition Agreements to
27
be satisfied or performed at or prior to the closings thereof, including
the procurement of all necessary approvals of governmental agencies and
authorities, and all other conditions precedent to the closings of the
Initial Acquisition Agreement shall have been satisfied, and evidence of
the foregoing shall have been delivered to the Lender.
(v) The Borrower shall have executed and delivered, or caused to
be executed and delivered, such agreements and documents and taken such
other actions as may be necessary to comply with Section 6.24.
(vi) All legal matters incident to the Initial Acquisitions shall
be satisfactory to the Lender and its counsel.
4.4 Acquisition Loans. The Lender shall not be required to make any
-----------------
Acquisition Loans under the Acquisition Loan Facility unless on or as of the
applicable Borrowing Date:
(i) Either (A) the proposed Acquisition shall be permitted
without the consent of the Lender under the provisions of Section
6.12.2(ii), and the Borrower shall have delivered all documents required to
be delivered under the terms of Section 6.12.2(ii), or (B) the proposed
Acquisition, including the terms and conditions thereof, and all related
Acquisition Documents shall have been approved by the Lender in accordance
with Section 6.12.2(iii).
(ii) All conditions precedent to the closing of the proposed
Acquisition (as set forth in the applicable Acquisition Documents and as
otherwise required by applicable law) shall have been satisfied, including
the procurement of all necessary approvals of governmental agencies and
authorities, and the closing of the proposed Acquisition shall have
occurred simultaneously in accordance with the provisions of such
Acquisition Documents.
(iii) The Borrower and, if applicable, the Target to be acquired
pursuant to such Acquisition shall have executed and delivered, or caused
to be executed and delivered, such agreements and documents and taken such
other actions as may be necessary to comply with Section 6.24.
(iv) All legal matters incident to the proposed Acquisition shall
be satisfactory to the Lender and its counsel.
4.5. Each Loan. The Lender shall not be required to make a Loan under any
---------
Facility unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V
are true and correct as of such Borrowing Date except to the extent any
such representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall have been true
and correct on and as of such earlier date.
(iii) All legal matters incident to the making of such Loan
shall be satisfactory to the Lender and its counsel.
28
4.6 Effect of Borrowing Notice. The Borrowing Notice with respect to
--------------------------
each Loan shall constitute a representation and warranty by the Borrower that
the applicable conditions precedent set forth in this Article IV have been
satisfied and that the statements contained in Sections 4.5(i) and (ii) are true
and correct. The Lender may require a duly completed Compliance Certificate as a
condition to making any Loan.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Lender as follows:
5.1. Existence and Standing. Each of the Borrower and its Subsidiaries is
----------------------
and will continue to be a corporation, partnership or limited liability company,
duly and properly incorporated or organized, as the case may be, validly
existing and (to the extent such concept applies to such entity) in good
standing under the laws of its jurisdiction of incorporation or organization and
has all requisite authority and is duly qualified or licensed to conduct its
business in each jurisdiction in which it owns any Property or conducts any
business (except where failure to be so qualified or licensed could not
reasonably be expected to have a Material Adverse Effect or result in the
forfeiture of any Property).
5.2. Authorization and Validity. Each of the Borrower and its
--------------------------
Subsidiaries has the power and authority and legal right to execute and deliver
the Loan Documents to which it is a party and to perform its obligations
thereunder. The execution and delivery by each of the Borrower and its
Subsidiaries of the Loan Documents to which it is a party and the performance of
its obligations thereunder have been duly authorized by proper corporate
proceedings, and the Loan Documents to which it is a party constitute its legal,
valid and binding obligations, enforceable against it in accordance with their
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and delivery
-------------------------------
by the Borrower and its Subsidiaries of the Loan Documents to which each is a
party, nor the consummation of the transactions therein contemplated, nor
compliance with the provisions thereof will violate (i) any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on the
Borrower or any of its Subsidiaries or (ii) the Borrower's or any Subsidiary's
articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, or operating or
other management agreement, as the case may be, or (iii) the provisions of any
indenture, instrument or agreement to which the Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its Property, is
bound, or conflict with or constitute a default thereunder, or result in, or
require, the creation or imposition of any Lien in, of or on the Property of the
Borrower or a Subsidiary pursuant to the terms of any such indenture, instrument
or agreement. No order, consent, adjudication, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by the Borrower or any of its
Subsidiaries, is required to be obtained by the Borrower or any of its
Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under this Agreement, the payment and performance by
the Borrower of the Obligations or the legality, validity, binding effect or
enforceability of any of the Loan Documents.
29
5.4. Financial Statements. The audited consolidated and consolidating
--------------------
financial statements of the Borrower and its Subsidiaries for the fiscal year
ended December 31, 1999, and the unaudited interim consolidated financial
statements of the Borrower and its Subsidiaries for the three months ended March
31, 2000, copies of which have been delivered to the Lender, were prepared in
accordance with GAAP in effect on the date such statements were prepared and
fairly present the consolidated financial position of the Borrower and its
Subsidiaries at such date and the results of operations for the periods then
ended.
5.5. Material Adverse Change. Since the respective dates of the financial
-----------------------
statements referred to in Section 5.4, there has been no adverse change in the
business, Property, prospects, condition (financial or otherwise) or results of
operations of the Borrower and its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed all United
-----
States federal tax returns and all other tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except for such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided in accordance with GAAP and as to which no Lien
exists. As of the date of this Agreement, the United States income tax returns
of the Borrower have been audited by the Internal Revenue Service through the
fiscal year ended December 31, 1994. No tax liens have been filed and no claims
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are adequate.
5.7. Litigation and Contingent Obligations. There is no litigation,
-------------------------------------
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of the Borrower's officers, threatened against or affecting
the Borrower or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect or which seeks to prevent, enjoin or delay the
making of any Loans. Other than any liability incident to any litigation,
arbitration or proceeding which could not reasonably be expected to have a
Material Adverse Effect, neither the Borrower nor any of its Subsidiaries has
any material contingent obligations not provided for or disclosed in the
financial statements referred to in Section 5.4.
5.8. Subsidiaries. Schedule 1 contains an accurate list of all
------------
Subsidiaries of the Borrower as of the date of this Agreement and as of the
Closing Date, setting forth their respective jurisdictions of organization and
the percentage of their respective capital stock or other ownership interests
owned by the Borrower or other Subsidiaries. All of the issued and outstanding
shares of capital stock or other ownership interests of such Subsidiaries have
been (to the extent such concepts are relevant with respect to such ownership
interests) duly authorized and issued and are fully paid and non-assessable.
5.9. ERISA. No Single Employer Plan has any Unfunded Liabilities. Each
-----
Plan complies in all material respects with all applicable requirements of law
and regulations, no Reportable Event has occurred with respect to any Plan,
neither the Borrower nor any other member of the Controlled Group has withdrawn
from any Plan or initiated steps to do so, and no steps have been taken to
reorganize or terminate any Plan.
5.10. Accuracy of Information. No information, exhibit or report furnished
------------------------
by the Borrower or any of its Subsidiaries to the Lender in connection with the
negotiation of, or
30
compliance with, the Loan Documents contained any material misstatement of fact
or omitted to state any material fact necessary to make the statements contained
therein not misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U) constitutes
------------
less than 25% of the value of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge, or other restriction
hereunder.
5.12. Material Agreements. Neither the Borrower nor any of its
-------------------
Subsidiaries is a party to any agreement or instrument or subject to any charter
or other corporate restriction which could reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (i) any agreement to which it is a party,
which default could reasonably be expected to have a Material Adverse Effect or
(ii) any agreement or instrument evidencing or governing Indebtedness.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have
--------------------
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property.
5.14. Ownership of Properties. Except as set forth on Schedule 2, on the
-----------------------
date of this Agreement, the Borrower and its Subsidiaries will have good title,
free of all Liens other than those permitted by Section 6.15, to all of the
Property and assets reflected in the Borrower's most recent consolidated
financial statements provided to the Lender as owned by the Borrower and its
Subsidiaries.
5.15. Plan Assets; Prohibited Transactions. The Borrower is not an entity
------------------------------------
deemed to hold "plan assets" within the meaning of 29 C.F.R. (S) 2510.3-101 of
an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA or any plan (within the meaning of Section 4975 of the
Code), and neither the execution of this Agreement nor the making of Loans
hereunder gives rise to a prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code.
5.16. Environmental Matters. In the ordinary course of its business, the
----------------------
officers of the Borrower consider the effect of Environmental Laws on the
business of the Borrower and its Subsidiaries, in the course of which they
identify and evaluate potential risks and liabilities accruing to the Borrower
due to Environmental Laws. On the basis of this consideration, the Borrower has
concluded that Environmental Laws cannot reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Borrower: (i) no
Hazardous Substance has been disposed of or released by the Borrower or any of
its Subsidiaries in violation of any Environmental Law; (ii) no Hazardous
Substances are stored or located upon, or otherwise exist in, on, under or about
any of the respective Properties of the Borrower and its Subsidiaries, except in
compliance with applicable Environmental Laws; (iii) no claim exists or is
threatened against the Borrower or any of its Subsidiaries arising from any
clean-up, remediation, removal or restoration work performed by the Borrower or
any of its Subsidiaries, which claim, if adversely decided, could reasonably be
expected to have a Material Adverse Effect; and (iv) neither the Borrower nor
any of its Subsidiaries has received any notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable Environmental Laws or is the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any Hazardous
31
Substance into the environment, which non-compliance or remedial action could
reasonably be expected to have a Material Adverse Effect.
5.17. Investment Company Act. Neither the Borrower nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
5.18. Public Utility Holding Company Act. 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" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
5.19. Post-Retirement Benefits. Neither the Borrower nor any of its
------------------------
Subsidiaries provides or is obligated to provide any post-retirement medical and
insurance benefits to its employees or former employees.
5.20. Insurance. The certificate signed by the President or chief
---------
financial officer of the Borrower, that attests to the existence and adequacy
of, and summarizes, the property and casualty insurance program carried by the
Borrower with respect to itself and its Subsidiaries and that has been furnished
by the Borrower to the Lender, is complete and accurate. This summary includes
the insurer's or insurers' name(s), policy number(s), expiration date(s),
amount(s) of coverage, type(s) of coverage, exclusion(s), and deductibles. This
summary also includes similar information, and describes any reserves, relating
to any self-insurance program that is in effect.
5.21. Solvency.
--------
(i) Immediately after the consummation of the transactions to
occur on the Closing Date and immediately following the making of each Loan
to be made on the Closing Date or at any time thereafter, and after giving
effect to the application of the proceeds of such Loans, (a) the fair value
of the assets of the Borrower and its Subsidiaries on a consolidated basis,
at a fair valuation, will exceed the debts and liabilities, subordinated,
contingent or otherwise, of the Borrower and its Subsidiaries on a
consolidated basis; (b) the present fair saleable value of the Properties
of the Borrower and its Subsidiaries on a consolidated basis will be
greater than the amount that will be required to pay the probable liability
of the Borrower and its Subsidiaries on a consolidated basis on their debts
and other liabilities, subordinated, contingent or otherwise, as such debts
and other liabilities become absolute and matured; (c) the Borrower and its
Subsidiaries on a consolidated basis will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) the Borrower and its
Subsidiaries on a consolidated basis will not have unreasonably small
capital with which to conduct the businesses in which they are engaged as
such businesses are now conducted and are proposed to be conducted after
the Closing Date.
(ii) The Borrower does not intend to, or to permit any of its
Subsidiaries to, and does not believe that it or any of its Subsidiaries
will, incur debts beyond its ability to pay such debts as they mature,
taking into account the timing of and amounts of cash to be received by it
or any such Subsidiary and the timing of the amounts of cash to be payable
on or in respect of its Indebtedness or the Indebtedness of any such
Subsidiary.
32
ARTICLE VI
COVENANTS
---------
During the term of this Agreement, unless the Lender shall otherwise
consent in writing:
6.1. Financial and Other Reporting. The Borrower will maintain, for
-----------------------------
itself and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and will furnish to the Lender:
(i) Within 90 days after the close of each of its fiscal years,
an unqualified audit report certified by independent certified public
accountants acceptable to the Lender, prepared in accordance with GAAP on a
consolidated and consolidating basis (consolidating statements need not be
certified by such accountants) for itself and its Subsidiaries, including
balance sheets as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash flows,
accompanied by any management letter prepared by said accountants.
(ii) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, for itself and its Subsidiaries,
consolidated and consolidating unaudited balance sheets as at the close of
each such period and consolidated and consolidating profit and loss and
reconciliation of surplus statements and a statement of cash flows for the
period from the beginning of such fiscal year to the end of such quarter,
all certified by its chief financial officer.
(iii) Together with the financial statements required under
Sections 6.1(i) and (ii), a Compliance Certificate signed by its chief
financial officer showing the calculations necessary to determine
compliance with this Agreement and stating that no Default or Unmatured
Default exists, or if any Default or Unmatured Default exists, stating the
nature and status thereof.
(iv) Within 90 days after the close of each of its fiscal years,
a financial projection and budget forecast covering the immediately
subsequent two (2) year period.
(v) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single Employer Plan,
certified as correct by an actuary enrolled under ERISA.
(vi) As soon as possible and in any event within 10 days after
the Borrower knows that any Reportable Event has occurred with respect to
any Plan, a statement, signed by the chief financial officer of the
Borrower, describing said Reportable Event and the action which the
Borrower proposes to take with respect thereto.
(vii) As soon as possible and in any event within 10 days after
the Borrower obtains knowledge thereof, notice of (A) the commencement of
any action, suit or proceeding against or involving any the Borrower or any
of its Subsidiaries not fully covered by insurance where the amount sued
for or the value of Property involved, individually or in the aggregate, is
in excess of $250,000 or which, if the outcome were adverse, could
reasonably be expected to have a Material Adverse Effect, (B) the existence
or asserted
33
existence of any Lien (other than Liens permitted under Section 6.15) on
any Properties of the Borrower or any of its Subsidiaries, or (C) any
change in the accounting practices and procedures of the Borrower.
(viii) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (A) any notice or claim to the effect
that the Borrower or any of its Subsidiaries is or may be liable to any
Person as a result of the release by the Borrower, any of its Subsidiaries,
or any other Person of any Hazardous Substance into the environment, (B)
any notice alleging any material violation by the Borrower or any of its
Subsidiaries of any federal, state or local Environmental Law or any law or
regulation relating to health, safety or sanitation, or (C) any notice to
the effect that the Borrower or any of its Subsidiaries is the subject of
any federal or state investigation evaluating whether any remedial action
is needed to respond to a release of any Hazardous Substance into the
environment or any alleged violation of any federal, state or local
Environmental Law, provided, however, that a copy of any such notice or
claim shall be required to be furnished under this clause (viii) only if it
relates to a matter which, if the outcome were adverse to the Borrower,
could reasonably be expected to have a Material Adverse Effect.
(ix) Promptly upon the furnishing thereof to the shareholders of
the Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(x) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which
the Borrower or any of its Subsidiaries files with the SEC.
(xi) Such other information (including non-financial information)
as the Lender may from time to time reasonably request.
6.2. Use of Proceeds. The Borrower will, and will cause each of its
---------------
Subsidiaries to, use the proceeds of the Loans only for the purposes stated in
Section 2.2. The Borrower will not, nor will it permit any of its Subsidiaries
to, use any of the proceeds of the Loans to purchase or carry any "margin stock"
(as defined in Regulation U); provided, however, that up to $1,000,000 of the
proceeds of a Working Capital Revolving Loan may be used to finance the
Borrower's purchase of shares of its capital stock, as contemplated by Section
2.2.1(iv). No portion of the Secured Obligations will be secured directly or
indirectly by shares of the Borrower's capital stock.
6.3. Notice of Default. The Borrower will, and will cause each of its
-----------------
Subsidiaries to, give prompt notice in writing to the Lender of the occurrence
of any Default or Unmatured Default and of any other development, financial or
otherwise which could reasonably be expected to have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each of its
-------------------
Subsidiaries to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and do all things necessary to remain duly incorporated or organized,
validly existing and (to the extent such concept applies to such entity) in good
standing as a domestic corporation, partnership or limited liability company in
its jurisdiction of incorporation or organization, as the case may be, and
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
34
6.5. Taxes. The Borrower will, and will cause each of its Subsidiaries
-----
to, timely file complete and correct United States federal and applicable
foreign, state and local tax returns required by law and pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits
or Property, except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside in
accordance with GAAP.
6.6. Insurance. The Borrower will, and will cause each of its
---------
Subsidiaries to, maintain with financially sound and reputable insurance
companies insurance on all their Property in such amounts and covering such
risks as is consistent with sound business practice, and the Borrower will
furnish to the Lender upon request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each of its
--------------------
Subsidiaries to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject. Without
limiting the generality of the foregoing, the Borrower covenants and agrees that
it will comply, and will cause each of its Subsidiaries and each of its and
their respective employees, agents and contractors to comply, in all materials
respects with all Environmental Laws which may from time to time apply or
pertain to the conduct of the respective businesses of the Borrower and its
Subsidiaries.
6.8. Maintenance of Properties. The Borrower will, and will cause each of
-------------------------
its Subsidiaries to, do all things necessary to maintain, preserve, protect and
keep its Property in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each of its
----------
Subsidiaries to, permit the Lender, by its representatives and agents, to
inspect any of the Property, books and financial records of the Borrower and
each of its Subsidiaries, to examine and make copies of the books of accounts
and other financial records of the Borrower and each of its Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and each of its
Subsidiaries with, and to be advised as to the same by, their respective
officers at such reasonable times and intervals as the Lender may designate.
6.10. Dividends. The Borrower will not, nor will it permit any of its
---------
Subsidiaries to, declare or pay any dividends or make any distributions on its
capital stock (other than dividends payable in its own capital stock) or redeem,
repurchase or otherwise acquire or retire any of its capital stock at any time
outstanding, except that (i) any Subsidiary may declare and pay dividends or
make distributions to the Borrower or to a Wholly-Owned Subsidiary, (ii) the
Borrower may repurchase shares of its capital stock from ▇▇▇▇▇▇▇▇▇, at an
aggregate purchase price not to exceed $1,000,000, from the proceeds of a
Working Capital Loan, as contemplated by Section 2.2.1(iv), and (iii) the
Borrower may purchase up to an additional 2,200,000 shares of its capital stock
(such shares being shares owned by ▇▇▇▇▇▇▇▇▇ and/or shares issued in connection
with the Borrower's previous acquisition of Summit Environmental Services,
Inc.), provided that the purchase price for the shares so purchased is paid from
the proceeds of an equity offering made by the Borrower to which the Lender has
given its consent.
6.11. Indebtedness. The Borrower will not, nor will it permit any of its
------------
Subsidiaries to, create, incur or suffer to exist any Indebtedness, except:
35
(i) The Loans.
(ii) Indebtedness existing on the date hereof and described in
Schedule 2.
(iii) Purchase money Indebtedness incurred in the ordinary course
of business in connection with the Borrower's purchase of equipment used in
connection with its business and not exceeding $250,000 at any one time
outstanding.
(iv) Rate Management Obligations arising under Rate Management
Transactions related to the Loans.
6.12. Mergers and Acquisitions.
------------------------
6.12.1 Mergers and Consolidations. Except for any merger or
--------------------------
consolidation incident to an Acquisition permitted under Section 6.12.2,
the Borrower will not, nor will it permit any of its Subsidiaries to, merge
or consolidate with or into any other Person, except that a Subsidiary may
merge into the Borrower or a Wholly-Owned Subsidiary.
6.12.2 Acquisitions. The Borrower will not, nor will it permit any
------------
of its Subsidiaries to, make any Acquisition of any Person, except that
Acquisitions may be permitted or approved in accordance with the following:
(i) For any proposed Acquisition, the following
conditions must be satisfied: (A) the Acquisition must be non-
hostile, (B) the Acquisition must be made in compliance with all
applicable laws and regulations, (C) the Person to be acquired (the
"Target") must be engaged in the same business or in a substantially
related line of business as the Borrower, (D) the Target must be
located in the United States, (E) if the Acquisition is structured
as a merger or consolidation, the Borrower must be the surviving
entity, (F) if the Target will become a Subsidiary, it must become a
consolidated Subsidiary, (G) there must not exist any Default or
Unmatured Default prior to or as of the effective date of such
Acquisition, and (H) the consummation of such Acquisition must not
result in or give rise to any Default or Unmatured Default,
including a violation of any of the financial covenants set forth in
Section 6.23.
(ii) If the total consideration payable by the Borrower
in connection with a proposed Acquisition (including Indebtedness to
be paid or assumed) does not exceed $1,000,000, the Borrower may
make such Acquisition without the prior consent of the Lender so
long as the conditions set forth in clause (i) above are satisfied,
provided that, prior to the consummation of such Acquisition, the
Borrower shall deliver to the Lender, (A) a Compliance Certificate
(which shall not be binding on the Lender), prepared on a pro forma
basis giving effect to the transactions contemplated to be conducted
at the closing thereof, demonstrating that the Borrower will be in
compliance with the financial covenants set forth in Section 6.23
immediately following the consummation of the Acquisition, (B) the
Acquisition Documents relating to the proposed Acquisition, (C) the
Target's audited financial statements for the three fiscal years
immediately preceding (to the extent available) or such other
financial statements and federal income tax returns of the Target as
are
36
available for the three fiscal years immediately preceding or
such shorter period as the Target has been in existence, (D) the
Target's interim unaudited financial statements for the fiscal
period most recently ended, and (E) if applicable, all registration
statements, reports and other filings made by the Target with the
SEC during the two years immediately preceding.
(iii) If the total consideration payable by the Borrower
in connection with a proposed Acquisition (including Indebtedness to
be paid or assumed) exceeds $1,000,000, the Borrower may not make
such Acquisition without the prior consent of the Lender (such
consent to be given, withheld or conditioned by the Lender in its
sole and absolute discretion based upon such factors as the Lender
shall deem appropriate). The Borrower may request that the Lender
consent to a proposed Acquisition by submitting a written request to
the Lender of the following documents: (A) a description of the
business conducted by the Target, (B) a summary of the material
terms and conditions of the proposed Acquisition, (C) the
Acquisition Documents relating to the proposed Acquisition, (D) a
Compliance Certificate (prepared on a pro forma basis giving effect
to the transactions contemplated to be conducted at the closing of
the proposed Acquisition) demonstrating that the Borrower will be in
compliance with the financial covenants set forth in Section 6.23
immediately following the consummation of such Acquisition, (E) the
Target's audited financial statements for the three fiscal years
immediately preceding (to the extent available) or such other
financial statements and federal income tax returns of the Target as
are available for the three fiscal years immediately preceding or
such shorter period as the Target has been in existence, (F) the
Target's interim unaudited financial statements for the fiscal
period most recently ended, and (G) if applicable, all registration
statements, reports and other filings made by the Target with the
SEC during the two years immediately preceding. Any Acquisition
proposed for approval pursuant to this clause (iii) must at a
minimum satisfy the conditions set forth in clause (i) above. In
evaluating any request submitted by the Borrower, the Lender shall
be given an opportunity to complete a due diligence review of the
financial condition, operations and prospects of the Target, and the
results of such due diligence review shall be satisfactory to the
Lender. The Borrower agrees to furnish, or cause to be furnished,
such additional information and documents as the Lender may request
for purposes of conducting its due diligence review and evaluating
the merits of the proposed Acquisition. If the Lender does not
consent in writing to the proposed Acquisition within thirty (30)
days following the Borrower's submission of its request for
approval, the Lender will be deemed not to have approved such
request. Any determination by the Lender not to approve a proposed
Acquisition shall be final.
(iv) Prior to or simultaneously with the consummation
of any Acquisition permitted under clause (ii) above or approved by
the Lender pursuant to clause (iii) above, the Borrower shall also
comply with Section 6.24.
6.13. Sale of Assets. The Borrower will not, nor will it permit any of its
--------------
Subsidiaries to, lease, sell or otherwise dispose of its Property to any other
Person, except:
(i) Sales of inventory in the ordinary course of business.
37
(ii) Leases, sales or other dispositions of its Property
(exclusive of any notes receivable or accounts receivable) that, together
with all other Property of the Borrower and its Subsidiaries previously
leased, sold or disposed of (other than inventory in the ordinary course of
business) as permitted by this Section 6.13(ii) during the twelve-month
period ending with the month in which any such lease, sale or other
disposition occurs, do not constitute a Substantial Portion of the Property
of the Borrower and its Subsidiaries.
6.14. Investments. The Borrower will not, nor will it permit any of its
-----------
Subsidiaries to, make or suffer to exist any Investments (including without
limitation, loans and advances to, and other Investments in, Subsidiaries), or
commitments therefor, or to create any of its Subsidiaries or to become or
remain a partner in any partnership or joint venture, except:
(i) Cash Equivalent Investments.
(ii) Existing Investments in Subsidiaries and other Investments
in existence on the date hereof and described in Schedule 1.
(iii) Any Investment arising from an Acquisition permitted or
approved under Section 6.12.2.
6.15. Liens. The Borrower will not, nor will it permit any of its
-----
Subsidiaries to, create, incur, or suffer to exist any Lien in, of or on the
Property of the Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good
faith and by appropriate proceedings
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due
or which are being contested in good faith by appropriate proceedings and
for which adequate reserves shall have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation.
(iv) Liens arising out of pledges or deposits in conjunction with
performance bonds or similar security for the full and complete performance
of services or construction of facilities.
(v) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not
in any material way affect the marketability of the same or interfere with
the use thereof in the business of the Borrower or its Subsidiaries.
(vi) Liens existing on the date hereof and described in
Schedule 2.
38
(vii) Liens in favor of the Lender granted pursuant to any
Collateral Document.
6.16. Capital Expenditures. The Borrower will not, nor will it permit any
--------------------
of its Subsidiaries to, expend, or be committed to expend, in excess of $750,000
for Capital Expenditures during any one fiscal year on a non-cumulative basis in
the aggregate for the Borrower and its Subsidiaries, excluding, however, (i)
Capital Expenditures made or committed during the fiscal year 2000 which are
described in Schedule 3, and (ii) Capital Expenditures incurred pursuant to the
requirements of any "pay for performance" contract for which reimbursement will
be made by the customer prior to or upon completion of the applicable contract.
6.17. Affiliates. The Borrower will not, and will not permit any of its
----------
Subsidiaries to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arm's-length transaction.
6.18. Operating Leases. The Borrower will not, nor will it permit any
----------------
of its Subsidiaries to, enter into or remain liable upon any Operating Lease,
except to the extent that the aggregate annual payments due on all Operating
Leases of the Borrower and its Subsidiaries do not exceed $200,000.
6.19. Sale and Leaseback Transactions and Other Off-Balance Sheet
-----------------------------------------------------------
Liabilities. The Borrower will not, nor will it permit any of its Subsidiaries
-----------
to, enter into or suffer to exist any (i) Sale and Leaseback Transaction or (ii)
any other transaction pursuant to which it incurs or has incurred Off-Balance
Sheet Liabilities, except for Rate Management Obligations permitted to be
incurred under the terms of Section 6.11(iv).
6.20. Contingent Obligations. The Borrower will not, nor will it permit
----------------------
any of its Subsidiaries to, make or suffer to exist any Contingent Obligation
(including, without limitation, any Contingent Obligation with respect to the
obligations of a Subsidiary), except by endorsement of instruments for deposit
or collection in the ordinary course of business.
6.21. Letters of Credit. None of the Borrowers will apply for or become
-----------------
liable upon or in respect of any Letter of Credit.
6.22. Financial Contracts. The Borrower will not, nor will it permit any
-------------------
of its Subsidiaries to, enter into or remain liable upon any Financial Contract,
other than Rate Management Transactions related to the Loans.
6.23. Financial Covenants.
-------------------
6.23.1. Current Ratio. The Borrower will not permit its current
-------------
ratio, determined as of the end of each of its fiscal quarters in
accordance with GAAP, to be less than 1.5 to 1.0.
6.23.2. Debt Service Coverage Ratio. The Borrower will not permit
---------------------------
the ratio, determined as of the end of each of its fiscal quarters for the
then most-recently ended four fiscal quarters, of (i) Consolidated EBIDA
minus unfunded Consolidated Capital Expenditures and dividends paid or
declared, to (ii) Consolidated Interest Expense, plus current maturities of
long-term Consolidated Funded Indebtedness (for the immediately
39
following twelve (12) month period), all calculated for the Borrower and
its Subsidiaries on a consolidated basis, to be less than 1.20 to 1.0.
6.23.3. Leverage Ratio. The Borrower will not permit the ratio,
--------------
determined as of the end of each of its fiscal quarters, of (i)
Consolidated Funded Indebtedness to (ii) Consolidated EBITDA for the then
most-recently ended four fiscal quarters to be greater than 2.75 to 1.0.
6.23.4. Minimum Net Worth. The Borrower will at all times maintain
-----------------
Consolidated Net Worth of not less than the sum of (i) $7,000,000 plus (ii)
75% of Consolidated Net Income earned in each fiscal quarter beginning with
the quarter ending June 30, 2000 (without deduction for losses), plus (iii)
100% of the net proceeds of any offering by the Borrower of equity
securities of the Borrower.
6.24 Additional Collateral and Guaranties.
------------------------------------
6.24.1 Acquisitions. In the event that, subsequent to the Closing
------------
Date, any Person becomes a Subsidiary of the Borrower, whether pursuant to
an Acquisition (including an Initial Acquisition) or otherwise, the
Borrower shall pledge all shares of capital stock or other equity
securities of such Subsidiary to the Lender, as provided in the Security
Agreement, and deliver the original stock certificates evidencing such
shares to the Lender, together with appropriate stock powers executed in
blank, and shall cause such Subsidiary (i) to ▇▇▇▇▇ ▇ ▇▇▇▇ (security
interest) in all of its personal property by joining the Security Agreement
and filing such UCC-1 financing statements or similar instruments required
by the Lender, (ii) if such Subsidiary owns or leases any real property, to
comply with Section 6.24.2, (iii) to join in the Guaranty with respect to
the Secured Obligations, and (iv) otherwise, to provide such documentation
and take such other actions as such Subsidiary would have provided and
taken if such Person had been a Subsidiary on the Closing Date. The
Borrower agrees that, following the delivery of any Collateral Documents
required to be executed and delivered by this Section 6.24.1, the Lender
shall have a valid and enforceable first priority Lien on the respective
Collateral covered thereby, free and clear of all Liens other than
Permitted Liens. All actions to be taken pursuant to this Section 6.24.1
shall be at the expense of the Borrower, shall be taken to the reasonable
satisfaction of the Lender, and shall be taken prior to or simultaneously
with the formation or Acquisition of such Subsidiary.
6.24.2 Real Property. In the event that, subsequent to the Closing
-------------
Date, the Borrower or any of its Subsidiaries intends to acquire or lease
any real property which is material or otherwise important to the business
operations of the Borrower or such Subsidiary (excluding, however, any
lease of real property to be used as office space), the Borrower shall, or
shall cause such Subsidiary to, notify the Lender of such intent as soon as
is reasonably practicable prior to the acquisition or lease of such real
property. At the request of the Lender, the Borrower shall cause the
Borrower or Subsidiary acquiring or leasing the real property to execute
and deliver a mortgage instrument, substantially in the form of the
Mortgages delivered on the Closing Date (subject to variation for
compliance with local law), and provide all relevant documentation with
respect thereto. The Borrower agrees that, following the taking of the
actions with respect to any real property required by this Section 6.24.2,
the Lender shall have a valid and enforceable first priority Lien on such
real property, free and clear of all defects and Liens, except for
Permitted Liens and other
40
matters acceptable to the Lender in its reasonable discretion. All actions
to be taken pursuant to this Section 6.24.2 shall be at the expense of the
Borrower, shall be taken to the reasonable satisfaction of the Lender, and
shall be taken within 10 days after such real property is acquired or
leased.
6.25 Equity Offerings. The Borrower will not, nor will it permit any of
----------------
its Subsidiaries to, offer or sell any shares of its capital stock or other
equity securities, or otherwise conduct any public or private offering of equity
securities, unless the Lender has consented to the proposed use of the proceeds
of such offering. The foregoing restriction shall not apply to (and an equity
offering will not be deemed to include) any of the following:
(i) securities issued or sold pursuant to outstanding warrants or
options or options or warrants that may be granted hereafter to officers,
employees, directors, consultants or advisors of the Borrower;
(ii) securities issued to officers, employees, directors, consultants
or advisors of the Borrower as compensation for services rendered or to be
rendered; or
(iii) securities issued in connection with or as consideration for
any Acquisition authorized to be made by Section 6.12.
ARTICLE VII
DEFAULTS
--------
The occurrence of any one or more of the following events shall constitute
a Default:
7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its Subsidiaries to the Lender under or in connection
with this Agreement, any Loan, or any certificate or information delivered in
connection with this Agreement or any other Loan Document shall be materially
false on the date as of which made.
7.2. Nonpayment of principal of any Loan when due, or nonpayment of
interest upon any Loan or of any commitment fee or other obligations under any
of the Loan Documents within five days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
Section 6.2, 6.10, 6.11, 6.12.1, 6.12.2, 6.13, 6.14, 6.15, 6.16, 6.17, 6.18,
6.22, 6.23 or 6.25.
7.4. The breach by the Borrower (other than a breach which constitutes a
Default under another Section of this Article VII) of any of the terms or
provisions of this Agreement which is not remedied within 20 days after written
notice from the Lender.
7.5. Failure of the Borrower or any of its Subsidiaries to pay when due
any Indebtedness aggregating in excess of $250,000 ("Material Indebtedness"), or
the default by the Borrower or any of its Subsidiaries in the performance
(beyond the applicable grace period with respect thereto, if any) of any term,
provision or condition contained in any agreement under which any such Material
Indebtedness was created or is governed, or any other event shall occur or
condition exist, the effect of which default or event is to cause, or to permit
the holder or holders of such Material Indebtedness
41
to cause, such Material Indebtedness to become due prior to its stated maturity;
or any Material Indebtedness of the Borrower or any of its Subsidiaries shall be
declared to be due and payable or required to be prepaid or repurchased (other
than by a regularly scheduled payment) prior to the stated maturity thereof; or
the Borrower or any of its Subsidiaries shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.
7.6. The Borrower or any of its Subsidiaries shall (i) have an order for
relief entered with respect to it under the Federal bankruptcy laws as now or
hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (iv) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (v)
take any corporate or partnership action to authorize or effect any of the
foregoing actions set forth in this Section 7.6 or (vi) fail to contest in good
faith any appointment or proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower or any
of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in Section
7.6(iv) shall be instituted against the Borrower or any of its Subsidiaries and
such appointment continues undischarged or such proceeding continues undismissed
or unstayed for a period of 60 consecutive days.
7.8. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of the Borrower and any of its Subsidiaries which, when taken together
with all other Property of the Borrower and any of its Subsidiaries so
condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such action occurs,
constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within 30 days to
pay, bond or otherwise discharge one or more (i) judgments or orders for the
payment of money in excess of $500,000 in the aggregate, or (ii) nonmonetary
judgments or orders which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, which judgment(s), in any such case,
is/are not stayed on appeal or otherwise being appropriately contested in good
faith.
7.10. The Unfunded Liabilities of all Single Employer Plans shall exceed
in the aggregate $250,000 or any Reportable Event shall occur in connection with
any Plan.
7.11. The Borrower or any of its Subsidiaries shall (i) be the subject of
any proceeding or investigation pertaining to the release by the Borrower, any
of its Subsidiaries or any other Person of any toxic or hazardous waste or
substance into the environment, or (ii) violate any Environmental Law, which, in
the case of an event described in clause (i) or clause (ii), could reasonably be
expected to have a Material Adverse Effect.
7.12. Any Change in Control shall occur.
42
7.13. The occurrence of any "default", as defined in any Loan Document
(other than this Agreement) or the breach of any of the terms or provisions of
any Loan Document (other than this Agreement), which default or breach continues
beyond any period of grace therein provided.
7.14. Any Collateral Document shall for any reason fail to create a valid
and perfected first priority security interest in the collateral purported to be
covered thereby, except as permitted by the terms of any Collateral Document, or
any Collateral Document shall fail to remain in full force or effect or any
action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Collateral Document, or the Borrower or any of its
Subsidiaries shall fail to comply with any of the terms or provisions of any
Collateral Document.
7.15. The Guaranty in respect of the Secured Obligations shall for any
reason cease to remain in full force or effect as to any of the Borrower's
Subsidiaries, or any action shall be taken by any Subsidiary party thereto to
revoke, cancel or terminate the same or to assert the invalidity or
unenforceability thereof, or any Subsidiary shall fail to comply with any of the
terms or provisions of the Guaranty.
7.16. Nonpayment by the Borrower or any of its Subsidiaries of any Rate
Management Obligation when due or the breach by the Borrower or any of its
Subsidiaries of any term, provision or condition contained in any Rate
Management Transaction.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
8.1. Acceleration. If any Default described in Section 7.6 or 7.7 occurs
------------
with respect to the Borrower, the obligation of the Lender to make Loans
hereunder shall automatically terminate and the Secured Obligations shall
immediately become due and payable without any election or action on the part of
the Lender. If any other Default occurs, the Lender may terminate or suspend
the obligation of the Lender to make Loans hereunder, or declare the Secured
Obligations to be due and payable, or both, whereupon the Secured Obligations
shall become immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which the Borrower hereby expressly waives.
8.2. Amendments. The Lender and the Borrower may enter into agreements
----------
supplemental hereto for the purpose of adding or modifying any provisions to the
Loan Documents or changing in any manner the rights of the Lender or the
Borrower hereunder or waiving any Default hereunder. No such agreement shall be
binding or effective unless in writing and executed by the party against whom
enforcement is sought.
8.3. Preservation of Rights. No delay or omission of the Lender to
----------------------
exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lender required pursuant to Section 8.2, and then only
to the extent
43
in such writing specifically set forth. All remedies contained in the Loan
Documents or by law afforded shall be cumulative and all shall be available to
the Lender until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
------------------
9.1. Survival of Representations. All representations and warranties of
---------------------------
the Borrower contained in this Agreement shall survive the making of the Loans
herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to the
-----------------------
contrary notwithstanding, the Lender shall not be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Entire Agreement. The Loan Documents embody the entire agreement and
----------------
understanding between the Borrower and the Lender and supersede all prior
agreements and understandings between the Borrower and the Lender relating to
the subject matter thereof.
9.4. Benefits of this Agreement. This Agreement shall not be construed so
--------------------------
as to confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
9.5. Expenses; Indemnification.
-------------------------
9.5.1. Expenses. The Borrower shall reimburse the Lender for any
--------
reasonable costs and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Lender) paid or
incurred by the Lender in connection with the preparation, negotiation,
execution, delivery, syndication, review, amendment, modification, and
administration of the Loan Documents. The Borrower also agrees to reimburse
the Lender for any reasonable costs and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the Lender)
paid or incurred by the Lender in connection with the collection and
enforcement of the Loan Documents.
9.5.2. Indemnification. The Borrower agrees to indemnify the
---------------
Lender, its Affiliates, and each of their directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Lender or any Affiliate is a party
thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated
hereby or the direct or indirect application or proposed application of the
proceeds of any Loan hereunder except to the extent that they are
determined in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or willful
misconduct of the party seeking indemnification.
9.5.3 Environmental Matters. Without in any manner limiting the
---------------------
generality of the indemnity provided in Section 9.5.2, the Borrower further
agrees to defend, indemnify and hold harmless the Lender, its Affiliates,
and each of their directors, officers and employees against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
44
without limitation, all expenses of litigation or preparation therefor
whether or not the Lender or any Affiliate is a party thereto) directly or
indirectly (i) arising out of or resulting from any Hazardous Substance
being present at any time on any Properties of the Borrower or any of its
Subsidiaries or in the soil, groundwater or solid vapor on or under any
such Properties, (ii) arising out of or attributable to the use,
generation, manufacture, production, storage, release, discharge or
disposal of any Hazardous Substance by the Borrower, any of its
Subsidiaries or any of their respective employees, agents and contractors
in connection with the conduct of the respective businesses of the Borrower
and its Subsidiaries, or (iii) arising out of or attributable to any
environmental investigation, clean-up, remediation, removal or restoration
work performed by the Borrower or any of its Subsidiaries.
9.5.4 Survival. The obligations of the Borrower under this Section
--------
9.5 shall survive the termination of this Agreement.
9.6. Severability of Provisions. Any provision in any Loan Document that
--------------------------
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.7. Nonliability of Lender. The relationship between the Borrower and
----------------------
the Lender shall be solely that of borrower and lender. The Lender shall not
have any fiduciary responsibilities to the Borrower. The Lender undertakes no
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations. The Borrower
agrees that the Lender shall have no liability to the Borrower (whether sounding
in tort, contract or otherwise) for losses suffered by the Borrower in
connection with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by the Loan Documents, or any act,
omission or event occurring in connection therewith, unless it is determined in
a final non-appealable judgment by a court of competent jurisdiction that such
losses resulted from the gross negligence or willful misconduct of the Lender.
The Lender shall not have any liability with respect to, and the Borrower hereby
waives, releases and agrees not to ▇▇▇ for, any special, indirect or
consequential damages suffered by the Borrower in connection with, arising out
of, or in any way related to the Loan Documents or the transactions contemplated
thereby.
9.8. Confidentiality. The Lender agrees to hold any confidential
---------------
information which it may receive from the Borrower pursuant to this Agreement in
confidence, except for disclosure (i) to its Affiliates, (ii) to legal counsel,
accountants, and other professional advisors to the Lender, (iii) to regulatory
officials, (iv) to any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with any legal
proceeding to which the Lender is a party, (vi) to the Lender's direct or
indirect contractual counterparties in swap agreements or to legal counsel,
accountants and other professional advisors to such counterparties, and (vii)
permitted by Section 10.4.
9.9. Setoff. In addition to, and without limitation of, any rights of the
------
Lender under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by the Lender or
any Affiliate of the Lender to or for the credit or account of the Borrower or
any of its Subsidiaries may
45
be offset and applied toward the payment of the Obligations owing to the Lender,
whether or not the Obligations, or any part thereof, shall then be due.
9.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower and the Lender.
ARTICLE X
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
10.1. Successors and Assigns. The terms and provisions of the Loan
----------------------
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lender and their respective successors and assigns, except that (i) the Borrower
shall not have the right to assign its rights or obligations under the Loan
Documents and (ii) any assignment by the Lender shall be made in compliance with
Section 10.3. The parties to this Agreement acknowledge that clause (ii) of this
Section 10.1 relates only to absolute assignments and does not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by the Lender of all or any portion of its rights under
this Agreement and any Note to a Federal Reserve Bank; provided, however, that
no such pledge or assignment creating a security interest shall release the
Lender from its obligations hereunder unless and until the parties thereto have
complied with the provisions of Section 10.3. Any assignee of the rights to any
Loan or any Note agrees by acceptance of such assignment to be bound by all the
terms and provisions of the Loan Documents. Any request, authority or consent of
any Person, who at the time of making such request or giving such authority or
consent is the owner of the rights to any Loan shall be conclusive and binding
on any subsequent holder or assignee of the rights to such Loan.
10.2. Participations.
--------------
10.2.1. Permitted Participants; Effect. The Lender may, in the
------------------------------
ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to the Lender, any Note held by
the Lender, any Commitment of the Lender or any other interest of the
Lender under the Loan Documents. In the event of any such sale by the
Lender of participating interests to a Participant, the Lender's
obligations under the Loan Documents shall remain unchanged, the Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, the Lender shall remain the owner of its
Loans and the holder of the Notes issued to it in evidence thereof for all
purposes under the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if the Lender had not sold such
participating interests, and the Borrower shall continue to deal solely and
directly with the Lender in connection with the Lender's rights and
obligations under the Loan Documents.
10.2.2. Benefit of Setoff. The Borrower agrees that each Participant
-----------------
shall be deemed to have the right of setoff provided in Section 9.9 in
respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest
were owing directly to it as the Lender under the Loan Documents,
46
provided that the Lender shall retain the right of setoff provided in
Section 9.9 with respect to the amount of participating interests sold to
each Participant.
10.3. Assignments. The Lender may, in the ordinary course of its business
-----------
and in accordance with applicable law, at any time assign to one or more banks
or other entities ("Purchasers") all or any part of its rights and obligations
under the Loan Documents. The consent of the Borrower shall be required prior to
an assignment becoming effective with respect to a Purchaser which is not an
Affiliate of the Lender; provided, however, that (i) such consent shall not be
unreasonably withheld or delayed and (ii) if a Default has occurred and is
continuing, the consent of the Borrower shall not be required.
10.4. Dissemination of Information. The Borrower authorizes the Lender to
----------------------------
disclose to any Participant or Purchaser, and any prospective Participant or
Purchaser, any and all information in the Lender's possession concerning the
creditworthiness of the Borrower and its Subsidiaries; provided that each
Participant or Purchaser, or prospective Participant or Purchaser, agrees to be
bound by Section 9.8.
ARTICLE XI
NOTICES
-------
11.1. Notices. Except as otherwise permitted by Section 2.15 with respect
-------
to Borrowing Notices, all notices, requests and other communications to either
party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party at
its address or facsimile number set forth on the signature pages hereof. Each
such notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
accordance with this Section 11.1 and confirmation of receipt is received, (ii)
if given by mail, 72 hours after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid, or (iii) if given by
any other means, when delivered (or, in the case of electronic transmission,
received) at the address specified in this Section 11.1.
11.2. Change of Address. Either party may change the address for service
-----------------
of notice upon it by a notice in writing to the other party.
ARTICLE XII
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
------------------------------------------------------------
12.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
-------------
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF OKLAHOMA, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
12.2. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
-----------------------
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR OKLAHOMA STATE
COURT SITTING IN TULSA, OKLAHOMA, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING
47
TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE LENDER OR ANY
AFFILIATE OF THE LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT
ONLY IN A COURT IN TULSA, OKLAHOMA.
12.3. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY WAIVE TRIAL
--------------------
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
IN WITNESS WHEREOF, the Borrower and the Lender have executed this
Agreement as of the date first above written.
NESCO, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman and CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
BANK ONE, OKLAHOMA, NA,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Address: ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
48
TERM NOTE
$13,300,000 May 12, 2000
NESCO, Inc., an Oklahoma corporation (the "Borrower"), promises to pay to
the order of Bank One, Oklahoma, NA (the "Lender"), the aggregate unpaid
principal amount of all Term Loans made by the Lender to the Borrower pursuant
to Section 2.1.2 of the Agreement (as hereinafter defined), in immediately
available funds at the main office of the Lender, together with interest on the
unpaid principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrower shall pay the principal of and accrued and unpaid
interest on the Term Loans in full on May 31, 2003, and prior to maturity shall
make such mandatory payments as are required to be made under the terms of
Article II of the Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Term Loan and the date and amount of each principal
payment hereunder.
This Note is the Term Note issued pursuant to, and is entitled to the
benefits of, the Credit Agreement dated as of May 12, 2000 (which, as it may be
amended or modified and in effect from time to time, is herein called the
"Agreement"), between the Borrower and the Lender, to which Agreement reference
is hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. This Note is secured pursuant to the Collateral
Documents, all as more specifically described in the Agreement, and reference is
made thereto for a statement of the terms and provisions thereof. Capitalized
terms used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
NESCO, INC.,
an Oklahoma corporation
By:________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
49
ACQUISITION NOTE
$4,000,000 May 12, 2000
NESCO, Inc., an Oklahoma corporation (the "Borrower"), promises to pay to
the order of Bank One, Oklahoma, NA (the "Lender") the aggregate unpaid
principal amount of all Acquisition Loans made by the Lender to the Borrower
pursuant to Section 2.1.3(a) of the Agreement (as hereinafter defined) that have
not been converted into Acquisition Term Loans, in immediately available funds
at the main office of the Lender, together with interest on the unpaid principal
amount hereof at the rates and on the dates set forth in the Agreement. The
Borrower shall pay the principal of and accrued and unpaid interest on any
unconverted Acquisition Loans in full on the Acquisition Facility Termination
Date and prior to maturity shall make such payments, including mandatory
payments, as are required to be made under the terms of Article II of the
Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Acquisition Loan and the date and amount of each
principal payment hereunder.
This Note is the Acquisition Note issued pursuant to, and is entitled to
the benefits of, the Credit Agreement dated as of May 12, 2000 (which, as it may
be amended or modified and in effect from time to time, is herein called the
"Agreement"), between the Borrower and the Lender, to which Agreement reference
is hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. This Note is secured pursuant to the Collateral
Documents, all as more specifically described in the Agreement, and reference is
made thereto for a statement of the terms and provisions thereof. Capitalized
terms used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
NESCO, INC.,
an Oklahoma corporation
By:________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
50
WORKING CAPITAL REVOLVING NOTE
$8,000,000.00 May 12, 2000
NESCO, Inc., an Oklahoma corporation (the "Borrower"), promises to pay to
the order of Bank One, Oklahoma, NA (the "Lender"), the aggregate unpaid
principal amount of all Working Capital Revolving Loans made by the Lender to
the Borrower pursuant to Section 2.1.1 of the Agreement (as hereinafter defined)
that have not been converted into Working Capital Term Loans, in immediately
available funds at the main office of the Lender, together with interest on the
unpaid principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrower shall pay the principal of and accrued and unpaid
interest on the Working Capital Revolving Loans in full on the Working Capital
Revolving Credit Facility Termination Date and prior to maturity shall make such
mandatory payments as are required to be made under the terms of Article II of
the Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Working Capital Revolving Loan and the date and
amount of each principal payment hereunder.
This Note is the Working Capital Revolving Note issued pursuant to, and is
entitled to the benefits of, the Credit Agreement dated as of May 12, 2000
(which, as it may be amended or modified and in effect from time to time, is
herein called the "Agreement"), between the Borrower and the Lender, to which
Agreement reference is hereby made for a statement of the terms and conditions
governing this Note, including the terms and conditions under which this Note
may be prepaid or its maturity date accelerated. This Note is secured pursuant
to the Collateral Documents, all as more specifically described in the
Agreement, and reference is made thereto for a statement of the terms and
provisions thereof. Capitalized terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Agreement.
NESCO, INC.,
an Oklahoma corporation
By:_______________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
51
