_________________________________________________________________
_________________________________________________________________
LOAN AND SECURITY AGREEMENT
DATED AS OF JUNE __, 1994
AMONG
EMPIRE GAS CORPORATION, AS BORROWER,
CONTINENTAL BANK N.A., AS AGENT AND A LENDER,
AND
THE OTHER LENDERS PARTY HERETO
_________________________________________________________________
_________________________________________________________________
TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND OTHER TERMS . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . 18
1.3 Interpretation of Agreement . . . . . . . . . 19
1.4 Compliance with Financial Restrictions . . . . 19
2. LOANS; LETTERS OF CREDIT; OTHER MATTERS . . . . . . . . 19
2.1 Loans . . . . . . . . . . . . . . . . . . . . 19
2.2 Letters of Credit . . . . . . . . . . . . . . 22
2.3 Loan Account; Demand Deposit Account . . . . . 24
2.4 Interest and Fees . . . . . . . . . . . . . . 24
2.5 Requests for Loans; Borrowing Base
Certificates; Other Information . . . . . . . 25
2.6 Statements . . . . . . . . . . . . . . . . . . 26
2.7 Overdraft Loans . . . . . . . . . . . . . . . 26
2.8 Over Advances . . . . . . . . . . . . . . . . 27
2.9 All Loans One Obligation . . . . . . . . . . . 27
2.10 Making of Payments; Application of
Collections; Charging of Accounts . . . . . . 28
2.11 Agent's Election Not to Enforce . . . . . . . 29
2.12 Reaffirmation . . . . . . . . . . . . . . . . 29
2.13 Setoff . . . . . . . . . . . . . . . . . . . . 30
2.14 Closing Fee . . . . . . . . . . . . . . . . . 30
2.15 Settlements, Distributions and Apportionment
of Payments . . . . . . . . . . . . . . . . . 30
3. COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . 31
3.1 Grant of Security Interest . . . . . . . . . . 31
3.2 Accounts Receivable . . . . . . . . . . . . . 32
3.3 Inventory . . . . . . . . . . . . . . . . . . 36
3.4 Supplemental Documentation . . . . . . . . . . 37
3.5 Collateral for the Benefit of Agent and
Lenders . . . . . . . . . . . . . . . . . . . 37
4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 37
4.1 Organization . . . . . . . . . . . . . . . . . 38
4.2 Authorization . . . . . . . . . . . . . . . . 38
4.3 No Conflicts . . . . . . . . . . . . . . . . . 38
4.4 Validity and Binding Effect . . . . . . . . . 38
4.5 No Default . . . . . . . . . . . . . . . . . . 39
4.6 Financial Statements . . . . . . . . . . . . . 39
4.7 Insurance . . . . . . . . . . . . . . . . . . 39
4.8 Litigation; Contingent Liabilities . . . . . . 39
4.9 Liens . . . . . . . . . . . . . . . . . . . . 40
4.10 Subsidiaries . . . . . . . . . . . . . . . . . 40
4.11 Partnerships; Joint Ventures . . . . . . . . . 40
4.12 Business and Collateral Locations . . . . . . 41
4.13 Senior Notes . . . . . . . . . . . . . . . . . 41
-i-
4.14 Eligibility of Collateral . . . . . . . . . . 41
4.15 Intentionally Omitted . . . . . . . . . . . . 42
4.16 Patents, Trademarks, etc . . . . . . . . . . . 42
4.17 Solvency . . . . . . . . . . . . . . . . . . . 42
4.18 Contracts; Labor Matters . . . . . . . . . . . 42
4.19 Pension and Welfare Plans . . . . . . . . . . 42
4.20 Regulations G and U . . . . . . . . . . . . . 43
4.21 Compliance . . . . . . . . . . . . . . . . . . 43
4.22 Taxes . . . . . . . . . . . . . . . . . . . . 43
4.23 Investment Company Act Representation . . . . 43
4.24 Public Utility Holding Company Act
Representation . . . . . . . . . . . . . . . . 43
4.25 Environmental and Safety and Health Matters . 44
4.26 Related Agreements . . . . . . . . . . . . . . 45
4.27 Capitalized Lease Obligations . . . . . . . . 45
5. BORROWER COVENANTS . . . . . . . . . . . . . . . . . . . 45
5.1 Financial Statements and Other Reports . . . . 45
5.2 Notices . . . . . . . . . . . . . . . . . . . 48
5.3 Existence . . . . . . . . . . . . . . . . . . 50
5.4 Nature of Business . . . . . . . . . . . . . . 50
5.5 Books, Records and Access . . . . . . . . . . 50
5.6 Insurance . . . . . . . . . . . . . . . . . . 51
5.7 Insurance Survey . . . . . . . . . . . . . . . 52
5.8 Repair . . . . . . . . . . . . . . . . . . . . 52
5.9 Taxes . . . . . . . . . . . . . . . . . . . . 53
5.10 Compliance . . . . . . . . . . . . . . . . . . 53
5.11 Pension Plans . . . . . . . . . . . . . . . . 53
5.12 Merger, Purchase and Sale . . . . . . . . . . 53
5.13 Restricted Payments . . . . . . . . . . . . . 54
5.14 Borrower's and Subsidiaries' Stock . . . . . . 54
5.15 Indebtedness . . . . . . . . . . . . . . . . . 55
5.16 Liens . . . . . . . . . . . . . . . . . . . . 55
5.17 Guaranties . . . . . . . . . . . . . . . . . . 55
5.18 Investments . . . . . . . . . . . . . . . . . 56
5.19 Subsidiaries . . . . . . . . . . . . . . . . . 56
5.20 Intentionally Omitted . . . . . . . . . . . . 56
5.21 Change in Accounts Receivable . . . . . . . . 56
5.22 Environmental Issues . . . . . . . . . . . . . 56
5.23 Related Agreements . . . . . . . . . . . . . . 57
5.24 Unconditional Purchase Options . . . . . . . . 57
5.25 Use of Proceeds . . . . . . . . . . . . . . . 57
5.26 Transactions with Related Parties . . . . . . 57
5.27 Amendment of Documents . . . . . . . . . . . . 58
6. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 58
6.1 Event of Default . . . . . . . . . . . . . . . 58
6.2 Effect of Event of Default; Remedies . . . . . 61
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND AGENT'S
RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.1 Notice of Disposition of Collateral . . . . . 62
7.2 Application of Proceeds of Collateral . . . . 62
-ii-
7.3 Care of Collateral . . . . . . . . . . . . . . 62
7.4 Performance of Borrower's Obligations . . . . 62
7.5 Agent's Rights . . . . . . . . . . . . . . . . 63
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER
MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 63
8.1 Conditions Precedent to Initial Loans . . . . 63
8.2 Continuing Conditions Precedent to all Loans;
Certification . . . . . . . . . . . . . . . . 68
9. INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . 69
9.1 Environmental and Safety and Health
Indemnity . . . . . . . . . . . . . . . . . . 69
9.2 General Indemnity . . . . . . . . . . . . . . 70
9.3 Capital Adequacy . . . . . . . . . . . . . . . 70
10. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.1 Appointment of Agent . . . . . . . . . . . . . 71
10.2 Nature of Duties of Agent . . . . . . . . . . 71
10.3 Agent in its Capacity as Lender . . . . . . . 72
10.4 Independent Credit Analysis . . . . . . . . . 72
10.5 General Immunity . . . . . . . . . . . . . . . 73
10.6 Action by Agent. . . . . . . . . . . . . . . . 73
10.7 Right to Indemnity. . . . . . . . . . . . . . 74
10.8 Rights and Remedies to be Exercised by Agent
Only. . . . . . . . . . . . . . . . . . . . . 75
10.9 Agent's Resignation. . . . . . . . . . . . . . 75
10.10 Disbursement of Proceeds of Loans and Other
Advances. . . . . . . . . . . . . . . . . . . 75
10.11 Release of Collateral. . . . . . . . . . . . . 75
10.12 Agreement to Cooperate. . . . . . . . . . . . 76
10.13 Sharing of Collateral. . . . . . . . . . . . . 76
10.14 Lenders to Act as Agents. . . . . . . . . . . 76
11. ADDITIONAL PROVISIONS . . . . . . . . . . . . . . . . . 77
12. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . 77
12.1 Borrower Waiver . . . . . . . . . . . . . . . 77
12.2 Power of Attorney . . . . . . . . . . . . . . 77
12.3 Expenses; Attorneys' Fees . . . . . . . . . . 78
12.4 Continental's Fees and Charges . . . . . . . . 79
12.5 Lawful Interest . . . . . . . . . . . . . . . 79
12.6 No Waiver by Agent or any Lender; Amendments . 80
12.7 Termination of Revolving Credit . . . . . . . 80
12.8 Notices . . . . . . . . . . . . . . . . . . . 81
12.9 Assignments and Participations; Information . 81
12.10 Severability . . . . . . . . . . . . . . . . . 84
12.11 Successors . . . . . . . . . . . . . . . . . . 84
12.12 Construction . . . . . . . . . . . . . . . . . 84
12.13 Consent to Jurisdiction . . . . . . . . . . . 84
12.14 Subsidiary Reference . . . . . . . . . . . . . 84
12.15 Waiver of Jury Trial . . . . . . . . . . . . . 84
-iii-
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT ("Agreement") is made as of this ____
day of June, 1994 by and among CONTINENTAL BANK N.A. (in its
individual capacity, "Continental"), a national banking
association having its principal office at 231 South LaSalle
Street, Chicago, Illinois 60697, as Agent and a Lender hereunder,
the other Lenders from time to time party hereto, and EMPIRE GAS
CORPORATION ("Borrower"), a Missouri corporation having its
principal office at 1700 South Jefferson Street, Lebanon,
Missouri 65536.
W I T N E S S E T H:
WHEREAS, Borrower may, from time to time, request loans
or other financial accommodations from Lenders, and the parties
wish to provide for the terms and conditions upon which such
loans or other financial accommodations shall be made;
NOW, THEREFORE, in consideration of any loan or advance
or grant of credit (including any loan or advance or grant of
credit by renewal or extension) hereafter made to Borrower by, or
on behalf of, Lenders, and for other good and valuable considera-
tion, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS AND OTHER TERMS.
1.1 DEFINITIONS. In addition to terms defined
elsewhere in this Agreement or any Supplement, Schedule or
Exhibit hereto, when used herein, the following terms shall have
the following meanings (such meanings shall be equally applicable
to the singular and plural forms of the terms used, as the
context requires):
"Account Debtor" means any Person who is or who may
become obligated to Borrower or any Subsidiary under, with
respect to, or on account of an Account Receivable, Contract
Right or other Collateral.
"Account Receivable" means any account of Borrower or
any Subsidiary and any other right of Borrower or any Subsidiary
to payment for goods sold or leased or for services rendered,
whether or not evidenced by an instrument or chattel paper and
whether or not yet earned by performance.
"Acquisitions" means, collectively, the acquisitions
from time to time by Borrower of other businesses engaged in
businesses comparable to those conducted by Borrower and the
Subsidiaries, including without limitation the acquisition of
PSNC Propane Corporation consummated on the date hereof.
"Adjusted Reference Rate" has the meaning ascribed to
such term in SUPPLEMENT A.
"Agent" means Continental in its capacity as agent for
Lenders hereunder and under the Related Agreements, or any
successor agent pursuant to SECTION 10.
"Agreement" means this Loan and Security Agreement, as
the same may be amended, modified or supplemented from time to
time.
"Application" means an application by Borrower, in a
form and containing terms and provisions acceptable to Agent and
Issuing Bank, for the issuance by Issuing Bank of a Letter of
Credit.
"Assignee Deposit Account" has the meaning ascribed to
such term in SECTION 3.2(d).
"Assignment and Acceptance Agreement" means an
agreement in the form of EXHIBIT D pursuant to which a Lender
assigns all or a portion of its rights, and delegates all or such
portion of its obligations, under this Agreement and the Related
Agreements, to another Person.
"Attorneys' Fees" has the meaning ascribed to such term
in SECTION 12.3.
"Banking Day" means any day other than a Saturday,
Sunday or legal holiday on which banks are authorized or required
to be closed for the conduct of commercial banking business in
Chicago, Illinois; provided, with respect to LIBOR Rate Loans,
Banking Days shall not include a day on which dealings in U.S.
Dollars may not be carried on by Continental in the London
interbank LIBOR market.
"Borrower" has the meaning ascribed to such term in the
Preamble.
"Borrower Collateral" has the meaning ascribed to such
term in SECTION 3.1.
"Borrowing Base" has the meaning ascribed to such term
in SUPPLEMENT A.
"Borrowing Base Certificate" means a certificate in the
form of EXHIBIT A attached hereto, executed and certified as
accurate by an officer of Borrower designated in writing by
Borrower to Lender pursuant to resolutions of the Board of
Directors of Borrower.
"Borrowing Subsidiary" means any Subsidiary identified
in writing to Agent by Borrower from time to time as a Borrowing
Subsidiary and that has satisfied, in form and substance satis-
factory to Agent in its sole discretion, each of the following
requirements: (i) such Subsidiary has executed a guaranty of
favor of Agent, for the benefit of itself and Lenders, pursuant
to which such Subsidiary has unconditionally guarantied the
Liabilities; (ii) such Subsidiary has entered into a security
agreement with
-2-
Agent, for the benefit of itself and Lenders, pursuant to which
such Subsidiary has granted a security interest in its accounts
receivable, inventory, and certain other assets to Agent, for the
benefit of itself and Lenders, as collateral for the guaranty
described in CLAUSE (i) above, and Agent, for the benefit of
itself and Lenders has a validly perfected first priority
security interest in such assets; (iii) such Subsidiary has
entered into a security agreement with Borrower pursuant to which
such Subsidiary has granted a security interest in its accounts
receivable, inventory, and certain other assets to Borrower as
security for the Intercompany Loans, and Borrower has a validly
perfected second priority security interest in such assets; (iv)
such Subsidiary has executed such agreements, instruments and
documents as Agent shall require in order to evidence such
Subsidiary's Intercompany Loans and (v) Borrower has assigned the
proceeds of such Subsidiary's Intercompany Loan, all of the
agreements, instruments and documents described in CLAUSE (iv),
and the second priority security interest related thereto, to
Agent, for the benefit of itself and Lenders. The Borrowing
Subsidiaries as of the date hereof are designated as such on
SCHEDULE 4.10 hereto.
"Capitalized Lease" means any lease which is or should
be capitalized on the balance sheet of the lessee in accordance
with GAAP.
"Closing Date" means the first date on which Loans are
made, or Letters of Credit are issued, under this Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from
time to time. References to sections of the Code shall be
construed to also refer to any successor sections.
"Collateral" means, collectively, (a) Borrower
Collateral and (b) the Obligor Collateral.
"Continental" has the meaning ascribed to such term in
the Preamble.
"Contract Right" means any right of Borrower or any
Subsidiary to payment under a contract for the sale or lease of
goods or the rendering of services, which right is not yet earned
by performance.
"Credit" means the facility established under this
Agreement pursuant to which Lenders will make Revolving Loans
(the "Revolving Credit") to Borrower, and/or cause Issuing Bank
to issue Letters of Credit for the account of Borrower.
"Default Rate" means, with respect to a Loan, the rate
of interest which is applicable to such Loan after the occurrence
of an Event of Default, as determined pursuant to SUPPLEMENT A.
-3-
"Demand Deposit Account" has the meaning ascribed to
such term in SECTION 2.3.
"Depository Accounts" has the meaning ascribed to such
term in SECTION 3.2(d).
"Disproportionate Advance" has the meaning ascribed to
such term in SECTION 2.1.1(a).
"Eligible Account Receivable" means an Account
Receivable owing to a Borrowing Subsidiary which meets the
following requirements:
(a) it is genuine and in all respects what it
purports to be;
(b) it arises from either (i) the performance of
services by such Borrowing Subsidiary, which services
have been fully performed and, if applicable, acknow-
ledged and/or accepted by the Account Debtor with
respect thereto or (ii) the sale or lease of goods by
such Borrowing Subsidiary; and if it arises from the
sale or lease of goods, (A) such goods comply with such
Account Debtor's specifications (if any) and have been
shipped to, or delivered to and accepted by, such
Account Debtor and neither Borrower nor such Borrowing
Subsidiary has knowledge that the Account Debtor has
failed to accept delivery of all or a portion of such
goods, and (B) such Borrowing Subsidiary has possession
of shipping and delivery receipts evidencing such
shipment, delivery and acceptance;
(c) it (i) is evidenced by an invoice rendered to
the Account Debtor with respect thereto which (A) is
dated not earlier than the date of shipment or perform-
ance and (B) has payment terms not unacceptable to
Agent in its reasonable judgment and (ii) meets the
additional Eligible Account Receivable requirements set
forth in SUPPLEMENT A;
(d) it is not subject to any assignment, claim or
Lien, other than (i) a Lien in favor of Agent, for the
benefit of itself and Lenders, (ii) a Lien in favor of
Borrower to secure the Intercompany Loans, so long as
Borrower has assigned such Lien to Agent, for the
benefit of itself and Lenders, (iii) a Lien for current
Taxes not delinquent, (iv) a carrier's, warehouseman's,
materialman's or other like statutory Lien arising in
the ordinary course of business and securing
obligations which are not overdue, or (v) a Lien
consented to by Agent in writing;
-4-
(e) to Borrower's knowledge, it is a valid,
legally enforceable and unconditional obligation of the
Account Debtor with respect thereto, and is not subject
to setoff, counterclaim, credit or allowance (except
any credit or allowance which has been deducted in
computing the net amount of the applicable invoice as
shown in the original schedule or Borrowing Base
Certificate furnished to Agent identifying or including
such Account Receivable) or adjustment by the Account
Debtor with respect thereto, or to any claim by such
Account Debtor denying liability thereunder in whole or
in part, and such Account Debtor has not refused to
accept any of the goods or services which are the
subject of such Account Receivable or offered or
attempted to return any of such goods;
(f) to Borrower's knowledge, there are no
proceedings or actions which are then threatened or
pending against the Account Debtor with respect thereto
or to which such Account Debtor is a party which might
result in any material adverse change in such Account
Debtor's financial condition or in its ability to pay
any Account Receivable in full when due;
(g) it does not arise out of a contract which, by
its terms, forbids, restricts or makes void or
unenforceable the assignment by such Borrowing
Subsidiary to Agent, for the benefit of itself and
Lenders, of the Account Receivable arising with respect
thereto;
(h) the Account Debtor with respect thereto is
not a Subsidiary, Related Party or Obligor, or a
director, officer, employee or agent of Borrower, a
Subsidiary, Related Party or Obligor;
(i) the Account Debtor with respect thereto is a
resident or citizen of, and is located within, the
United States of America;
(j) it is not an Account Receivable arising from
a "sale on approval," "sale or return" or
"consignment," or subject to any other repurchase or
return agreement;
(k) it is not an Account Receivable with respect
to which possession and/or control of the goods sold
giving rise thereto is held, maintained or retained by
such Borrowing Subsidiary or any Subsidiary, Related
Party or other Obligor (or by any agent or custodian of
such Borrowing Subsidiary, any Subsidiary, Related
Party or Obligor) for the account of or subject to
further and/or future direction from the Account Debtor
thereof;
-5-
(l) it is not an Account Receivable which in any
way fails to meet or violates any warranty, representa-
tion or covenant contained in this Agreement or any
Related Agreement relating directly or indirectly to
Accounts Receivable;
(m) the Account Debtor thereunder is not located
in the States of Indiana, New Jersey or Minnesota;
provided, however, that such restriction shall not
apply to an Account Receivable if at the time the
Account Receivable was created and at all times
thereafter (i) such Borrowing Subsidiary has filed and
has maintained effective a current Notice of Business
Activities Report with the appropriate office or agency
of the State of Indiana, New Jersey or Minnesota, as
applicable or (ii) such Borrowing Subsidiary was and
has continued to be exempt from the filing of such
Report and has provided Agent with satisfactory
evidence thereof;
(n) it arises in the ordinary course of such
Borrowing Subsidiary's business;
(o) if the Account Debtor is the United States of
America or any department, agency or instrumentality
thereof, and the face amount of such Account Receivable
is in excess of $10,000, such Borrowing Subsidiary has
assigned its rights to payment of such Account
Receivable to Agent, for the benefit of itself and
Lenders, pursuant to the Assignment of Claims Act of
1940, as amended;
(p) if Agent in its reasonable business judgment
has established a credit limit for an Account Debtor,
the aggregate dollar amount of Accounts Receivable due
from such Account Debtor, including such Account
Receivable, does not exceed such credit limit;
(q) if the Account Receivable is evidenced by
chattel paper or an instrument, (i) Agent shall have
specifically agreed in writing to include such Account
Receivable as an Eligible Account Receivable, (ii) only
payments then due and payable under such chattel paper
or instrument shall be included as an Eligible Account
Receivable and (iii) the originals of such chattel
paper or instruments have been endorsed and/or assigned
and delivered to Agent, for the benefit of itself and
Lenders, in a manner satisfactory to Agent; and
(r) it is an Account Receivable with respect to
which Agent, for itself and Lenders, has a valid, first
priority and fully perfected Lien.
Agent further reserves the right, from time to time hereafter, to
designate as ineligible specific Accounts Receivable that meet
the
-6-
aforementioned criteria for Eligible Accounts Receivable if
either (i) such Accounts Receivable are deemed by Agent, in its
reasonable business judgment, to be unacceptable or (ii) Agent
determines, in its reasonable business judgment, that the
prospect of payment or performance by the Account Debtor with
respect thereto is or will be impaired for any reason whatsoever.
An Account Receivable which is at any time an Eligible Account
Receivable, but which subsequently fails to meet any of the
foregoing requirements, shall forthwith cease to be an Eligible
Account Receivable.
"Eligible Inventory" means Inventory of propane gas and
other hard good inventory (exclusive of propane gas tanks leased
and held for sale) of Borrower or any Borrowing Subsidiary, which
meets the following requirements:
(a) it is owned by Borrower or a Borrowing Sub-
sidiary and is not subject to any prior assignment,
claim or Lien, other than (i) a Lien in favor of Agent,
for the benefit of itself and Lenders, (ii) a Lien in
favor of Borrower to secure the Intercompany Loans, so
long as Borrower has assigned such Lien to Agent, for
the benefit of itself and Lenders, and (iii) Liens
consented to by Agent in writing;
(b) if it is a hard good held for sale or lease
or furnishing under contracts of service, it is (except
as Agent may otherwise consent in writing) new and
unused;
(c) except as Agent may otherwise consent, it is
in the possession and control of Borrower, a Borrowing
Subsidiary or their respective agents;
(d) if it is in the possession or control of a
bailee, warehouseman, processor or other Person other
than Borrower or a Borrowing Subsidiary, Agent is in
possession of such agreements, instruments and
documents as Agent may require (each in form and
content acceptable to Agent and duly executed, as
appropriate, by the bailee, warehouseman, processor or
other Person in possession or control of such
Inventory, as applicable), including but not limited to
warehouse receipts in Agent's name, for the benefit of
itself and Lenders, covering such Inventory;
(e) it is not Inventory which is dedicated to,
identifiable with, or is otherwise specifically to be
used in the manufacture of, goods which are to be sold
or leased to the United States of America or any
department, agency or instrumentality thereof and in
respect of which Inventory Borrower or a Borrowing
Subsidiary shall have received any progress or other
advance payment which is or may be against any Account
Receivable generated upon the sale or lease of any such
goods;
-7-
(f) it is not Inventory produced in violation of
the Fair Labor Standards Act and subject to the "hot
goods" provisions contained in Title 29 U.S.C. Section
215 or any successor statute or section;
(g) it is not (i) packaging or shipping
materials, (ii) goods used in connection with
maintenance or repair of Borrower's or a Borrowing
Subsidiary's business, properties or assets, (iii)
work-in-process or (iv) general supplies;
(h) it is not Inventory which in any way fails to
meet or violates any warranty, representation or
covenant contained in this Agreement or any Related
Agreement relating directly or indirectly to Inventory;
(i) Agent has not determined in its reasonable
business judgment that it is unacceptable due to age,
type, category, quality and/or quantity;
(j) it is Inventory with respect to which (i)
Agent, for itself and Lenders, has a valid, first
priority and fully perfected Lien (as determined by
Agent in its reasonable discretion) and (ii) if it is
Inventory of a Borrowing Subsidiary, Borrower has a
valid, second priority and fully perfected Lien, and
such Lien has been assigned to Agent, for itself and
Lenders; and
(k) it is not Inventory the use of which by
Borrower or a Borrowing Subsidiary or the manufacture
or sale thereof by Borrower or a Borrowing Subsidiary,
is subject to any licensing, patent, royalty,
trademark, tradename or copyright agreement of any
other Person.
Inventory which is at any time Eligible Inventory but which
subsequently fails to meet any of the foregoing requirements
shall forthwith cease to be Eligible Inventory.
"Environmental Laws" means the Resource Conservation
and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, any so-called "Superfund" or
"Superlien" law, the Toxic Substances Control Act, and any other
federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree or other requirement regulating,
relating to, or imposing liability or standards of conduct
(including but not limited to permit requirements, and emission
or effluent restrictions) concerning any Hazardous Materials or
any hazardous, toxic or dangerous waste, substance or
constituent, or any pollutant or contaminant or other substance,
whether solid, liquid or gas, as now or at any time hereafter in
effect.
"Environmental Lien" means a Lien in favor of any
governmental entity for (a) any liability under any Environmental
-8-
Law or (b) damages arising from or costs incurred by such govern-
mental entity in response to a Release of any Hazardous Material
or the spillage, disposal or release into the environment of any
other hazardous, toxic or dangerous waste, substance or
constituent, or other substance.
"Equipment" means all equipment of Borrower or any
Subsidiary of every description, including without limitation
fixtures, furniture, vehicles and trade fixtures, together with
any and all accessions, parts and equipment attached thereto or
used in connection therewith, and any substitutions therefor and
replacements thereof.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute of similar
import, together with the regulations thereunder, in each case as
in effect from time to time. References to sections of ERISA
shall be construed to also refer to any successor sections.
"ERISA Affiliate" means any corporation, partnership,
or other trade or business (whether or not incorporated) that is,
along with Borrower, a member of a controlled group of
corporations or a controlled group of trades or businesses, as
described in Sections 414(b) and 414(c), respectively, of the
Code or Section 4001 of ERISA, or a member of the same affiliated
service group within the meaning of Section 414(m) of the Code.
"Eurocurrency Reserve Requirement" means, with respect
to any LIBOR Rate Loan for any Interest Rate Period, a percentage
equal to the daily average during such Interest Rate Period of
the percentages in effect on each day of such Interest Rate
Period, as prescribed by the Federal Reserve Board, for
determining the aggregate maximum reserve requirements (including
all basic, supplemental, marginal and other reserves) applicable
to "Eurocurrency liabilities" pursuant to Regulation D or any
other then applicable regulation of the Federal Reserve Board
which prescribes reserve requirements applicable to "Eurocurrency
liabilities," as presently defined in Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve
Requirement shall reflect any other reserves required to be
maintained by Continental against (i) any category of liabilities
that includes deposits by reference to which the LIBOR Rate is to
be determined, or (ii) any category of extensions of credit or
other assets that includes LIBOR Rate Loans. For purposes of
this Agreement, any LIBOR Rate Loan hereunder shall be deemed to
be "Eurocurrency liabilities," as defined in Regulation D, and,
as such, shall be deemed to be subject to such reserve
requirements without the benefit of, or credit for, proration,
exceptions or offsets which may be available to Continental from
time to time under Regulation D.
"Event of Default" has the meaning ascribed to such
term in SECTION 6.1.
-9-
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal, for each day during
such period, to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such
day (or, if such day is not a Banking Day, for the next preceding
Banking Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Banking Day, the
average of the quotations for such day on such transactions
received by Agent from three federal funds brokers of recognized
standing selected by it.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System or any successor thereto.
"Fiscal Year" means any period of twelve (12)
consecutive calendar months ending on the thirtieth (30th) day of
June. References to a Fiscal Year with a number corresponding to
any calendar year (e.g. "Fiscal Year 1994") refer to the Fiscal
Year ending on the thirtieth (30th) day of June occurring during
such calendar year.
"GAAP" means generally accepted accounting principles
as in effect from time to time (except as otherwise provided in
SECTION 1.4), as applied in the preparation of the audited
financial statement of Borrower referred to in SECTION 4.6.
"Hazardous Materials" means any toxic substance,
hazardous substance, hazardous material, hazardous chemical or
hazardous waste defined or qualifying as such in (or for the
purposes of) any Environmental Law, or any pollutant or contami-
nant, and shall include, but not be limited to, petroleum,
including crude oil, any radioactive material, including but not
limited to any source, special nuclear or by-product material as
defined at 42 U.S.C. Section 2011 ET SEQ., as amended or
hereafter amended, polychlorinated biphenyls and asbestos in any
form or condition.
"Indebtedness" of any Person means, without
duplication, (a) the principal portion of any obligation of such
Person for borrowed money, including without limitation (i) any
obligation of such Person evidenced by bonds, debentures, notes
or other similar debt instruments and (ii) any obligation for
borrowed money which is non-recourse to the credit of such Person
but which is secured by a Lien on any asset of such Person, (b)
any obligation of such Person on account of deposits or advances,
(c) any obligation of such Person for the deferred purchase price
of any property or services, except Trade Accounts Payable, (d)
any obligation of such Person as lessee under a Capitalized
Lease, (e) any obligation of such Person with respect to interest
rate swaps, interest rate caps, interest rate collars or other
interest hedging agreements, (f) any obligation of such Person in
respect of foreign exchange contracts, (g) any obligation of such
Person with respect to Letters of Credit, acceptances, guarantees
or similar obligations
-10-
of another Person issued for the account of such Person and (h)
any Indebtedness of another Person secured by a Lien on any asset
of such first Person, whether or not such Indebtedness is assumed
by such first Person. For all purposes of this Agreement, the
Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general
partner or joint venturer.
"Intercompany Agreement" means that certain
Intercompany Agreement of even date herewith among Borrower and
each of the Borrowing Subsidiaries.
"Intercompany Loans" means revolving loans made by
Borrower to the Borrowing Subsidiaries with the proceeds of the
Loans pursuant to the terms of this Agreement and the
Intercompany Agreement. All funds downstreamed by Borrower to
the Borrowing Subsidiaries with the proceeds of the Loans will be
deemed to be Intercompany Loans.
"Interest Rate Period" means with respect to any
portion of the Revolving Loans, the period commencing on the date
on which the LIBOR Rate is deemed applicable to such portion of
the Revolving Loans, and ending on the numerically corresponding
day one (1), two (2) or three (3) months thereafter, as selected
by Borrower pursuant to SECTION 3.1.1(c) OF SUPPLEMENT A;
provided, however, that:
(a) any Interest Rate Period which would
otherwise end on a day which is not a Banking Day shall
end on the next succeeding Banking Day unless such next
succeeding Banking Day falls in another calendar month,
in which case such Interest Rate Period shall end on
the next preceding Banking Day;
(b) any Interest Rate Period which begins on the
last Banking Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Rate Period)
shall end on the last Banking Day of the calendar month
at the end of such Interest Rate Period; and
(c) no Interest Rate Period shall extend beyond
the Termination Date.
"Inventory" means any and all of Borrower's and each
Subsidiary's goods (including without limitation goods in
transit) which are held for sale, furnished under any contract of
service, or held as raw materials, work in process, or supplies
or materials used or consumed in Borrower's or such Subsidiary's
business, or which are held for use in connection with the
manufacture, packing, shipping, advertising, selling or finishing
of such goods, and any and all goods the sale or other
disposition of which has given rise to an Account Receivable,
Contract Right or any other property
-11-
described in SECTION 3.1(a), which are returned to and/or repos-
sessed and/or stopped in transit by, or at any time hereafter are
in the possession or under the control of, Borrower, any Subsidi-
ary, Agent or any Lender or any agent or bailee of any of them,
and all documents of title or other documents representing the
same; provided, that the foregoing does not include tanks leased
to, or held for lease to, customers, storage tanks and other
Equipment.
"Investment" of any Person means any investment, made
in cash or by delivery of any kind of property or asset, in any
other Person, whether by acquisition of shares of stock or
similar interest, Indebtedness or other obligation or security,
or by loan, advance or capital contribution, or otherwise.
"Issuing Bank" means Continental or any other Lender
selected by Agent with Borrower's consent (which will not be
unreasonably withheld) to issue Letters of Credit under this
Agreement.
"L/C Draft" means a draft drawn on Issuing Bank
pursuant to a Letter of Credit.
"Lenders" means, collectively, Continental and any
other Person that becomes a Lender under this Agreement and each
of their respective successors and assigns as provided in this
Agreement; and "Lender" means any one of Lenders.
"Letter of Credit" means a standby or documentary
letter of credit issued by the Issuing Bank on the Application of
Borrower.
"Letter of Credit Obligations" means at any time an
amount equal to the sum of (a) the aggregate outstanding face
amount of all Letters of Credit plus (b) the aggregate
outstanding face amount of all accepted but unpaid L/C Drafts.
"Liabilities" means all of the liabilities, obligations
(including obligations of performance) and indebtedness of
Borrower to Agent or any Lender of any kind or nature, however
created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing or due or to
become due, and arising under, or in connection with, this
Agreement, any Note, any Related Agreement, any Letter of Credit
or any Application therefor, including without limitation all
interest, charges, expenses, Attorneys' Fees and other sums
chargeable to Borrower by Agent or any Lender hereunder or
thereunder. "Liabilities" shall also include any and all amend-
ments, extensions, renewals, refundings or refinancings of any of
the foregoing.
"LIBOR Base Rate" means, with respect to each Interest
Rate Period for a LIBOR Rate Loan, the sum of two and one-half
percent (2.50%) PLUS the rate per annum at which U.S. Dollar
deposits in immediately available funds are offered to
Continental
-12-
two (2) Banking Days prior to the beginning of such Interest Rate
Period by major banks in the London interbank eurodollar market
at or about 11:00 a.m., London time, for delivery on the first
day of such Interest Rate Period, for the number of days com-
prised therein and in an amount equal to the amount of the LIBOR
Rate Loan to be outstanding during such Interest Rate Period.
"LIBOR Rate" means, with respect to each Interest Rate
Period for a LIBOR Rate Loan, a rate per annum (rounded upward,
if necessary, to the nearest one hundredth of one percent
(1/100th of 1%)) determined pursuant to the following formula:
LIBOR Rate = LIBOR Base Rate
----------------------------------
1-Eurocurrency Reserve Requirement
"LIBOR Rate Loan" means any portion of the Revolving
Loan which bears interest at a rate determined with reference to
the LIBOR Rate.
"Lien" means any security interest, mortgage, pledge,
hypothecation, judgment lien or similar legal process, title
retention lien, or other lien or encumbrance, including without
limitation the interest of a vendor under any conditional sale or
other title retention agreement and the interest of a lessor
under any Capitalized Lease.
"Loan" means (a) any Revolving Loan made pursuant to
SECTION 2.1.1 and (b) any other loan or advance made to Borrower
by Agent or any Lender under or pursuant to this Agreement.
"Loan Account" has the meaning ascribed to such term in
SECTION 2.3.
"Margin Stock" has the meaning ascribed to such term in
Regulation U of the Federal Reserve Board or any regulation
substituted therefor, as in effect from time to time.
"Master Revolving Credit Note" means the Master
Revolving Credit Note dated on or about June 30, 1994 (as it may
be amended from time to time) executed by each Borrowing
Subsidiary in favor of Borrower and evidencing the Intercompany
Loans made to each Borrowing Subsidiary under the Intercompany
Agreement.
"Material Adverse Change" means (a) a material adverse
change in the condition (financial or otherwise), operations,
performance, prospects, properties or affairs [, TAKEN AS A
WHOLE,] of Borrower or in the ability of Borrower to perform its
obligations under any material agreement to which Borrower is a
party, (b) a material adverse change in the condition (financial
or otherwise), operations, performance, prospects, properties or
affairs of Borrower and the Subsidiaries taken as a whole or in
the ability of Borrower and the Subsidiaries taken as a whole to
perform their obligations under any material agreements to which
-13-
they are parties or (c) an impairment of Agent's interest, for
the benefit of itself and Lenders, in any material portion of the
Collateral or the material diminution in value of the Collateral.
"Material Adverse Effect" means (a) a material adverse
effect upon the condition (financial or otherwise), operations,
performance, prospects, properties or affairs [,TAKEN AS A WHOLE,]
of Borrower or upon the ability of Borrower to perform its
obligations under any material agreement to which Borrower is a
party, (b) a material adverse effect upon the condition
(financial or otherwise), operations, performance, prospects,
properties or affairs of Borrower and the Subsidiaries taken as a
whole or upon the ability of Borrower and the Subsidiaries taken
as a whole to perform their obligations under any material
agreements to which they are parties or (c) an impairment of
Agent's interest, for the benefit of itself and Lenders, in any
material portion of the Collateral or the material diminution in
value of the Collateral.
"Maximum Facility" means $15,000,000.
"Maximum Loan Amount" means, with respect to any
Lender, the maximum amount of Loans which such Lender has agreed,
pursuant to the terms and conditions of this Agreement, to make
available to Borrower, as set forth on the signature page hereto
or in an Assignment and Acceptance Agreement executed by such
Lender.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA that is maintained for
employees of Borrower or any ERISA Affiliate.
"Note" means any promissory note of Borrower evidencing
any loan or advance made by any Lender to Borrower pursuant to
this Agreement, as the same may be amended, modified or supple-
mented from time to time.
"Obligor" means Borrower and each other Person who is
or shall become primarily or secondarily liable on any of the
Liabilities, or who grants to Agent, for the benefit of itself
and Lenders, a Lien on any property of such Person as security
for any of the Liabilities.
"Obligor Collateral" means any real or personal
property of any Obligor on which a Lien has been granted to
Agent, for the benefit of itself and Lenders, in order to secure
the Liabilities and/or such Obligor's guaranty of the
Liabilities.
"Occupational Safety and Health Law" means the Occupa-
tional Safety and Health Act of 1970 and any other federal, state
or local statute, law, ordinance, code, rule, regulation, order
or decree regulating, relating to or imposing liability or
standards of conduct concerning employee health and/or safety.
-14-
"Over Advance" has the meaning ascribed to such term in
SECTION 2.8.
"Overdraft Loan" has the meaning ascribed to such term
in SECTION 2.7.
"Participant" means any Person, now or at any time or
times hereafter, participating with any Lender, pursuant to the
provisions of SECTION 12.9, in the Loans made or Letters of
Credit issued, pursuant to this Agreement or any Related
Agreement.
"Payment Liabilities" means all Liabilities other than
contingent obligations of Borrower with respect to which neither
Agent nor any Lender has asserted a claim against Borrower;
provided, that Payment Liabilities shall include the Letter of
Credit Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation
and any entity succeeding to any or all of its functions under
ERISA.
"Pension Plan" means a "pension plan," as such term is
defined in Section 3(2) of ERISA, that is subject to the provi-
sions of Title IV of ERISA (other than a Multiemployer Plan) and
to which Borrower or any ERISA Affiliate may have any liability,
including any liability by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, or government
(whether national, federal, state, county, city, municipal or
otherwise, including without limitation any instrumentality,
division, agency, body or department thereof).
"Pre-Settlement Determination Date" has the meaning
ascribed to such term in SECTION 2.15.
"Pro Rata Share" means, with respect to any Lender, a
fraction (expressed as a percentage in nine (9) decimal places),
the numerator of which shall be the Maximum Loan Amount of such
Lender and the denominator of which shall be the aggregate amount
of the Maximum Loan Amounts of all Lenders.
"Real Property" means, collectively, all real property
presently owned or hereafter acquired, or presently or hereafter
leased, by Borrower or any Subsidiary.
"Reference Rate" means, at any time, the rate of
interest then most recently announced by Continental at Chicago,
Illinois as its reference rate. Each change in the interest rate
on any Loan shall take effect on the effective date of the change
in the Reference Rate.
-15-
"Register" has the meaning ascribed to such term in
SECTION 12.9(d).
"Related Agreement" means any agreement, instrument or
document (including without limitation notes, guarantees, chattel
mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing
statements, subordination agreements, intercreditor agreements,
trust account agreements and all other written matter)
heretofore, now, or hereafter delivered to Agent or any Lender
with respect to or in connection with or pursuant to this
Agreement or any of the Liabilities, and executed by or on behalf
of Borrower, any Subsidiary or any other Obligor, as each of the
same may be amended, modified or supplemented from time to time
and shall specifically include any Notes.
"Related Party" means, with respect to any Person, any
other Person (a) that directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, such first Person or a subsidiary of such first
Person, (b) that beneficially owns or holds ten percent (10%) or
more of the equity interest of such first Person or a subsidiary
of such first Person or (c) ten percent (10%) or more of the
equity interest of which is beneficially owned or held by such
first Person or a subsidiary of such first Person. The term
"control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Release" means any actual or threatened spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing of Hazardous
Materials into the environment.
"Reportable Event" has the meaning given to such term
in ERISA.
"Requisite Lenders" means Lenders having, in the
aggregate, Pro Rata Shares of (a) one hundred percent (100%) at
such times as there are one or two Lenders, or (b) at least
fifty-one percent (51%) at such times as there are three or more
Lenders.
"Revolving Credit" has the meaning ascribed to such
term in the definition of "Credit."
"Revolving Credit Amount" has the meaning ascribed to
such term in SUPPLEMENT A.
"Revolving Loan" has the meaning ascribed to such term
in SECTION 2.1.1.
-16-
"Revolving Loan Availability" means the lesser of (a)
the Revolving Credit Amount minus the Letter of Credit
Obligations and (b) the Borrowing Base minus the Letter of Credit
Obligations.
"Senior Loan Documents" means, collectively, the
agreements, instruments and documents evidencing, governing and
securing the Senior Notes, including the indenture pursuant to
which the Senior Notes are issued, as each of the same may be
amended, modified or supplemented from time to time pursuant to
SECTION 5.27 hereof.
"Senior Loans" means, collectively, all indebtedness of
Borrower represented by the Senior Notes.
"Senior Notes" means, collectively, Borrower's
_____________ percent (___%) Senior Secured Notes due 2004 in the
aggregate principal amount due upon maturity of not more than
$___________, issued pursuant to the Senior Loan Documents.
"Settlement Date" has the meaning ascribed to such term
in SECTION 2.15.
"Stock Repurchase" means the repurchase by Borrower of
all shares of its common stock held by Mr. Robert W. Plaster and
certain other departing officers of Borrower, which is being
consummated on the date hereof.
"Subordinated Debt" means, collectively, (a)
Indebtedness of Borrower under the certain Indenture dated June
7, 1983 relating to Borrower's 9% Subordinated Debentures due
December 31, 2007, as supplemented by a certain First
Supplemental Indenture dated December 13, 1989, in the current
aggregate principal amount of $____________, and (b) that portion
of any other liabilities, obligations or Indebtedness of Borrower
which contains terms satisfactory to Agent and is subordinated,
in a manner satisfactory to Agent (as evidenced by Agent's
written agreement of satisfaction), as to right and time of
payment of principal and interest thereon, to all of the
Liabilities.
"Subordinated Debt Documents" means, collectively, the
agreements, instruments and documents evidencing or otherwise
pertaining to any Subordinated Debt, as each of the same may be
amended, modified or supplemented from time to time with the
consent of the Requisite Lenders.
"Subsidiary" means any Person of which or in which
Borrower and its other Subsidiaries own directly or indirectly
more than fifty percent (50%) of (a) the combined voting
power of all classes of stock having general voting power under
ordinary circumstances to elect a majority of the board of
directors of such Person, if it is a corporation, (b) the capital
interest or profits interest of such Person, if it is a
partnership, joint venture or
-17-
similar entity or (c) the beneficial interest of such Person, if
it is a trust, association or other unincorporated organization.
"Supplemental Documentation" has the meaning ascribed
to such term in SECTION 3.4.
"Tangible Net Worth" means at any time, the total of
shareholders' equity (including capital stock, additional paid-in
capital and retained earnings and after deducting treasury
stock), less the sum of the total amount of all intangible
assets, in each case determined on a consolidated basis for
Borrower and the Subsidiaries and in accordance with GAAP.
Intangible assets shall include, without limitation, unamortized
debt discount and expense, unamortized deferred charges and
goodwill.
"Taxes" with respect to any Person means taxes, assess-
ments or other governmental charges or levies imposed upon such
Person, its income or any of its properties, franchises or
assets.
"Termination Date" means June __, 1997 or such later
date to which it may be extended pursuant to SECTION 12.7.
"Trade Accounts Payable" of any Person means trade
accounts payable of such Person with a maturity of not greater
than ninety (90) days incurred in the ordinary course of such
Person's business.
"Transactions" has the meaning ascribed to such term in
SECTION 8.1.3.
"UCC" means the Uniform Commercial Code as in effect in
the State of Illinois, and any successor statute, together with
any regulations thereunder, in each case as in effect from time
to time. References to sections of the UCC shall be construed to
also refer to any successor sections.
"Units" means the investment unit consisting of
$________ principal amount of Senior Notes and ________ Warrants.
"Unmatured Event of Default" means any event or
condition which, with the lapse of time or giving of notice to
Borrower or both, would constitute an Event of Default.
"Warrants" means warrants issued to holders of the
Senior Notes entitling such holders to purchase up to _____
shares of the common stock, $.001 par value per share, of
Borrower, in accordance with the Warrant Agreement dated as of
_____________, 1994.
1.2 OTHER DEFINITIONAL PROVISIONS. Unless otherwise
defined or the context otherwise requires, all financial and
accounting terms used herein or in any certificate or other
document made or delivered pursuant hereto shall be defined in
accordance with GAAP. Unless otherwise defined therein, all
terms
-18-
defined in this Agreement shall have the defined meanings when
used in any Related Agreement or Supplemental Documentation.
Terms used in this Agreement which are defined in any SUPPLEMENT
or EXHIBIT hereto shall, unless the context otherwise indicates,
have the meanings given them in such SUPPLEMENT or EXHIBIT.
Other terms used in this Agreement shall, unless the context
indicates otherwise, have the meanings provided for by the UCC to
the extent the same are used or defined therein.
1.3 INTERPRETATION OF AGREEMENT. A SECTION, an
EXHIBIT or a SCHEDULE is, unless otherwise stated, a reference to
a section hereof, an exhibit hereto or a schedule hereto, as the
case may be. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this
Agreement. The words "hereof," "herein," "hereto" and
"hereunder" and words of similar import when used in this
Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Reference to "this
Agreement" shall include the provisions of SUPPLEMENT A.
1.4 COMPLIANCE WITH FINANCIAL RESTRICTIONS.
Compliance with each of the financial ratios and restrictions
contained in SECTION 5 or SUPPLEMENT A shall, except as otherwise
provided herein, be determined in accordance with GAAP
consistently followed.
2. LOANS; LETTERS OF CREDIT; OTHER MATTERS.
2.1 LOANS.
2.1.1 REVOLVING LOANS.
(a) Subject to the terms and conditions of this
Agreement and the Related Agreements, and in reliance upon the
warranties and representations of Borrower set forth herein and
the warranties and representations of Borrower and each other
Obligor set forth in the Related Agreements, each Lender,
severally and not jointly, agrees to make its Pro Rata Share of
such loans or advances (individually each a "Revolving Loan" and
collectively the "Revolving Loans") from time to time before the
Termination Date to Borrower as Borrower may from time to time
request; provided, that Agent may, but shall not be obligated to,
make such Revolving Loans to Borrower on behalf of Lenders as a
"Disproportionate Advance" (as defined below); provided further,
that, except as provided in SECTION 2.8, the aggregate
outstanding principal amount of the Revolving Loans made by or on
behalf of Lenders shall not at any time exceed the Revolving Loan
Availability. Revolving Loans made by or on behalf of Lenders
may be repaid and, subject to the terms and conditions hereof,
reborrowed to but not including the Termination Date unless the
Credit extended under this Agreement is otherwise terminated as
provided in this Agreement. No Lender shall be obligated at any
time to make available to Borrower its Pro Rata Share of any
requested Revolving Loan if such amount, plus
-19-
its Pro Rata Share of all Revolving Loans then outstanding, would
exceed such Lender's Maximum Loan Amount at such time. No Lender
shall be obligated to make available its Pro Rata Share of any
Revolving Loans during the occurrence of any Event of Default or
Unmatured Event of Default; provided that notwithstanding the
foregoing or anything contained herein to the contrary,
regardless of whether an Event of Default or an Unmatured Event
of Default exists, each Lender shall, at the request of Agent,
continue to be obligated to make its Pro Rata Share of the
Revolving Loans available to Borrower for a period of up to five
(5) Banking Days, but in any event, no Lender shall be obligated
at any time to make available to Borrower its Pro Rata Share of
any such requested Revolving Loan if such amount, plus its Pro
Rata Share of all Revolving Loans then outstanding, would exceed
such Lender's Maximum Loan Amount at such time. Neither Agent
nor any Lender shall be responsible for any failure by any other
Lender to perform its obligations to make advances hereunder, and
the failure of any Lender to make its Pro Rata Share of any
advance hereunder shall not relieve any other Lender of its
obligation, if any, to make its Pro Rata Share of Loans
hereunder, nor require such other Lender to make more than its
Pro Rata Share of any Loans hereunder. If Borrower makes a
request for a Revolving Loan as provided herein, or if Agent
desires to make a Revolving Loan pursuant to SECTIONS 2.2(b),
2.2(c), 2.2(d), 2.4.4, 2.10(c), 3.2(c), 5.5, 5.6, 5.22, 7.4,
12.3, 12.4 or any other provision of this Agreement or any
Related Agreement that permits Agent to advance Revolving Loans
to Borrower, Agent, at its option and in its sole and absolute
discretion, shall do either of the following:
(i) Advance the amount of the proposed Revolving
Loan to Borrower disproportionately (a
"Disproportionate Advance") out of Agent's own funds on
behalf of Lenders, and request settlement in accordance
with SECTION 2.15, such that upon such settlement, each
Lender's share of the outstanding Revolving Loans
(including, without limitation, the amount of any
Disproportionate Advance) equals its Pro Rata Share and
such Disproportionate Advance shall be deemed to be
repaid; or
(ii) Notify each Lender and Borrower by telecopy
or other similar form of teletransmission of the
proposed advance on the same day Agent is notified by
Borrower of Borrower's request for an advance hereunder
or the same day Agent desires to make a Revolving Loan
for the benefit of Borrower (to the extent permitted
hereunder or under any Related Agreement). Each Lender
shall remit, to the Demand Deposit Account, on or prior
to twelve o'clock noon, Chicago time, on the business
day immediately succeeding the date of such
notification, immediately available funds in an amount
equal to such Lender's Pro Rata Share of such proposed
advance.
-20-
If and to the extent that a Lender does not settle with Agent as
required under CLAUSE (i), Borrower agrees to repay to Agent
forthwith on demand such amount required to be paid by such
Lender to Agent, together with interest thereon, for each day
from the date such amount is made available to Borrower until the
date such amount is repaid to Agent, at the interest rate
applicable at such time for such Revolving Loans; provided, that
Borrower's obligation to repay such advance to Agent shall not
relieve each Lender of its liability to Agent or Borrower for
failure to settle as provided in CLAUSE (i).
(b) In the event the aggregate outstanding principal
balance of the Revolving Loans exceeds the Revolving Loan Avail-
ability, Borrower shall, unless Agent permits such Over Advance
as provided in SECTION 2.8 or Requisite Lenders shall otherwise
consent, without notice or demand of any kind, immediately make
such repayments of the Revolving Loans or take such other actions
as shall be necessary to eliminate such excess.
(c) All Revolving Loans hereunder shall be paid by
Borrower on the Termination Date, unless payable sooner pursuant
to the provisions of this Agreement, but may, at Borrower's
election, be repaid in whole or in part at any time prior to such
date without premium or penalty (other than as expressly provided
in SECTION 3.4 of SUPPLEMENT A with respect to LIBOR Rate Loans
repaid prior to the end of the applicable Interest Rate Period).
2.1.2 PREPAYMENT OF ALL LIABILITIES; REDUCTION OF
REVOLVING CREDIT AMOUNT. Borrower may prepay all of the Liabil-
ities in full at any time, without premium or penalty (other than
as expressly provided in SECTION 3.4 of SUPPLEMENT A with respect
to LIBOR Rate Loans repaid prior to the end of the applicable
Interest Rate Period), by prepaying the outstanding principal
balance of the Revolving Loans, together with (a) all accrued and
unpaid interest on the Liabilities, (b) all other outstanding
Liabilities and (c) cash in the amount of, or adequate (in
Agent's determination) cash collateral for, the Letter of Credit
Obligations. Borrower may not permanently reduce the Revolving
Credit Amount except in connection with the prepayment in full of
all of the Liabilities.
2.1.3 MAXIMUM OUTSTANDING LIABILITIES. Notwithstanding
any other provision of this Agreement, the aggregate outstanding
principal balance of the Loans plus Letter of Credit Obligations
shall not exceed the Maximum Facility; PROVIDED, HOWEVER, that
the foregoing shall not limit the right of Agent to advance
Revolving Loans to Borrower pursuant to the provisions of SECTION
2.2(b), 2.2(c), 2.2(d), 2.4.4, 2.10(c), 3.2(c), 5.5, 5.6, 5.22,
7.4, 12.3 or 12.4 or any other provision of this Agreement or any
Related Agreement that permits Agent to advance Revolving Loans
to Borrower. Any Revolving Loan advanced by Agent to Borrower
under any of the foregoing provisions shall be deemed to be a
Revolving Loan made by Agent on behalf of Lenders.
-21-
2.2 LETTERS OF CREDIT.
(a) In addition to Loans made pursuant to SECTION 2.1,
Agent will, upon receipt of duly executed Applications and such
other documents, instruments and/or agreements as Agent may
require, request, on Borrower's behalf, that Issuing Bank issue
Letters of Credit on such terms as are satisfactory to Agent and
Issuing Bank, PROVIDED, HOWEVER that no Letter of Credit will be
issued if, before or after taking such Letter of Credit into
account, (i) the Letter of Credit Obligations exceed $__________
or (ii) the Letter of Credit Obligations exceeds the lesser of
(A) the Revolving Credit Amount minus the outstanding principal
balance of the Revolving Loans and (B) the Borrowing Base minus
the outstanding principal balance of the Revolving Loans. If
such excess shall at any time exist, Borrower shall, unless
Requisite Lenders shall otherwise consent, promptly make such
payments as are necessary to eliminate such excess or shall
promptly post cash collateral in the amount of such excess. No
Letter of Credit shall have an expiry date after the date that is
thirty (30) days prior to the initial Termination Date or, if the
Termination Date is extended pursuant to SECTION 12.7, the
applicable extended Termination Date.
(b) Borrower agrees to pay to Issuing Bank, on demand,
Issuing Bank's standard issuance, negotiation and administrative
operating fees and charges in effect from time to time for
issuing and administering any Letters of Credit and if not so
paid, each Lender shall, without regard to any other provision of
this Agreement or any other Related Agreement, any defense that
Borrower may have to its obligation to pay Issuing Bank in
connection with such fees and charges or any defense that any
Lender may have in connection with the participation described in
SECTION 2.2(e) in connection with any Letter of Credit or L/C
Draft, pay Issuing Bank for such Lender's Pro Rata Share of such
fees and charges, and any payments so made by Lenders to Issuing
Bank shall be deemed to be Revolving Loans. Each Lender (other
than a Lender that is Issuing Bank) acknowledges and agrees that
it shall not be entitled to any of the fees and charges of
Issuing Bank. Borrower further agrees to pay Agent, for the
benefit of itself and Lenders, a commission equal to one percent
(1%) per annum (calculated on the basis of a year consisting of
three hundred sixty (360) days and paid for actual days elapsed)
of the daily average of the undrawn amount of each Letter of
Credit and on each L/C Draft accepted in connection therewith.
Such Letter of Credit commissions shall be paid in arrears on the
last day of each month thereafter. Agent may provide for the
payment of any fees, charges or commissions due hereunder by
advancing the amount thereof to Borrower as a Revolving Loan. At
all times that any Default Rate is being charged under this
Agreement, the Letter of Credit commission shall be equal to the
otherwise applicable commission plus two percent (2%) per annum.
(c) Borrower agrees to reimburse Issuing Bank, on
demand, for each payment made by Issuing Bank under or pursuant
to
-22-
any Letter of Credit or L/C Draft and if not so reimbursed, each
Lender shall, without regard to any other provision of this
Agreement or any other Related Agreement, any defense that
Borrower may have to its obligation to reimburse Issuing Bank in
connection with such payment or any defense that any Lender may
have in connection with the participation described in SECTION
2.2(e) in connection with any Letter of Credit or L/C Draft,
reimburse Issuing Bank for such Lender's Pro Rata Share of such
payment, and any payments so made by Lenders to Issuing Bank
shall be deemed to be Revolving Loans. Agent and Lenders agree
that so long as there is sufficient Revolving Loan Availability
and provided that no Event of Default is then in existence or
would be caused thereby, Agent will provide for the payment of
any reimbursement obligations and any interest accrued thereon by
advancing the amount thereof to Borrower as a Revolving Loan.
Agent shall have the option, pursuant to SECTION 2.8, to so
provide for such payments even if there is not sufficient
Revolving Loan Availability or if an Event of Default is then in
existence or would be caused thereby and such amounts will bear
interest at the rate set forth in SECTION 2.8. Borrower agrees
to pay Agent, for the benefit of itself and Lenders, on demand,
interest at the Default Rate on any amounts paid by Issuing Bank
in respect of a Letter of Credit or an L/C Draft until the
earlier of (i) reimbursement of Issuing Bank by Borrower of such
payment and (ii) reimbursement of Issuing Bank by means of a
Revolving Loan made by Agent pursuant to the immediately
preceding two sentences.
(d) Notwithstanding anything to the contrary herein or
in any Application, upon the occurrence of an Event of Default,
an amount equal to the aggregate amount of the outstanding Letter
of Credit Obligations shall, at Agent's option and without demand
upon or further notice to Borrower, be deemed (as between Lenders
and Borrower) to have been paid or disbursed by Agent under the
Letters of Credit and accepted L/C Drafts (notwithstanding that
such amounts may not in fact have been so paid or disbursed), and
a Revolving Loan to Borrower in the amount of such Letter of
Credit Obligations to have been made and accepted, which Loan
shall be immediately due and payable. In lieu of the foregoing,
at the election of Agent at any time after an Event of Default,
Borrower shall, upon Agent's demand, deliver to Agent cash
collateral equal to the aggregate Letter of Credit Obligations.
Any such cash collateral and/or any amounts received by Agent in
payment of the Loan made pursuant to this PARAGRAPH (d) shall be
held by Agent, for the benefit of itself and Lenders, in the
Assignee Deposit Account or a separate account appropriately
designated as a cash collateral account in relation to this
Agreement and the Letters of Credit and shall be retained by
Agent, for the benefit of itself and Lenders, as collateral
security in respect of, first, the Liabilities under or in
connection with the Letters of Credit and L/C Drafts and then,
all other Liabilities. Such amounts shall not be used by Agent
to pay any amounts drawn or paid under or pursuant to any Letter
of Credit or L/C Draft, but may be applied to reimburse Issuing
Bank for drawings or payments under or pursuant
-23-
to Letters of Credit or L/C Drafts which Issuing Bank has paid,
or if no such reimbursement is required, to payment of such other
Liabilities as Agent shall determine. Any amounts remaining in
any cash collateral account established pursuant to this
PARAGRAPH (d) following payment in full of all Liabilities shall
be returned to Borrower.
(e) Immediately upon the issuance of a Letter of
Credit in accordance with this Agreement, each Lender shall be
deemed to have irrevocably and unconditionally purchased and
received from Issuing Bank, without recourse or warranty, an
undivided interest and participation therein to the extent of
such Lender's Pro Rata Share (including without limitation, all
obligations of Borrower with respect thereto). Borrower hereby
indemnifies each of Agent and each Lender against any and all
liability and expense it may incur in connection with any Letter
of Credit or L/C Draft and agrees to reimburse each of Agent and
each Lender for any payment made by Agent or any Lender to
Issuing Bank, except for any liability incurred or payment made
as a result of Agent's or such Lender's gross negligence or
willful misconduct.
2.3 LOAN ACCOUNT; DEMAND DEPOSIT ACCOUNT. Agent shall
establish or cause to be established on its books in Borrower's
name one or more accounts (each a "Loan Account") to evidence
Loans made to Borrower. Agent or Lenders, as appropriate, will
credit or cause to be credited to a commercial account ("Demand
Deposit Account") maintained by Borrower at Continental's 231
South LaSalle Street, Chicago, Illinois office the amount of any
sums advanced as Loans hereunder. Any amounts advanced as Loans
hereunder which are credited to Borrower's Demand Deposit
Account, together with any other amounts advanced to Borrower as
a Loan pursuant to this Agreement, will be debited to the
applicable Loan Account and result in an increase in the
principal balance outstanding in such Loan Account in the amount
thereof.
2.4 INTEREST AND FEES.
2.4.1 INTEREST. The unpaid principal amount of each
Revolving Loan hereunder shall bear interest until maturity at
the rate or rates applicable to Revolving Loans indicated in
SUPPLEMENT A hereto. If any Revolving Loan or portion thereof is
not paid when due, whether by acceleration or otherwise, the
entire unpaid principal amount of the Revolving Loans shall bear
interest thereafter until such amount is paid in full at the
Default Rate applicable to Revolving Loans indicated in
SUPPLEMENT A hereto. Until maturity, interest on the Revolving
Loans shall be paid by Borrower on the date(s) indicated in
SUPPLEMENT A, and at such maturity. After maturity, whether by
acceleration or otherwise, accrued interest shall be payable on
demand.
2.4.2 NONUSE FEE. Borrower agrees to pay to Agent, for
the benefit of itself and Lenders, a fee equal to three-eighths
of one percent (0.375%) per annum on the daily average amount by
which
-24-
the Revolving Credit Amount exceeds the outstanding principal
balance of the Revolving Loans plus the Letter of Credit Obliga-
tions. The fee provided for in this SECTION 2.4.2 shall be
payable monthly in arrears on the twenty-eighth day of each month
commencing July 28, 1994, and on the date the Revolving Credit
terminates for the period then ended.
2.4.3 METHOD OF CALCULATING INTEREST AND FEES. Interest
on the unpaid principal amount of each Loan shall accrue from and
including the date such Loan is made to, but not including, the
date such Loan is paid. Interest and any fees shall be
calculated on the basis of a year consisting of three hundred
sixty (360) days and paid for actual days elapsed.
2.4.4 PAYMENT OF INTEREST AND FEES. Agent may provide
for the payment of any unpaid accrued interest and any fees by
charging the Demand Deposit Account or any bank account
maintained by Borrower with Agent or by advancing the amount
thereof to Borrower as a Revolving Loan.
2.5 REQUESTS FOR LOANS; BORROWING BASE CERTIFICATES;
OTHER INFORMATION.
(a) Loans shall be requested in writing or by
telephone, except for Overdraft Loans and Revolving Loans made
pursuant to the provisions of SECTION 2.2(b), 2.2(c), 2.2(d),
2.4.4, 2.10(c), 3.2(c), 5.5, 5.6, 5.22, 7.4, 12.3, or 12.4 or any
other provision of this Agreement or any Related Agreement that
permits Agent to advance Revolving Loans to Borrower.
(b) In the event that Borrower shall at any time, or
from time to time, (i) make a request for a Loan hereunder or
(ii) be deemed to have requested an Overdraft Loan, Borrower
agrees to forthwith provide Agent and Lenders with such
information, at such frequency and in such format, as is
reasonably required by Agent, such information to be current as
of the time of such request. As of the date hereof, it is not
Agent's intent to require that Borrower provide information to
Agent and Lenders in excess of, or at times other than, that
specifically required to be provided by the terms of this
Agreement or the Related Agreements; however, Agent reserves the
right, from time to time, in its reasonable judgment to require
Borrower to provide information at different times than currently
required and/or to provide additional types of information.
(c) Borrower further agrees to provide to Agent and
Lenders a current Borrowing Base Certificate on the first Banking
Day of each month for the preceding month and, after the
occurrence of an Event of Default or an Unmatured Event of
Default, at such other times as Agent may request. Such
Borrowing Base Certificate shall be in substantially the same
form as that attached hereto as EXHIBIT A, executed and certified
as accurate by such officers or employees of Borrower as Borrower
designates in writing to Agent
-25-
pursuant to duly adopted resolutions of Borrower's Board of
Directors authorizing such action.
(d) Borrower may request, telephonically or by written
authorization, the disbursement of Revolving Loans by Agent or
Lenders, as appropriate. Borrower shall provide Agent with
documentation satisfactory to Agent indicating the names of those
employees of Borrower authorized by Borrower to sign Borrowing
Base Certificates and/or to make telephonic requests for Loans
and Letters of Credit, and/or to authorize disbursement of the
proceeds of Loans by wire transfer or otherwise, and Agent and
Lenders shall be entitled to rely upon such documentation until
notified in writing by Borrower of any change(s) in the names of
the employees so authorized. Agent and Lenders shall be entitled
to act on the instructions of anyone identifying himself as one
of the persons authorized to request Loans and Letters of Credit,
or disbursements of Loan proceeds by telephone and Borrower shall
be bound thereby in the same manner as if the person were
actually so authorized. Borrower agrees to indemnify and hold
each of Agent and each Lender harmless from any and all claims,
damages, liabilities, losses, costs and expenses (including
Attorneys' Fees) which may arise or be created by the acceptance
of instructions for making or paying Loans in writing or by
telephone. Each such request must be received by Agent no later
than 11:00 a.m. (Chicago time) on the date on which such
Revolving Loan is requested to be made.
2.6 STATEMENTS. All Loans and payments hereunder
shall be recorded on Agent's books, which shall be rebuttably
presumptive evidence of the amount of such Loans outstanding at
any time hereunder. Agent will account monthly as to all Loans
and payments hereunder and, absent demonstrable error, each
monthly accounting will be fully binding on Borrower unless,
within fifteen (15) days of Borrower's receipt thereof, Borrower
shall provide Agent with a specific listing of exceptions.
Notwithstanding any term or condition of this Agreement to the
contrary, however, the failure of Agent to record the date and
amount of any Loan hereunder shall not limit or otherwise affect
the obligation of Borrower to repay any such Loan.
2.7 OVERDRAFT LOANS. Agent, in its sole and absolute
discretion, and subject to the terms hereof, may make a Revolving
Loan to Borrower in an amount equal to the amount of any
overdraft which may from time to time exist with respect to the
Demand Deposit Account or any bank account which Borrower may now
or hereafter have with Agent. The existence of any such
overdraft shall be deemed to be a request by Borrower for such
Loan. Borrower acknowledges that Agent is under no duty or
obligation to make any Loan to Borrower to cover any overdraft.
Borrower further agrees that if the making of a Loan to cover any
Overdraft would result in an Over Advance, such overdraft shall
constitute a separate Loan under this Agreement (an "Overdraft
Loan"), which shall bear, from the date on which the overdraft
occurred until paid, interest in an amount equal to the greater
of one hundred
-26-
thirty percent (130%) of the highest rate of interest then
actually being charged for Revolving Loans (other than Overdraft
Loans) made hereunder, and $50 per day. If Agent, in its sole
and absolute discretion, decides not to make a Loan to cover part
or all of any overdraft, Agent may return any check(s) which
created such overdraft.
2.8 OVER ADVANCES. If the aggregate outstanding
Revolving Loans and Letter of Credit Obligations exceed the
lesser of (i) the Borrowing Base and (ii) the Revolving Credit
Amount (such excess Liabilities are herein referred to as "Over
Advances"), Agent, in its sole and absolute discretion, may, for
a period of five (5) Banking Days, to the extent such Over
Advance arises as a result of a reduction in the Borrowing Base,
permit such Over Advance to exist without the consent of any
Lender (but subject to SECTION 2.1.1(a)) and continue to make
Revolving Loans on behalf of Lenders, and after the expiration of
such five (5) Banking Day period, no such event or occurrence
shall cause or constitute a waiver by any Lender of its right to
refuse to make any further Revolving Loans at any time that an
Over Advance exists or would result therefrom; provided, that
Agent may not (i) make Revolving Loans on behalf of Lenders under
this SECTION 2.8 to the extent such Revolving Loans would cause a
Lender's Pro Rata Share of the Revolving Loans to exceed such
Lender's Maximum Loan Amount or (ii) make Revolving Loans on
behalf of Lenders under this SECTION 2.8 to the extent such
Revolving Loans would cause the then outstanding Revolving Loans
and Letter of Credit Obligations to exceed the sum of $1,000,000
and the amount of the outstanding Revolving Loans and Letter of
Credit Obligations as of the date Agent became aware of the Over
Advance. During any period in which an Over Advance exists, the
amount of Over Advances shall bear interest at a rate equal to
one hundred thirty percent (130%) of the highest rate of interest
then actually being charged for Revolving Loans made hereunder.
2.9 ALL LOANS ONE OBLIGATION. The Revolving Loans and
all other Loans under this Agreement shall constitute one Loan,
and all Indebtedness and other Liabilities of Borrower under this
Agreement and any of the Related Agreements shall constitute one
general obligation secured by Agent's Lien, for the benefit of
itself and Lenders, on all of the Collateral and by all other
Liens heretofore, now, or at any time or times hereafter granted
by Borrower or any other Obligor to Agent, for the benefit of
itself and Lenders. Borrower agrees that all of the rights of
Agent and Lenders set forth in this Agreement shall apply to any
modification of or supplement to this Agreement, any Supplements
or Exhibits hereto, and the Related Agreements, unless otherwise
agreed in writing.
-27-
2.10 MAKING OF PAYMENTS; APPLICATION OF COLLECTIONS;
CHARGING OF ACCOUNTS.
(a) All payments hereunder (including payment of
Letter of Credit Obligations and payments with respect to any
Notes) shall be made without set-off or counterclaim and shall be
made to Agent in immediately available funds (except for payments
to be made to Issuing Bank as provided in SECTION 2.2 and except
as Agent may otherwise consent) prior to 12:30 p.m., Chicago
time, on the date due at Continental's office at 231 South
LaSalle Street, Chicago, Illinois 60697, or at such other place
as may be designated by Agent to Borrower in writing. Any
payments received after such time shall be deemed received on the
next Banking Day. Whenever any payment to be made hereunder or
under any Note shall be stated to be due on a date other than a
Banking Day, such payment may be made on the next succeeding
Banking Day, and such extension of time shall be included in the
calculation of interest and any fees.
(b) (i) Borrower authorizes Agent, and Agent will,
subject to the provisions of this PARAGRAPH (b), apply the whole
or any part of any amounts received by Agent (whether deposited
in the Assignee Deposit Account or otherwise received by Agent)
from the collection of items of payment and proceeds of any
Collateral (including without limitation proceeds of insurance),
against the principal and/or interest of any Loans made hereunder
and/or any other Liabilities, whether or not then due, in such
order of application as Agent may determine; PROVIDED, HOWEVER,
that prior to the occurrence of an Event of Default, any such
amounts received by Agent shall be applied in the manner, if any,
specifically set forth in this Agreement with respect to such
payment and if no such manner is specifically set out, then as
follows: FIRST, to payment of amounts then due with respect to
fees (including Attorneys' Fees), charges and expenses for which
Borrower is liable pursuant to this Agreement and the Related
Agreements; SECOND, to payment of amounts then due with respect
to interest on the Loans; THIRD, to payment of the principal of
the Loans;
(ii) Notwithstanding SUBPARAGRAPH (i) above, if prior
to an Event of Default or an Unmatured Event of Default, at any
time the funds received by Agent in the Assignee Deposit Account,
or otherwise, exceed (x) the sum of the outstanding principal
balance of the Loans bearing interest at the Adjusted Reference
Rate, and the amounts described in CLAUSES FIRST and SECOND of
the proviso set forth above in SUBPARAGRAPH (i) or [(y) THE SUM
OF THE AMOUNTS DESCRIBED IN CLAUSES FIRST, SECOND AND THIRD OF
THE PROVISO SET FORTH ABOVE IN SUBPARAGRAPH (i),] then in any
such case, Borrower may direct that such excess proceeds be held
in a cash collateral account maintained by Agent. The funds held
in any cash collateral account referred to in the preceding
sentence may be disbursed, at Borrower's direction, so long as
after giving effect to such disbursements, the Payment
Liabilities do not exceed Revolving Loan Availability;
-28-
(iii) Notwithstanding anything to the contrary herein,
(i) all cash, checks, instruments and other items of payment,
solely for purposes of determining the occurrence of an Event of
Default, shall be deemed received upon actual receipt by Agent,
unless the same is subsequently dishonored for any reason
whatsoever, (ii) for purposes of determining whether, under
SECTIONS 2.1 and 2.2, there is availability for Loans or Letters
of Credit, all cash, checks, instruments and other items of
payment shall be applied against the Liabilities on the first
Banking Day after receipt thereof by Agent and (iii) solely for
purposes of interest calculation hereunder, all cash, checks,
instruments and other items of payment shall be deemed to have
been applied against the Liabilities on the first Banking Day
after receipt by Agent of collected funds with respect thereto;
further provided, that any amounts earned on such funds during
the period after receipt thereof by Agent and prior to
application thereof against the Liabilities as provided herein,
shall be retained by Agent for Agent's own account.
Notwithstanding the foregoing, no checks, drafts or other instru-
ments received by Agent shall constitute final payment with
respect to any Liabilities unless and until such item of payment
has actually been collected.
(c) Borrower hereby authorizes Agent, and Agent may,
in its sole and absolute discretion, charge to Borrower at any
time when due all or any portion of any of the Liabilities
including but not limited to any Attorneys' Fees and other costs
and expenses of Agent and Lenders for which Borrower is liable
pursuant to the terms of this Agreement or any Related Agreement,
or for which any other Obligor is liable pursuant to the terms of
any Related Agreement, by charging Borrower's Demand Deposit
Account or any bank account of Borrower with Agent or by
advancing the amount thereof to Borrower as a Revolving Loan;
PROVIDED, HOWEVER that the provisions of this SECTION 2.10(c)
shall not affect Borrower's obligation to pay when due all
amounts payable by Borrower under this Agreement, any Note or any
Related Agreement, whether or not there are sufficient funds
therefor in the Demand Deposit Account or any such other bank
account of Borrower.
2.11 AGENT'S ELECTION NOT TO ENFORCE. Notwithstanding
any term or condition of this Agreement to the contrary, Agent,
in the sole and absolute discretion of Requisite Lenders, at any
time and from time to time, may suspend or refrain from enforcing
any or all of the restrictions imposed in this SECTION 2, but no
such suspension or failure to enforce shall impair any right or
power of Agent or any Lender under this Agreement, including
without limitation any right of each Lender to refrain from
making a Loan or Issuing Bank to refrain from issuing a Letter of
Credit if all conditions precedent to such Lender's obligation to
make such Loan or Issuing Bank's obligation to issue such Letter
of Credit have not been satisfied.
2.12 REAFFIRMATION. Each Loan or Letter of Credit, or
designation or continuation of a LIBOR Rate Loan, in each case
-29-
requested by Borrower pursuant to this Agreement, shall
constitute an automatic certification by Borrower to Agent and
Lenders that (a) all of the representations and warranties of
Borrower in this Agreement and each of the Related Agreements are
true and correct on the date of such request to the same extent
as if made on such date, except for such changes as are
specifically permitted hereunder (or under such Related
Agreement) and (b) immediately before and after making the
requested Loan or issuing the requested Letter of Credit, no
Event of Default, or Unmatured Event of Default, then exists or
would result therefrom.
2.13 SETOFF. In addition to and not in limitation of
all other rights and remedies (including other rights of offset
or banker's lien) that Agent and Lenders may have under
applicable law, each of Agent and each Lender shall, upon the
occurrence of any Event of Default described in SECTION 6.1, or
any Unmatured Event of Default described in SECTION 6.1(e), have
the right to appropriate and apply to the payment of the
Liabilities (whether or not then due), in such order of
application as Agent may elect, any and all balances, credits,
deposits (general or special, time or demand, provisional or
final), accounts or moneys of Borrower then or thereafter with
Agent or any Lender. Agent and each Lender shall promptly advise
Borrower of any such setoff and application but failure to do so
shall not affect the validity of such setoff and application.
2.14 CLOSING FEE. Borrower agrees to pay to
Continental, for its own account, in connection with the closing
of this Agreement, a closing fee of $150,000, which amount shall
be deemed fully earned and shall be payable in full on the
Closing Date. With Agent's consent, the amount of the closing
fee may be advanced to Borrower as a Revolving Loan.
2.15 SETTLEMENTS, DISTRIBUTIONS AND APPORTIONMENT OF
PAYMENTS. On a weekly basis (or more frequently if required by
Agent) (a "Settlement Date"), Agent shall provide each Lender
with a statement of the outstanding balance of the Liabilities as
of the end of the Banking Day preceding the Settlement Date (the
"Pre-Settlement Determination Date") and the current balance of
the Revolving Loans funded by each Lender (whether made directly
by such Lender to Borrower or constituting a settlement by such
Lender of a previous Disproportionate Advance made by Agent on
behalf of such Lender to Borrower). If such statement discloses
that such Lender's current balance of the Revolving Loans as of
the Pre-Settlement Determination Date exceeds such Lender's Pro
Rata Share of the Revolving Loans outstanding as of the Pre-
Settlement Determination Date, then Agent shall, one (1) Banking
Day after the Settlement Date, transfer to such Lender, by wire
transfer, the net amount due to such Lender in accordance with
such Lender's instructions, and if such statement discloses that
such Lender's current balance of the Revolving Loans as of the
Pre-Settlement Determination Date is less than such Lender's Pro
Rata Share of the Revolving Loans outstanding as of the Pre-
Settlement Determination
-30-
Date, then such Lender shall, one (1) Banking Day after the
Settlement Date, transfer to Agent, by wire transfer the net
amount due to Agent in accordance with Agent's instructions. In
addition, payments actually received by Agent with respect to the
following items shall be distributed by Agent to Lenders as
follows:
(a) Within one (1) Banking Day of receipt thereof
by Agent, payments to be applied to interest on the
Loans shall be paid to each Lender in proportion to its
Pro Rata Share, subject to any adjustments for any
Disproportionate Advances so that Agent shall receive
interest on the Disproportionate Advances and each
Lender shall only receive interest on the amount of
funds actually advanced by such Lender; and
(b) Within one (1) Banking Day of receipt thereof
by Agent, payments to be applied to the unused line fee
set forth in SECTION 2.4.2 and the Letter of Credit
commission set forth in SECTION 2.2(b), shall each be
paid to each Lender in proportion to its Pro Rata
Share.
Notwithstanding the foregoing, if a Lender has failed to remit
its Pro Rata Share of any Loans required to be made pursuant to
SECTION 2.1.1 or has failed to make a settlement payment to Agent
pursuant to this SECTION 2.15, no payment shall be made to such
Lender by Agent at any time such Lender's share of the
outstanding Loans is less than such Lender's Pro Rata Share. If
Agent or any Lender fails to pay the other any payment due under
this Agreement on its due date, the party to whom such payment is
due shall be entitled to recover interest from the party
obligated to make such payment at a rate per annum equal to the
overnight Federal Funds Rate.
3. COLLATERAL.
3.1 GRANT OF SECURITY INTEREST. As security for the
payment of all Loans now or hereafter made by, or on behalf of,
Lenders to Borrower hereunder or under any Note, and as security
for the payment or other satisfaction of all other Liabilities
(including without limitation all reimbursement obligations under
any Letters of Credit), Borrower hereby grants to Agent, for the
benefit of itself and Lenders, a security interest in and to the
following property of Borrower, whether now owned or existing, or
hereafter acquired or coming into existence, wherever now or
hereafter located (all such property is hereinafter referred to
collectively as the "Borrower Collateral"):
(a) Accounts Receivable; Contract Rights; any and
all security deposits and other security held by or
granted to Borrower to secure payments from any and all
persons who are or may become obligated to Borrower
under, with respect to, or on account of any Account
Receivable or Contract Right; and all chattel paper and
instruments evidencing, arising out of or relating to
any
-31-
obligations to Borrower for goods sold or leased or
services rendered, or otherwise arising out of or
relating to any property described in this SECTION 3.1;
(b) any and all amounts from time to time owing
by Subsidiaries to Borrower pursuant to the Master
Revolving Credit Note; all agreements, instruments and
documents evidencing or otherwise pertaining to the
loans made pursuant to such Master Revolving Credit
Note; and any or all security held by or granted to
Borrower by any or all Subsidiaries to secure amounts
owing by any or all Subsidiaries to Borrower pursuant
to such Master Revolving Credit Note;
(c) Inventory (whether or not Eligible
Inventory);
(d) Any and all balances, credits, deposits
(general or special, time or demand, provisional or
final), accounts or monies of or in the name of
Borrower now or hereafter with Agent and any and all
property of every kind or description of or in the name
of Borrower now or hereafter, for any reason or purpose
whatsoever, in the possession or control of, or in
transit to, or standing to Borrower's credit on the
books of, Agent, any agent or bailee for Agent, or any
Participant;
(e) To the extent related to the property
described in CLAUSES (a) through (d) above, all books,
correspondence, credit files, records, invoices and
other papers and documents, including without
limitation, to the extent so related, all tapes, cards,
computer runs, computer programs and other papers and
documents in the possession or control of Borrower or
any computer bureau from time to time acting for
Borrower, and, to the extent so related, all rights in,
to and under all policies of insurance, including
claims of rights to payments thereunder and proceeds
therefrom, including any credit insurance; and
(f) All products and proceeds (including but not
limited to any Accounts Receivable or other proceeds
arising from the sale or other disposition of any
property described above, any returns of Inventory sold
by Borrower, and the proceeds of any insurance covering
any of the property described above) of any of the
foregoing.
3.2 ACCOUNTS RECEIVABLE.
(a) If requested by Agent, Borrower shall notify Agent
immediately of each dispute or claim by any Account Debtor in an
amount in excess of $10,000 and settle or adjust them, or cause
them to be settled or adjusted, at no expense to Agent or
Lenders.
-32-
If Agent directs after the occurrence of an Event of Default, no
discount or credit allowance shall be granted thereafter by
Borrower or any Subsidiary to any Account Debtor, other than
discounts and trade allowances offered in the ordinary course of
Borrower's or a Subsidiary's business, on terms no more advanta-
geous to customers than those being granted by Borrower or such
Subsidiary to customers on the Closing Date. If requested by
Agent, Borrower will, and will cause each Subsidiary to, make
proper entries in its books and records, disclosing the
assignment of Accounts Receivable to Agent, for the benefit of
itself and Lenders.
(b) Borrower warrants and covenants that: (i) all of
the Accounts Receivable are and will continue to be bona fide
existing obligations created by the sale of goods, the rendering
of services, or the furnishing of other good and sufficient
consideration to Account Debtors in the regular course of
business; (ii) all shipping or delivery receipts and other
documents furnished or to be furnished to Agent upon Agent's
request in connection therewith are and will be genuine; and
(iii) none of the Accounts Receivable identified or included on
any schedule, Borrowing Base Certificate or report as Eligible
Accounts Receivable fail at the time so identified or included to
satisfy any of the requirements for eligibility set forth in the
definition of Eligible Accounts Receivable.
(c) Agent is authorized and empowered (which
authorization and power, being coupled with an interest, is
irrevocable until the last to occur of termination of this
Agreement and payment and performance in full of all of the
Payment Liabilities under this Agreement) at any time in its sole
and absolute discretion:
(i) After the occurrence of an Event of Default,
to request, in the name of Agent, in Borrower's or a
Subsidiary's name or the name of a third party,
confirmation from any Account Debtor or party obligated
under or with respect to any Collateral of the amount
shown by the Accounts Receivable or other Collateral to
be payable, or any other matter stated therein;
(ii) To endorse in Borrower's or a Subsidiary's
name and to collect any chattel paper, checks, notes,
drafts, instruments or other items of payment tendered
to or received by Agent in payment of any Account
Receivable or other obligation owing to Borrower or
such Subsidiary;
(iii) After the occurrence of an Event of Default,
to notify, either in Agent's name or Borrower's or a
Subsidiary's name, and/or to require Borrower or such
Subsidiary to notify, any Account Debtor or other
Person obligated under or in respect of any Collateral,
of the fact of Agent's Lien thereon, for the benefit of
itself
-33-
and Lenders, and of the collateral assignment thereof
to Agent, for the benefit of itself and Lenders;
(iv) After the occurrence of an Event of Default,
to direct, either in Borrower's or a Subsidiary's name
or Agent's name, and/or to require Borrower or such
Subsidiary to direct, any Account Debtor or other
Person obligated under or in respect of any Collateral
to make payment directly to Agent of any amounts due or
to become due thereunder or with respect thereto; and
(v) After the occurrence of an Event of Default,
to demand, collect, surrender, release or exchange all
or any part of any Collateral or any amounts due there-
under or with respect thereto, or compromise or extend
or renew for any period (whether or not longer than the
initial period) any and all sums which are now or may
hereafter become due or owing upon or with respect to
any of the Collateral, or enforce, by suit or
otherwise, payment or performance of any of the
Collateral either in Agent's own name or in the name of
Borrower or a Subsidiary.
Under no circumstances shall Agent be under any duty to act in
regard to any of the foregoing matters. The costs relating to
any of the foregoing matters, including Attorneys' Fees and out-
of-pocket expenses, and the cost of any Depository Account,
Assignee Deposit Account, or other bank account or accounts which
may be required hereunder, shall be borne solely by Borrower
whether the same are incurred by Agent or Borrower, and Agent may
advance same to Borrower as a Revolving Loan.
(d) Unless otherwise consented to by Agent, Borrower
will, forthwith upon receipt by Borrower of all checks, drafts,
cash and other remittances in payment or as proceeds of, or on
account of, any of the Accounts Receivable or other Collateral,
deposit the same in special bank accounts (the "Depository
Accounts") at such banks or financial institutions as Agent shall
consent. Said proceeds shall be deposited in precisely the form
received except for Borrower's endorsement where necessary to
permit collection of items, which endorsement Borrower agrees to
make. Pending such deposit, Borrower agrees not to commingle any
such checks, drafts, cash and other remittances with any of its
funds or property, but will hold them separate and apart
therefrom and upon an express trust for Agent, for the benefit of
itself and Lenders, until deposit thereof is made in the
Depository Accounts. All funds in the Depository Accounts at the
end of each Banking Day will be wire transferred or transferred
by other means acceptable to Agent to a special bank account (the
"Assignee Deposit Account") at Continental, over which Agent
alone has power of withdrawal. Borrower acknowledges that the
maintenance of the Assignee Deposit Account is solely for the
convenience of Agent in facilitating its own operations and,
Borrower does not and shall not have any right, title or interest
in the Assignee Deposit Account or in the amounts
-34-
at any time appearing to the credit thereof, except to the extent
that such amounts are transferred to a cash collateral account in
accordance with SECTION 2.10(b)(ii). Borrower agrees not to
maintain any depository accounts other than Depository Accounts
and the Assignee Deposit Account established pursuant to this
SECTION 3.2(d) and other than depository accounts established
solely for the proceeds of property of Borrower and the
Subsidiaries other than the Collateral pursuant to the terms of
the Senior Loan Documents. Upon Agent's request after the
occurrence of an Event of Default, Borrower agrees to notify its
Account Debtors to make all payments in respect of Borrower's
Accounts Receivable directly to one or more lockbox accounts
under the control of Agent and evidenced by agreements in form
and substance satisfactory to Agent. Upon the full and final
liquidation of all Payment Liabilities, Agent will pay over to
Borrower any excess amounts received by Agent as payment or
proceeds of Collateral, whether received by Agent as a deposit in
the Assignee Deposit Account, contained in a lockbox account or
any Depository Account or received by Agent as a direct payment
on any of the sums due hereunder. Borrower will cause each of
its Subsidiaries to establish accounts comparable to those set
forth above for the collection of the proceeds of their Accounts
Receivable, and Borrower shall cause each Subsidiary to take all
other actions to implement the collection mechanism set forth in
this SECTION 3.2(d).
(e) Borrower appoints Agent, or any Person whom Agent
may from time to time designate, as Borrower's attorney and
agent-in-fact with power: (i) after the occurrence of an Event
of Default, to notify the post office authorities to change the
address for delivery of Borrower's mail to an address designated
by Agent; (ii) to receive, open and dispose of all mail addressed
to Borrower, but received by Agent; (iii) after the occurrence of
an Event of Default, to send requests for verification of
Accounts Receivable or other Collateral to Account Debtors; (iv)
to open an escrow account, Assignee Deposit Account, Depository
Accounts or other accounts under Agent's sole control for the
collection of Accounts Receivable or other Collateral, if not
required contemporaneously with the execution hereof; and (v) to
do all other things which Agent is permitted to do under this
Agreement or any Related Agreement or which are necessary to
carry out this Agreement and the Related Agreements. Neither
Agent nor any of its directors, officers, employees or agents
will be liable for any acts of commission or omission nor for any
error in judgment or mistake of fact or law, unless the same
shall have resulted from gross negligence or willful misconduct.
The foregoing appointment and power, being coupled with an
interest, is irrevocable until all Payment Liabilities under this
Agreement are paid and performed in full and this Agreement is
terminated. Borrower expressly waives presentment, demand,
notice of dishonor and protest of all instruments and any other
notice to which it might otherwise be entitled.
-35-
(f) If any Account Receivable or Contract Right in an
amount in excess of $10,000 arises out of a contract with the
United States or any department, agency, or instrumentality
thereof, Borrower will, upon Agent's request, immediately notify
Agent in writing and execute any instruments and take any steps
required by Agent in order that all monies due and to become due
under such contract shall be assigned to Agent, for the benefit
of itself and Lenders, and notice thereof given to the government
under the Federal Assignment of Claims Act of 1940, as amended,
or other applicable laws or regulations.
(g) If any Account Receivable or Contract Right is
evidenced by chattel paper or promissory notes, trade
acceptances, or other instruments for the payment of money,
Borrower will, unless Agent shall otherwise agree, deliver the
originals of same to Agent, appropriately endorsed to Agent's
order and, regardless of the form of such endorsement, Borrower
hereby expressly waives presentment, demand, notice of dishonor,
protest and notice of protest and all other notices with respect
thereto.
3.3 INVENTORY.
(a) Borrower warrants and covenants that: (i) all of
the Inventory is, and at all times shall be, owned by Borrower or
a Subsidiary free of all claims and Liens (except as set forth in
SECTION 5.16); and (ii) neither Borrower nor any Subsidiary will
make any further assignment of any thereof or create or permit to
exist any further Lien thereon, unless approved in writing by
Requisite Lenders, nor permit any of Agent's rights therein to be
affected by any attachment, levy, garnishment or other judicial
process.
(b) Neither Agent nor any Lender shall be liable or
responsible in any way for the safekeeping of any Inventory
delivered to it, to any bailee appointed by or for it, to any
warehouseman, or under any other circumstances. Neither Agent
nor any Lender shall be responsible for collection of any
proceeds or for losses in collected proceeds held by Borrower or
any Subsidiary in trust for Agent. Any and all risk of loss for
any or all of the foregoing shall be upon Borrower and the
Subsidiaries, except for such loss as shall result from Agent's
or any Lenders' gross negligence or willful misconduct.
(c) Any material change in the value or condition of
any Inventory, and any errors discovered in any monthly inventory
certificate under SECTION 5.1.3 or any other schedule delivered
to Agent and Lenders, shall be reported to Agent promptly.
Borrower represents and warrants that, as to each schedule of
Inventory delivered to Agent or any Lender:
(i) The descriptions, origins, sizes, qualities,
quantities, weights, and markings of all goods stated
-36-
thereon, or on any attachment thereto, are true and
correct in all material respects;
(ii) None of the goods are defective, of second
quality, used, or goods returned after shipment, except
where described as such; and
(iii) All Inventory not included on such schedule
has been previously scheduled.
3.4 SUPPLEMENTAL DOCUMENTATION. At Agent's request,
Borrower shall execute and deliver, or cause to be executed and
delivered, to Agent, at any time or times hereafter, such agree-
ments, documents, financing statements, warehouse receipts, bills
of lading, notices of assignment of Accounts Receivable,
schedules of Accounts Receivable assigned, and other written
matter necessary or reasonably requested by Agent to perfect and
maintain perfected Agent's security interest in the Collateral,
for the benefit of itself and Lenders (all the above hereinafter
referred to as "Supplemental Documentation"), in form and
substance acceptable to Agent, and pay all taxes, fees and other
costs and expenses associated with any recording or filing of the
Supplemental Documentation. Borrower hereby irrevocably makes,
constitutes and appoints Agent (and all Persons designated by
Agent for that purpose) as Borrower's true and lawful attorney
(and agent-in-fact) (which appointment and power, being coupled
with an interest, is irrevocable until the last to occur of
termination of this Agreement and payment and performance in full
of all of the Payment Liabilities under this Agreement) to sign
the name of Borrower on any of the Supplemental Documentation and
to deliver any of the Supplemental Documentation to such Persons
as Agent in its sole and absolute discretion, may elect.
Borrower agrees that a carbon, photographic, photostatic, or
other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement.
3.5 COLLATERAL FOR THE BENEFIT OF AGENT AND LENDERS.
All Liens granted to Agent hereunder and under the Related
Agreements and all Collateral delivered to Agent hereunder and
under the Related Agreements shall be deemed to have been granted
and delivered to Agent, for the benefit of itself and Lenders, to
secure the Liabilities.
4. REPRESENTATIONS AND WARRANTIES.
To induce Agent and Lenders to make Loans to, and issue
Letters of Credit for the account of, Borrower under this Agree-
ment, Borrower makes the following representations and warranties
to Agent and Lenders, all of which shall be true and correct as
of the date the initial Loan is made or the initial Letter of
Credit is issued and shall survive the execution of this
Agreement and the making of the initial Loan and the issuance of
the initial Letter of Credit:
-37-
4.1 ORGANIZATION. Borrower and all of its corporate
Borrowing Subsidiaries are corporations duly organized, validly
existing and in good standing under the laws of the jurisdictions
of their respective incorporation. All of Borrower's other
Borrowing Subsidiaries, if any, are entities duly organized,
validly existing and in good standing under the laws of the
jurisdictions of their respective organization. Borrower and all
of the Borrowing Subsidiaries are in good standing and are duly
qualified to do business in each jurisdiction where, because of
the nature of their respective activities or properties, such
qualification is required. Except as set forth on SCHEDULE 4.1,
on the date hereof, Borrower and each Borrowing Subsidiary
conducts business in its own name exclusively. SCHEDULE 4.1 sets
forth a complete and accurate list, as of the date of this
Agreement, of (a) the state of formation of Borrower, (b) each
state in which Borrower is qualified to do business and (c) all
of Borrower's tradenames, trade styles or doing business forms.
4.2 AUTHORIZATION. Borrower is duly authorized to
execute and deliver this Agreement, any Notes, and any Related
Agreements or Supplemental Documentation contemplated by this
Agreement, and is and will continue to be duly authorized to
borrow monies hereunder and to perform its obligations under this
Agreement, any Notes and any such Related Agreements and Supple-
mental Documentation. Each Borrowing Subsidiary is duly
authorized to execute and deliver any Related Agreements or
Supplemental Documentation contemplated to be delivered by such
Borrowing Subsidiary, and is and will continue to be duly
authorized to perform its obligations thereunder. The execution,
delivery and performance by (a) Borrower of this Agreement, any
Notes, and any Related Agreements or Supplemental Documentation
contemplated by this Agreement, and the borrowings hereunder and
(b) each Borrowing Subsidiary of any Related Agreements or
Supplemental Documentation to which it is a party, do not and
will not require any consent or approval of any governmental
agency or authority.
4.3 NO CONFLICTS. The execution, delivery and
performance by (a) Borrower of this Agreement, any Notes, and any
Related Agreements or Supplemental Documentation contemplated by
this Agreement and (b) each Borrowing Subsidiary of any Related
Agreements or Supplemental Documentation to which it is a party,
do not and will not conflict with (i) any provision of law, (ii)
the Certificate or Articles of Incorporation, as applicable, or
by-laws, of Borrower or such Borrowing Subsidiary, (iii) any
agreement binding upon Borrower or such Borrowing Subsidiary or
(iv) any court or administrative order or decree applicable to
Borrower or such Borrowing Subsidiary, and do not and will not
require, or result in, the creation or imposition of any Lien on
any asset of Borrower or any Borrowing Subsidiary, except as
provided herein.
4.4 VALIDITY AND BINDING EFFECT. This Agreement, any
Notes, and any Related Agreements or Supplemental Documentation
-38-
contemplated by this Agreement, when duly executed and delivered
will be legal, valid and binding obligations of Borrower and each
Subsidiary party thereto, as applicable, enforceable against
Borrower and each such Subsidiary in accordance with their
respective terms.
4.5 NO DEFAULT. Neither Borrower nor any Subsidiary
is in default under any agreement or instrument to which Borrower
or any Subsidiary is a party or by which any of their respective
properties or assets is bound or affected, which default is
reasonably likely to have a Material Adverse Effect. No Event of
Default or Unmatured Event of Default has occurred and is con-
tinuing.
4.6 FINANCIAL STATEMENTS. Borrower's consolidated
audited financial statements as at June 30, 1993 and Borrower's
consolidated unaudited financial statement as at March 31, 1994,
copies of which have been furnished to Agent, have been prepared
in conformity with GAAP applied on a basis consistent with that
of the preceding Fiscal Year and period and present fairly the
financial condition of Borrower and the Subsidiaries as at such
dates and the results of their operations for the periods then
ended, subject (in the case of the interim financial statement)
to year-end audit adjustments. Since March 31, 1994, there has
been no Material Adverse Change. Borrower's consolidated
unaudited pro forma balance sheets as of the Closing Date reflect
the pro forma effects of the Transactions and the application of
proceeds in respect thereof, and have been prepared in conformity
with GAAP and, to the best knowledge of Borrower, present fairly
the expected financial condition of Borrower and the Subsidiaries
as of such date.
4.7 INSURANCE. SCHEDULE 4.7 hereto is a complete and
accurate summary of the property and casualty insurance program
carried by Borrower and the Subsidiaries on the date hereof.
SCHEDULE 4.7 includes the insurer's(s') name(s), policy
number(s), expiration date(s), amount(s) of coverage, type(s) of
coverage, the annual premium(s), deductibles and self-insured
retention and describes any retrospective rating plan, fronting
arrangement or any other self-insurance or risk assumption agreed
to by Borrower or any Subsidiary or imposed upon Borrower or any
Subsidiary by any such insurer. This summary also includes any
self-insurance program that is in effect.
4.8 LITIGATION; CONTINGENT LIABILITIES.
(a) Except for those referred to in SCHEDULE 4.8,
there are no claims, litigation, arbitration proceedings or
governmental proceedings pending or threatened against or are
affecting Borrower or any Subsidiary which involve an amount in
controversy in excess of $25,000 or which request injunctive or
other equitable relief. Neither Borrower nor any Subsidiary is
subject to any claims, litigation, arbitration proceeding or
governmental proceeding,
-39-
either pending or threatened, the results of which is reasonably
likely to have a Material Adverse Effect.
(b) Other than any liability incident to the claims,
litigation or proceedings disclosed in SCHEDULE 4.8 or SCHEDULE
4.19, or provided for or disclosed in the financial statements
referred to in SECTION 4.6, neither Borrower nor any of the
Subsidiaries has any contingent liabilities which are reasonably
likely to have a Material Adverse Effect.
4.9 LIENS. None of the Collateral or other property,
revenues or assets of Borrower or any Subsidiary is subject to
any Lien (including but not limited to Liens pursuant to
Capitalized Leases under which Borrower or any Subsidiary is a
lessee) except: (a) Liens in favor of Agent, for the benefit of
itself and Lenders; (b) Liens for current Taxes not delinquent or
Taxes being contested in good faith and by appropriate
proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP are being maintained; (c)
carriers', warehousemen's, mechanics', materialmen's and other
like statutory Liens arising in the ordinary course of business
securing obligations which are not overdue or which are being
contested in good faith and by appropriate proceedings and as to
which such reserves or other appropriate provisions as may be
required by GAAP are being maintained; (d) Liens listed on
SCHEDULE 4.9 and Liens permitted by SECTION 5.16; (e) Liens
granted to the holders of the Senior Notes or their
representatives pursuant to the Senior Loan Documents; (f) Liens
on Obligor Collateral of the Borrowing Subsidiaries in favor of
Borrower, securing the Intercompany Loans and assigned to Agent,
for the benefit of itself and Lenders, and (g) Liens consented to
in writing by Requisite Lenders.
4.10 SUBSIDIARIES. All of Borrower's Subsidiaries are
listed on SCHEDULE 4.10. SCHEDULE 4.10 sets forth, for each
Subsidiary, a complete and accurate statement of (a) Borrower's
and each Subsidiary's percentage ownership of each of their
respective Subsidiaries, (b) the state or other jurisdiction of
formation or incorporation of each Subsidiary, (c) each state in
which each Subsidiary is qualified to do business and (d) all of
each Subsidiary's trade names, trade styles or doing business
forms. All of the Subsidiaries listed on SCHEDULE 4.10 are
"Restricted Subsidiaries" (as defined in the Senior Loan
Documents).
4.11 PARTNERSHIPS; JOINT VENTURES. Neither Borrower
nor any of the Subsidiaries is a partner or joint venturer in any
partnership or joint venture other than the partnerships and
joint ventures listed on SCHEDULE 4.11. SCHEDULE 4.11 sets
forth, for each such partnership or joint venture, a complete and
accurate statement of (a) Borrower's and each Subsidiary's
percentage ownership of each such partnership or joint venture,
(b) the state or other jurisdiction of formation or
incorporation, as appropriate, of each such partnership or joint
venture, (c) each state in which each such partnership or joint
venture is qualified to do
-40-
business and (d) all of each such partnership's or joint
venture's trade names, trade styles or doing business forms on
the date of this Agreement.
4.12 BUSINESS AND COLLATERAL LOCATIONS.
(a) On the date hereof, the office where Borrower and
each Borrowing Subsidiary keeps its books and records concerning
its Accounts Receivable and other Collateral, and Borrower's
chief place of business and chief executive office, is located at
the address of Borrower set forth on the signature pages of this
Agreement. SCHEDULE 4.12 contains a complete and accurate list,
as of the date of this Agreement, of all of Borrower's and each
Subsidiary's places of business other than that referred to in
the first sentence of this PARAGRAPH (a).
(b) SCHEDULE 4.12 contains a complete and accurate
list, as of the date of this Agreement, of the locations of all
Inventory and other tangible Collateral and if any Inventory or
other Collateral is not in the possession or control of Borrower
or the owner of such Collateral, the name and mailing address of
each bailee, processor, warehouseman or other Person in
possession or control thereof.
4.13 SENIOR NOTES. The Units have been issued in
accordance with and pursuant to the terms of the Prospectus dated
as of June __, 1994 and in compliance with all applicable federal
and state securities laws. The issuance of the Units has been
duly authorized by all necessary corporate action on the part of
Borrower and will not require any consent or approval of any
governmental agency or authority that has not been obtained prior
to the date hereof. The issuance of the Units and the execution
of the Senior Loan Documents does not conflict with (i) any
provision of law, (ii) the Certificate of Incorporation or
by-laws of Borrower, (iii) any agreement binding upon Borrower or
(iv) any court or administrative order or decree applicable to
Borrower, and do not and will not require, or result in, the
creation or imposition of any Lien on any asset of Borrower or
any Subsidiary, except as expressly provided therein. All
representations and warranties of Borrower contained in the
Underwriting Agreement, dated June __, 1994, between Borrower and
Morgan Stanley & Co. Incorporated are true and correct in all
material respects as of the date hereof.
4.14 ELIGIBILITY OF COLLATERAL. Each Account
Receivable or item of Inventory which Borrower shall, expressly
or by implication (by inclusion on a Borrowing Base Certificate
or otherwise), request Agent to classify as an Eligible Account
Receivable or as Eligible Inventory, respectively, will, as of
the time when such request is made, conform in all respects to
the requirements of such classification set forth in the
respective definitions of "Eligible Account Receivable" and
"Eligible Inventory" set forth herein.
-41-
4.15 INTENTIONALLY OMITTED.
4.16 PATENTS, TRADEMARKS, ETC. Borrower and each of
the Subsidiaries possesses adequate assets, licenses, patents,
patent applications, copyrights, trademarks, trademark
applications, trade styles, and tradenames to continue to conduct
its respective business as heretofore conducted by it, and all
such licenses, patents, patent applications, copyrights,
trademarks, trademark applications, trade styles, and tradenames
existing on the date hereof and that are material to the business
of Borrower or any Subsidiary, and, in the case of patents,
trademarks and copyrights, the date of issuance thereof, are
listed on SCHEDULE 4.16.
4.17 SOLVENCY. Each of Borrower and each of the
Subsidiaries now has capital sufficient to carry on its
respective business and transactions and all business and
transactions in which it is about to engage, and is able to pay
its respective debts as they mature. Each of Borrower and each
of the Subsidiaries is now solvent and now owns property having a
value, both at fair valuation and at present fair salable value,
greater than the amount required to pay Borrower's or such
Subsidiary's debts.
4.18 CONTRACTS; LABOR MATTERS. Except as disclosed on
SCHEDULE 4.18: (a) neither Borrower nor any Subsidiary is a
party to any contract or agreement, or is subject to any charge,
corporate restriction, judgment, decree or order, which is
reasonably likely to have a Material Adverse Effect; (b) no labor
contract to which Borrower or any Subsidiary is a party or is
otherwise subject is scheduled to expire prior to the initial
Termination Date; (c) neither Borrower nor any Subsidiary has,
within the two (2)-year period preceding the date of this Agree-
ment, taken any action which would have constituted or resulted
in a "plant closing" or "mass layoff" within the meaning of the
Federal Worker Adjustment and Retraining Notification Act of 1988
or any similar applicable federal, state or local law, and
Borrower has no reasonable expectation that any such action is or
will be required at any time prior to the initial Termination
Date and (d) on the date of this Agreement (i) neither Borrower
nor any Subsidiary is a party to any labor dispute and (ii) there
are no strikes or walkouts relating to any labor contracts to
which Borrower or any Subsidiary is a party or is otherwise
subject.
4.19 PENSION AND WELFARE PLANS. Each Pension Plan
complies, and has been administered in compliance, in all
material respects, with all applicable statutes and governmental
rules and regulations; no Reportable Event has occurred and is
continuing with respect to any Pension Plan; neither Borrower nor
any ERISA Affiliate has withdrawn from any Multiemployer Plan in
a "complete withdrawal" or a "partial withdrawal" as defined in
Section 4203 or 4205 of ERISA, respectively; no steps have been
instituted to terminate any Pension Plan; no contribution failure
has occurred with respect to any Pension Plan sufficient to give
rise to a Lien under Section 302(f) of ERISA; no condition exists
or event or
-42-
transaction has occurred in connection with any Pension Plan or
Multiemployer Plan that is reasonably likely to have a Material
Adverse Effect; and neither Borrower nor any ERISA Affiliate is a
"contributing sponsor" as defined in Section 4001(a)(13) of ERISA
of a "single-employer plan" as defined in Section 4001(a)(15) of
ERISA that has two or more contributing sponsors at least two of
whom are not under common control. Except as listed in SCHEDULE
4.19, neither Borrower nor any ERISA Affiliate, to the extent
there is joint and several liability with Borrower to pay such
benefits, has any liability to pay any welfare benefits under any
employee welfare benefit plan within the meaning of Section 3(l)
of ERISA to former employees thereof or to current employees with
respect to claims incurred after the termination of their
employment other than as required by Section 4980B of the Code or
Part 6 of Subtitle B of Title 1 of ERISA.
4.20 REGULATIONS G AND U. Borrower is not engaged in
the business of purchasing or selling Margin Stock or extending
credit to others for the purpose of purchasing or carrying Margin
Stock, and no part of the proceeds of any borrowing hereunder
will be used to purchase or carry any Margin Stock or for any
other purpose which would violate any of the margin regulations
of the Federal Reserve Board.
4.21 COMPLIANCE. Except as described on SCHEDULE 4.21
or SCHEDULE 4.25, Borrower and the Subsidiaries are in compliance
with all statutes and governmental rules and regulations
applicable to them, the noncompliance with which is reasonably
likely to have a Material Adverse Effect.
4.22 TAXES. Each of Borrower and the Subsidiaries has
filed all tax returns which are required to have been filed and
has paid, or made adequate provisions for the payment of, all of
its Taxes which are due and payable, except such Taxes, if any,
as are being contested in good faith and by appropriate
proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP have been maintained. The
federal income tax liability of Borrower and the Subsidiaries has
been audited by the Internal Revenue Service and has been finally
determined and satisfied (or the time for audit has expired) for
all tax years up to and including the tax year ended ___________.
Except as described on SCHEDULE 4.22, Borrower is not aware of
any proposed assessment against Borrower or any of the
Subsidiaries for additional Taxes (or any basis for any such
assessment) which might have a Material Adverse Effect.
4.23 INVESTMENT COMPANY ACT REPRESENTATION. Borrower
is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended.
4.24 PUBLIC UTILITY HOLDING COMPANY ACT REPRESENTATION.
-43-
Borrower is not a "holding company" or a "subsidiary company" of
a "holding company" or an "affiliate" of a "holding company"
within the meaning of the Public Utility Holding Company Act of
1935, as amended.
4.25 ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS.
Except as disclosed on SCHEDULE 4.25, Borrower and each of the
Subsidiaries and/or each property, operations and facility that
Borrower or any Subsidiary may own, operate or control (a)
complies in all respects with (i) all applicable Environmental
Laws the failure with which to comply would be reasonably likely
to have a Material Adverse Effect and (ii) all applicable
Occupational Safety and Health Laws the failure with which to
comply would be reasonably likely to have a Material Adverse
Effect; (b) is not subject to any judicial or administrative
proceeding alleging the violation of any Environmental Law or
Occupational Safety and Health Law the violation of which would
be reasonably likely to have a Material Adverse Effect; (c) has
not received any notice (i) that it may be in violation of any
Environmental Law or Occupational Safety and Health Law the
violation of which would be reasonably likely to have a Material
Adverse Effect, (ii) threatening the commencement of any
proceeding relating to allegedly unlawful, unsafe or unhealthy
conditions, which, if adversely determined, would be reasonably
likely to have a Material Adverse Effect, in either case, or
(iii) alleging that it is or may be responsible for any response,
cleanup, or corrective action, including but not limited to any
remedial investigation/feasibility studies, under any
Environmental Law or Occupational Safety and Health Law, which,
if adversely determined, would be reasonably likely to have a
Material Adverse Effect, in either case; (d) is not the subject
of federal or state investigation evaluating whether any
investigation, remedial action or other response is needed to
respond to (i) a Release or threatened Release into the
environment of any Hazardous Material or the spillage, disposal
or release or threatened release into the environment of any
other hazardous, toxic or dangerous waste, substance or
constituent, or other substance or (ii) any allegedly unsafe or
unhealthful condition, which, if adversely determined, would be
reasonably likely to have a Material Adverse Effect, in either
case; (e) has not filed any notice under or relating to any
Environmental Law or Occupational Safety and Health Law
indicating or reporting (i) any past or present Release into the
environment of, or treatment, storage or disposal of, any
Hazardous Material or spillage, disposal or release into the
environment of any other hazardous, toxic or dangerous waste,
substance or constituent, or other substance or (ii) any poten-
tially unsafe or unhealthful condition, in either case, which, if
adversely determined, would be reasonably likely to have a
Material Adverse Effect, and there exists no basis for such
notice irrespective of whether such notice was actually filed;
and (f) has no contingent liability in connection with (i) any
actual or potential Release into the environment of, or otherwise
with respect to, any Hazardous Material or spillage, disposal or
release into the environment of any other hazardous, toxic or
dangerous waste,
-44-
substance or constituent, or other substance, whether on any
premises owned or occupied by Borrower or any Subsidiary or on
any other premises or (ii) any unsafe or unhealthful condition,
in either case, which would be reasonably likely to have a
Material Adverse Effect. Except as disclosed on SCHEDULE 4.25,
there are no Hazardous Materials on, in or under any property or
facilities owned, operated or controlled by Borrower or any
Subsidiary, including but not limited to such Hazardous Materials
that may be contained in underground storage tanks, but excepting
such Hazardous Materials used in accordance with all applicable
laws and in the same manner as an ordinary consumer (e.g.,
gasoline in tanks of motor vehicles, small amounts of cosmetic
cleaners, etc.).
4.26 RELATED AGREEMENTS. All representations and
warranties of Borrower and each Subsidiary contained in any
Related Agreements and any agreement evidencing any of the other
Transactions (whether such representations and warranties were
made to Agent or any Lender or to another Person) are true and
correct as if made on the date hereof and Borrower hereby adopts
and affirms all such representations and warranties which
Borrower agrees shall be incorporated by reference herein and
made a part hereof.
4.27 CAPITALIZED LEASE OBLIGATIONS. As of the date
hereof, the Indebtedness of Borrower and its Subsidiaries under
Capitalized Leases is as set forth on SCHEDULE 4.27.
5. BORROWER COVENANTS.
From the date of this Agreement and thereafter until
the Credit is terminated and all Payment Liabilities of Borrower
hereunder are paid in full, Borrower agrees that unless Agent, at
the written direction of Requisite Lenders, shall otherwise
consent in writing, it will:
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS. Furnish
to Agent and each Lender, in form satisfactory to Agent:
5.1.1 FINANCIAL REPORTS:
(a) ANNUAL AUDIT REPORT. Within ninety (90) days
after each Fiscal Year, a copy of the annual audited financial
statements of Borrower and the Subsidiaries prepared on a
consolidated basis and in conformity with GAAP and certified by
an independent certified public accountant who shall be
satisfactory to Agent, together with (i) a certificate from such
accountant, (x) in the form attached hereto as EXHIBIT B,
acknowledging to Agent and Lenders such accountant's
understanding that Agent, Lenders and any Participant are relying
on such annual audit report, (y) containing a computation of, and
showing compliance with, each of the financial ratios and
restrictions contained in this SECTION 5 or in SUPPLEMENT A, and
(z) to the effect that, in making the examination necessary for
the signing of such annual audit report, such accountant has not
become aware of any Event of Default or
-45-
Unmatured Event of Default that has occurred and is continuing
and that relates to financial or other accounting matters or the
financial ratios and restrictions contained in this SECTION 5 or
in SUPPLEMENT A, or, if such accountant has become aware of any
such event, describing it and the steps, if any, being taken to
cure it and (ii) the annual operating statements of Borrower and
the Subsidiaries prepared on a consolidating basis and in
conformity with GAAP applied in a manner consistent with the
audit report referred to in preceding CLAUSES (A)(i), signed by
Borrower's chief financial officer.
(b) MONTHLY FINANCIAL STATEMENT. Within thirty (30)
days after the end of each month of each Fiscal Year of Borrower,
a copy of the unaudited financial statement of Borrower and the
Subsidiaries prepared on a consolidated basis and in conformity
with GAAP applied in a manner consistent with the audit report
referred to in preceding CLAUSE (A)(i), signed by Borrower's
chief financial officer and consisting of at least a balance
sheet as at the close of such month and an income statement and
cash flow statement for such month and for the period from the
beginning of such Fiscal Year to the close of such month,
compared, in each case, to the actual results for the same period
during the prior Fiscal Year and to Borrower's budget (delivered
pursuant to SECTION 5.1.1(c), for the current Fiscal Year.
(c) ANNUAL BUDGETS. Within thirty (30) days after the
end of each Fiscal Year of Borrower, a copy of an annual budget
for the current Fiscal Year, prepared on a consolidated basis and
in conformity with GAAP applied in a manner consistent with the
prior Fiscal Year's budget, signed by Borrower's chief financial
officer and consisting of at least a balance sheet, an income
statement and a cash flow statement, each calculated on a quarter
by quarter basis.
(d) OFFICER'S CERTIFICATE. Together with the
financial statements furnished by Borrower under the preceding
CLAUSES (a), and (b), a certificate of Borrower's chief
financial officer in the form of EXHIBIT C, dated the date of
such annual audit report or such monthly financial statement, as
the case may be, containing a statement that no Event of Default
or Unmatured Event of Default has occurred and is continuing, or,
if there is any such event, describing it and the steps, if any,
being taken to cure it, and containing a computation of, and
showing compliance with, each of the financial ratios and
restrictions contained in this SECTION 5 or in SUPPLEMENT A.
5.1.2 AGINGS. Within fifteen (15) days after the end of
each month, an aging of all Accounts Receivable and an aging of
all accounts payable of Borrower and the Borrowing Subsidiaries
as of the end of such month, in each case separated by region and
otherwise in form and content acceptable to Agent.
-46-
5.1.3 INVENTORY CERTIFICATION. Within fifteen (15) days
after the end of each month, an Inventory certification report as
of the end of the month for all Inventory locations of Borrower
and the Borrowing Subsidiaries as of the end of such month, in
form and content acceptable to Agent.
5.1.4 OTHER REPORTS AND INFORMATION:
(a) SEC AND OTHER REPORTS. Copies of each filing and
report made by Borrower or any Subsidiary with or to any
securities exchange or the Securities and Exchange Commission
promptly upon the filing or making thereof;
(b) REPORT OF CHANGE RELATING TO BORROWER,
SUBSIDIARIES OR PARTNERSHIPS. Promptly from time to time, a
written report of any change in the information set forth in
SCHEDULE 4.1, SCHEDULE 4.10 or SCHEDULE 4.11 concerning Borrower,
any Subsidiary, or any partnership or joint venture;
(c) PATENTS, ETC. Within fifteen (15) days after the
end of each month, a written report of any change to the list of
patents, trademarks, copyrights and other information set forth
in SCHEDULE 4.16;
(d) OTHER INDEBTEDNESS NOTICES. On a weekly basis,
copies of any amendments, waivers or consents, notices of breach
or default, notices relating to the exercise or nonexercise of
any remedy available to any Person, notices of indemnity or other
claims, written materials relating to any dispute, written
materials relating to the exercise of any rights derived from or
arising in connection with any Indebtedness and other written
communications of a material nature, including any communications
by Borrower in connection with the Senior Loans or the
Subordinated Debt other than any such notice or other written
materials already sent to Agent pursuant to any other Section of
this Agreement;
(e) INTERCOMPANY LOANS. Within fifteen (15) days
after the end of each month, a list of all outstanding balances
of each Borrowing Subsidiary's Intercompany Loan as of the end of
such month, together with a list of all debits and credits with
respect thereto, in form and content acceptable to Agent;
(f) STOCK PURCHASE/ACQUISITIONS. Promptly from time
to time, copies of any agreements, instruments and documents and
any amendments, waivers or consents, notices of breach or
default, notices relating to the exercise or nonexercise of any
remedy available to any Person, notices of indemnity or other
claims, written materials relating to any dispute, written
materials relating to the exercise of any rights derived from or
arising in connection with the Stock Repurchase or any
Acquisition and other written communications of a material
nature, pertaining thereto; and
-47-
(g) OTHER REPORTS. Any information required to be
provided pursuant to other provisions of this Agreement, and such
other reports or information from time to time reasonably
requested by Agent on behalf of itself or any Lender.
5.2 NOTICES. Notify Agent in writing of any of the
following within three (3) days after learning of the occurrence
thereof (or, in the case of CLAUSES (E)(i) and (ii) of this
SECTION 5.2, at least fifteen (15) days prior to the occurrence
thereof, or in the case of CLAUSES (E)(iii), (iv), (v), (vi) and
(vii) and (f) of this SECTION 5.2, at least thirty (30) days
prior to the occurrence thereof), describing the same and, if
applicable, the steps being taken by the Person(s) affected with
respect thereto:
(a) DEFAULT. The occurrence of (i) an Event of
Default or Unmatured Event of Default and (ii) to the
extent not included in CLAUSE (i) of this SECTION
5.2(a), the default by Borrower, any other Obligor or
any Subsidiary under any note, indenture, loan
agreement, mortgage, lease, deed or other similar
agreement to which Borrower, any other Obligor or any
Subsidiary, as appropriate, is a party or by which it
is bound (including without limitation any Senior Loan
Document or Subordinated Debt Document) that evidences
or secures Indebtedness in a principal amount in excess
of $_________, or where such default would be
reasonably likely to have a Material Adverse Effect;
(b) LITIGATION. The institution of any
litigation, arbitration proceeding or governmental
proceeding affecting Borrower, any other Obligor, any
Subsidiary or any Collateral, involving an amount in
controversy in excess of $100,000, whether or not
considered to be covered by insurance, or requesting
injunctive relief;
(c) JUDGMENT. The entry of any judgment or
decree against Borrower, any other Obligor or any
Subsidiary, if the amount of such judgment exceeds
$75,000;
(d) PENSION PLANS AND WELFARE PLANS. The occur-
rence of a Reportable Event with respect to any Pension
Plan; the filing of a notice of intent to terminate a
Pension Plan by Borrower or any ERISA Affiliate; the
institution of proceedings to terminate a Pension Plan
by the PBGC or any other Person; the withdrawal in a
"complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 and 4205, respectively, of
ERISA by Borrower or any ERISA Affiliate from any
Multiemployer Plan; the failure of Borrower or any
ERISA Affiliate to make a required contribution to any
Pension Plan, including but not limited to any failure
to pay an amount sufficient to give rise to a Lien
under Section 302(f) of ERISA; the taking of any action
with respect to a Pension
-48-
Plan that could result in the requirement that Borrower
or any ERISA Affiliate furnish a bond or other security
to the PBGC or such Pension Plan; the occurrence of any
other event with respect to any Pension Plan that is
reasonably likely to have a Material Adverse Effect;
or, with respect to any "employee welfare benefit plan"
as defined in Section 3(l) of ERISA which covers former
employees thereof or current employees and their
beneficiaries with respect to claims incurred after the
termination of their employment, the establishment of a
new plan subject to ERISA or an amendment to any
existing plan which will result in a material increase
in contributions or benefits under such plan or the
incurrence of any material increase in the liability of
Borrower or an ERISA Affiliate to the extent there is
joint and several liability with Borrower or any other
Obligor or any Subsidiary;
(e) BUSINESS AND COLLATERAL INFORMATION. Any
change or proposed change in any of the information set
forth on SCHEDULE 4.10 or SCHEDULE 4.12, including but
not limited to (i) the formation of any new Subsidiary,
(ii) the consummation of any Acquisition, (iii) any
change in the location of any Inventory or any
Collateral to a location not included on such Schedule,
(iv) the identity of any new bailee, processor,
warehouseman or other Person in possession or control
of any Inventory or other Collateral, (v) any proposed
change in the location of Borrower's or any
Subsidiary's chief executive office or chief place of
business, (vi) any proposed opening, closing or other
change in the list of offices and other places of
business of Borrower and each Subsidiary and (vii) any
opening, closing or other change in the offices and
other places of business of each other Obligor;
(f) CHANGE OF NAME OR STATUS. Any change in the
name or address of Borrower, any Subsidiary or any
other Obligor;
(g) INSURANCE INFORMATION. Any material change
in the information set forth in SCHEDULE 4.7;
(h) ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS.
The occurrence of any event, or the acquisition of any
information which, if it had occurred or was true on or
before the Closing Date, would have been required to
have been disclosed and included on SCHEDULE 4.25,
including but not limited to existence of any
Environmental Lien and receipt of any notice from any
federal, state or local government or agency with
respect to any actual or alleged violation of any
Environmental Law or any Occupational Safety and Health
Law;
-49-
(i) MATERIAL ADVERSE CHANGE. The occurrence of a
Material Adverse Change;
(j) DEFAULT BY OTHERS. Any default by any
Account Debtor or other Person obligated to Borrower,
any other Obligor, or any Subsidiary, under any
contract, chattel paper, note or other evidence of
amounts payable or due or to become due to Borrower,
such Obligor or Subsidiary, if the amount payable under
such contract, chattel paper, note or other evidence of
amounts payable or due or to become due is at least
$10,000;
(k) MOVEABLE COLLATERAL. If any of the
Collateral shall consist of goods of a type normally
used in more than one state (other than propane in
transit to the Subsidiaries' locations), whether or not
actually so used, any use of any such goods in any
state other than a state in which Borrower or a
Subsidiary shall have previously advised Agent such
goods will be used. Borrower agrees that such goods
will not, unless Agent shall otherwise consent in
writing, be used outside the continental United States;
(l) CHANGE IN OPERATING MANAGEMENT OR LINE(S) OF
BUSINESS. If any substantial change in the senior
management of Borrower, or any change occurs in Bor-
rower's or any Subsidiary's line(s) of business; and
(m) OTHER NOTICES. Any notices required to be
provided pursuant to any Related Agreement or the other
provisions of this Agreement, and notice of the occur-
rence of such other events as Agent may reasonably from
time to time specify.
5.3 EXISTENCE. Maintain and preserve, and cause each
Subsidiary to maintain and preserve, its respective existence as
a corporation or other form of business organization, as the case
may be, and all rights, privileges, licenses, patents, patent
rights, copyrights, trademarks, trade names, trade styles,
franchises and other authority to the extent material and
necessary for the conduct of its respective business in the
ordinary course as conducted from time to time.
5.4 NATURE OF BUSINESS. Engage in, and cause each
Subsidiary to engage in, substantially the same fields of
business as it is engaged in on the date hereof.
5.5 BOOKS, RECORDS AND ACCESS. Maintain, and cause
each Subsidiary to maintain, complete and accurate books and
records (including but not limited to records relating to
Accounts Receivable, Inventory, and other Collateral and
property), in which full and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation
to its respective
-50-
business and activities, including without limitation complete
and accurate records of all debits and credits in respect of all
Intercompany Loans. Cause its books and records as at the end of
any calendar month to be posted and closed not more than thirty
(30) days after the last business day of such month. Permit, and
cause each Subsidiary to permit, access by Agent and each Lender
and its respective agents and employees to the books and records
of Borrower and such Subsidiary at Borrower's or such
Subsidiary's place or places of business at intervals to be
determined by Agent (but in the absence of an Event of Default no
more than five (5) times in any twelve (12) month period) upon
reasonable prior notice and during normal business hours and
without hindrance or delay, and permit and cause each Subsidiary
to permit Agent and each Lender and its respective agents and
employees to inspect the Real Property, Inventory and Equipment
and to inspect, audit, check and make copies and/or extracts from
the books, records, computer data and records, computer programs,
journals, orders, receipts, correspondence and other data
relating to Inventory, Accounts Receivable, and, any other
Collateral and property, or relating to any other transactions
between the parties hereto; provided, that after the occurrence
of an Event of Default, Agent and Lenders may have access to such
premises at such times as they desire, without having given prior
notice. Any and all such inspections, appraisals and/or audits
by Agent and its agents and employees shall be at Borrower's
expense, and Agent may advance same to Borrower as a Revolving
Loan.
5.6 INSURANCE. Maintain, and cause each Subsidiary to
maintain, insurance to such extent and against such hazards and
liabilities as is commonly maintained by companies similarly
situated. Keep the Collateral properly housed and insured for
its full insurable value (subject to customary deductibles)
against loss or damage by fire, theft, explosion, sprinklers and
such other risks as are customarily insured against by persons
engaged in business similar to that of Borrower or such
Subsidiary, as applicable, with such companies, in such amounts
and under policies in such form as shall be satisfactory to
Agent. Certificates of such policies of insurance have been
delivered to Agent prior to the date hereof together with
evidence of payment of all premiums therefor then due. Borrower
shall cause each issuer of an insurance policy for Borrower or
any Subsidiary to provide Agent, prior to the Closing Date, with
an endorsement or an independent instrument (a) substantially in
the form of EXHIBIT B or such other form and containing such
other terms as shall be acceptable to Agent and (b) showing loss
payable to Agent, for the benefit of itself and Lenders, with
respect to the Collateral and as its interest may appear and
naming Agent as an additional insured, for the benefit of itself
and Lenders. Borrower hereby directs all insurers under
Borrower's policies of insurance to pay all proceeds payable
thereunder directly to Lender, as its interest may appear.
Borrower appoints Agent and any Person whom Agent may from time
to time designate (and all officers, employees or agents
designated by Agent or such Person) as Borrower's true and lawful
attorney and
-51-
agent-in-fact with power to make, settle and adjust all claims
under such policies of insurance in an amount of $100,000 or more
and all claims arising or in existence after the occurrence of an
Event of Default, and which relate to the Collateral, endorse the
name of Borrower on any check, draft, instrument or other item of
payment for the proceeds of such claims which are payable to
Agent or any Lender hereunder and make all determinations and
decisions with respect to such claims. The foregoing appointment
and power, being coupled with an interest, is irrevocable until
all Payment Liabilities under this Agreement are paid and
performed in full and this Agreement is terminated. In the event
Borrower at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required herein or to
pay any premium in whole or in part relating thereto when due,
then Agent, without waiving or releasing any obligation of or
default by Borrower hereunder, may at any time or times
thereafter (but shall be under no obligation to do so) obtain and
maintain such policies of insurance and pay such premiums and
take any other action with respect thereto which Agent deems
advisable. All sums so disbursed by Agent, including reasonable
Attorneys' Fees, court costs, expenses and other charges relating
thereto, shall be payable on demand by Borrower to Agent, and
Agent may, in its sole and absolute discretion, advance such sums
to Borrower as a Revolving Loan. Borrower shall cause each
Subsidiary to grant to Agent rights identical to those granted by
Borrower to Agent in respect of its insurance.
5.7 INSURANCE SURVEY. Provide to Agent and each
Lender at least annually within ninety (90) days of the end of
each of Borrower's Fiscal Years, a certificate signed by its
chief financial officer that attests to and summarizes the
property and casualty insurance program carried by Borrower and
the Subsidiaries. This summary shall include the insurer's(s')
name(s), policy number(s), expiration date(s), amount(s) of
coverage, type(s) of coverage, the annual premium(s), deductibles
and self-insured retention and shall describe any retrospective
rating plan, fronting arrangement or any other self-insurance or
risk assumption agreed to by Borrower or any Subsidiary or
imposed upon Borrower or any Subsidiary by any such insurer, as
well as any self-insurance program that is in effect. Borrower
shall notify Agent in writing (a) at least twenty (20) days prior
to any cancellation or material change of any such insurance by
Borrower or any Subsidiary and (b) within five (5) Banking Days
after receipt of any notice (whether formal or informal) of any
cancellation or change in any of its insurance by any of its
insurers or any material change in the cost thereof.
5.8 REPAIR. Maintain, preserve and keep, and cause
each Subsidiary to maintain, preserve and keep, its properties in
good operating condition and repair, ordinary wear and tear
excepted, and from time to time make, and cause each Subsidiary
to make, all necessary and proper repairs, renewals,
replacements, additions, betterments and improvements thereto so
that at all times the
-52-
efficiency thereof shall be fully preserved and maintained; and
at all times keep and cause each Subsidiary to keep its Equipment
in good operating condition and repair, ordinary wear and tear
excepted, and Borrower shall not and shall not permit any
Subsidiary to, without the prior written consent of Requisite
Lenders, sell, lease or otherwise dispose of any of its
Equipment, or any part thereof or interest therein; PROVIDED,
HOWEVER, that without Agent's or any Lender's consent (but with
notice to Agent) Borrower and each Subsidiary may dispose of
obsolete or unuseful Equipment in the ordinary course, PROVIDED
that the Equipment disposed of by Borrower and the Subsidiaries
in any Fiscal Year has an aggregate market value of $__________
or less.
5.9 TAXES. Pay, and cause each Subsidiary to pay,
when due, all of its Taxes, unless and only to the extent that
Borrower or such Subsidiary is contesting such Taxes in good
faith and by appropriate proceedings and Borrower or such
Subsidiary has set aside on its books such reserves or other
appropriate provisions therefor as may be required by GAAP; not
file a consolidated tax return together with any other Person,
unless consented to in writing by Agent, except that Borrower and
the Subsidiaries may file consolidated returns; and not change
its Fiscal Year or tax year without Agent's prior written
consent.
5.10 COMPLIANCE. Comply, and cause each Subsidiary to
comply, with all statutes and governmental rules and regulations
applicable to it, except where the failure to so comply would not
be reasonably likely to have a Material Adverse Effect.
5.11 PENSION PLANS. Not permit, and not permit any
Subsidiary to permit, any condition to exist in connection with
any Pension Plan that might constitute grounds for the PBGC to
institute proceedings to have such Pension Plan terminated or a
trustee appointed to administer such Pension Plan; not fail, and
not permit any Subsidiary to fail, to make a required
contribution to any Pension Plan if such failure is sufficient to
give rise to a Lien under Section 302(f) of ERISA; and not engage
in, or permit to exist or occur, or permit any of the
Subsidiaries to engage in, or permit to exist or occur, any other
condition, event or transaction with respect to any Pension Plan
that is reasonably likely to result in a Material Adverse Effect.
5.12 MERGER, PURCHASE AND SALE. Not, and not permit
any Subsidiary to: (a) be a party to any merger, liquidation or
consolidation; (b) except for sales of Inventory in the normal
course of its business, sell, transfer, convey, lease or
otherwise dispose of its assets; (c) sell or assign, with or
without recourse, any Accounts Receivable, Contract Rights, notes
receivable or chattel paper, except as provided in this
Agreement; or (d) purchase or otherwise acquire all or
substantially all the stock or assets of any Person; provided,
that nothing herein shall prohibit the (i) merger of any
Borrowing Subsidiary with another Borrowing Subsidiary, (ii) any
sale of Equipment permitted by SECTION 5.8,
-53-
(iii) purchase or other acquisition of all or substantially all
of the stock or assets of any Person unless such purchase or
other acquisition involves the incurrence of Indebtedness to the
seller thereof or unless the business being acquired is subject
to material actual or contingent liabilities, including without
limitation litigation or environmental matters and (iv) sale,
transfer, conveyance, lease or other disposition of all of the
capital stock of any Subsidiary or all or substantially all of
the assets of any Subsidiary if: (A) no Event of Default or
Unmatured Event of Default then exists or would exist after
giving effect to such transaction and the application of proceeds
thereof, and (B) Borrower delivers to Agent from the proceeds
thereof for application to the Loans in accordance with SECTION
2.10 an amount not less than the outstanding principal amount of
the Intercompany Loan of such Subsidiary, along with all accrued
interest thereon, as of the date of such transaction, PLUS the
amount, if any, of any Over Advance that would result from such
transaction after giving effect to the repayment of such
Intercompany Loan but before any other application of proceeds
thereof. Nothing in this Agreement shall be deemed to in any way
limit the right of the holders of the Senior Notes or their
representative to exercise any rights under the Senior Loan
Documents, although such exercise may constitute a breach of this
SECTION 5.12 or other Sections of this Agreement.
5.13 RESTRICTED PAYMENTS. Not, and not permit any
Subsidiary to, (a) purchase or redeem any shares of its stock or
any options or warrants therefor; (b) declare or pay any
dividends on any of its stock (other than dividends payable in
non-redeemable capital stock) or make any distribution to
stockholders as such or set aside any funds for any such purpose;
(c) make any voluntary prepayment, purchase or redemption of any
Senior Loans other than as expressly required by the terms of the
Senior Loan Documents; (d) except as permitted in any applicable
subordination or intercreditor agreements, or any subordination
terms contained within the applicable Subordinated Debt
Documents, pay, prepay, purchase or redeem any Subordinated Debt;
or (e) repay any amounts owing from time to time by any
Subsidiary to Borrower, exclusive of the Intercompany Loans;
provided, that if no Event of Default or Unmatured Event of
Default then exists and if the outstanding amount of the
Revolving Loans does not exceed the sum of the amounts described
in SECTIONS 2.2(i) and (ii) of SUPPLEMENT A, (i) any Borrowing
Subsidiary may pay dividends to Borrower from time to time, and
(ii) any Borrowing Subsidiary may repay any amounts owing from
time to time by such Borrowing Subsidiary to Borrower [other than
in respect of the Intercompany Loans].
5.14 BORROWER'S AND SUBSIDIARIES' STOCK. Not permit
any Subsidiary to purchase or otherwise acquire any shares of the
stock of Borrower, and not take any action, or permit any
Subsidiary to take any action, which will result in a decrease in
Borrower's or any Subsidiary's ownership interest in any
Subsidiary.
-54-
5.15 INDEBTEDNESS. Not, and not permit any Subsidiary
to, incur or permit to exist any Indebtedness (including but not
limited to Indebtedness as lessee under Capitalized Leases),
except: (a) Indebtedness under the terms of this Agreement; (b)
Subordinated Debt; (c) other Indebtedness outstanding on the date
hereof and listed on SCHEDULE 5.15; (d) Indebtedness hereafter
incurred in connection with Liens permitted under SECTION
5.16(d); (e) Indebtedness in respect of the Senior Loans, with an
aggregate principal amount due upon maturity of not more than
$_________; (f) Indebtedness in respect of loans from Borrower to
a Borrowing Subsidiary, including without limitation any
Intercompany Loans the right to receive payment of which has been
assigned by Borrower to Agent, for the benefit of itself and
Lenders; (g) other unsecured Indebtedness not in excess of
$100,000 for Borrower and the Subsidiaries at any time
outstanding; and (h) other Indebtedness approved in writing by
Requisite Lenders.
5.16 LIENS. Not, and not permit any Subsidiary to,
create or permit to exist any Lien with respect to any property,
revenue or assets now owned or hereafter acquired, except: (a)
Liens for current Taxes not delinquent or Taxes being contested
in good faith and by appropriate proceedings and as to which such
reserves or other appropriate provisions as may be required by
GAAP are being maintained; (b) carriers', warehousemen's,
mechanics', materialmen's, repairmen's, and other like statutory
Liens arising in the ordinary course of business securing
obligations which are not overdue or which are being contested in
good faith and by appropriate proceedings and as to which such
reserves or other appropriate provisions as may be required by
GAAP are being maintained; (c) pledges or deposits in connection
with workers' compensation, unemployment insurance and other
social security legislation; (d) Liens in connection with the
acquisition of personal property after the date hereof, by way of
purchase money mortgage, conditional sale or other title
retention agreement, Capitalized Lease or other deferred payment
contract, and attaching only to the property being acquired, if
(i) the Indebtedness secured thereby does not exceed seventy-five
percent (75%) of the fair market value of such property at the
time of the acquisition thereof, (ii) the Indebtedness secured by
any single piece of property does not exceed $100,000 and (iii)
the aggregate outstanding amount of such Indebtedness of Borrower
and the Subsidiaries does not exceed $1,000,000; (e) Liens in
favor of Agent, for the benefit of itself and Lenders; (f) Liens
on property of Borrowing Subsidiaries in favor of Borrower
securing the Intercompany Loans and assigned to Agent, for the
benefit of itself and Lenders; (g) Liens granted to the holders
of Senior Notes or their representative pursuant to the Senior
Loan Documents; (h) Liens referred to in SECTION 4.9; and (i)
Liens consented to in writing by Requisite Lenders.
5.17 GUARANTIES. Not, and not permit any Subsidiary
to, become or be a guarantor or surety of, or otherwise become or
be responsible in any manner (whether by agreement to purchase
any
-55-
obligations, stock, assets, goods or services, or to supply or
advance any funds, assets, goods or services, or otherwise) with
respect to, any undertaking of any other Person, except for the
endorsement, in the ordinary course of collection, of instruments
payable to it or its order, except any guaranty in favor of
Agent, for the benefit of itself and Lenders and except for any
guaranty of the Senior Notes (in the form attached to the Senior
Loan Documents) executed by any Restricted Subsidiary.
5.18 INVESTMENTS. Not, and not permit any Subsidiary
to, make or permit to exist any Investment in any Person, except
for: (a) advances to employees of Borrower or any of the
Subsidiaries for travel or other ordinary business expenses
provided that the aggregate amount outstanding at any one time
shall not exceed $25,000 for any single employee and $75,000 in
the aggregate for all employees; (b) extensions of credit in the
nature of Accounts Receivable or notes receivable arising from
the sale of goods and services in the ordinary course of
business; (c) shares of stock, obligations or other securities
received in settlement of claims arising in the ordinary course
of business; (d) other Investments outstanding on the date hereof
and listed on SCHEDULE 5.18; (e) other Investments not in excess
of $50,000 in the aggregate for Borrower and the Subsidiaries;
(f) Investments made in the form of loans by Borrower to the
Borrowing Subsidiary, including without limitation the
Intercompany Loans, (g) Investments in the form of capital
contributions by Borrower in new and existing Subsidiaries with
funds not constituting proceeds of the Revolving Loans or the
Collateral and (h) other Investments consented to by Requisite
Lenders in writing.
5.19 SUBSIDIARIES. Except as provided in SECTION 5.12,
not, and not permit any Subsidiary to, acquire any stock or
similar interest in any Person, and not create, establish or
acquire any Subsidiaries; and not designate any Restricted
Subsidiary to be an "Unrestricted Subsidiary" (as defined in the
Senior Loan Documents), designate any Unrestricted Subsidiary to
be a Restricted Subsidiary or designate any Unrestricted
Subsidiary.
5.20 INTENTIONALLY OMITTED.
5.21 CHANGE IN ACCOUNTS RECEIVABLE. After the
occurrence of an Event of Default, not permit or agree to, or
permit any Subsidiary to permit or agree to, any extension,
compromise or settlement or make any change or modification of
any kind or nature with respect to any Account Receivable,
including any of the terms relating thereto.
5.22 ENVIRONMENTAL ISSUES. Provide such information
and certifications which Agent may reasonably request from time
to time pertaining to the environmental aspects of Borrower and
the Subsidiaries and any property owned, operated or controlled
by Borrower or any Subsidiary. In order to investigate
environmental aspects of Borrower and the Subsidiaries and their
properties,
-56-
facilities and operations, Agent and its agents shall have the
right at any time to enter upon the property of Borrower or any
Subsidiary, take samples, review the books, records or other
documents of Borrower and the Subsidiaries, interview officers
and employees of Borrower or the Subsidiaries, and conduct such
other activities as Agent, in its sole discretion, deems
appropriate. Borrower shall, and shall cause the Subsidiaries
to, cooperate fully in the conduct of any such audit. Borrower
shall pay upon demand all costs and expenses (including
Attorney's Fees) connected with such audit; provided, that prior
to the occurrence of an Event of Default, Borrower shall be so
obligated with respect to no more than one such audit per annum.
Agent, may, in its discretion, provide for the payment of any
amount due from Borrower under this SECTION 5.22 by making
Borrower a Revolving Loan. Nothing in this SECTION 5.22, and no
actions taken by Agent or any Lender pursuant thereto, shall
give, or be construed as controlling, or giving to Agent or any
Lender the right or obligation to direct or control, the conduct
or action or inaction of Borrower or any Subsidiary with respect
to any environmental matters, including but not limited to those
pertaining to compliance with any Environmental Laws. Agent
agrees to share with Borrower the results of any such audit
conducted by a third party.
5.23 RELATED AGREEMENTS. Not enter into, or permit any
Subsidiary to enter into, any agreement containing any provision
which would be violated or breached by the performance by
Borrower or such Subsidiary of its obligations hereunder or under
any Related Agreement or any instrument or document delivered or
to be delivered by Borrower or such Subsidiary in connection
herewith.
5.24 UNCONDITIONAL PURCHASE OPTIONS. Not enter into or
be a party to, or permit any Subsidiary to enter into or be a
party to any contract for the purchase of materials, supplies or
other property or services, if such contract requires that
payment be made by it regardless of whether or not delivery is
ever made of such materials, supplies or other property or
services.
5.25 USE OF PROCEEDS. Not use or permit any proceeds
of the Loans or Letters of Credit to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying" any Margin Stock, and
furnish to Agent upon request, a statement in conformity with the
requirements of Federal Reserve Form U-l referred to in
Regulation U of the Board of Governors of the Federal Reserve
System.
5.26 TRANSACTIONS WITH RELATED PARTIES. Not, and not
permit any Subsidiary to, (a) pay any management, consulting or
similar fees to any Related Party, whether for services rendered
to Borrower or any Subsidiary, or otherwise or (b) enter into or
be a party to any other transaction or arrangement, including
without limitation the purchase, sale, lease or exchange of
property or the rendering of any service, with any Related Party,
except in the ordinary course of and pursuant to the reasonable
requirements of
-57-
Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to Borrower or such Subsidiary
than would obtain in a comparable arm's-length transaction with a
Person not a Related Party.
5.27 AMENDMENT OF DOCUMENTS. Not amend, modify or
alter, or permit to be amended, modified or altered, any Senior
Loan Document (other than a technical amendment that, pursuant to
the terms of the Subordinated Debt Documents, may be made by the
trustee for the holders of the Senior Notes without the consent
of such holders) or Subordinated Debt Document or any agreement,
instrument or document evidencing any of the Indebtedness listed
on SCHEDULE 5.15.
6. DEFAULT.
6.1 EVENT OF DEFAULT. Each of the following shall
constitute an Event of Default under this Agreement:
(a) NON-PAYMENT. Default in the payment, when due or
declared due, of any of the Liabilities.
(b) NON-PAYMENT OF OTHER INDEBTEDNESS. Default in the
payment when due, whether by acceleration or otherwise (subject
to any applicable grace period), of any Indebtedness of, or
guaranteed by, Borrower, any other Obligor or any Subsidiary with
a principal balance in excess of $___________ (other than (i) any
Indebtedness under this Agreement and any Notes or (ii) any
Indebtedness of any Subsidiary to Borrower or to any other
Subsidiary), including without limitation the Senior Loans and
the Subordinated Debt.
(c) ACCELERATION OF OTHER INDEBTEDNESS. Any event or
condition shall occur which results in the acceleration of the
maturity of any Indebtedness of, or guaranteed by, Borrower, any
other Obligor or any Subsidiary with a principal balance in
excess of $__________ (other than (i) any Indebtedness of any
Subsidiary to Borrower or to any other Subsidiary and (ii) the
Indebtedness under this Agreement and any Notes), including
without limitation the Senior Loans and the Subordinated Debt, or
enables the holder or holders of such other Indebtedness or any
trustee or agent for such holders to accelerate the maturity of
such other Indebtedness.
(d) OTHER OBLIGATIONS. Default in the performance or
observance (subject to any applicable grace period or waiver of
such default) of (i) any obligation or agreement of Borrower, any
other Obligor or any Subsidiary to or with Agent or any Lender
(other than any obligation or agreement of Borrower hereunder and
under any Notes) or (ii) any obligation or agreement of Borrower,
any other Obligor or any Subsidiary to or with any other Person
(other than (x) any such obligation or agreement constituting or
related to Indebtedness, (y) Trade Accounts Payable or (z) any
obligation or agreement of any Subsidiary to Borrower or to any
other Subsidiary), if such default would be reasonably likely to
-58-
have a Material Adverse Effect, except only to the extent that
the existence of any such default is being contested by Borrower,
such other Obligor or such Subsidiary, as the case may be, in
good faith and by appropriate proceedings and Borrower, such
other Obligor or such Subsidiary, as applicable, shall have set
aside on its books such reserves or other appropriate provisions
therefor as may be required by GAAP.
(e) BANKRUPTCY. Borrower, any other Obligor or any
Subsidiary applies for, consents to, or acquiesces in the
appointment of a trustee, receiver or other custodian for
Borrower, such other Obligor or such Subsidiary, or for a
substantial part of the property of Borrower, such other Obligor
or such Subsidiary, or makes a general assignment for the benefit
of creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed
for Borrower, any other Obligor or any Subsidiary, or for a
substantial part of the property of Borrower, any other Obligor
or any Subsidiary and is not discharged or dismissed within sixty
(60) days; or any bankruptcy, reorganization, debt arrangement or
other proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is instituted by or
against Borrower, any other Obligor or any Subsidiary; or any
warrant of attachment or similar legal process is issued against
any substantial part of the property of Borrower, any other
Obligor or any Subsidiary. Notwithstanding the foregoing, none
of the foregoing events that occurs with respect to a Subsidiary
shall constitute an Event of Default, unless such event would be
reasonably likely to have a Material Adverse Effect.
(f) INSOLVENCY. Borrower, any other Obligor or any
Subsidiary becomes insolvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they mature.
(g) ERISA LIABILITIES. Any of the following events
shall have occurred, if such event is reasonably likely to have a
Material Adverse Effect: (i) the existence of a Reportable
Event, (ii) the withdrawal of Borrower or any ERISA Affiliate
from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA,
(iii) the occurrence of an obligation to provide affected parties
with a written notice of intent to terminate a Pension Plan in a
distress termination under Section 4041 of ERISA, (iv) the
institution by PBGC of proceedings to terminate any Pension Plan,
(v) any event or condition that would require the appointment of
a trustee to administer a Pension Plan, (vi) the withdrawal of
Borrower or any ERISA Affiliate from a Multiemployer Plan, and
(vii) any event that would give rise to a Lien under Section
302(f) of ERISA.
(h) NON-COMPLIANCE WITH THIS AGREEMENT. Default in
the performance of any of Borrower's agreements set forth in
SECTION 3.2, 3.3, 5.5, 5.6, 5.12 through 5.19, 5.21 through 5.27
or in SECTION 6 of SUPPLEMENT A hereto (and not constituting an
Event of
-59-
Default under any of the other subsections of this SECTION 6.1)
and continuance of such default for ten (10) days after the
occurrence thereof; or default in the performance of any of
Borrower's agreements set forth in SECTION 5.1.1, 5.1.2, 5.1.3,
5.1.4 or 5.2 (and not constituting an Event of Default under any
of the other subsections of this SECTION 6.1), and continuance of
such default for five (5) days after the occurrence thereof; or
default in the performance of any of Borrower's other agreements
herein set forth (and not constituting an Event of Default under
any of the other subsections of this SECTION 6.1), and
continuance of such default for thirty (30) days after notice
thereof to Borrower by Agent.
(i) NON-COMPLIANCE WITH RELATED AGREEMENTS. Default
in the performance by Borrower, any other Obligor or any
Subsidiary of any of its agreements set forth in any Related
Agreement (and not constituting an Event of Default under any of
the other subsections of this SECTION 6.1), and continuance of
such default after notice from Agent and the expiration of the
grace or cure period (if any) set forth therein.
(j) REPRESENTATIONS AND WARRANTIES. Any
representation or warranty made by Borrower or any other Obligor
herein or in any Related Agreement is untrue or misleading in any
material respect when made or deemed made; or any schedule,
statement, report, notice, certificate or other writing furnished
by Borrower or any other Obligor to Agent or any Lender is untrue
or misleading in any material respect on the date as of which the
facts set forth therein are stated or certified; or any
certification made or deemed made by Borrower or any other
Obligor to Agent or any Lender is untrue or misleading in any
material respect on or as of the date made or deemed made.
(k) LITIGATION. There shall be entered against any
one of Borrower, any other Obligor or any Subsidiary one or more
judgments or decrees in excess of $500,000 in the aggregate at
any one time outstanding, excluding those judgments or decrees
(i) that shall have been outstanding less than thirty (30)
calendar days from the entry thereof, (ii) for and to the extent
which Borrower, such Obligor or such Subsidiary, as applicable,
is insured and with respect to which the insurer has assumed
responsibility in writing or for and to the extent which
Borrower, such Obligor or such Subsidiary, as applicable, is
otherwise indemnified if the terms of such indemnification are
satisfactory to Agent or (iii) which have been stayed pending
appeal and with respect to which Borrower, such Obligor or such
Subsidiary has posted the appropriate bond or letter of credit.
(l) TERMINATION OF OBLIGATIONS. If any Obligor shall
terminate any of its obligations to Agent or any Lender in
respect of the Liabilities.
(m) VALIDITY. If the validity or enforceability of
this Agreement or any Related Agreement shall be challenged by
Borrower
-60-
or any other Obligor, or if this Agreement or any Related
Agreement shall fail to remain in full force and effect.
(n) CONDUCT OF BUSINESS. If Borrower, any other
Obligor or any Subsidiary is enjoined, restrained or in any way
prevented by court order, which has not been dissolved or stayed
within five (5) Banking Days, from conducting all or any material
part of its business affairs and such event might have a Material
Adverse Effect.
(o) CHANGE OF CONTROL. If Paul S. Lindsey, Jr., and
members of his immediate family cease to retain among them record
and beneficial ownership of not less than a majority of the
outstanding voting stock of Borrower on a fully diluted basis; or
if any "Change of Control" (as defined in the Senior Loan
Documents) occurs which results in an obligation of Borrower to
commence a "Change of Control Offer" pursuant to the terms of the
Senior Loan Documents.
(p) MATERIAL ADVERSE CHANGE. Agent shall have deter-
mined in good faith that a Material Adverse Change has occurred.
6.2 EFFECT OF EVENT OF DEFAULT; REMEDIES.
(a) In the event that one or more Events of Default
described in SECTION 6.1(e) shall occur, then each Lender's
commitment and the Credit extended under this Agreement shall
terminate and all Liabilities hereunder and under any Notes shall
be immediately due and payable without demand, notice or declara-
tion of any kind whatsoever.
(b) In the event an Event of Default other than one
described in SECTION 6.1(e) shall occur, at the option of Agent
or Requisite Lenders, each Lender's commitment shall terminate
and all Liabilities hereunder and under any Notes shall
immediately be due and payable without demand or notice of any
kind whatsoever, whereupon the Credit extended under this
Agreement shall terminate. Agent shall promptly advise Borrower
of any such declaration, but failure to do so shall not impair
the effect of such declaration.
(c) In the event of the occurrence of any Event of
Default, Agent may exercise any one or more or all of the
following remedies, all of which are cumulative and non-
exclusive:
(i) Any remedy contained in this Agreement or in
any of the Related Agreements or any Supplemental
Documentation;
(ii) Any rights and remedies available to Agent or
any Lender under the UCC, and any other applicable law;
(iii) To the extent permitted by applicable law,
Agent may, without notice, demand or legal process of
any
-61-
kind, take possession of any or all of the Collateral
(in addition to Collateral which it may already have in
its possession), wherever it may be found, and for that
purpose may pursue the same wherever it may be found,
and may enter into any premises where any of the
Collateral may be or is supposed to be, and search for,
take possession of, remove, keep and store any of the
Collateral until the same shall be sold or otherwise
disposed of, and Agent shall have the right to store
the same in any of Borrower's premises without cost to
Agent;
(iv) At Agent's request, Borrower will, at Bor-
rower's expense, assemble the Collateral and make it
available to Agent at a place or places to be
designated by Agent which is reasonably convenient to
Agent and Borrower; and
(v) Agent at its option, and pursuant to
notification given to Borrower as provided for below,
may sell any Collateral actually or constructively in
its possession at public or private sale and apply the
proceeds thereof as provided below.
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND AGENT'S
RIGHTS.
7.1 NOTICE OF DISPOSITION OF COLLATERAL. Any
notification of intended disposition of any of the Collateral
required by law shall be deemed reasonably and properly given if
given at least five (5) calendar days before such disposition.
7.2 APPLICATION OF PROCEEDS OF COLLATERAL. Any
proceeds of any disposition by Agent of any of the Collateral may
be applied by Agent to the payment of expenses in connection with
the taking possession of, storing, preparing for sale, and
disposition of Collateral, including Attorneys' Fees and legal
expenses, and any balance of such proceeds may be applied by
Agent toward the payment of such of the Liabilities, and in such
order of application, as Agent may from time to time elect.
7.3 CARE OF COLLATERAL. Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any
Collateral in its possession if it takes such action for that
purpose as Borrower requests in writing, but failure of Agent to
comply with such request shall not, of itself, be deemed a
failure to exercise reasonable care, and no failure of Agent to
preserve or protect any rights with respect to such Collateral
against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by Borrower,
shall be deemed a failure to exercise reasonable care in the
custody or preservation of such Collateral.
7.4 PERFORMANCE OF BORROWER'S OBLIGATIONS. Agent
shall have the right, but shall not be obligated, to discharge
any claims
-62-
or Liens against, and any Taxes at any time levied or placed upon
any or all Collateral, including without limitation those arising
under statute or in favor of landlords, taxing authorities,
government, public and/or private warehousemen, common and/or
private carriers, processors, finishers, draymen, coopers,
dryers, mechanics, artisans, laborers, attorneys, courts, or
others. Agent may also pay for maintenance and preservation of
Collateral. Agent may, but is not obligated to, perform or
fulfill any of Borrower's responsibilities under this Agreement
which Borrower has failed to perform or fulfill. Agent may
advance to Borrower as a Revolving Loan any payment made or
expense incurred under this SECTION 7.4.
7.5 AGENT'S RIGHTS. None of the following shall
affect the obligations of Borrower or any Subsidiary to Agent or
any Lender under this Agreement or Agent's right with respect to
the remaining Collateral (any or all of which actions may be
taken by Agent at any time, whether before or after an Event of
Default, at its sole and absolute discretion and without notice
to Borrower):
(a) acceptance or retention by Agent or any
Lender of other property or interests in property as
security for the Liabilities, or acceptance or
retention of any Obligor(s), in addition to Borrower,
with respect to any of the Liabilities;
(b) release of its Lien on, or surrender or
release of, or the substitution or exchange of or for,
all or any part of the Collateral or any other property
securing any of the Liabilities (including but not
limited to any property of any Obligor other than
Borrower), or any extension or renewal for one or more
periods (whether or not longer than the original
period), or release, compromise, alteration or
exchange, of any obligations of any guarantor or other
Obligor with respect to any Collateral or any such
property;
(c) extension or renewal for one or more periods
(whether or not longer than the original period), or
release, compromise, alteration or exchange of any of
the Liabilities, or release or compromise of any
obligation of any Obligor with respect to any of the
liabilities; or
(d) failure by Agent or any Lender to resort to
other security or pursue any Person liable for any of
the Liabilities before resorting to the Collateral.
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER
MATTERS.
8.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTERS
OF CREDIT. The obligation of each Lender that is a party to this
Agreement on the date hereof to make the initial Loans and for
Issuing Bank to issue the initial Letters of Credit is subject to
-63-
satisfaction of the following conditions precedent (in addition
to those provided in SECTION 8.2):
8.1.1 LEGAL AUDIT. Each Lender's counsel shall have
completed its legal due diligence relating to Borrower, each
Subsidiary, and each other Obligor, the results of which shall
provide such Lender with results and information which, in such
Lender's sole determination, are satisfactory to permit such
Lender to enter into the secured financing transaction described
in this Agreement and the Related Agreements. Such due diligence
examination may include but need not be limited to an analysis of
all of Borrower's, each Subsidiary's, and each other Obligor's
business operations, affairs, conditions, assets, liabilities and
commitments (including without limitation analysis of contingent
liabilities, environmental and health and safety matters,
material contracts, labor matters, union contracts, employee
benefit plans, pending or threatened litigation and tax matters).
8.1.2 LIENS. The Liens on the Collateral granted under
this Agreement and the Related Agreements and all other Liens
granted to Agent, for the benefit of itself and Lenders, to
secure the Liabilities, shall be senior, perfected Liens, except
for the Liens disclosed on SCHEDULE 4.9 which are designated as
senior to the Liens of Agent, and except as otherwise agreed by
Agent and Lenders, and all financing statements and other
documents relating to Collateral shall have been filed or
recorded, as appropriate.
8.1.3 TRANSACTIONS. (i) Borrower shall have issued the
Units, such Units and the Senior Loan Documents shall in all
respects be satisfactory to each Lender, the net proceeds of such
Units, in an amount not less than $95,000,000, shall have been
received by Borrower and the proceeds thereof shall have been
used by Borrower in substantially the manner described in the
"Use of Proceeds" section of the effective Registration Statement
for the Units (the "Prospectus"), (ii) the Stock Repurchase shall
have been consummated in accordance with the terms of the
applicable agreements and all applicable laws, (iii) Borrower
shall have acquired the assets of PSNC Propane Corporation, and
(iv) the merger of Energy Gas Operating Corporation and Borrower
shall have been consummated, all as described in the Prospectus
and all pursuant to agreements, instruments and documents in form
and substance satisfactory to each Lender (the transactions
referred to in CLAUSES (i), (ii), (iii) and (iv) are hereinafter
referred to as the "Transactions").
8.1.4 SOLVENCY. Each Lender shall be satisfied that,
after giving effect to the Transactions, and the initial Loans
and Letters of Credit, Borrower, each Subsidiary and each other
Obligor shall have assets (excluding goodwill and other
intangible assets not capable of valuation) having a value, both
at present fair salable value and at fair valuation, greater than
the amount of such Person's liabilities (including trade debt and
Indebtedness to Agent and Lenders). Each Lender shall be
satisfied that all of the
-64-
assets supporting the Loans and Letters of Credit under this
Agreement shall be sufficient in value to provide Borrower and
each Subsidiary with sufficient cash flow and working capital to
enable it to thereafter profitably operate its business and to
meet its obligations as they become due. Each Lender shall be
satisfied that Borrower and each Subsidiary has adequate capital
for the business in which it is about to engage. In connection
with the foregoing, each Lender shall have received such written
appraisals, balance sheets, solvency certificates or other
materials as Agent shall reasonably request.
8.1.5 MAXIMUM INITIAL LOANS. There shall be no Loans
made on the Closing Date in excess of $2,000,000.
8.1.6 ORGANIZATION. Each Lender shall be satisfied with
the corporate, capital and legal structures of Borrower and the
Subsidiaries, and the terms of any agreements, documents or
instruments relating thereto.
8.1.7 EFFECT OF LAW. No law or regulation affecting
Agent's or any Lender's entering into the secured financing
transaction contemplated by this Agreement shall impose upon
Agent or such Lender any material obligation, fee, liability,
loss, penalty, cost, expense or damage.
8.1.8 EXHIBITS; SCHEDULES. All Exhibits and Schedules
to this Agreement shall have been completed and submitted to each
Lender, shall be in form and substance satisfactory to such
Lender and shall contain no facts or information which such
Lender, in its sole judgment, determines to be unacceptable.
8.1.9 LICENSES, PERMITS AND CONSENTS. All licenses,
permits, consents, judicial and regulatory approvals and
corporate action necessary to consummate the Transactions and the
making of the initial Loans and the issuance of the initial
Letters of Credit shall have been obtained on terms acceptable to
each Lender.
8.1.10 FEES. If not funded with the proceeds of the
initial Loans, Agent shall have received the closing fee referred
to in SECTION 2.14 and any other fees due and payable by Borrower
or any other Person on the funding of the initial Loans and the
issuance of the initial Letters of Credit.
8.1.11 TITLE TO ASSETS. Borrower and its Subsidiaries
shall have good, indefeasible and merchantable title to the
Collateral, free and clear of all Liens, except as otherwise
permitted in SECTION 5.16 hereof.
8.1.12 MATERIAL ADVERSE CHANGE; LITIGATION. No Material
Adverse Change, as reasonably determined by each Lender, shall
have occurred from March 31, 1994 through the Closing Date and
the issuance of the initial Letters of Credit and no Material
Adverse Change, as reasonably determined by such Lender, shall
have
-65-
occurred in the facts and information disclosed to such Lender or
otherwise relied upon by such Lender in making its decision to
enter into this Agreement. In addition, there shall not have
been instituted or threatened any litigation or proceedings in
any court or administrative forum affecting or threatening to
affect the consummation of the Transactions or which would have a
Material Adverse Effect, in each case as reasonably determined by
each Lender.
8.1.13 DOCUMENTS. In addition to this Agreement, each
Lender shall have received all of the following, each duly
executed where appropriate and dated as of the Closing Date (or
such other date as shall be satisfactory to Agent), in form, and
containing terms and provisions, acceptable to such Lender:
(a) RESOLUTIONS. A copy, duly certified by the
secretary or an assistant secretary of Borrower of (i)
resolutions of the Board of Directors of Borrower
authorizing (A) the borrowings by Borrower hereunder,
(B) the execution, delivery and performance by Borrower
of this Agreement and each Related Agreement to which
Borrower is a party or by which it is bound, and (C)
certain officers or employees of Borrower to request
borrowings by telephone and to execute Borrowing Base
Certificates, and the consent of the shareholders of
Borrower thereto, (ii) all documents evidencing any
other necessary corporate action with respect to this
Agreement and the Related Agreements, (iii) all
approvals or consents, if any, with respect to this
Agreement and the Related Agreements, (iv) a list of
the names of all officers and directors of Borrower,
together with the true signatures of such officers, and
specifying those authorized to sign this Agreement and
the Related Agreements, (v) the by-laws of Borrower,
(vi) the Certificate of Incorporation of Borrower and
(vii) a list of all shareholders of Borrower and the
number of shares of Borrower's stock owned by each; and
similar certificates executed by the secretary or
assistant secretary of each Borrowing Subsidiary or
other Obligor;
(b) BORROWER'S CLOSING CERTIFICATE. The certifi-
cate of the President or Chairman of the Board of
Borrower certifying to the fulfillment of all
conditions precedent to closing (other than those
solely under the control of Agent and Lenders), and
funding the secured financing transaction contemplated
by this Agreement, to the truth and accuracy, as of
such date, of the representations and warranties of
Borrower contained in this Agreement and each Related
Agreement to which Borrower is a party or by which it
is bound and to the absence of any defaults under any
such agreements;
-66-
(c) CERTIFICATES AND ARTICLES OF INCORPORATION.
A copy, duly certified by the Secretary of State of
Missouri, of Borrower's Certificate of Incorporation;
and a copy, duly certified by the Secretary of State of
the applicable state, of each Borrowing Subsidiary's
and other Obligor's Articles or Certificates of
Incorporation, as applicable;
(d) GOOD STANDING. A copy, duly certified by the
applicable Secretary of State of (i) a certificate of
good standing issued by the Secretary of the State of
each state where Borrower, any Borrowing Subsidiary or
any other Obligor is incorporated or organized and (ii)
in any state in which Borrower, any Borrowing
Subsidiary or any other Obligor is doing business under
an assumed name, a certificate or other document issued
by the Secretary of State of each such state evidencing
Borrower's, any Borrowing Subsidiary's or any other
Obligor's authority to use such name;
(e) LEGAL OPINION. Legal opinion from Wilmer,
Cutler & Pickering, counsel for Borrower and the
Subsidiaries;
(f) INSURANCE. Evidence satisfactory to Agent of
the existence of insurance on the Collateral and
business of Borrower and each Subsidiary, in amounts
and with insurers acceptable to Agent, together with
evidence establishing that Agent, for the benefit of
itself and Lenders, is named as the sole loss payee
with respect to property and casualty insurance
covering the Collateral, and additional insured with
respect to liability insurance;
(g) AUTHORIZATION TO PAY PROCEEDS. Written
authorization and instructions from Borrower, in form
satisfactory to Agent, for disbursement of the proceeds
of the initial Loans and issuance and delivery of the
initial Letters of Credit;
(h) INTERCOMPANY LOANS. The agreements, instru-
ments and documents governing the Intercompany Loans
shall have been executed and delivered by Borrower and
the Subsidiaries, such agreements, instruments and
documents shall be in form and substance satisfactory
to each Lender, and the liens and security interests
granted to secure such indebtedness shall have been
properly perfected;
(i) LANDLORD'S AGREEMENTS. A landlord's
agreement, duly executed by the owner of each leased
premise identified by Agent;
-67-
(j) OTHER RELATED AGREEMENTS. Notes in the
aggregate amount of $15,000,000 with respect to the
Revolving Loans executed by Borrower; and a Solvency
Certificate executed by Borrower;
(k) SUBSIDIARY GUARANTY. Each Subsidiary shall
have entered into a guaranty in favor of Agent, for the
benefit of itself and Lenders, pursuant to which such
Subsidiary shall have unconditionally guaranteed the
Liabilities;
(l) SUBSIDIARY SECURITY AGREEMENT. Each
Subsidiary shall have entered into a security agreement
with Agent, for the benefit of itself and Lenders,
pursuant to which such Subsidiary shall have granted to
Agent, for the benefit of itself and Lenders, a
security interest in the accounts receivable,
inventory, and certain other assets of such Subsidiary
as collateral for the guaranty described in CLAUSE (k)
above; and
(m) OTHER DOCUMENTS. Such other documents as
Lenders shall determine, in their sole discretion, to
be necessary or desirable.
8.1.14 DEFAULT. No Event of Default or Unmatured Event
of Default shall have occurred and be continuing or would be
caused thereby.
8.2 CONTINUING CONDITIONS PRECEDENT TO ALL LOANS;
CERTIFICATION. The obligation of each Lender to make the initial
Loans and each subsequent Loan and to establish any LIBOR Rate
Loans, and for Issuing Bank to issue the initial Letters of
Credit and each subsequent Letter of Credit, is subject to
satisfaction of the following conditions precedent in addition to
those provided in SECTION 8.1:
(a) NO CHANGE IN CONDITION. No change in the
condition or operations, financial or otherwise, of
Borrower, any Subsidiary or any other Obligor, shall
have occurred which change, in the reasonable credit
judgment of Requisite Lenders, is reasonably likely to
have a Material Adverse Effect;
(b) DEFAULT. Before and after giving effect to
such Loan and/or Letter of Credit, no Event of Default
or Unmatured Event of Default shall have occurred and
be continuing;
(c) INSURANCE. There shall have been no material
change, or notice of prospective material change
(whether such notice is formal or informal), in the
nature, extent, scope or cost of the insurance policies
of Borrower or any Subsidiary listed on SCHEDULE 4.7
which
-68-
change would have a Material Adverse Effect, or would
significantly adversely affect Borrower's or any
Subsidiary's ability to perform its obligations under
this Agreement, any Note(s), or any Related Agreement
to which it is a party or by which it is bound;
(d) REPRESENTATIONS AND WARRANTIES. Before and
after giving effect to such Loan and/or Letter of
Credit, the representations and warranties in SECTION 4
shall be true and correct as though made on the date of
such Loan and/or Letter of Credit, except for such
changes as are specifically permitted hereunder, and
except for the representation and warranty contained in
SECTION 4.26 with regard to the truthfulness and
correctness of all representations and warranties
contained in any agreement evidencing any of the
Transactions (which representations and warranties are
only being made as of the date hereof); and
(e) ACCOUNTING METHODS. Borrower shall not have
made any material (as determined by Agent) change in
its accounting methods or principles except as required
by GAAP.
Each request for a Loan or a Letter of Credit hereunder made or
deemed to have been made by Borrower shall be deemed to be a
certificate of Borrower as to the matters set out in the
foregoing provisions of this SECTION 8.2.
9. INDEMNITY.
9.1 ENVIRONMENTAL AND SAFETY AND HEALTH INDEMNITY.
Borrower hereby indemnifies Agent and each Lender and agrees to
hold Agent and each Lender harmless from and against any and all
losses, liabilities, damages, injuries, costs, expenses and
claims of any and every kind whatsoever (including without
limitation court costs and Attorneys' Fees) which at any time or
from time to time may be paid, incurred or suffered by, or
asserted against, Agent or any Lender for, with respect to, or as
a direct or indirect result of the violation by Borrower or any
of the Subsidiaries of any Environmental Law or Occupational
Safety and Health Law, or with respect to, or as a direct or
indirect result of (a) the presence on or under, or the Release
from, properties utilized by Borrower and/or any Subsidiary in
the conduct of its business into or upon any land, the atmo-
sphere, or any watercourse, body of water or wetland, of any
Hazardous Material or the escape, seepage, leakage, spillage,
disposal, discharge, emission or release of any other hazardous
or toxic waste, substance or constituent, or other substance
(including without limitation any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law) or (b) the existence of any unsafe or
unhealthful condition on or at any premises utilized by Borrower
and/or any Subsidiary in the conduct
-69-
of its business, in either case, except for any such amounts
owing as a direct result of the gross negligence or willful
misconduct of Agent or any Lender. The provisions of and
undertakings and indemnification set out in this SECTION 9.1
shall survive satisfaction and payment of the Liabilities and
termination of this Agreement.
9.2 GENERAL INDEMNITY. In addition to the payment of
expenses pursuant to SECTION 12.3, whether or not the
transactions contemplated hereby shall be consummated, Borrower
agrees to indemnify, pay and hold Agent and each Lender, and the
officers, directors, employees, agents, and affiliates of each of
Agent and each Lender (collectively, the "Indemnitees") harmless
from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the reasonable fees and
disbursements of counsel for any of such Indemnitees in
connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not any of such
Indemnitees shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against any Indemnitee, in
any manner relating to or arising out of this Agreement or any
Related Agreement, the statements contained in any commitment
letter delivered by Agent or any Lender, Agent's or any Lender's
agreement to make the Loans or to issue Letters of Credit
hereunder, the use or intended use of any Letters of Credit, or
the use or intended use of the proceeds of any of the Loans
hereunder (the "indemnified liabilities"); PROVIDED that Borrower
shall have no obligation to an Indemnitee hereunder with respect
to indemnified liabilities arising from the gross negligence or
willful misconduct of such Indemnitee. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any
law or public policy, Borrower shall contribute the maximum
portion that it is permitted to pay under applicable law to the
payment and satisfaction of all indemnified liabilities incurred
by the Indemnitees or any of them. The provisions of the
undertakings and indemnification set out in this SECTION 9.2
shall survive satisfaction and payment of the Liabilities and
termination of this Agreement.
9.3 CAPITAL ADEQUACY. If Agent or any Lender shall
reasonably determine that the application or adoption of any law,
rule, regulation, directive, interpretation, treaty or guideline
regarding capital adequacy, or any change therein or in the
interpretation or administration thereof, whether or not having
the force or law (including without limitation application of
changes to Regulation H and Regulation Y of the Federal Reserve
Board issued by the Federal Reserve Board on January 19, 1989 and
regulations of the Comptroller of the Currency, Department of the
Treasury, 12 CFR Part 3, Appendix A, issued by the Comptroller of
the Currency on January 27, 1989) increases the amount of capital
required or expected to be maintained by Agent or such Lender or
-70-
any Person controlling Agent or such Lender in excess of any such
increases affecting Agent or such Lender as of the date hereof,
and such increase is based upon the existence of Agent's or such
Lender's obligations hereunder and other commitments of this
type, then from time to time, within ten (10) days after demand
from Agent or such Lender, Borrower shall pay to Agent or such
Lender, as applicable, such amount or amounts as will compensate
Agent or such Lender or such controlling Person, as the case may
be, for such increased capital requirement. The determination of
any amount to be paid by Borrower under this SECTION 9.3 shall
take into consideration the policies of Agent or such Lender or
any Person controlling Agent or such Lender with respect to
capital adequacy and shall be based upon any reasonable
averaging, attribution and allocation methods. A certificate of
Agent or such Lender, as applicable, setting forth the amount or
amounts as shall be necessary to compensate Agent or such Lender
as specified in this SECTION 9.3 shall be delivered to Borrower
and shall be conclusive in the absence of manifest error.
10. AGENT.
10.1 APPOINTMENT OF AGENT. Each Lender hereby irrevoc-
ably appoints and authorizes Continental to act as its Agent
under this Agreement and the Related Agreements. Each Lender
hereby irrevocably appoints and authorizes Agent to take such
action on such Lender's behalf under the provisions of this
Agreement and the Related Agreements and to exercise such powers
and perform such duties under this Agreement and the Related
Agreements as are specifically delegated to Agent by the terms
hereof and thereof, together with such other powers as are
reasonably incidental hereto and thereto. Agent may perform any
of its duties hereunder or under the Related Agreements by or
through its agents or employees. The provisions of this SECTION
10 are solely for the benefit of Agent and Lenders, and neither
Borrower nor any Obligor shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the Related
Agreements, Agent shall act solely as agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for Borrower or
any Obligor.
10.2 NATURE OF DUTIES OF AGENT. Agent shall have no
duties, obligations or responsibilities except those expressly
set forth in this Agreement and the Related Agreements. Neither
Agent nor any of its officers, directors, employees or agents
shall be liable for any action taken or omitted by it as such
hereunder or under the Related Agreements or in connection
herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of Agent shall be
mechanical and administrative in nature; Agent shall not have by
reason of this Agreement or the Related Agreements a fiduciary
relationship in respect of any Lender; and nothing in this
Agreement or the Related Agreements, expressed or implied, is
intended to or shall be so
-71-
construed as to impose upon Agent any obligations in respect of
this Agreement or the Related Agreements except as expressly set
forth herein or therein. No duty to act, or refrain from acting,
and no other obligation whatsoever, shall be implied on the basis
of or imputed in respect of any right, power or authority granted
to Agent or shall become effective in the event of any temporary
or partial exercise of such rights, power or authority.
10.3 AGENT IN ITS CAPACITY AS LENDER. With respect to
its obligation to lend under this Agreement and the Related
Agreements, the Loans made by it and its participation in Letters
of Credit, Agent shall have the same rights and powers under this
Agreement and the Related Agreements as any Lender and may
exercise the same as though it were not Agent, and the terms
"Lender" or "Lenders" shall, unless the context otherwise
indicates, include Agent in its capacity as a Lender hereunder.
Agent, any Lender and their respective affiliates may accept
deposits from, lend money to, and generally engage in any kind of
banking or trust business with Borrower, or Related Parties of
Borrower, as if it were not Agent or as if it or they were not a
Lender hereunder and without any duty to account therefor to the
other parties to this Agreement; provided, that the obligations
of Borrower under such transactions shall not be deemed to be
Liabilities or secured by any Collateral without the prior
written agreement of the Requisite Lenders; provided, further
that Lenders acknowledge and agree that the obligations of
Borrower to Continental or any other Lender as Issuing Bank and
with respect to any lockbox or bank account maintained by or for
the benefit of Borrower, including the Demand Deposit Account,
the Depository Accounts, and the Assignee Deposit Account, shall
be deemed to be Liabilities secured by the Collateral.
10.4 INDEPENDENT CREDIT ANALYSIS. Each Lender agrees
that it has, independently and without reliance upon Agent, any
other Lender, or the directors, officers, agents, attorneys or
employees of Agent or of any other Lender, and instead in
reliance upon information supplied to it by or on behalf of
Borrower, made its own independent credit analysis and decision
to enter into this Agreement and the Related Agreements to which
it is a party, and that it shall independently and without
reliance upon Agent, any other Lender, or the directors,
officers, agents, attorneys or employees of Agent or of any other
Lender, continue to make its own independent credit analysis and
decisions in acting or not acting under this Agreement and the
Related Agreements. Except as otherwise expressly provided
herein, Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to provide any Lender with
any credit or other information concerning the affairs, financial
condition, litigation, liabilities, or business of Borrower or
any other Obligor which may at any time come into the possession
of Agent (or any of its affiliates). In the event such
information is furnished to any Lender by Agent, Agent shall have
no duty to confirm or verify its accuracy or
-72-
completeness and shall have no liability whatsoever with respect
thereto.
10.5 GENERAL IMMUNITY. Neither Agent nor any of its
directors, officers, agents, attorneys or employees shall be
liable to any Lender for any action taken or omitted to be taken
by it or them under this Agreement or the Related Agreements or
in connection herewith or therewith except for its or their own
willful misconduct or gross negligence. Without limiting the
generality of the foregoing, Agent: (i) shall not be responsible
to Lenders for any recitals, statements, warranties or
representations under this Agreement or the Related Agreements or
any agreement or document relative hereto or thereto or for the
financial or other condition of any Obligor, (ii) shall not be
responsible for the authenticity, accuracy, completeness, value,
validity, effectiveness, due execution, legality, genuineness,
enforceability, collectibility or sufficiency of this Agreement
or the Related Agreements or any other agreements or any
assignments, certificates, requests, financial statements,
projections, notices, schedules or opinions of counsel executed
and delivered pursuant hereto or thereto, (iii) shall not be
bound to ascertain or inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement or
the Related Agreements on the part of Obligors or of any of the
terms of any such agreement by any party hereto or thereto and
shall have no duty to inspect the property (including the books
and records) of any Obligor, (iv) shall have no obligation
whatsoever to Lenders or to any other Person to assure that the
Collateral exists or is owned by Borrower or another Obligor or
is cared for, protected or insured or that the Liens granted to
Agent herein or in Related Agreements or pursuant hereto or
thereto have been properly or sufficiently or lawfully created,
perfected, protected, enforced, realized upon or are entitled to
any particular priority, and (v) shall incur no liability under
or in respect of this Agreement or the Related Agreements or any
other document by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telegram, cable,
telex, telecopier or similar form of facsimile transmission)
believed by Agent to be genuine and signed or sent by the proper
party. Agent may consult with legal counsel (including counsel
for Borrower), independent public accountants and other experts
selected by Agent and shall not be liable for any action taken or
omitted to be taken in good faith in accordance with the advice
of such counsel, accountants or experts.
10.6 ACTION BY AGENT.
(a) ACTUAL KNOWLEDGE. Agent may assume that no Event
of Default has occurred and is continuing, unless Agent has
actual knowledge of the Event of Default, has received notice
from Borrower or Borrower's independent certified public
accountants stating the nature of the Event of Default, or has
received notice from a Lender stating the nature of the Event of
Default and that
-73-
such Lender considers the Event of Default to have occurred and
to be continuing.
(b) DISCRETION TO ACT. Agent shall have the right to
request instructions from Requisite Lenders by notice to each
Lender. If Agent shall request instructions from Requisite
Lenders with respect to any act or action (including the failure
to act) in connection with this Agreement or any Related
Agreement, Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received
instructions from Requisite Lenders, and Agent shall not incur
liability to any Person by reason of so refraining. Without
limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or
refraining from acting hereunder or under any Related Agreement
in accordance with the instructions of Requisite Lenders. Agent
may give any notice required under SECTION 6 hereof without the
consent of any of Lenders unless otherwise directed by Requisite
Lenders in writing and will, at the direction of Requisite
Lenders, give any such notice required under SECTION 6. Except
for any obligation expressly set forth in this Agreement or the
Related Agreements, Agent may, but shall not be required to,
exercise its discretion to act or not act, except that Agent
shall be required to act or not act upon the instructions of
Requisite Lenders (unless all of Lenders are required to provide
such instructions as provided in SECTION 12.6) and those instruc-
tions shall be binding upon Agent and all Lenders; PROVIDED that
Agent shall not be required to act or not act if to do so would
expose Agent to liability or would be contrary to this Agreement
or any Related Agreements or to applicable law.
10.7 RIGHT TO INDEMNITY. Agent shall be fully
justified in failing or refusing to take any action under this
Agreement or the Related Agreements or in relation hereto or
thereto unless it shall first be indemnified (upon requesting
such indemnification) to its satisfaction by Lenders against any
and all liability and expense which it may incur by reason of
taking or continuing to take any such action. Lenders further
agree to indemnify Agent ratably in accordance with their Pro
Rata Shares for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against Agent in any way
relating to or arising out of this Agreement or the other Related
Agreements or the transactions contemplated hereby or thereby, or
the enforcement of any of the terms hereof or thereof or of any
other documents; provided no such liability, obligation, loss,
damage, penalty, action, judgment, suit, cost, expense or
disbursement results from Agent's gross negligence or willful
misconduct. Each Lender agrees to reimburse Agent in the amount
of its Pro Rata Share of any out-of-pocket expenses for which
Agent is entitled to receive, but has not received, reimbursement
pursuant to this Agreement. The agreements in this SECTION 10.7
shall survive the payment and fulfillment of the Liabilities and
termination of this Agreement.
-74-
10.8 RIGHTS AND REMEDIES TO BE EXERCISED BY AGENT ONLY.
In the event any remedy may be exercised with respect to this
Agreement or the Related Agreements or the Collateral, Agent
shall pursue remedies designated by Requisite Lenders subject to
the proviso set forth in SECTION 10.6(b). Each Lender agrees
that no Lender shall have any right individually (a) to realize
upon the security created by this Agreement or the Related
Agreements, (b) enforce any provision of this Agreement or the
Related Agreements, or (c) make demand under this Agreement or
the Related Agreements; provided, that any Lender that is an
Issuing Bank may make demand upon Borrower as the Issuing Bank
pursuant to SECTIONS 2.2(b) and 2.2(c) and Continental may make
demand upon Borrower pursuant to SECTION 12.4. Without limiting
the foregoing, no Lender shall have any right individually to
take any action or provide any notice in connection with any
Subordinated Debt.
10.9 AGENT'S RESIGNATION. Agent may resign at any time
after giving at least thirty (30) days' prior written notice of
its intention to do so to each Lender and to Borrower. Upon
satisfaction of the foregoing condition, Requisite Lenders shall
have the right to appoint a successor Agent (such appointment to
be subject to the consent of Borrower (which consent of Borrower
shall not be unreasonably withheld or delayed); provided, that
Borrower's consent shall not be required if a Lender is appointed
Agent). If no successor Agent shall have been so appointed and
shall have accepted such appointment within twenty (20) days
after Agent's giving of such notice of resignation, then the
resigning Agent may appoint a successor Agent. After any
resigning Agent's resignation hereunder as Agent, it shall be
discharged from its duties and obligations under this Agreement
but the provisions of this SECTION 10 shall continue to bind
Agent and inure to Agent's benefit as to any actions taken or
omitted to be taken by it while it was Agent hereunder. Upon
appointment of a successor Agent, the term "Agent" shall for all
purposes of this Agreement thereafter mean such successor.
10.10 DISBURSEMENT OF PROCEEDS OF LOANS AND OTHER
ADVANCES. Agent may (and is hereby irrevocably authorized by
Lenders), but shall have no duty to make such other disbursements
and advances as Revolving Loans on behalf of Lenders, including
without limitation the making of advances for the expenditures
described in SECTION 7.4 of this Agreement, which Agent, in its
sole discretion, deems necessary or desirable to preserve or
protect the Collateral, or any portion thereof. Agent's use of
its own checks upon its funds or Agent's transfer of its own
funds, by wire or otherwise, to an account of Borrower or any
other Obligor shall be deemed to be disbursements made by each
Lender under this Agreement and pursuant to the Related
Agreements.
10.11 RELEASE OF COLLATERAL. Each Lender hereby
irrevocably authorizes Agent, at its option and in its
discretion, to release any Lien granted to or held by Agent upon
any Collateral and all guaranties of the Liabilities (i) upon
termination of
-75-
Lenders' obligations to make Loans and payment and satisfaction
of all Loans, Letter of Credit reimbursement obligations and all
other Payment Liabilities and which Agent has been notified in
writing are then due and payable; (ii) constituting Collateral
being sold or disposed of if Borrower certifies to Agent that the
sale or disposition is made in compliance with the terms of this
Agreement (and, absent any actual knowledge of Agent to the
contrary, Agent may rely conclusively on any such certificate,
without further inquiry); (iii) constituting property in which
Borrower or any other Obligor owned no interest at the time the
Lien was granted and at all times thereafter; or (iv) if
approved, authorized or ratified in writing by Agent at the
direction of all Lenders. Upon request by Agent at any time,
each Lender will confirm in writing Agent's authority to release
particular types or items of Collateral pursuant to this SECTION
10.11.
10.12 AGREEMENT TO COOPERATE. Each Lender agrees to
cooperate to the end that the terms and provisions of this
Agreement may be promptly and fully carried out. Lenders also
agree, from time to time, at the request of Agent, to execute and
deliver any and all other agreements, documents or instruments
and to take such other actions, all as may be reasonably
necessary or desirable to effectuate the terms, provisions and
intent of this Agreement and the Related Agreements.
10.13 SHARING OF COLLATERAL. If any Lender shall obtain
any payment (whether voluntary, involuntary, through exercise of
any right of set off, or otherwise) on account of the Liabilities
in excess of the amount to which it is entitled pursuant to this
Agreement, such Lender shall forthwith purchase from the other
Lenders such participations in such other Lenders' claims against
Borrower as shall be necessary to cause such purchasing Lender to
share the excess payment with the other Lenders in accordance
with the provisions of this Agreement; provided, that if all or
any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from such other Lender
shall be rescinded and such other Lenders shall repay to the
purchasing Lender the purchase price to the extent of their
portion of such recovery together with an amount equal to the
share (according to the proportion of (i) the amount of such
other Lenders' required repayment, to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other
amount paid or payable by purchasing Lender in respect of the
total amount recovered.
10.14 LENDERS TO ACT AS AGENTS. If any Collateral or
proceeds thereof at any time comes into the possession or under
the control of any Lender, such Lender shall hold such Collateral
or proceeds thereof as agent for the joint benefit of Lenders,
and will, upon receipt therefor, deliver such Collateral or
proceeds thereof to Agent.
-76-
11. ADDITIONAL PROVISIONS.
Additional provisions are set forth in SUPPLEMENT A.
12. GENERAL.
12.1 BORROWER WAIVER. Except as otherwise provided for
in this Agreement, Borrower waives (a) presentment, demand and
protest and notice of presentment, protest, default, non-payment,
maturity, release, compromise, settlement, one or more extensions
or renewals of any or all commercial paper, accounts, contract
rights, documents, instruments, chattel paper and guaranties at
any time held by Agent or any Lender on which Borrower may in any
way be liable and hereby ratifies and confirms whatever Agent or
any Lender may do in this regard; (b) all rights to notice and a
hearing prior to Agent's or any Lender's taking possession or
control of, or Agent's or any Lender's replevy, attachment or
levy on or of, the Collateral or any bond or security which might
be required by any court prior to allowing Agent or any Lender to
exercise any of Agent's or any Lender's remedies; and (c) the
benefit of all valuation, appraisement and exemption laws.
Borrower acknowledges that it has been advised by counsel of its
choice with respect to this Agreement and the transactions
evidenced by this Agreement.
12.2 POWER OF ATTORNEY. Borrower appoints Agent, or
any Person whom Agent may from time to time designate, as
Borrower's attorney and agent-in-fact with power (which
appointment and power, being coupled with an interest, is
irrevocable until all Payment Liabilities under this Agreement
are paid and performed in full and this Agreement is terminated),
without notice to Borrower, to:
(a) At such time or times hereafter as Agent or
said agent, in its sole and absolute discretion, may
determine in Borrower's or Agent's name (i) endorse
Borrower's name on any checks, notes, drafts or any
other items of payment relating to and/or proceeds of
the Collateral which come into the possession of Agent
or under Agent's control and apply such payment or
proceeds to the Liabilities; (ii) endorse Borrower's
name on any chattel paper, document, instrument,
invoice, freight bill, bill of lading or similar
document or agreement in Agent's possession relating to
Accounts Receivable, Inventory or any other Collateral;
(iii) after the occurrence of an Event of Default, use
the information recorded on or contained in any data
processing equipment and computer hardware and software
to which Borrower has access relating to Accounts
Receivable, Inventory and/or other Collateral; (iv)
after the occurrence of an Event of Default, use
Borrower's stationery and sign the name of Borrower to
verification of Accounts Receivable and notices thereof
to Account Debtors; and (v) if not done by Borrower, do
all acts and things determined by Agent
-77-
to be necessary, to fulfill Borrower's obligations
under this Agreement; and
(b) At such time or times after the occurrence of
an Event of Default, as Agent or said agent, in its
sole and absolute discretion, may determine, in
Borrower's or Agent's name: (i) demand payment of the
Accounts Receivable; (ii) enforce payment of the
Accounts Receivable, by legal proceedings or otherwise;
(iii) exercise all of Borrower's rights and remedies
with respect to the collection of the Accounts
Receivable and other Collateral; (iv) settle, adjust,
compromise, extend or renew the Accounts Receivable;
(v) settle, adjust or compromise any legal proceedings
brought to collect the Accounts Receivable; (vi) if
permitted by applicable law, sell or assign the
Accounts Receivable and/or other Collateral upon such
terms for such amounts and at such time or times as
Agent may deem advisable; (vii) discharge and release
the Accounts Receivable and/or other Collateral; (viii)
prepare, file and sign Borrower's name on any proof of
claim in bankruptcy or similar document against any
Account Debtor; (ix) prepare, file and sign Borrower's
name on any notice of lien, assignment or satisfaction
of lien or similar document in connection with the
Accounts Receivable and/or other Collateral; and (x) do
all acts and things necessary, in Agent's sole and
absolute discretion, to obtain repayment of the
Liabilities and to fulfill Borrower's other obligations
under this Agreement.
12.3 EXPENSES; ATTORNEYS' FEES. Borrower agrees,
whether or not any Loan is made or Letter of Credit is issued
hereunder, to pay upon demand all Attorneys' Fees and all other
reasonable expenses incurred by Agent at any time, including
fees, costs and expenses incurred in connection with Collateral
field audits or other due diligence investigations by Agent and
all Attorneys' Fees and other reasonable expenses incurred by any
Lender after the occurrence of an Event of Default. For purposes
of this Agreement, "Attorneys' Fees" means the reasonable value
of the services (and costs, charges and expenses related thereto)
of the attorneys (and all paralegals and any outside consultants
employed by such attorneys) employed by Agent or any Lender
(including but not limited to attorneys and paralegals who are
employees of Agent or any Lender) from time to time (a) in
connection with the negotiation, preparation, execution,
delivery, administration, syndication, participation, assignment
and enforcement of this Agreement, any Related Agreement, any
Supplemental Documentation and all other documents or instruments
provided for herein or in any thereof or delivered or to be
delivered hereunder or under any thereof or in connection
herewith or with any thereof, (b) to prepare documentation
related to the Loans made and other Liabilities incurred
hereunder, (c) to prepare any amendment to or waiver under this
Agreement or any Related Agreement and any documents or
instruments
-78-
related thereto, (d) to represent Agent or any Lender in any
litigation, contest, dispute, suit or proceeding or to commence,
defend or intervene in any litigation, contest, dispute, suit or
proceeding or to file a petition, complaint, answer, motion or
other pleading, or to take any other action in or with respect
to, any litigation, contest, dispute, suit or proceeding (whether
instituted by Agent or any Lender, Borrower or any other Person
and whether in bankruptcy or otherwise) in any way or respect
relating to the Collateral, this Agreement or any Related
Agreement (other than any litigation, contest, dispute, suit or
proceedings involving a dispute between Agent and any Lender or
between any Lender and any other Lender), or Borrower's or any
other Obligor's or any Subsidiary's affairs, (e) to protect,
collect, lease, sell, take possession of, or liquidate any of the
Collateral, (f) to perfect or attempt to enforce any security
interest in any of the Collateral or to give any advice with
respect to such enforcement and (g) to enforce any of Agent's or
any Lender's rights to collect any of the Liabilities. Agent may
advance all such amounts to Borrower as a Revolving Loan.
Borrower also agrees (y) to indemnify and hold Agent and each
Lender harmless from any loss or expense which may arise or be
created by the acceptance of telephonic or other instructions for
making Loans or issuing Letters of Credit and (z) to pay, and
save Agent and each Lender harmless from all liability for, any
stamp or other taxes which may be payable with respect to the
execution or delivery of this Agreement, or any Related Agreement
or Supplemental Documentation, or the issuance of any Note or of
any other instruments or documents provided for herein or to be
delivered hereunder or in connection herewith. Borrower's
foregoing obligations shall survive any termination of this
Agreement.
12.4 CONTINENTAL'S FEES AND CHARGES. Borrower agrees
to pay Continental on demand by Continental the customary fees
and charges of Continental for maintenance of accounts with
Continental or for providing other services to Borrower
(including fees, costs, and expenses incurred in connection with
Collateral field audits or other due diligence investigations)
and if not so paid, each Lender shall, without regard to any
other provision of this Agreement or any other Related Agreement
or any defense that Borrower may have to its obligation to pay
Continental in connection with such fees and charges, pay
Continental for such Lender's Pro Rata Share of such fees and
charges, and any payments so made by Lenders to Continental shall
be deemed to be Revolving Loans. Each Lender (other than
Continental) acknowledges and agrees that it shall not be
entitled to any of the fees and charges of Continental as
provided in the immediately preceding sentence. Agent may, in
its sole and absolute discretion, provide for such payment by
advancing the amount thereof to Borrower as a Revolving Loan.
12.5 LAWFUL INTEREST. In no contingency or event
whatsoever shall the interest rate charged pursuant to the terms
of this Agreement exceed the highest rate permissible under any
law which a court of competent jurisdiction shall, in a final
deter-
-79-
mination, deem applicable hereto. In the event that such a court
determines that any Lender has received interest hereunder in
excess of the highest applicable rate, such Lender shall promptly
refund its Pro Rata Share of such excess interest to Borrower.
12.6 NO WAIVER BY AGENT OR ANY LENDER; AMENDMENTS. No
failure or delay on the part of Agent or any Lender in the
exercise of any power or right, and no course of dealing between
Borrower and Agent or any Lender shall operate as a waiver of
such power or right, nor shall any single or partial exercise of
any power or right preclude other or further exercise thereof or
the exercise of any other power or right. The remedies provided
for herein are cumulative and not exclusive of any remedies which
may be available to Agent or any Lender at law or in equity. No
notice to or demand on Borrower not required hereunder shall in
any event entitle Borrower to any other or further notice or
demand in similar or other circumstances or constitute a waiver
of the right of Agent or any Lender to any other or further
action in any circumstances without notice or demand. No
amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement or any Related Agreement shall in
any event be effective unless the same shall be in writing and
signed and delivered by Requisite Lenders. Notwithstanding the
foregoing, any amendment, modification, termination, waiver or
consent with respect to any of the following provisions of this
Agreement shall be effective only by a written agreement, signed
by each Lender affected thereby: (a) increase in the amount of
the Maximum Loan Amount of such Lender, (b) reduction of the
principal of, rate or amount of interest on the Revolving Loans
or any fees or charges (including, without limitation, any Letter
of Credit fees or charges) payable to such Lender (other than by
the payment or prepayment thereof), (c) postponement of the date
fixed for any payment of principal of, or interest on, the Loans
or any fees or charges) (including, without limitation, any
Letter of Credit fees or charges) or other amounts payable to
such Lender, (d) change in the aggregate Pro Rata Share of
Lenders which shall be required for Lenders or any of them to
take action hereunder or amend the definition of "REQUISITE
LENDERS," or (e) amendment of this SECTION 12.6. Agent may, but
shall have no obligation to, with the written concurrence of any
Lender, execute amendments, modifications, waivers or consents on
behalf of that Lender. Any waiver of any provision of this
Agreement, and any consent to any departure by Borrower from the
terms of any provision of this Agreement, shall be effective only
in the specific instance and for the specific purpose for which
given.
12.7 TERMINATION OF REVOLVING CREDIT. The Termination
Date and each Lender's commitment to make Loans hereunder may be
extended for successive one (1)-year periods by written agreement
among Borrower and each Lender executed at least ninety (90) days
prior to a scheduled Termination Date. Borrower may terminate
the Revolving Credit at any time upon notice to Agent and payment
in full of the outstanding principal balance of the Loans and all
other Payment Liabilities under this Agreement and the Related
-80-
Agreements, as provided in SECTION 2.1.2. All of Agent's and
each Lender's rights and remedies, the Liens of Agent on the
Collateral, for the benefit of itself and Lenders, and all of
Borrower's duties and obligations under this Agreement shall
survive termination of the Credit extended to Borrower hereunder
until all of the Payment Liabilities hereunder have been finally
paid and performed in full. The termination or cancellation of
the Credit shall not affect or impair the liabilities and
obligations of Borrower or any one or more of the Obligors to
Agent and Lenders or Agent's and each Lender's rights with
respect to any Loans and advances made and other Liabilities
incurred prior to such termination or with respect to the
Collateral. Upon termination of the Revolving Credit and
repayment of the Payment Liabilities, Agent will promptly release
all of its Liens on the Collateral and all guaranties of the
Liabilities.
12.8 NOTICES. Except as otherwise expressly provided
herein, any notice hereunder to Borrower, Agent or any Lender
shall be in writing (including facsimile communication) and shall
be given to Borrower, Agent or such Lender at its address or
facsimile number set forth on the signature pages hereof or at
such other address or facsimile number as Borrower, Agent or such
Lender may, by written notice, designate as its address or
facsimile number for purposes of notices hereunder. All such
notices shall be deemed to be given when transmitted by
facsimile, delivered by courier, personally delivered or, in the
case of notice by mail, three (3) Banking Days following deposit
in the United States mails, properly addressed as herein
provided, with proper postage prepaid; provided, however, that
notice to Agent of Borrower's intent to terminate the Credit
shall not be effective until actually received by Agent.
12.9 ASSIGNMENTS AND PARTICIPATIONS; INFORMATION.
(a) This Agreement may not be assigned by Borrower
without the prior written consent of Agent and Lenders. Whenever
in this Agreement reference is made to any of the parties hereto,
such reference shall be deemed to include, wherever applicable, a
reference to the successors and permitted assigns of Borrower and
the successors and assigns of Agent and each Lender.
(b) Borrower and each Lender hereby agree that on or
after the date hereof, Continental may, in its discretion,
without Borrower's or any other Lender's consent, sell one or
more assignments of portions of its interest in the Credit. Each
sale described in the preceding sentence shall be to a Person or
Persons satisfactory to Continental, in its discretion, and on
such terms and conditions as Continental may determine. No other
Lender may sell any portion of its interest in the Credit without
the consent of Borrower and Agent, which consent will not be
unreasonably withheld.
-81-
(c) Each assignment of an interest hereunder shall be
subject to the following conditions: (i) each assignment shall
be of a constant, and not a varying, ratable percentage of all of
the assigning Lender's rights and obligations under this
Agreement, and the Maximum Loan Amount assigned shall be in a
minimum amount of $5,000,000 and after giving effect to such
assignment no Lender's Maximum Loan Amount shall be less than
$5,000,000 (unless such Lender sells all of its interest in the
Credit), and (ii) the parties to each such assignment shall
execute and deliver to Agent, for its acceptance and recording in
the Register, an Assignment and Acceptance Agreement, with a copy
to Borrower. Upon such execution, delivery, acceptance and
recording in the Register, from and after the effective date
specified in each Assignment and Acceptance Agreement and agreed
to by Agent, (x) the assignee thereunder shall, in addition to
any rights and obligations hereunder held by it immediately prior
to such effective date, if any, have the rights and obligations
hereunder that have been assigned to it pursuant to such
Assignment and Acceptance Agreement and shall, to the fullest
extent permitted by law, have the same rights and benefits
hereunder as if it were an original Lender hereunder and (y) the
assigning Lender shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment
and Acceptance Agreement, relinquish its rights and be released
from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance Agreement covering all or the remaining
portion of such assigning Lender's rights and obligations under
this Agreement, the assigning Lender shall cease to be a party
hereto).
(d) Agent shall maintain a copy of each Assignment and
Acceptance Agreement delivered to and accepted by it and a
register (the "Register") for the recordation of the names and
addresses of Lenders and the Maximum Loan Amount and principal
amount of the Loans owing to each Lender from time to time. The
entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Agent and Lenders
may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by Borrower or any
Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance
Agreement executed by the assigning Lender and the assignee and a
processing and recordation fee of $2,500 (payable by the
assigning Lender or the assignee, as shall be agreed between
them), Agent shall, if such Assignment and Acceptance Agreement
has been completed and is in compliance with this Agreement and
in substantially the form of EXHIBIT D and Agent has consented to
the assignment evidenced thereby, (i) accept such Assignment and
Acceptance Agreement, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to
Borrower.
-82-
(f) Each Lender may sell participations to one or more
other financial institutions in or to all or a portion of its
rights and obligations under and in respect of any and all
facilities under this Agreement; PROVIDED, HOWEVER, that (i) such
Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii)
Borrower, Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and (iv)
such participant's rights to agree or to restrict such Lender's
ability to agree to the modification, waiver or release of any of
the terms of this Agreement or the Related Agreements or to the
release of any Collateral covered by this Agreement or the
Related Agreements, to consent to any action or failure to act by
any party to this Agreement or any of the Related Agreements, or
to exercise or refrain from exercising any powers or rights which
any Lender may have under or in respect of this Agreement or the
Related Agreements or any Collateral, shall be limited to the
right to consent to (A) an increase in the Maximum Loan Amount of
Lender from whom such participant purchased a participation, (B)
reduction of the principal of, or rate or amount of interest on
the Loans subject to such participation (other than by the
payment or prepayment thereof) or (C) postponement of any date
fixed for any payment of principal of, or interest on, the Loans
subject to such participation.
(g) Any Lender may, in connection with any assignment
or participation or proposed assignment or participation pursuant
to this SECTION 12.9, disclose to the assignee or participant or
proposed assignee or participant, any information relating to
Borrower or its Subsidiaries furnished to such Lender by or on
behalf of Borrower; PROVIDED that, prior to any such disclosure,
such assignee or participant, or proposed assignee or
participant, shall agree to preserve the confidentiality of any
confidential information described therein and such Lender shall
notify Borrower of the assignee or participant, or proposed
assignee or participant.
(h) Anything in this Agreement to the contrary
notwithstanding, in the case of any participation, all amounts
payable by Borrower under this Agreement or the Related
Agreements shall be calculated and made in the manner and to the
parties required hereby as if no such participation had been
sold.
(i) Agent agrees to promptly notify Borrower of each
sale of a participation or permitted assignment hereunder.
Borrower agrees to use its best efforts to assist Lenders in
their efforts to sell assignments and participations hereunder.
In addition, Borrower agrees to execute new Notes in favor of
each of the selling and purchasing Lender, upon each sale of an
assignment hereunder, provided that the existing Notes in favor
of the selling Lender are simultaneously therewith returned to
Borrower.
-83-
12.10 SEVERABILITY. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
12.11 SUCCESSORS. This Agreement shall be binding upon
each of Borrower, Agent and each Lender and their respective
successors and permitted assigns, and shall inure to the benefit
of each of Borrower, Agent and each Lender and their respective
successors and permitted assigns.
12.12 CONSTRUCTION. Borrower acknowledges that this
Agreement shall not be binding upon Agent or any Lender or become
effective until and unless accepted by Agent or such Lender, as
applicable, in writing. If so accepted by Agent or any Lender,
this Agreement and the Related Agreements and Supplemental
Documents shall, unless otherwise expressly provided therein, be
deemed to have been negotiated and entered into in, and shall be
governed and controlled by the laws of, the State of Illinois as
to interpretation, enforcement, validity, construction, effect,
choice of law, and in all other respects, including but not
limited to the legality of the interest rate and other charges,
but excluding perfection of security interests and liens which
shall be governed and controlled by the laws of the relevant
jurisdiction.
12.13 CONSENT TO JURISDICTION. To induce Agent and each
Lender to accept this Agreement, Borrower irrevocably agrees
that, subject to Agent's sole and absolute election, ALL ACTIONS
OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR
FROM OR RELATED TO THIS AGREEMENT, THE RELATED AGREEMENTS, OR THE
SUPPLEMENTAL DOCUMENTATION OR THE COLLATERAL SHALL BE LITIGATED
IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF
ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN
SAID CITY AND STATE AND WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON BORROWER, AND AGREES THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO BORROWER AT
THE ADDRESS STATED ON THE SIGNATURE PAGE HEREOF AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.
12.14 SUBSIDIARY REFERENCE. Any reference herein to a
Subsidiary or Subsidiaries of Borrower, and any financial defini-
tion, ratio, restriction or other provision of this Agreement
which is stated to be applicable to "Borrower and the
Subsidiaries" or which is to be determined on a "consolidated" or
"consolidating" basis, shall apply only to the extent Borrower
has any Subsidiaries and, where applicable, to the extent any
such Subsidiaries are consolidated with Borrower for financial
reporting purposes.
12.15 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH
LENDER EACH WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
-84-
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS
AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (b) ARISING FROM
ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized as of the date first written above.
EMPIRE GAS CORPORATION
By__________________________________
Title_____________________________
Address: 1700 South Jefferson
Street
Lebanon, Missouri 65536
Telecopier Number: (___) ___-____
Attention: ____________
CONTINENTAL BANK N.A.
By__________________________________
Title_____________________________
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopier Number: (312) 828-6647
Attention: Business Credit Group
Maximum Loan Amount: $15,000,000
-85-
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS:
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Accountant's Letter
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance Agreement
SCHEDULES:
Schedule 4.1 Schedule of Tradenames, State of Incorporation &
Qualification
Schedule 4.7 Insurance Summary
Schedule 4.8 Schedule of Litigation and Contingent Liabilities
Schedule 4.9 Schedule of Liens
Schedule 4.10 Schedule of Subsidiaries
Schedule 4.11 Schedule of Partnerships and Joint Ventures
Schedule 4.12 Schedule of Business and Collateral Locations
Schedule 4.16 Schedule of Patents, Trademarks and Copyrights
Schedule 4.18 Schedule of Labor Matters
Schedule 4.19 Schedule of Contingent Employee Benefit Plan
Liabilities
Schedule 4.21 Schedule of Noncompliance
Schedule 4.22 Schedule of Proposed Tax Assessments
Schedule 4.25 Schedule of Environmental Matters
Schedule 4.27 Schedule of Capitalized Lease Obligations
Schedule 5.15 Schedule of Indebtedness
Schedule 5.18 Schedule of Investments
SUPPLEMENT A
to
LOAN AND SECURITY AGREEMENT
Dated as of June __, 1994 among
Empire Gas Corporation,
Continental Bank N.A., as Agent and a Lender,
and the other Lenders Party Thereto
1. LOAN AGREEMENT REFERENCE. This Supplement A, as it may be amended or
modified from time to time, is a part of the Loan and Security Agreement dated
as of June __, 1994 among Borrower, Agent and Lenders (together with all
amendments, modifications and supplements thereto, the "Loan Agreement"). Terms
used herein and not otherwise defined shall have the meanings ascribed to them
in the Loan Agreement.
2. REVOLVING CREDIT AMOUNT; BORROWING BASE.
2.1 REVOLVING CREDIT AMOUNT. The maximum amount of Revolving Loans
which Lenders will make available to Borrower (such amount is herein called the
"Revolving Credit Amount") is $15,000,000.
2.2 BORROWING BASE. The term "Borrowing Base," as used herein, shall
mean:
(i) an amount equal to up to 85% of the net
amount (after deduction of such reserves and allowances
as Agent deems proper and necessary in its reasonable
judgment) of Eligible Accounts Receivable ("Accounts
Receivable Availability"); PLUS
(ii) an amount equal to the least of (a)
$8,000,000, (b) 150% of Accounts Receivable
Availability and (c) up to 60% (after deduction of such
reserves and allowances as Agent deems proper and
necessary in its reasonable judgment) of Eligible
Inventory; PLUS
(iii) during the period commencing on August 1, 1994 and ending
on January 31, 1995, $3,000,000; PLUS
(iv) during the period commencing on August 1, 1995 and ending on
January 31, 1996, $1,500,000.
2.3 AGENT'S AND LENDERS' RIGHTS. Borrower agrees that nothing
contained in SUPPLEMENT A (i) shall be construed as Agent's or any Lender's
agreement to resort or look to a particular type or item of Collateral as
security for any specific Loan or portion of the Liabilities or advance or in
any way limit Agent's or any Lender's right to resort to any or all of the
Collateral as security for any of the Liabilities, (ii) shall be deemed to limit
or reduce any Lien upon any portion of the Collateral or other security for the
Liabilities or (iii) shall supersede SECTION 2.9 of the Loan Agreement.
3. INTEREST.
3.1 LOANS.
3.1.1 REVOLVING LOANS.
(a) INTEREST TO MATURITY. The unpaid principal balance of the Revolving
Loans (other than Overdraft Loans and Over Advances) shall bear interest to
maturity at a per annum rate equal to the Reference Rate in effect from time to
time plus 1.00% (the "Adjusted Reference Rate"); provided, that pursuant to the
provisions of SECTION 3.1.1(c), below, from time to time Borrower may elect to
have all or any portion of the Revolving Loans bear interest at the LIBOR Rate.
(b) DEFAULT RATE. After the occurrence of any Event of Default, at the
option of Requisite Lenders, the entire unpaid principal balance of the
Revolving Loans shall bear interest until paid at a rate per annum equal to the
greater of (i) the applicable interest rate from time to time in effect plus
2.00% and (ii) 2.00% above the applicable interest rate in effect at the time of
such Event of Default.
(c) LIBOR RATE OPTION. Borrower shall have the right, from time to time,
to designate all or any portion of the Revolving Loans as bearing interest at
the then applicable LIBOR Rate, by means of a written notice to Agent specifying
(i) the amount of such Revolving Loans that will bear interest at a LIBOR Rate
(provided, that such LIBOR Rate Loans shall be in a minimum amount of
______________ _______________________ Dollars ($___________)); (ii) the date on
which the applicable Interest Rate Period shall begin; and (iii) the Interest
Rate Period applicable thereto. All designations of Revolving Loans as LIBOR
Rate Loans must be received by Agent not later than 10:00 a.m., Chicago time,
three (3) Banking Days prior to the date the applicable Interest Rate Period is
to begin (or is to be continued). Notwithstanding the foregoing, (x) all
undesignated portions of the Revolving Loans shall bear interest at the Adjusted
Reference Rate, (y) no Interest Rate Period may commence at any time that an
Event of Default or an Unmatured Event of Default is in existence, notwith-
standing a contrary designation by Borrower, and (z) in no event may more than
____________ (____) LIBOR Rate Loans having different Interest Rate Periods be
outstanding at any one time. Each designation by Borrower of a LIBOR Rate Loan
shall be irrevocable.
3.1.2 OVERDRAFT LOANS; OVER ADVANCES. Overdraft Loans and Over
Advances shall bear interest at the
-2-
rate(s) determined pursuant to SECTION 2.7 or SECTION 2.8 of the Loan
Agreement, as applicable.
3.2 COMPUTATION. Interest shall be calculated on the basis of a year
consisting of 360 days and paid for actual days elapsed; provided, that the
computation of interest on LIBOR Rate Loans shall include the date on which the
applicable Interest Rate Period began, but shall exclude the last day of the
applicable Interest Rate Period. LIBOR Rate Loans not repaid on the last day of
the Interest Rate Period applicable thereto shall be continued or converted into
Revolving Loans bearing interest at the Adjusted Reference Rate, as applicable,
and bear interest as provided herein, from and including the last day of such
Interest Rate Period. Changes in any interest rate provided for herein which
are due to changes in the Reference Rate shall take effect on the date of the
change in the Reference Rate.
3.3 PAYMENT. Until maturity, interest on the Loans shall be payable
on the 28th day of each month, commencing on July 28, 1994, and at maturity;
provided, that interest on LIBOR Rate Loans shall be payable in arrears on the
last day of the Interest Rate Period applicable thereto and at maturity. After
maturity, whether by acceleration or otherwise, accrued interest shall be
payable on demand.
3.4 FUNDING INDEMNIFICATION. If any payment of a LIBOR Rate Loan
occurs on a date which is not the last day of the applicable Interest Rate
Period, whether because of acceleration, prepayment or otherwise, Borrower will
indemnify each Lender and Agent 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 Loan. Agent shall deliver
a written statement as to the amount due, if any, under this Section, after
consultation with each Lender so affected. Such written statement shall set
forth in reasonable detail the calculations upon which Agent and each Lender
determined such amount and shall be final, conclusive and binding on Borrower in
the absence of manifest error. Determination of amounts payable under this
Section shall be calculated as though each Lender funded its LIBOR Rate Loans
through the purchase of a deposit of the type and maturity corresponding to the
LIBOR Rate Loan and applicable Interest Rate Period bearing interest at the
LIBOR Base Rate less two and fifty hundredths percent (2.50%), as applicable,
whether or not the Lender actually funded the Loan in that manner. The amount
specified in the written statement shall be payable on demand after receipt by
Borrower of the written statement.
3.5 AVAILABILITY OF INTEREST RATE OPTIONS. If any Lender determines
that maintenance of any of its LIBOR Rate Loans would violate any applicable
law, rule, regulation or directive, whether or not having the force of law, the
Lender shall immediately notify Agent thereof and Agent shall suspend the
availability of such LIBOR Rate Loans and require any LIBOR Rate Loans
-3-
outstanding and so affected to be repaid; or if any Lender determines that (i)
deposits of a type or maturity appropriate to match fund LIBOR Rate Loans are
not available, (ii) the LIBOR Rate does not accurately reflect the cost of
making such Loans, or (iii) the Lender's ability to make or maintain LIBOR
Rate Loans has been materially adversely affected by the occurrence of any
event after the date hereof, then Lender shall immediately notify Agent
thereof and Agent shall suspend the availability of the LIBOR Rate Loans, as
applicable, after the date of any such determination.
3.6 LENDERS' OBLIGATION TO MITIGATE. Agent and each Lender agrees
that if it becomes aware of either (i) the occurrence of an event or the
existence of a condition described in SECTION 9.3 of the Loan Agreement or
SECTION 3.5 hereof that would cause Agent or such Lender to make a determination
of the nature described therein, or (ii) the imposition, assessment or
collection of any taxes on or in respect of any Loan or Letter of Credit, Agent
or such Lender will, to the extent consistent with its internal policies, use
reasonable efforts to issue, make, fund or maintain the affected Letters of
Credit or Loans through another lending office of such Agent or Lender, if any,
if, as a result thereof, the additional amounts that would otherwise be required
to be paid to Agent or such Lender in respect thereof, would be reduced, or
LIBOR Rate Loans could be maintained, as the case may be, and if, as determined
by Agent or such Lender in its reasonable discretion, the issuing, making,
funding or maintaining of such Letters of Credit or Loans through such other
lending office would not adversely affect Agent or such Lender or such Letters
of Credit or Loans. Borrower hereby agrees to pay all reasonable expenses
incurred by Agent or any Lender in using another lending office pursuant to this
SECTION 3.6.
4. ADDITIONAL ELIGIBLE ACCOUNT RECEIVABLE REQUIREMENTS. Each Account
Receivable identified by Borrower as an Eligible Account Receivable must not be
unpaid on the date that is 120 days after the applicable invoice dates. If
invoices representing 25% or more of the unpaid net amount of all Accounts
Receivable from any one Account Debtor are unpaid more than 120 days after the
applicable invoice dates, then all Accounts Receivable relating to such Account
Debtor shall cease to be Eligible Accounts Receivable.
5. INTENTIONALLY OMITTED.
6. ADDITIONAL COVENANTS. From the Closing Date and thereafter until all of
Borrower's Liabilities under the Loan Agreement are paid in full, Borrower
agrees that, unless Requisite Lenders otherwise consent in writing:
6.1 TANGIBLE NET WORTH. Borrower will not permit Tangible Net Worth
to be less than the following amounts on any date set forth below:
-4-
DATE TANGIBLE NET WORTH
[ ] [ ]
6.2 CAPITAL EXPENDITURES. Borrower will not purchase or otherwise
acquire (including, without limitation, acquisition by way of Capitalized
Lease), or commit to purchase or otherwise acquire, or permit its Subsidiaries
to purchase or otherwise acquire or commit to purchase or otherwise acquire, any
fixed asset if, after giving effect to such purchase or other acquisition, the
aggregate cost of all fixed assets purchased or otherwise acquired by Borrower
or its Subsidiaries in any period set forth below would exceed the following
amounts during the corresponding periods:
PERIOD CAPITAL EXPENDITURES
[ ] [ ]
6.3 INTEREST COVERAGE RATIO. Borrower will not permit the ratio
("Interest Coverage Ratio") of (a) net earnings before interest expense and
income tax expense for any period set forth below, to (b) interest expense in
respect of Indebtedness for such period, each determined for Borrower and its
Subsidiaries on a consolidated basis, and in accordance with GAAP, to be less
than the following for the corresponding period:
PERIOD INTEREST COVERAGE
[ ] [ ]
6.4 INDEBTEDNESS TO TANGIBLE NET WORTH RATIO. Borrower will not
permit the ratio of (a) the aggregate amount of Indebtedness on any date set
forth below, to (b) Tangible Net Worth as of such date, each determined for
Borrower and its Subsidiaries on a consolidated basis, and, except as otherwise
provided in the definition of the term "Tangible Net Worth," in accordance with
GAAP, to be greater than the following on the corresponding dates:
-5-
INDEBTEDNESS
TO
TANGIBLE NET
PERIOD WORTH
[ ] [ ]
6.5 FIXED CHARGE COVERAGE RATIO. Borrower will not permit the
ratio of (a) the sum of (i) net earnings for any period set forth below, PLUS
(ii) depreciation and amortization for such period, PLUS (iii) interest expense
in respect of Indebtedness for such period, MINUS (iv) capital expenditures made
during such period to (b) the aggregate amount of scheduled principal and
interest payments in respect of Indebtedness required during such period, all
determined for Borrower and its Subsidiaries on a consolidated basis and in
accordance with GAAP, to be less then the following for the corresponding
period:
PERIOD FIXED CHARGE
[ ] [ ]
For purposes of SECTION 6.3, (i) net earnings shall not include any
gains or losses on the sale or other disposition of Investments or fixed assets
or any other extraordinary items of income, and (ii) interest expense shall
include, without limitation, implicit interest expense on Capitalized Leases.
Borrower's Initials_______
Agent's Initials_________
Date: June __, 1994
-6-