Exhibit 99.2 Credit Agreement
CREDIT AGREEMENT
DATED AS OF MARCH 7, 2003
AMONG
MATRIX SERVICE COMPANY,
THE LENDERS,
BANK ONE, OKLAHOMA, NA,
AS AGENT,
WELLS FARGO BANK TEXAS, N.A.,
AS CO-AGENT
AND
BANC ONE CAPITAL MARKETS, INC.
AS LEAD ARRANGER AND SOLE BOOK RUNNER
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS....................................................1
ARTICLE II. THE CREDITS...................................................20
2.1. Commitment....................................................20
2.1.1 Revolving Credit Commitment...........................20
2.1.2 Term Loan Facility....................................21
2.1.3 Swing Line Facility...................................21
2.2. Required Payments; Termination................................21
2.3. Ratable Loans.................................................21
2.4. Types of Advances.............................................21
2.5. Commitment Fee; Reductions in Aggregate Commitment............21
2.6. Minimum Amount of Each Advance................................22
2.7. Prepayments...................................................22
2.7.1 Optional Prepayments..................................22
2.7.2 Mandatory Prepayments.................................22
2.7.3 Application of Mandatory Prepayments..................23
2.8. Method of Selecting Types and Interest Periods for
New Advances...............................................23
2.9. Conversion and Continuation of Outstanding Advances...........23
2.10. Changes in Interest Rate, etc.................................24
2.11. Rates Applicable After Default................................24
2.12. Method of Payment.............................................25
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2.13. Noteless Agreement; Evidence of Indebtedness..................25
2.14. Telephonic Notices............................................26
2.15. Interest Payment Dates; Interest and Fee Basis................26
2.16. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions......................................26
2.17. Lending Installations.........................................27
2.18. Non-Receipt of Funds by the Agent.............................27
2.19. Facility LCs..................................................27
2.19.1 Issuance..............................................27
2.19.2 Participations........................................27
2.19.3 Notice................................................28
2.19.4 LC Fees...............................................28
2.19.5 Administration; Reimbursement by Lenders..............28
2.19.6 Reimbursement by Borrower.............................29
2.19.7 Obligations Absolute..................................29
2.19.8 Actions of LC Issuer..................................30
2.19.9 Indemnification.......................................30
2.19.10 Lender's Indemnification..............................31
2.19.11 Facility LC Collateral Account........................31
2.19.12 Rights as a Lender....................................31
2.20. Swing Line Loans..............................................31
2.20.1 Amount of Swing Line Loans............................31
2.20.2 Borrowing Notice......................................32
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2.20.3 Making of Swing Line Loans............................32
2.20.4 Repayment of Swing Line Loans.........................32
2.21. Extension of Facility Termination Date........................33
2.22. Replacement of Lender.........................................33
2.23. Limitation of Interest........................................34
ARTICLE III. YIELD PROTECTION; TAXES.......................................35
3.1. Yield Protection..............................................35
3.2. Changes in Capital Adequacy Regulations.......................36
3.3. Availability of Types of Advances.............................36
3.4. Funding Indemnification.......................................36
3.5. Taxes.........................................................37
3.6. Lender Statements; Survival of Indemnity......................38
ARTICLE IV. CONDITIONS PRECEDENT..........................................39
4.1. Initial Advance...............................................39
4.2. Each Credit Extension.........................................41
ARTICLE V. REPRESENTATIONS AND WARRANTIES................................41
5.1. Existence and Standing........................................42
5.2. Authorization and Validity....................................42
5.3. No Conflict; Government Consent...............................42
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5.4. Financial Statements..........................................42
5.5. Material Adverse Change.......................................43
5.6. Taxes.........................................................43
5.7. Litigation and Contingent Obligations.........................43
5.8. Subsidiaries..................................................43
5.9. ERISA.........................................................43
5.10. Accuracy of Information.......................................43
5.11. Regulation U..................................................44
5.12. Material Agreements...........................................44
5.13. Compliance With Laws..........................................44
5.14. Ownership of Properties.......................................44
5.15. Plan Assets; Prohibited Transactions..........................44
5.16. Environmental Matters.........................................44
5.17. Investment Company Act........................................45
5.18. Public Utility Holding Company Act............................45
5.19. Subordinated Indebtedness.....................................45
5.20. Post-Retirement Benefits......................................45
5.21. Insurance.....................................................45
5.22. Solvency......................................................45
5.23. Payment and Performance Bonds.................................46
5.24. Acquisition...................................................46
ARTICLE VI. COVENANTS.....................................................46
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6.1. Financial and Other Reporting.................................46
6.2. Use of Proceeds...............................................48
6.3. Notice of Default.............................................48
6.4. Conduct of Business...........................................48
6.5. Taxes.........................................................48
6.6. Insurance.....................................................48
6.7. Compliance with Laws..........................................48
6.8. Maintenance of Properties.....................................48
6.9. Inspection....................................................49
6.10. Dividends.....................................................49
6.11. Indebtedness..................................................49
6.12. Merger........................................................49
6.13. Sale of Assets................................................49
6.14. Investments and Acquisitions..................................50
6.15. Liens.........................................................50
6.16. Capital Expenditures..........................................51
6.17. Rentals.......................................................51
6.18. Affiliates....................................................51
6.19. Amendments to Agreements......................................51
6.20. Subordinated Indebtedness.................................... 51
6.21. Operating Leases............................................. 51
6.22. Sale of Accounts..............................................52
6.23. Sale and Leaseback Transactions and other Off-Balance
Sheet Liabilities..........................................52
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6.24. Contingent Obligations........................................52
6.25. Letters of Credit.............................................52
6.26. Financial Contracts...........................................52
6.27. Financial Covenants...........................................52
6.27.1. Fixed Charge Coverage Ratio...........................52
6.27.2. Leverage Ratio........................................52
6.27.3. Minimum Net Worth.....................................53
ARTICLE VII. DEFAULTS......................................................53
ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES...............56
8.1. Acceleration..................................................56
8.2. Amendments....................................................57
8.3. Preservation of Rights........................................58
ARTICLE IX. GENERAL PROVISIONS............................................58
9.1. Survival of Representations...................................58
9.2. Governmental Regulation.......................................58
9.3. Headings......................................................59
9.4. Entire Agreement..............................................59
9.5. Several Obligations; Benefits of this Agreement...............59
9.6. Expenses; Indemnification.....................................59
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9.7. Numbers of Documents..........................................60
9.8. Accounting....................................................60
9.9. Severability of Provisions....................................60
9.10. Nonliability of Lenders.......................................60
9.11. Confidentiality...............................................61
9.12. Nonreliance...................................................61
9.13. Disclosure....................................................61
ARTICLE X. THE AGENT.....................................................61
10.1. Appointment; Nature of Relationship...........................61
10.2. Powers........................................................62
10.3. General Immunity..............................................62
10.4. No Responsibility for Loans, Recitals, etc....................62
10.5. Action on Instructions of Lenders.............................62
10.6. Employment of Agents and Counsel..............................63
10.7. Reliance on Documents; Counsel................................63
10.8. Agent's Reimbursement and Indemnification.....................63
10.9. Notice of Default.............................................63
10.10. Rights as a Lender............................................64
10.11. Lender Credit Decision........................................64
10.12. Successor Agent...............................................64
10.13. Agent and Arranger Fees.......................................65
10.14. Delegation to Affiliates......................................65
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10.15. Execution of Collateral Documents.............................65
10.16. Collateral Releases...........................................65
ARTICLE XI. SETOFF; RATABLE PAYMENTS......................................65
11.1. Setoff........................................................65
11.2. Ratable Payments..............................................65
ARTICLE XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.............66
12.1. Successors and Assigns........................................66
12.2. Participations................................................66
12.2.1. Permitted Participants; Effect........................66
12.2.2. Voting Rights.........................................67
12.2.3. Benefit of Certain Provisions.........................67
12.3. Assignments...................................................67
12.3.1. Permitted Assignments.................................67
12.3.2. Effect; Effective Date................................68
12.3.3. Register..............................................68
12.4. Dissemination of Information..................................69
12.5. Tax Treatment.................................................69
ARTICLE XIII. NOTICES.......................................................69
13.1. Notices.......................................................69
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13.2. Change of Address.............................................69
ARTICLE XIV. COUNTERPARTS..................................................69
ARTICLE XV. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL..70
15.1. CHOICE OF LAW.................................................70
15.2. CONSENT TO JURISDICTION.......................................70
15.3. WAIVER OF JURY TRIAL..........................................70
PRICING SCHEDULE (Section 2.10; Section 2.19.4; Article I)....................77
EXHIBIT A. FORM OF OPINION (Section 4.1(v))..............................78
EXHIBIT B. COMPLIANCE CERTIFICATE (Section 4.2; Section 6.1(iii))........81
EXHIBIT C. ASSIGNMENT AND ASSUMPTION AGREEMENT (Section 2.22;
Section 12.3.1; Section 12.3.2)............................86
EXHIBIT D. LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
(Section 4.1(vii)).........................................93
EXHIBIT E-1. REVOLVING NOTE (Section 2.13(iv)).............................94
EXHIBIT E-2. TERM NOTE (Section 2.13(iv))..................................96
EXHIBIT E-3. SWING LINE NOTE (Section 2.13(iv))............................98
EXHIBIT F. SUBSIDIARY GUARANTY (Article I)).............................100
EXHIBIT G. PLEDGE AND SECURITY AGREEMENT (Article I)....................124
EXHIBIT H. BORROWING BASE CERTIFICATE (Article I).......................174
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EXHIBIT I. UCC-1 FINANCING STATEMENT (Article I)........................176
EXHIBIT J. MORTGAGED PROPERTIES SECURITY INSTRUMENTS
(Article I)...............................................177
SCHEDULE 1. HAKE GROUP (Article I).......................................178
SCHEDULE 2. MORTGAGED PROPERTIES
(Section 5.14; Section 6.15(v); ArticleI).................179
SCHEDULE 3. TITLE INSURANCE AMOUNT (Article I)...........................188
SCHEDULE 4. UCC LIEN SEARCH (Article I)..................................190
SCHEDULE 5. VEHICLES (Article I).........................................191
SCHEDULE 6. VEHICLE TITLES (Article I)...................................192
SCHEDULE 7. EXISTENCE AND STANDING (Section 5.1).........................193
SCHEDULE 8. DISSOLVING SUBSIDIARIES (Section 5.1)........................194
SCHEDULE 9. LITIGATION (Section 5.7; Section 7.16).......................195
SCHEDULE 10. SUBSIDIARIES (Section 5.8; Section 6.14(ii)).................198
SCHEDULE 11. ENVIRONMENTAL DISCLOSURES (Section 5.16).....................199
SCHEDULE 12. PAYMENT AND PERFORMANCE BONDS (Section 5.23).................200
SCHEDULE 13. INDEBTEDNESS (Section 6.11(ii)...............................201
SCHEDULE 14. HAKE GROUP CONSOLIDATED EBITDA CALCULATIONS (Article I).....202
SCHEDULE 15. SALE PROPERTIES (Section 6.13(ii))...........................203
SCHEDULE 16. OPERATING LEASES (Section 6.21)..............................204
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CREDIT AGREEMENT
This Agreement, dated as of March 7, 2003, is among MATRIX SERVICE COMPANY,
the Lenders (as defined herein) and BANK ONE, OKLAHOMA, NA, a national banking
association having its principal office in Oklahoma, as LC Issuer and as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Account" shall have the meaning given in the Security Agreement.
"Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any firm, corporation or limited liability company, or division
thereof, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the outstanding ownership interests of a partnership or limited
liability company.
"Advance" means a borrowing hereunder, (i) made by some or all of the
Lenders on the same Borrowing Date, or (ii) converted or continued by the
Lenders on the same date of conversion or continuation, consisting, in either
case, of the aggregate amount of the several Loans of the same Type and, in the
case of Eurodollar Loans, for the same Interest Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns
twenty-five percent (25%) or more of any class of voting securities (or other
ownership interests) of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock, by
contract or otherwise.
"Agent" means Bank One, Oklahoma, NA in its capacity as contractual
representative of the Lenders pursuant to Article X, and not in its individual
capacity as a Lender, and any successor Agent appointed pursuant to Article X.
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"Aggregate Commitment" means the aggregate of the Revolving Credit
Commitments and the Term Loan Commitments of all the Lenders, as reduced from
time to time pursuant to the terms hereof.
"Aggregate Outstanding Credit Exposure" means, at any time, the aggregate
of the Outstanding Credit Exposure of all the Lenders.
"Agreement" means this Credit Agreement, as it may be amended or modified
and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4.
"Alternate Base Rate" or "ABR" means, for any day, a rate of interest per
annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of
the Federal Funds Effective Rate for such day plus 1/2% per annum.
"Applicable Fee Rate" means, at any time, the percentage rate per annum at
which Commitment Fees are accruing on the unused portion of the Aggregate
Commitment at such time as set forth in the Pricing Schedule.
"Applicable Margin" means, with respect to Advances of any Type at any
time, the percentage rate per annum which is applicable at such time with
respect to Advances of such Type as set forth in the Pricing Schedule.
"Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.
"Arranger" means Banc One Capital Markets, Inc., and its successors, in its
capacity as Lead Arranger and Sole Book Runner.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means, as to Borrower or any Subsidiary, (i) the
President or any Vice President, or (ii) any other officer, manager or general
partner designated as an authorized officer of such party in a certificate
delivered pursuant to Section 4.1, or (iii) who is otherwise designated as such
in a written certificate delivered to Agent.
"Available Aggregate Commitment" means, at any time, the Aggregate
Commitment then in effect minus the Aggregate Outstanding Credit Exposure at
such time.
"Borrower" means Matrix Service Company, a Delaware corporation, and its
successors and assigns.
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"Borrowing Base" means eighty percent (80%) of Consolidated Eligible
Accounts Receivable.
"Borrowing Base Certificate" means a certificate in form and content as set
forth on Exhibit "H" hereto, executed by each Grantor to a Security Agreement
dated as of the applicable Borrowing Base Determination Date.
"Borrowing Base Determination Date" means the last day of each calendar
month.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Oklahoma and New York City for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Oklahoma for the conduct of substantially all of their commercial
lending activities and interbank wire transfers can be made on the Fedwire
system.
"Capital Expenditures" means, without duplication, any expenditures for any
purchase or other acquisition of any asset which would be classified as a fixed
or capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with Agreement Accounting Principles
excluding (i) the cost of assets acquired with Capitalized Lease Obligations,
(ii) expenditures of insurance proceeds to rebuild or replace any asset after a
casualty loss and (iii) leasehold improvement expenditures for which the
Borrower or a Subsidiary is reimbursed promptly by the lessor.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Equivalent Investments" means (i) short-term obligations of, or fully
guaranteed by, the United States of America, (ii) commercial paper rated A-1 or
better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts
maintained in the ordinary course of business, and (iv) certificates of deposit
issued by and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000; provided in each case that
the same provides for payment of both principal and interest (and not principal
alone or
3
interest alone) and is not subject to any contingency regarding the payment of
principal or interest.
"Change in Control" means (i) the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 25% or more of the outstanding shares of voting stock of the
Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral Documents" means, collectively, the Security Agreements,
Mortgaged Properties Security Instruments and the Guaranty Agreements.
"Collateral Shortfall Amount" is defined in Section 8.1.
"Commitment" means, for each Lender, the obligation of such Lender to make
Term Loans and Revolving Loans to, and participate in Swing Line Loans and
Facility LCs issued upon the application of, the Borrower in an aggregate amount
not exceeding the amount set forth opposite its signature below, as it may be
modified as a result of any assignment that has become effective pursuant to
Section 12.3.2 or as otherwise modified from time to time pursuant to the terms
hereof.
"Consolidated Capital Expenditures" means, with reference to any period,
the Capital Expenditures of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Eligible Accounts Receivable" means as to the Borrower and
each Subsidiary a party to a Security Agreement ("Grantor"), without duplication
an Account owing by an account debtor ("Account Debtor") to the Grantor which
meets the following requirements at the time it comes into existence and
continues to meet the same until it is collected in full:
(i) it is genuine and in all respects what it purports to be;
(ii) it is created in the ordinary course of the Grantor's business and
arises from: (a) (i) the bona fide performance of services by the Grantor and
such services have been fully performed, acknowledged and accepted by the
Account Debtor or (ii) if not fully performed, other Accounts identified on the
Borrower's balance sheet, reduced to the extent billings in excess of costs and
estimated earnings under uncompleted contracts approved and accepted by the
Account Debtor exceeds costs and estimated earnings under uncompleted contracts;
(b) the bona fide sale or lease of goods by the Grantor, and such goods have
been completed in accordance with Account Debtor's specifications (if any) and
delivered to and accepted by the Account Debtor, and the Grantor has possession
of, or has delivered to the Agent at the Agent's request, shipping and delivery
receipts evidencing such shipment, and, in the case of clauses (a) and (b) of
this clause (ii), no part of such Account which represents interest or
incidental service charges shall be considered an Eligible Account;
4
(iii) if the Account arises because of the sale of goods, such goods have
been shipped or delivered on open account and on an absolute sale basis and not
on consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return agreement and no material part of such goods has been
returned, repossessed, rejected, lost or damaged, provided that such goods may
have been shipped on a C.O.D. basis (except to the extent that the Agent objects
to the Account Debtor in question);
(iv) it is not evidenced by chattel paper or an instrument of any kind;
(v) it is evidenced by an invoice rendered to the Account Debtor thereunder
which invoice is in form reasonably acceptable to the Agent and was sent to the
Account Debtor concurrently with or not more than ten (10) days after the
shipment and delivery to and acceptance by said Account Debtor of the goods
giving rise thereto or performance of the services giving rise thereto, and such
Account is due and payable no later than sixty (60) days after the date of the
invoice and is not more than ninety (90) days past the date of the invoice;
(vi) not more than ten percent (10%) of the balance of all Accounts owing
from the Account Debtor obligated on such Account has remained unpaid for more
than ninety (90) days after the date of the relevant invoice (at all times when
this condition is not met, all Accounts upon which such Account Debtor is
obligated shall be ineligible Accounts);
(vii) it is owned by the Grantor, the Grantor has the right to subject it
to a security interest in favor of Agent for the ratable benefit of the Lenders,
and it is subject to a first priority perfected security interest in favor of
the Agent for the ratable benefit of the Lenders, and to no other claims, Liens,
security interests or encumbrances whatsoever;
(viii) it is a valid, legally enforceable and unconditional obligation of
the Account Debtor thereunder, and is not subject to setoff, counterclaim,
credit, allowance or adjustment by the Account Debtor thereunder, 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 and/or has not returned or
offered to return any of the goods or services which are the subject of such
Account;
(ix) the Account Debtor obligated on such Account is not insolvent or the
subject of any bankruptcy or insolvency proceeding of any kind, neither the
Agent nor the Required Lenders are dissatisfied with the creditworthiness of
such Account Debtor, and, to the knowledge of the Grantor, there are no actions
or proceedings which are then threatened or pending against the Account Debtor
which might result in any material adverse change in its financial condition or
in its ability to pay any Account in full;
(x) it does not arise out of a contract or order which, by its terms,
forbids or effectively makes void or unenforceable the assignment by the Grantor
to the Agent of the Account arising with respect thereto;
(xi) the Account Debtor is not a director, officer, employee, agent,
Subsidiary or Affiliate of the Grantor or any Subsidiary of the Grantor;
5
(xii) the Account Debtor is a resident or citizen of and is located within
the United States of America or Canada (unless the Required Lenders, in their
sole discretion, include such Account and the Agent shall have first received,
at its option, a written opinion in form and substance, and from counsel for the
Borrower, satisfactory to the Required Lenders reflecting that all necessary
steps have been taken to render the Agent's lien on such Account properly
perfected and of first priority);
(xiii) The Account may not be due and owing to a Grantor which is located
outside of the United States or which is incorporated or organized under the
laws of a jurisdiction other than a state of the United States, other than
Account Debtors located in Canada to the extent of (i) $400,000 per Account and
(ii) $1,000,000 per all Accounts of all such Account Debtors (unless the
Required Lenders determine, in their sole discretion, to include such Account or
the Required Lenders to their reasonable satisfaction shall have determined that
all necessary steps have been taken to render the Agent's lien on such Account
properly perfected and of first priority);
(xiv) it is not an Account with respect to which the Account Debtor is the
United States of America or any department, agency or instrumentality thereof,
unless the Grantor assigns its right to payment of such Account to the Agent
pursuant to, and in full compliance with, the Assignment of Claims Act of 1940,
as amended;
(xv) it is not an Account with respect to which the Account Debtor is any
state, municipality or any department, agency or instrumentality thereof, unless
the Grantor assigns its rights to payment of such Account to Agent pursuant to,
and in full compliance with all applicable laws, rules and regulations relating
thereto;
(xvi) it is not an Account with respect to which the Account Debtor is
located in a state which requires the Grantor, as a precondition to commencing
or maintaining an action in the courts of that state, either to (A) receive a
certificate of authority to do business and be in good standing in such state,
or (B) file a notice of business activities report or similar report with such
state's taxing authority, unless (x) the Grantor has taken one of the actions
described in clauses (A) or (B), (y) the failure to take one of the actions
described in either clause (A) or (B) may be cured retroactively by the Grantor
at its election, or (z) the Grantor has proven, to Agent's satisfaction, that it
is exempt from any such requirements under any such state's laws;
(xvii) it is an Account against which each Lender is legally permitted to
make advances;
(xviii) The Account shall not be eligible to the extent of (i) any
retainage held by the Account Debtor, and (ii) the amount by which the total
balance due from any Account Debtor (or group of related Account Debtors) on
invoiced Accounts exceeds twenty-five percent (25%) of the aggregate balance due
under all invoiced Accounts then outstanding; and
(xix) Any amounts in the aggregate in excess of $10,000,000 derived from
Accounts created under a bonded, in whole or in part, contract shall be
excluded.
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An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account. Further, with respect to any Account, if the Agent at any time
or times hereafter determines, in its sole and absolute discretion, that the
prospect of payment or performance by the Account Debtor is or will be impaired,
notwithstanding anything to the contrary contained above, such Account shall no
longer be an Eligible Account and the Agent shall promptly thereafter notify the
Borrower in writing of such classification.
"Consolidated EBITDA" means Consolidated Net Income plus, to the extent
deducted from revenues in determining Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) expense for taxes paid or accrued, (iii) depreciation,
amortization, other non-cash charges, (iv) losses on sale of fixed assets, and
(v) extraordinary losses incurred other than in the ordinary course of business,
minus, to the extent included in Consolidated Net Income, (i) gains on sales of
fixed assets, and (ii) extraordinary gains realized other than in the ordinary
course of business, all calculated for the Borrower and its Subsidiaries on a
consolidated basis for the then most recently ended four fiscal quarters. As to
the Hake Group for the period through November 30, 2003, the EBITDA calculations
shall be made in accordance with Schedule "14" attached hereto. In the future
calculations of Consolidated EBITDA, the Lenders may, in their sole discretion,
agree to consider historical EBITDA of acquired entities and may also, in their
sole discretion, agree to consider methodologies and proposals from Borrower as
to the calculation of historical EBITDA of acquired entities.
"Consolidated Funded Indebtedness" means at any time the aggregate dollar
amount of Consolidated Indebtedness which has actually been funded and is
outstanding at such time, whether or not such amount is due or payable at such
time.
"Consolidated Indebtedness" means at any time the Indebtedness of the
Borrower and its Subsidiaries calculated on a consolidated basis as of such
time.
"Consolidated Interest Expense" means the interest expense of Borrower and
its Subsidiaries.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Worth" means at any time the consolidated stockholders'
equity of the Borrower and its Subsidiaries calculated on a consolidated basis
as of such time.
"Consolidated Rentals" means, with reference to any period, the Rentals of
the Borrower and its Subsidiaries calculated on a consolidated basis for such
period.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
7
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or the obligations of any such Person as general
partner of a partnership with respect to the liabilities of the partnership.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Controlled Group" means all members of a controlled group of corporations
or other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Credit Extension" means the making of an Advance or the issuance of a
Facility LC hereunder.
"Credit Extension Date" means the Borrowing Date for an Advance or the
issuance date for a Facility LC.
"Default" means an event described in Article VII.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or (iv)
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which, except as otherwise provided
in Section 2.11, bears interest at the applicable Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the applicable British Bankers' Association LIBOR rate
for deposits in U.S. dollars as reported by any generally recognized financial
information service as of 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period, and having a maturity equal to such
Interest Period, provided that, if no such British Bankers' Association LIBOR
rate is available to the Agent, the applicable Eurodollar Base Rate for the
relevant Interest Period shall instead be the rate determined by the Agent to be
the rate at which Bank One or one of its Affiliate banks offers to place
deposits in U.S. dollars with first-class banks in the London interbank market
at approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, in the approximate amount of Bank One's relevant
Eurodollar Loan and having a maturity equal to such Interest Period.
8
"Eurodollar Loan" means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the applicable Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base
Rate applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable Margin.
"Excluded Taxes" means, in the case of each Lender or applicable Lending
Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Lender or the Agent is incorporated or organized or (ii) the jurisdiction
in which the Agent's or such Lender's principal executive office or such
Lender's applicable Lending Installation is located.
"Exhibit" refers to an exhibit to this Agreement, unless another document
is specifically referenced.
"Extension Request" is defined in Section 2.21.
"Facility LC" is defined in Section 2.19.1.
"Facility LC Application" is defined in Section 2.19.3.
"Facility LC Collateral Account" is defined in Section 2.19.11.
"Facility Termination Date" means March 31, 2006, or any later date as may
be specified as the Facility Termination Date in accordance with Section 2.21 or
any earlier date on which the Revolving Credit Commitment is reduced to zero or
otherwise terminated pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Tulsa
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Financial Contract" means (i) any exchange-traded or over-the-counter
futures, forward, swap or option contact or other financial instrument with
similar characteristics or (ii) any Rate Management Transaction.
"Floating Rate" means, for any day, a rate per annum equal to (i) the
Alternate Base Rate for such day plus (ii) the Applicable Margin, in each case
changing when and as the Alternate Base Rate changes.
9
"Floating Rate Advance" means an Advance which, except as otherwise
provided in Section 2.11, bears interest at the Floating Rate.
"Floating Rate Loan" means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the Floating Rate.
"Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"Guarantor" means each of the Subsidiaries.
"Guaranty" means that certain Guaranty dated as of the date hereof executed
by the Guarantor in favor of the Agent, for the ratable benefit of the Lenders,
as it may be amended or modified and in effect from time to time, in form and
content as set forth on Exhibit "F" hereto.
"Hake Group" means those entities described on Schedule "1" hereto.
"Hake Group Acquisition" means the acquisition of 100% of the outstanding
common stock or equity interest of the Hake Group by Borrower or one of its
Wholly-Owned Subsidiaries.
"Hake Group Acquisition Documents" means the instruments, documents and
agreements evidencing the Hake Group Acquisition, including without limitation
the Equity Interest Purchase Agreement dated March 7, 2003.
"Highest Lawful Rate" shall mean, on any day, the maximum nonusurious rate
of interest permitted for that day by whichever of applicable federal or
Oklahoma law permits the higher interest rate, stated as a rate per annum. On
each day, if any, that the Oklahoma Finance Code, as amended establishes the
Highest Lawful Rate, such rate shall be the "indicated (weekly) rate ceiling"
for that day.
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable or accrued liabilities arising in the
ordinary course of such Person's business payable on terms customary in the
trade), (iii) obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from Property now or hereafter owned or
acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances, or other instruments, (v) obligations of such Person to purchase
securities or other Property arising out of or in connection with the sale of
the same or substantially similar securities or Property, (vi) Capitalized Lease
Obligations, and (vii) any other obligation for borrowed money or other
financial accommodation which in accordance with Agreement Accounting Principles
would be shown as a liability on the consolidated balance sheet of such Person.
10
"Interest Period" means, with respect to a Eurodollar Advance, a period of
one, two, three or six months commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on the day
which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade) or
contribution of capital by such Person; stocks, bonds, mutual funds, partnership
interests, notes, debentures or other securities owned by such Person; any
deposit accounts and certificate of deposit owned by such Person; and structured
notes, derivative financial instruments and other similar instruments or
contracts owned by such Person.
"LC Fee" is defined in Section 2.19.4.
"LC Issuer" means Bank One, Oklahoma, NA (or any subsidiary or affiliate of
Bank One, Oklahoma, NA designated by Bank One, Oklahoma, NA) in its capacity as
issuer of Facility LCs hereunder.
"LC Obligations" means, at any time, the sum, without duplication, of (i)
the aggregate undrawn stated amount under all Facility LCs outstanding at such
time plus (ii) the aggregate unpaid amount at such time of all Reimbursement
Obligations.
"LC Payment Date" is defined in Section 2.19.5.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns. Unless otherwise
specified, the term "Lenders" includes Bank One in its capacity as Swing Line
Lender.
"Lending Installation" means, with respect to a Lender or the Agent, the
office, branch, subsidiary or affiliate of such Lender or the Agent listed on
the signature pages hereof or on a Schedule or otherwise selected by such Lender
or the Agent pursuant to Section 2.17.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person, or upon which
such Person is an account party or for which such Person is in any way liable.
"Leverage Ratio" means, as of any date of calculation, the ratio described
in Section 6.27.2.
11
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means a Term Loan, Revolving Loan or a Swing Line Loan.
"Loan Documents" means this Agreement, the Facility LC Applications, any
Notes issued pursuant to Section 2.13, the Collateral Documents, and the
Guaranty
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower or any Subsidiary to perform its obligations under the
Loan Documents, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Agent, the LC Issuer or the Lenders
thereunder.
"Material Indebtedness" means Indebtedness in an outstanding principal
amount of $1,000,000 or more in the aggregate (or the equivalent thereof in any
currency other than U.S. dollars).
"Material Indebtedness Agreement" means any agreement under which any
Material Indebtedness was created or is governed or which provides for the
incurrence of Indebtedness in an amount which would constitute Material
Indebtedness (whether or not an amount of Indebtedness constituting Material
Indebtedness is outstanding thereunder).
"Modify" and "Modification" are defined in Section 2.19.1.
"Moody's" means Moody's Investors Service, Inc.
"Mortgaged Properties" means the properties described on Schedule "2"
attached hereto.
"Mortgaged Properties Documents" means as to each of the Mortgaged
Properties:
(i) Appraisal. An appraisal prepared by a public appraiser acceptable
to Agent.
(ii) Environmental Audit. An audit performed by an inspecting entity
or person reasonably acceptable to Borrower and Agent verifying that no
hazardous wastes, toxic substances, asbestos insulation and/or UREA
formaldehyde insulation (as those terms are defined by any Governmental
Authority) has been or are presently stored, treated, disposed of or
incorporated into, on or around the Mortgaged Property, and no underground
tanks exist on the Mortgaged Property. Borrower shall pay all costs and
expenses relating to the Environmental Audit. Any exceptions, conditions or
disclaimers set forth in the Environmental Audit must be reasonably
acceptable to Agent.
12
(iii) Environmental Reports. Written information relating to
environmental aspects of the Mortgaged Property and adjacent properties
including, without limitation, soil tests, hazardous waste, toxic
substances, asbestos insulation, UREA formaldehyde insulation, underground
storage tanks, compliance with health and safety requirements (all
applicable statutes and regulations), any pending or threatened action,
proceeding or allegation of violations of environmental health or safety
statutes, ordinances or regulations, and environmental audits.
(iv) Insurance. Borrower will deliver to Agent, and maintain until the
Loan is paid, original policies of insurance (or certificates acceptable to
Agent), premiums prepaid, with insurance companies satisfactory to Agent,
in such amounts and against such risks as shall be required by Agent
including, but not limited to, the following:
(a) All risk insurance, extended coverage insurance against loss
or damage by fire, lightning, windstorm, hail, explosion, riot,
vandalism, malicious mischief, riot attending a strike, civil
commotion, aircraft, vehicles, smoke and other risks from time to time
included under "extended coverage" policies, in an amount equal to
100% of the full replacement value of the improvements, which policy
shall not include a co-insurance clause with a higher percentage than
80%, but shall include stipulated value endorsement showing compliance
with any co-insurance clause included in the policy. Such insurance
policy shall name Agent and any party designated by Agent as mortgagee
and loss payee as it and their respective interests may appear;
(b) Appropriate workmen's compensation or other insurance against
liability arising from claims of workmen in respect of and during the
period of any work on or about the Mortgaged Property and/or
improvements;
(c) Public liability and property damage insurance applicable to
the improvements and Mortgaged Property in amounts approved from time
to time by Agent, which insurance shall provide coverage to Agent as
an additional insured; and
(d) Flood and mudslide insurance in an amount equal to the lesser
of: (i) the appraised value of the Mortgaged Property; or (ii) the
maximum limit of coverage made available with respect to the Mortgaged
Property under the Federal Flood Insurance Program; provided that such
flood and mudslide insurance shall not be required if Borrower shall
provide Lender with evidence satisfactory to Agent, in its sole
discretion, that the Mortgaged Property is not situated within an area
identified by the Secretary of Housing and Urban Development or any
other Governmental Authority as an area having special flood or
mudslide hazards, and that no flood insurance is required on the
Mortgaged Property by any Governmental Authority.
(v) Survey. An ALTA survey of the Mortgaged Property prepared by and
certified to Agent by a licensed civil engineer or surveyor satisfactory to
Agent, which
13
survey shall: (a) include a legal description identical to the legal
description identified in the Title Insurance Binder; (b) locate the
perimeter of the Mortgaged Property; (c) locate any improvements (e.g.,
water, gas, electric and sewer lines, walks, alleys, drives); (d) locate
and identify (by reference to book and page number and/or instrument of
record) all easements, rights of way, setback lines and other matters
affecting the Mortgaged Property and set forth in the Title Insurance
Binder; and (e) showing other physical matters affecting the title and use
of the Mortgaged Property required by the Agent and the title insurance
company issuing the Title Insurance Binder and Title Insurance Policy.
(vi) Title Insurance Binder. An original mortgagee's title guaranty
binder or commitment in favor of Agent issued by a title insurer and agent
satisfactory to Agent, committing to issue an ALTA mortgagee's title
guaranty policy insuring the Mortgaged Properties Security Instrument to be
a first and prior lien on the Mortgaged Property and improvements,
containing only such exceptions which are acceptable to Agent, and subject
to the following additional requirements: (a) the insured amount must equal
the Title Insurance Amount; (b) the legal description must be identical
with the description of the property identified in the Survey; (c) the
legal description should show as separately insured parcels any
off-premises private easements that benefit the Mortgaged Property; (d)
list and identify by reference to volume and page number all easements,
rights of way and other instruments or matters affecting title to the
Mortgaged Property or any off-premises easements that benefit the Mortgaged
Property; (e) legible copies of all instruments affecting title to the
Mortgaged Property must be submitted with the Title Insurance Binder; and
(f) the "standard" exceptions regarding (i) matters which a survey would
disclose, (ii) liens, (iii) possessory interests, and (iv) all requirements
must be deleted prior to closing.
(vii) Title Insurance Policy. An original fully paid ALTA mortgage
title insurance policy issued pursuant to the Title Insurance Binder in the
Title Insurance Amount and insuring the Mortgaged Properties Security
Instruments to be a first and prior lien on Borrower's fee simple ownership
interests (or leasehold, as applicable) in the Mortgaged Property and
improvements, with no exceptions from coverage as to mechanics' and
materialmen's liens, matters shown by a current survey, rights of parties
in possession, or such other exceptions as Lender shall approve.
"Mortgaged Properties Security Instruments" means the mortgages or deeds of
trust, as applicable, necessary to create a first and prior lien in favor of
Agent with respect to the Mortgaged Properties, in form and content as set forth
on Exhibit "J" attached hereto.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Net Market-to-Market Exposure" of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over all unrealized
profits of such Person arising from Rate Management Transactions. "Unrealized
losses" means the fair market value of the cost to such Person of replacing such
Rate Management Transaction as of the date of determination
14
(assuming the Rate Management Transaction were to be terminated as of that
date), and "unrealized profits" means the fair market value of the gain to such
Person of replacing such Rate Management Transaction as of the date of
determination (assuming such Rate Management Transaction were to be terminated
as of that date).
"Newco" means HAKE ACQUISITION CORP., a Delaware corporation, a
Wholly-Owned Subsidiary of Borrower established to acquire the Hake Group.
"Non-U.S. Lender" is defined in Section 3.5(iv).
"Note" is defined in Section 2.13.
"Obligations" means, without duplication, all unpaid principal of and
accrued and unpaid interest on the Loans, all Reimbursement Obligations, all
Rate Management Obligations, Net Market-to-Market Exposure, all accrued and
unpaid fees and all expenses, reimbursements, indemnities and other obligations
of the Borrower to the Lenders or to any Lender, the Agent, the LC Issuer or any
indemnified party arising under the Loan Documents.
"Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any Sale and Leaseback
Transaction which is not a Capitalized Lease, (iii) any liability under any
so-called "synthetic lease" transaction entered into by such Person, or (iv) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheets of such Person, but excluding from this clause
(iv) Operating Leases.
"Operating Lease" of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.
"Operating Lease Obligations" means, as at any date of determination, the
amount obtained by aggregating the present values, determined in the case of
each particular Operating Lease by applying a discount rate (which discount rate
shall equal the discount rate which would be applied under Agreement Accounting
Principles if such Operating Lease were a Capitalized Lease) from the date on
which each fixed lease payment is due under such Operating Lease to such date of
determination, of all fixed lease payments due under all Operating Leases of the
Borrower and its Subsidiaries.
"Other Taxes" is defined in Section 3.5(ii).
"Outstanding Credit Exposure" means, as to any Lender at any time, the sum
of (i) the aggregate principal amount of its Loans outstanding at such time,
plus (ii) an amount equal to its Pro Rata Share on an individual basis of the LC
Obligations and the aggregate principal amount of Swing Line Loans at such time.
"Participants" is defined in Section 12.2.1.
15
"Payment Date" means the last day of each month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"Pledged Shares" means the original stock-certificates, with executed stock
powers attached thereto, evidencing all of the outstanding shares of capital
stock of each of the Subsidiaries, which are pledged by Borrower to Agent
pursuant to the Borrower's Security Agreement.
"Pricing Schedule" means the Schedule attached hereto identified as such.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One, Oklahoma, NA or its parent (which is
not necessarily the lowest rate charged to any customer), changing when and as
said prime rate changes.
"Pro Rata Share" means, with respect to a Lender, a portion equal to a
fraction the numerator of which is such Lender's Commitment and the denominator
of which is the Aggregate Commitment.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Purchasers" is defined in Section 12.3.1.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Borrower or any Wholly-Owned
Subsidiary also a grantor under a Security Agreement pursuant to which the
Borrower or any such Subsidiary may sell, convey or otherwise transfer to a
newly-formed Subsidiary or other special-purpose entity, or any other Person,
any accounts or notes receivable and rights related thereto, provided that all
of the terms and conditions of such transaction or series of transactions,
including without limitation the amount and type of any recourse to the Borrower
or any such Subsidiary with respect to the assets transferred, are acceptable to
the Agent and the Required Lenders.
"Rate Management Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all
16
cancellations, buy backs, reversals, terminations or assignments of any Rate
Management Transactions.
"Rate Management Transaction " means any transaction (including an
agreement with respect thereto) now existing or hereafter entered by the
Borrower which is a rate swap, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
these transactions) or any combination thereof, whether linked to one or more
interest rates, foreign currencies, commodity prices, equity prices or other
financial measures.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Reimbursement Obligations" means, at any time, the aggregate of all
obligations of the Borrower then outstanding under Section 2.19 to reimburse the
LC Issuer for amounts paid by the LC Issuer in respect of any one or more
drawings under Facility LCs.
"Rentals" of a Person means the aggregate fixed amounts payable by such
Person under any Operating Lease.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Reports" is defined in Section 9.6.
"Required Lenders" means Lenders in the aggregate having at least sixty-six
and two-thirds percent (66 2/3%) of the Aggregate Commitment or, if the
Aggregate Commitment has been terminated, Lenders in the aggregate holding at
least sixty-six and two-thirds percent (66 2/3%) of the Aggregate Outstanding
Credit Exposure.
17
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Revolving Loan" means, with respect to a Lender, such Lender's loan made
pursuant to its commitment to lend set forth in Section 2.1.1 (or any conversion
or continuation thereof).
"S&P" means Standard and Poor's Ratings Services, a division of The McGraw
Hill Companies, Inc.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Schedule" refers to a specific schedule to this Agreement, unless another
document is specifically referenced.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Security Agreement" means, separately and collectively, a Security
Agreement executed by Borrower and each Subsidiary with respect to their
respective accounts, inventory, machinery, equipment and proceeds, with each
security agreement in form and content as set forth on Exhibits "G" hereto.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Subordinated Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Obligations to the
written satisfaction of the Required Lenders.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower. For purposes of the representations and
warranties made herein, each reference to a "Subsidiary" of the Borrower shall
include Hake Group and its Subsidiaries.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which represents more than five percent (5%) of
the consolidated assets of the Borrower and its Subsidiaries or property which
is responsible for more than ten percent (10%) of the consolidated net income of
the Borrower and its Subsidiaries, in each case, as would be shown in the
consolidated financial statements of the Borrower and its Subsidiaries as
18
at the beginning of the twelve-month period ending with the month in which such
determination is made (or if financial statements have not been delivered
hereunder for that month which begins the twelve-month period, then the
financial statements delivered hereunder for the quarter ending immediately
prior to that month).
"Swing Line Borrowing Notice" is defined in Section 2.20.2.
"Swing Line Commitment" means the obligation of the Swing Line Lender to
make Swing Line Loans up to a maximum principal amount of $5,000,000 at any one
time outstanding.
"Swing Line Lender" means Bank One or such other Lender which may succeed
to its rights and obligations as Swing Line Lender pursuant to the terms of this
Agreement.
"Swing Line Loan" means a Loan made available to the Borrower by the Swing
Line Lender pursuant to Section 2.20.
"Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes and Other Taxes.
"Term Loan" means the Loans made by each of the Lenders based upon their
respective Term Loan Commitment, advanced in accordance with the provisions of
Section 2.1.2, below.
"Term Loan Commitment" means, as to each Lender, the amount designated as
opposite its signature below.
"Term Loan Maturity Date" means March 31, 2008.
"Title Insurance Amount" means as to each of the Mortgaged Properties, the
amount of insurance under each Title Insurance Binder and Title Insurance Policy
equal to 100% of the Agent approved appraisal amount, as described on Schedule
"3" attached hereto.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or a Eurodollar Advance and with respect to any Loan, its nature as a
Floating Rate Loan or a Eurodollar Loan.
"UCC-1 Financing Statement" means, separately and collectively, a UCC-1
Financing Statement from each grantor of a Security Agreement, in form and
content as set forth on Exhibit "I" hereto.
"UCC Lien Search" means, separately and collectively, a UCC Lien Search as
to each grantor of a Security Agreement, issued as to jurisdiction in which the
grantor was organized and
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such other jurisdictions as Agent may require, including without limitation the
jurisdictions described on Schedule "4" hereto.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Vehicles" means the vehicles with a book value equal to or greater than
$15,000 owned by Borrower or any grantor of a Security Agreement, as described
on Schedule "5" hereto, including without limitation the location and vehicle
identification number for each vehicle.
"Vehicle Titles" means the original certificate of title for each of the
Vehicles for which the Agent shall file a lien entry form ("Lien Entry Forms"),
which Vehicles are identified on Schedule "6" hereto.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization 100% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Commitment.
2.1.1 Revolving Credit Commitment. The "Revolving Credit Commitment"
means, for each Lender, the obligation of such Lender to make Revolving
Loans to, and participate in Facility LCs issued upon the application of,
the Borrower in an aggregate amount not exceeding the amount set forth
opposite its signature below or as set forth in any Notice of Assignment
relating to any assignment that has become effective pursuant to Section
12.3.2, as such amount may be modified from time to time pursuant to the
terms hereof. From and including the date hereof and prior to the Facility
Termination Date, the Lenders agree to make Revolving Loans to the Borrower
or participate in Facility LCs in accordance with the provisions of Section
2.19 (not to exceed $25,000,000 in the aggregate) from time to time, in
amounts not to exceed in the
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aggregate at any one time outstanding the lesser of (i) the Borrowing Base,
(ii) $55,000,000, or (iii) the Aggregate Commitments to make Revolving
Loans. Not later than 11:00 a.m. Tulsa, Oklahoma time on the date specified
for each borrowing hereunder, each Lender shall make available the amount
of the Loan to be made by it on such date to the Agent, to an account which
the Agent shall specify, in immediately available funds, for the account of
the Borrower. The amounts so received by the Agent shall, subject to the
terms and conditions of this Agreement, be made available to the Borrower
by depositing the same, in immediately available funds, in an account of
the Borrower, designated by the Borrower from time to time, written notice
of the location of which shall be given to the Agent together with the
notice made pursuant to Section 2.8.
2.1.2 Term Loan Facility. On the Closing Date, each Lender agrees to
make a Term Loan to Borrower in an amount not to exceed the Term Loan
Commitment set forth opposite its signature below, the aggregate sum of
which shall not exceed $32,500,000, for the purpose of enabling Borrower to
complete the Hake Group Acquisition through its wholly owned subsidiary,
NEWCO.
2.1.3 Swing Line Facility. From and including the Closing Date, and
prior to the Facility Termination Date, Bank One agrees to make Swing Line
Loans to Borrower in accordance with the provisions of Section 2.20 up to a
maximum aggregate principal amount of $5,000,000 at any one time
outstanding. Any Swing Line Loans shall reduce the Revolving Credit
Commitment of Bank One (ratably as to any participant therein) by an equal
amount.
2.2. Required Payments; Termination. The Aggregate Outstanding Credit
Exposure and all other unpaid Obligations other than the Term Loan shall be paid
in full by the Borrower on the Facility Termination Date. The Term Loan shall be
payable as follows: (i) interest shall be payable on the Interest Payment Dates,
and (ii) principal shall be payable in nineteen (19) consecutive quarterly
installments of $1,160,714.29, on the last day of each fiscal quarter ending
May, August, November and February, commencing with the fiscal quarter ending
August 31, 2003, and the last installment due on the Term Loan Maturity Date
equal to the remaining balance.
2.3. Ratable Loans. Each Advance hereunder (other than any Swing Line Loan)
shall consist of Revolving Loans made from the several Lenders ratably in
proportion to the ratio that their respective Commitments bear to the Aggregate
Commitment.
2.4. Types of Advances. The Advances may be Floating Rate Advances or
Eurodollar Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.8 and 2.10, or Swing Line Loans selected by the
Borrower in accordance with Section 2.20.
2.5. Commitment Fee; Reductions in Aggregate Commitment. The Borrower
agrees to pay to the Agent for the account of each Lender a commitment fee at a
per annum rate equal to the Applicable Fee Rate on the daily unused portion of
such Lender's Revolving Loan Commitment from the date hereof to and including
the Facility Termination Date, payable on each Payment Date hereafter and on the
Facility Termination Date. Swing Line Loans shall
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count as usage as to the Commitment of the Swing Line Lender, and other Lenders
Participating therein, for the purpose of calculating the commitment fee due
hereunder. The Borrower may permanently reduce the Aggregate Commitment in
whole, or in part ratably among the Lenders in integral multiples of $5,000,000,
upon at least three (3) Business Days' written notice to the Agent, which notice
shall specify the amount of any such reduction, provided, however, that the
amount of the Aggregate Commitment may not be reduced below the aggregate
principal amount of the outstanding Advances. All accrued commitment fees shall
be payable on the effective date of any termination of the obligations of the
Lenders to make Loans hereunder.
2.6. Minimum Amount of Each Advance. Each Eurodollar Advance shall be in
the minimum amount of $500,000 (and in multiples of $50,000 if in excess
thereof), and each Floating Rate Advance (other than an Advance to repay Swing
Line Loans) shall be in the minimum amount of $100,000 (and in multiples of
$100,000 if in excess thereof), provided, however, that any Floating Rate
Advance may be in the amount of the Available Revolving Credit Commitment.
2.7. Prepayments.
2.7.1. Optional Prepayments. Loans bearing interest based on the ABR
(other than Swing Line Loans) may be prepaid at any time without penalty or
premium on one Business Day's prior written notice in a minimum amount of
$500,000. Loans bearing interest based on the Eurodollar Rate (other than
Swing Line Loans) may be prepaid, subject to funding indemnification but
without penalty or premium on at least three Business Days' prior written
notice in a minimum amount of $3,000,000 or any integral multiple of
$1,000,000 in excess thereof.
2.7.2. Mandatory Prepayments. In addition to any scheduled
installments due on the Loans, the following mandatory prepayments shall be
made:
(i) Sale of Assets: Upon the sale, transfer or other disposition
of any asset of the Borrower or any of its Subsidiaries (other than
the sale of inventory in the ordinary course of business and the sale
of up to $250,000 of other assets per year) which is permitted by the
terms of the Loan Documents, the Borrower shall make a mandatory
prepayment of the Term Loans in an amount equal to 100% of the net
proceeds realized from such sale, transfer or other disposition.
(ii) Sale of Stock: Upon the sale of any common stock, preferred
stock, warrant or other equity (other than the exercise of stock
options by employees, officers and directors), or upon the receipt of
proceeds from the issuance of any Subordinated Indebtedness, the
Borrower shall make a mandatory prepayment of the Term Loans in an
amount equal to 100% of the net proceeds so realized or so received
from such sale or issuance.
(iii) Excess Cash Flow: On or before each date on which the
Borrower's annual audited financial statements are required to be
delivered pursuant to this Agreement, commencing with the fiscal year
ending May 31,
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2004, the Borrower shall make a mandatory prepayment of the Term Loan
in an amount equal to 50% of the Excess Cash Flow, if positive, for
the most recently ended fiscal year. For purposes hereof, the term
Excess Cash Flow, as to the applicable period, means Consolidated
EBITDA, less (i) Consolidated Interest Expense, (ii) taxes paid, (iii)
principal payments on the Term Loan, (iv) Capital Expenditures, and
(v) dividends and distributions permitted in this Agreement.
(iv) Borrowing Base Deficiency. If the aggregate principal amount
of the outstanding Revolving Loans and LC Obligations as of any date
exceeds the Borrowing Base then in effect, the Borrower shall be
required, immediately upon receipt of written notice from Agent, to
make a mandatory principal payment on Revolving Loans necessary to
establish compliance.
2.7.3. Application of Mandatory Prepayments. All mandatory prepayments
(other than under 2.7.2.(iv)) shall first be applied to the next principal
installment due under the Term Facility, then to the principal installments
of the Term Facility in the inverse order of maturity.
2.8. Method of Selecting Types and Interest Periods for New Advances. The
Borrower shall select the Type of Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable thereto from time to time. The Borrower
shall give the Agent irrevocable notice (a "Borrowing Notice") not later than
10:00 a.m. (Tulsa time) at least one Business Day before the Borrowing Date of
each Floating Rate Advance (other than a Swing Line Loan) and two (2) Business
Days before the Borrowing Date for each Eurodollar Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Interest Period
applicable thereto.
Not later than 11:00 a.m. (Tulsa time) on each Borrowing Date, each Lender shall
make available its Loan or Loans in funds immediately available in Tulsa to the
Agent at its address specified pursuant to Article XIII. The Agent will make the
funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address.
2.9. Conversion and Continuation of Outstanding Advances. Floating Rate
Advances (other than Swing Line Loans) shall continue as Floating Rate Advances
unless and until such Floating Rate Advances are converted into Eurodollar
Advances pursuant to this Section 2.9 or are repaid in accordance with Section
2.7. Each Eurodollar Advance shall continue as a Eurodollar Advance until the
end of the then applicable Interest Period therefor, at which time such
Eurodollar Advance shall be automatically converted into a Floating Rate Advance
unless
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(x) such Eurodollar Advance is or was repaid in accordance with Section 2.7 or
(y) the Borrower shall have given the Agent a Conversion/Continuation Notice (as
defined below) requesting that, at the end of such Interest Period, such
Eurodollar Advance continue as a Eurodollar Advance for the same or another
Interest Period. Subject to the terms of Section 2.6, the Borrower may elect
from time to time to convert all or any part of a Floating Rate Advance (other
than Swing Line Loans) into a Eurodollar Advance. The Borrower shall give the
Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion
of a Floating Rate Advance into a Eurodollar Advance or continuation of a
Eurodollar Advance not later than 10:00 a.m. (Tulsa time) at least two (2)
Business Days prior to the date of the requested conversion or continuation,
specifying:
(i) the requested date, which shall be a Business Day, of such conversion
or continuation,
(ii) the a ggregate amount and Type of the Advance which is to be converted
or continued, and
(iii) the amount of such Advance which is to be converted into or continued
as a Eurodollar Advance and the duration of the Interest Period applicable
thereto.
2.10. Changes in Interest Rate, etc. Each Floating Rate Advance (other than
a Swing Line Loan) shall bear interest on the outstanding principal amount
thereof, for each day from and including the date such Advance is made or is
automatically converted from a Eurodollar Advance into a Floating Rate Advance
pursuant to Section 2.9, to but excluding the date it is paid or is converted
into a Eurodollar Advance pursuant to Section 2.9 hereof, at a rate per annum
equal to the Floating Rate for such day. Each Swing Line Loan shall bear
interest on the outstanding principal amount thereof, for each day from and
including the day such Swing Line Loan is made to but excluding the date it is
paid, at a rate per annum equal to the Floating Rate for such day, plus the
Applicable Margin set forth on the Pricing Schedule. Changes in the rate of
interest on that portion of any Advance maintained as a Floating Rate Advance
will take effect simultaneously with each change in the Alternate Base Rate.
Each Eurodollar Advance shall bear interest on the outstanding principal amount
thereof from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such Interest Period at the
interest rate determined by the Agent as applicable to such Eurodollar Advance
based upon the Borrower's selections under Sections 2.8 and 2.9 and otherwise in
accordance with the terms hereof. No Interest Period may end after the Facility
Termination Date.
2.11. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.8, 2.9 or 2.10, during the continuance of a
Default or Unmatured Default the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that no
Advance may be made as, converted into or continued as a Eurodollar Advance.
During the continuance of a Default the Required Lenders may, at their option,
by notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates),
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declare that (i) each Eurodollar Advance shall bear interest for the remainder
of the applicable Interest Period at the rate otherwise applicable to such
Interest Period plus 2% per annum, (ii) each Floating Rate Advance shall bear
interest at a rate per annum equal to the Floating Rate in effect from time to
time plus 2% per annum and (iii) the LC Fee shall be increased by 2% per annum,
provided that, during the continuance of a Default under Section 7.6 or 7.7, the
interest rates set forth in clauses (i) and (ii) above and the increase in the
LC Fee set forth in clause (iii) above shall be applicable to all Credit
Extensions without any election or action on the part of the Agent or any
Lender.
2.12. Method of Payment. All payments of the Obligations hereunder shall be
made, without setoff, deduction, or counterclaim, in immediately available funds
to the Agent at the Agent's address specified pursuant to Article XIII, or at
any other Lending Installation of the Agent specified in writing by the Agent to
the Borrower, by noon (local time) on the date when due and shall (except in the
case of Reimbursement Obligations for which the LC Issuer has not been fully
indemnified by the Lenders, or as otherwise specifically required hereunder and
except with respect to repayments of Swing Line Loans) be applied ratably by the
Agent among the Lenders. Each payment delivered to the Agent for the account of
any Lender shall be delivered promptly by the Agent to such Lender in the same
type of funds that the Agent received at its address specified pursuant to
Article XIII or at any Lending Installation specified in a notice received by
the Agent from such Lender. The Agent is hereby authorized to charge the account
of the Borrower maintained with Bank One for each payment of principal,
interest, Reimbursement Obligations and fees as it becomes due hereunder. Each
reference to the Agent in this Section 2.12 shall also be deemed to refer, and
shall apply equally, to the LC Issuer, in the case of payments required to be
made by the Borrower to the LC Issuer pursuant to Section 2.19.6.
2.13. Noteless Agreement; Evidence of Indebtedness. (i) Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(ii) The Agent shall also maintain accounts in which it will record (a) the
amount of each Loan made hereunder, the Type thereof and the Interest Period
with respect thereto, (b) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder,
(c) the original stated amount of each Facility LC and the amount of LC
Obligations outstanding at any time, and (d) the amount of any sum received by
the Agent hereunder from the Borrower and each Lender's share thereof.
(iii) The entries maintained in the accounts maintained pursuant to
paragraphs (i) and (ii) above shall be prima facie evidence of the existence and
amounts of the Obligations therein recorded; provided, however, that the failure
of the Agent or any Lender to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Obligations
in accordance with their terms.
(iv) Any Lender may request that its Loans be evidenced by a promissory
note, substantially in the form of Exhibits "E-1", "E-2", or "E-3" (each a
"Note"). In such event, the
25
Borrower shall prepare, execute and deliver to such Lender such Note or Notes
payable to the order of such Lender. Thereafter, the Loans evidenced by each
such Note and interest thereon shall at all times (prior to any assignment
pursuant to Section 12.3) be represented by one or more Notes payable to the
order of the payee named therein, except to the extent that any such Lender
subsequently returns any such Note for cancellation and requests that such Loans
once again be evidenced as described in paragraphs (i) and (ii) above.
2.14. Telephonic Notices. The Borrower hereby authorizes the Lenders and
the Agent to extend, convert or continue Advances, effect selections of Types of
Advances and to transfer funds based on telephonic notices made by any person or
persons the Agent or any Lender in good faith believes to be acting on behalf of
the Borrower, it being understood that the foregoing authorization is
specifically intended to allow Borrowing Notices and Conversion/Continuation
Notices to be given telephonically. The Borrower agrees to deliver promptly to
the Agent a written confirmation, if such confirmation is requested by the Agent
or any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent and the Lenders, the records of the Agent and the Lenders shall govern
absent manifest error.
2.15. Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which
the Floating Rate Advance is prepaid, whether due to acceleration or otherwise,
and at maturity. Interest accrued on that portion of the outstanding principal
amount of any Floating Rate Advance converted into a Eurodollar Advance on a day
other than a Payment Date shall be payable on the date of conversion. Interest
accrued on each Eurodollar Advance shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurodollar Advance is
prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued
on each Eurodollar Advance having an Interest Period longer than three months
shall also be payable on the last day of each three-month interval during such
Interest Period. Interest, commitment fees and LC Fees shall be calculated for
actual days elapsed on the basis of a 360-day year. Interest shall be payable
for the day an Advance is made but not for the day of any payment on the amount
paid if payment is received prior to noon (local time) at the place of payment.
If any payment of principal of or interest on an Advance shall become due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such extension
of time shall be included in computing interest in connection with such payment.
2.16. Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions. Promptly after receipt thereof, the Agent will notify each Lender of
the contents of each Aggregate Commitment reduction notice, Borrowing Notice,
Swing Line Borrowing Notice, Conversion/Continuation Notice, and repayment
notice received by it hereunder. Promptly after notice from the LC Issuer, the
Agent will notify each Lender of the contents of each request for issuance of a
Facility LC hereunder. The Agent will notify each Lender of the interest rate
applicable to each Eurodollar Advance promptly upon determination of such
interest rate and will give each Lender prompt notice of each change in the
Alternate Base Rate.
26
2.17. Lending Installations. Each Lender may book its Loans and its
participation in any LC Obligations and the LC Issuer may book the Facility LCs
at any Lending Installation selected by such Lender or the LC Issuer, as the
case may be, and may change its Lending Installation from time to time. All
terms of this Agreement shall apply to any such Lending Installation and the
Loans, Facility LCs, participations in LC Obligations and any Notes issued
hereunder shall be deemed held by each Lender or the LC Issuer, as the case may
be, for the benefit of any such Lending Installation. Each Lender and the LC
Issuer may, by written notice to the Agent and the Borrower in accordance with
Article XIII, designate replacement or additional Lending Installations through
which Loans will be made by it or Facility LCs will be issued by it and for
whose account Loan payments or payments with respect to Facility LCs are to be
made.
2.18. Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day for the first three days and,
thereafter, the interest rate applicable to the relevant Loan or (y) in the case
of payment by the Borrower, the interest rate applicable to the relevant Loan.
2.19. Facility LCs.
2.19.1. Issuance. The LC Issuer hereby agrees, on the terms and
conditions set forth in this Agreement, to issue standby and commercial
letters of credit (each, a "Facility LC") and to renew, extend, increase,
decrease or otherwise modify each Facility LC ("Modify," and each such
action a "Modification"), from time to time from and including the date of
this Agreement and prior to the Facility Termination Date upon the request
of the Borrower; provided that immediately after each such Facility LC is
issued or Modified, (i) the aggregate amount of the outstanding LC
Obligations shall not exceed $25,000,000 and (ii) the Aggregate Outstanding
Credit Exposure shall not exceed the Aggregate Commitment. No Facility LC
shall have an expiry date later than the earlier of (x) the fifth Business
Day prior to the Facility Termination Date and (y) one year after its
issuance, provided that Facility LC with a one (1) year expiration date may
include renewals for additional one year periods, so long as it does not
extend beyond (x).
2.19.2. Participations. Upon the issuance or Modification by the LC
Issuer of a Facility LC in accordance with this Section 2.19, the LC Issuer
shall be deemed, without further action by any party hereto, to
27
have unconditionally and irrevocably sold to each Lender, and each Lender
shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the LC Issuer, a
participation in such Facility LC (and each Modification thereof) and the
related LC Obligations in proportion to its Pro Rata Share.
2.19.3. Notice. Subject to Section 2.19.1, the Borrower shall give the
LC Issuer notice prior to 10:00 a.m. (Tulsa time) at least five Business
Days prior to the proposed date of issuance or Modification of each
Facility LC, specifying the beneficiary, the proposed date of issuance (or
Modification) and the expiry date of such Facility LC, and describing the
proposed terms of such Facility LC and the nature of the transactions
proposed to be supported thereby. Upon receipt of such notice, the LC
Issuer shall promptly notify the Agent, and the Agent shall promptly notify
each Lender, of the contents thereof and of the amount of such Lender's
participation in such proposed Facility LC. The issuance or Modification by
the LC Issuer of any Facility LC shall, in addition to the conditions
precedent set forth in Article IV (the satisfaction of which the LC Issuer
shall have no duty to ascertain), be subject to the conditions precedent
that such Facility LC shall be satisfactory to the LC Issuer and that the
Borrower shall have executed and delivered such application agreement
and/or such other instruments and agreements relating to such Facility LC
as the LC Issuer shall have reasonably requested (each, a "Facility LC
Application"). In the event of any conflict between the terms of this
Agreement and the terms of any Facility LC Application, the terms of this
Agreement shall control.
2.19.4. LC Fees. The Borrower shall pay to the Agent, for the account
of the Lenders ratably in accordance with their respective Pro Rata Shares,
with respect to each Facility LC, a letter of credit fee at a per annum
rate equal to the applicable percentage set forth on the Pricing Schedule
on the average daily undrawn stated amount under such standby Facility LC,
such fee to be payable in arrears on each Payment Date, (such fee described
as the "LC Fee". The Borrower shall also pay to the LC Issuer for its own
account (x) at the time of issuance of each Facility LC, a fronting fee
equal to 0.125%, and (y) documentary and processing charges in connection
with the issuance or Modification of and draws under Facility LCs in
accordance with the LC Issuer's standard schedule for such charges as in
effect from time to time.
2.19.5. Administration; Reimbursement by Lenders. Upon receipt from
the beneficiary of any Facility LC of any demand for payment under such
Facility LC, the LC Issuer shall notify the Agent and the Agent shall
promptly notify the Borrower and each other Lender as to the amount to be
paid by the LC Issuer as a result of such demand and the proposed payment
date (the "LC Payment Date"). The responsibility of the LC Issuer to the
Borrower and each Lender shall be only to determine that the documents
(including each demand for payment) delivered under each Facility LC in
connection with such presentment shall be in conformity in all material
respects with such Facility LC. The LC Issuer shall endeavor to exercise
the same care in the issuance and administration of the Facility LCs as it
does with respect to letters of credit in which no participations are
granted, it being understood that in the absence of any gross negligence or
willful misconduct by the LC Issuer, each Lender shall be unconditionally
and irrevocably liable without regard to the occurrence of any Default or
any condition
28
precedent whatsoever, to reimburse the LC Issuer on demand for (i) such
Lender's Pro Rata Share of the amount of each payment made by the LC Issuer
under each Facility LC to the extent such amount is not reimbursed by the
Borrower pursuant to Section 2.19.6 below, plus (ii) interest on the
foregoing amount to be reimbursed by such Lender, for each day from the
date of the LC Issuer's demand for such reimbursement (or, if such demand
is made after 11:00 a.m. (Tulsa time) on such date, from the next
succeeding Business Day) to the date on which such Lender pays the amount
to be reimbursed by it, at a rate of interest per annum equal to the
Federal Funds Effective Rate for the first three days and, thereafter, at a
rate of interest equal to the rate applicable to Floating Rate Advances.
2.19.6. Reimbursement by Borrower. The Borrower shall be irrevocably
and unconditionally obligated to reimburse the LC Issuer on or before the
applicable LC Payment Date for any amounts to be paid by the LC Issuer upon
any drawing under any Facility LC, without presentment, demand, protest or
other formalities of any kind; provided that neither the Borrower nor any
Lender shall hereby be precluded from asserting any claim for direct (but
not consequential) damages suffered by the Borrower or such Lender to the
extent, but only to the extent, caused by (i) the willful misconduct or
gross negligence of the LC Issuer in determining whether a request
presented under any Facility LC issued by it complied with the terms of
such Facility LC or (ii) the LC Issuer's failure to pay under any Facility
LC issued by it after the presentation to it of a request strictly
complying with the terms and conditions of such Facility LC. All such
amounts paid by the LC Issuer and remaining unpaid by the Borrower shall
bear interest, payable on demand, for each day until paid at a rate per
annum equal to (x) the rate applicable to Floating Rate Advances for such
day if such day falls on or before the applicable LC Payment Date and (y)
the sum of 2% plus the rate applicable to Floating Rate Advances for such
day if such day falls after such LC Payment Date. The LC Issuer will pay to
each Lender ratably in accordance with its Pro Rata Share all amounts
received by it from the Borrower for application in payment, in whole or in
part, of the Reimbursement Obligation in respect of any Facility LC issued
by the LC Issuer, but only to the extent such Lender has made payment to
the LC Issuer in respect of such Facility LC pursuant to Section 2.19.5.
Subject to the terms and conditions of this Agreement (including without
limitation the submission of a Borrowing Notice in compliance with Section
2.8 and the satisfaction of the applicable conditions precedent set forth
in Article IV), the Borrower may request an Advance hereunder for the
purpose of satisfying any Reimbursement Obligation.
2.19.7. Obligations Absolute. The Borrower's obligations under this
Section 2.19 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the LC Issuer, any
Lender or any beneficiary of a Facility LC. The Borrower further agrees
with the LC Issuer and the Lenders that the LC Issuer and the Lenders shall
not be responsible for, and the Borrower's Reimbursement Obligation in
respect of any Facility LC shall not be affected by, among other things,
the validity or genuineness of documents or of any endorsements thereon,
even if such documents should in fact prove to be in any or all respects
invalid, fraudulent or forged, or any dispute between or among
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the Borrower, any of its Affiliates, the beneficiary of any Facility LC or
any financing institution or other party to whom any Facility LC may be
transferred or any claims or defenses whatsoever of the Borrower or of any
of its Affiliates against the beneficiary of any Facility LC or any such
transferee. The LC Issuer shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message
or advice, however transmitted, in connection with any Facility LC. The
Borrower agrees that any action taken or omitted by the LC Issuer or any
Lender under or in connection with each Facility LC and the related drafts
and documents, if done without gross negligence or willful misconduct,
shall be binding upon the Borrower and shall not put the LC Issuer or any
Lender under any liability to the Borrower. Nothing in this Section 2.19.7
is intended to limit the right of the Borrower to make a claim against the
LC Issuer for damages as contemplated by the proviso to the first sentence
of Section 2.19.6.
2.19.8. Actions of LC Issuer. The LC Issuer shall be entitled to rely,
and shall be fully protected in relying, upon any Facility LC, draft,
writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order
or other document believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts
selected by the LC Issuer. The LC Issuer shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first have received such advice or concurrence of the Required Lenders as
it reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to
take any such action. Notwithstanding any other provision of this Section
2.19, the LC Issuer shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement in accordance with a request
of the Required Lenders, and such request and any action taken or failure
to act pursuant thereto shall be binding upon the Lenders and any future
holders of a participation in any Facility LC.
2.19.9. Indemnification. The Borrower hereby agrees to indemnify and
hold harmless each Lender, the LC Issuer and the Agent, and their
respective directors, officers, agents and employees from and against any
and all claims and damages, losses, liabilities, costs or expenses which
such Lender, the LC Issuer or the Agent may incur (or which may be claimed
against such Lender, the LC Issuer or the Agent by any Person whatsoever)
by reason of or in connection with the issuance, execution and delivery or
transfer of or payment or failure to pay under any Facility LC or any
actual or proposed use of any Facility LC, including, without limitation,
any claims, damages, losses, liabilities, costs or expenses which the LC
Issuer may incur by reason of or in connection with (i) the failure of any
other Lender to fulfill or comply with its obligations to the LC Issuer
hereunder (but nothing herein contained shall affect any rights the
Borrower may have against any defaulting Lender) or (ii) by reason of or on
account of the LC Issuer issuing any Facility LC which specifies that the
term "Beneficiary" included therein includes any successor by operation of
law of the named Beneficiary, but which Facility LC does not require that
any drawing by any such successor Beneficiary be accompanied by a copy of a
legal document, satisfactory to the LC Issuer, evidencing the appointment
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of such successor Beneficiary; provided that the Borrower shall not be
required to indemnify any Lender, the LC Issuer or the Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent, but
only to the extent, caused by (x) the willful misconduct or gross
negligence of the LC Issuer in determining whether a request presented
under any Facility LC complied with the terms of such Facility LC or (y)
the LC Issuer's failure to pay under any Facility LC after the presentation
to it of a request strictly complying with the terms and conditions of such
Facility LC. Nothing in this Section 2.19.9 is intended to limit the
obligations of the Borrower under any other provision of this Agreement.
2.19.10. Lenders' Indemnification. Each Lender shall, ratably in
accordance with its Pro Rata Share, indemnify the LC Issuer, its affiliates
and their respective directors, officers, agents and employees (to the
extent not reimbursed by the Borrower) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross negligence or
willful misconduct or the LC Issuer's failure to pay under any Facility LC
after the presentation to it of a request strictly complying with the terms
and conditions of the Facility LC) that such indemnitees may suffer or
incur in connection with this Section 2.19 or any action taken or omitted
by such indemnitees hereunder.
2.19.11. Facility LC Collateral Account. The Borrower agrees that it
will, upon the request of the Agent or the Required Lenders and until the
final expiration date of any Facility LC and thereafter as long as any
amount is payable to the LC Issuer or the Lenders in respect of any
Facility LC, maintain a special collateral account pursuant to arrangements
satisfactory to the Agent (the "Facility LC Collateral Account") at the
Agent's office at the address specified pursuant to Article XIII, in the
name of such Borrower but under the sole dominion and control of the Agent,
for the benefit of the Lenders and in which such Borrower shall have no
interest other than as set forth in Section 8.1. The Borrower hereby
pledges, assigns and grants to the Agent, on behalf of and for the ratable
benefit of the Lenders and the LC Issuer, a security interest in all of the
Borrower's right, title and interest in and to all funds which may from
time to time be on deposit in the Facility LC Collateral Account to secure
the prompt and complete payment and performance of the Obligations. The
Agent will invest any funds on deposit from time to time in the Facility LC
Collateral Account in certificates of deposit of Bank One having a maturity
not exceeding 30 days. Nothing in this Section 2.19.11 shall either
obligate the Agent to require the Borrower to deposit any funds in the
Facility LC Collateral Account or limit the right of the Agent to release
any funds held in the Facility LC Collateral Account in each case other
than as required by Section 8.1.
2.19.12. Rights as a Lender. In its capacity as a Lender, the LC
Issuer shall have the same rights and obligations as any other Lender.
2.20. Swing Line Loans.
2.20.1. Amount of Swing Line Loans. Upon the satisfaction of the
conditions precedent set forth in Section 4.2 and, if such Swing Line Loan
is to be made on the date
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of the initial Advance hereunder, the satisfaction of the conditions
precedent set forth in Section 4.1 as well, from and including the date of
this Agreement and prior to the Facility Termination Date, the Swing Line
Lender agrees, on the terms and conditions set forth in this Agreement, to
make Swing Line Loans to the Borrower from time to time in an aggregate
principal amount not to exceed the Swing Line Commitment, provided that the
Aggregate Outstanding Credit Exposure shall not at any time exceed the
Aggregate Commitment, and provided further that at no time shall the sum of
(i) the Swing Line Lender's Pro Rata Share of the Swing Line Loans, plus
(ii) the outstanding Revolving Loans made by the Swing Line Lender pursuant
to Section 2.1, exceed the Swing Line Lender's Commitment at such time.
Subject to the terms of this Agreement, the Borrower may borrow, repay and
reborrow Swing Line Loans at any time prior to the Facility Termination
Date.
2.20.2. Borrowing Notice. The Borrower shall deliver to the Agent and
the Swing Line Lender irrevocable notice (a "Swing Line Borrowing Notice")
not later than noon (Tulsa time) on the Borrowing Date of each Swing Line
Loan, specifying (i) the applicable Borrowing Date (which date shall be a
Business Day), and (ii) the aggregate amount of the requested Swing Line
Loan which shall be an amount not less than $100,000. The Swing Line Loans
shall bear interest at the Floating Rate.
2.20.3. Making of Swing Line Loans. Promptly after receipt of a Swing
Line Borrowing Notice, the Agent shall notify each Lender by fax, or other
similar form of transmission, of the requested Swing Line Loan. Not later
than 2:00 p.m. (Tulsa time) on the applicable Borrowing Date, the Swing
Line Lender shall make available the Swing Line Loan, in funds immediately
available in Tulsa, to the Agent at its address specified pursuant to
Article XIII. The Agent will promptly make the funds so received from the
Swing Line Lender available to the Borrower on the Borrowing Date at the
Agent's aforesaid address.
2.20.4. Repayment of Swing Line Loans. Each Swing Line Loan shall be
paid in full by the Borrower on or before the fifth (5th) Business Day
after the Borrowing Date for such Swing Line Loan. In addition, the Swing
Line Lender (i) may at any time in its sole discretion with respect to any
outstanding Swing Line Loan, or (ii) shall on the fifth (5th) Business Day
after the Borrowing Date of any Swing Line Loan, require each Lender
(including the Swing Line Lender) to make a Revolving Loan in the amount of
such Lender's Pro Rata Share of such Swing Line Loan (including, without
limitation, any interest accrued and unpaid thereon), for the purpose of
repaying such Swing Line Loan. Not later than noon (Tulsa time) on the date
of any notice received pursuant to this Section 2.20.4, each Lender shall
make available its required Revolving Loan, in funds immediately available
in Tulsa to the Agent at its address specified pursuant to Article XIII.
Revolving Loans made pursuant to this Section 2.20.4 shall initially be
Floating Rate Loans and thereafter may be continued as Floating Rate Loans
or converted into Eurodollar Loans in the manner provided in Section 2.10
and subject to the other conditions and limitations set forth in this
Article II. Unless a Lender shall have notified the Swing Line Lender,
prior to its making any Swing Line Loan, that any applicable condition
precedent set forth in Sections 4.1 or 4.2 had not then been satisfied,
such
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Lender's obligation to make Revolving Loans pursuant to this Section 2.20.4
to repay Swing Line Loans shall be unconditional, continuing, irrevocable
and absolute and shall not be affected by any circumstances, including,
without limitation, (a) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the Agent, the Swing Line
Lender or any other Person, (b) the occurrence or continuance of a Default
or Unmatured Default, (c) any adverse change in the condition (financial or
otherwise) of the Borrower, or (d) any other circumstances, happening or
event whatsoever. In the event that any Lender fails to make payment to the
Agent of any amount due under this Section 2.20.4, the Agent shall be
entitled to receive, retain and apply against such obligation the principal
and interest otherwise payable to such Lender hereunder until the Agent
receives such payment from such Lender or such obligation is otherwise
fully satisfied. In addition to the foregoing, if for any reason any Lender
fails to make payment to the Agent of any amount due under this Section
2.20.4, such Lender shall be deemed, at the option of the Agent, to have
unconditionally and irrevocably purchased from the Swing Line Lender,
without recourse or warranty, an undivided interest and participation in
the applicable Swing Line Loan in the amount of such Revolving Loan, and
such interest and participation may be recovered from such Lender together
with interest thereon at the Federal Funds Effective Rate for each day
during the period commencing on the date of demand and ending on the date
such amount is received. On the Facility Termination Date, the Borrower
shall repay in full the outstanding principal balance of the Swing Line
Loans.
2.21. Extension of Facility Termination Date. The Borrower may request an
extension of the Facility Termination Date by submitting a request for an
extension to the Agent (an "Extension Request") no more than 90 and no less than
30 days prior to the second (2nd) anniversary of the closing of this Agreement.
Promptly upon receipt of an Extension Request, the Agent shall notify each
Lender thereof and shall request each Lender to approve the Extension Request.
Each Lender approving the Extension Request shall deliver its written consent no
later than 15 days prior to such second (2nd) anniversary of the closing of this
Agreement. If the consent of each of the Lenders is received by the Agent, the
Facility Termination Date shall be extended by one year and the Agent shall
promptly notify the Borrower and each Lender of the new Facility Termination
Date.
2.22. Replacement of Lender. If the Borrower is required pursuant to
Section 3.1, 3.2 or 3.5 to make any additional payment to any Lender or if any
Lender's obligation to make or continue, or to convert Floating Rate Advances
into, Eurodollar Advances shall be suspended pursuant to Section 3.3 (any Lender
so affected an "Affected Lender"), the Borrower may elect, if such amounts
continue to be charged or such suspension is still effective, to replace such
Affected Lender as a Lender party to this Agreement, provided that no Default or
Unmatured Default shall have occurred and be continuing at the time of such
replacement, and provided further that, concurrently with such replacement, (i)
another bank or other entity which is reasonably satisfactory to the Borrower
and the Agent shall agree, as of such date, to purchase for cash the Advances
and other Obligations due to the Affected Lender pursuant to an assignment
substantially in the form of Exhibit C and to become a Lender for all purposes
under this Agreement and to assume all obligations of the Affected Lender to be
terminated as of such date and to comply with the requirements of Section 12.3
applicable to assignments, and (ii) the
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Borrower shall pay to such Affected Lender in same day funds on the day of such
replacement (A) all interest, fees and other amounts then accrued but unpaid to
such Affected Lender by the Borrower hereunder to and including the date of
termination, including without limitation payments due to such Affected Lender
under Sections 3.1, 3.2 and 3.5, and (B) an amount, if any, equal to the payment
which would have been due to such Lender on the day of such replacement under
Section 3.4 had the Loans of such Affected Lender been prepaid on such date
rather than sold to the replacement Lender.
2.23. Limitation of Interest. The Borrower, the Agent and the Lenders
intend to strictly comply with all applicable laws, including applicable usury
laws. Accordingly, the provisions of this Section 2.23 shall govern and control
over every other provision of this Agreement or any other Loan Document which
conflicts or is inconsistent with this Section 2.23, even if such provision
declares that it controls. As used in this Section 2.23, the term "interest"
includes the aggregate of all charges, fees, benefits or other compensation
which constitute interest under applicable law, provided that, to the maximum
extent permitted by applicable law, (a) any non-principal payment shall be
characterized as an expense or as compensation for something other than the use,
forbearance or detention of money and not as interest, and (b) all interest at
any time contracted for, reserved, charged or received shall be amortized,
prorated, allocated and spread, in equal parts during the full term of the
Obligations. In no event shall the Borrower or any other Person be obligated to
pay, or any Lender have any right or privilege to reserve, receive or retain,
(a) any interest in excess of the maximum amount of nonusurious interest
permitted under the laws of the State of Oklahoma or the applicable laws (if
any) of the United States or of any other applicable state, or (b) total
interest in excess of the amount which such Lender could lawfully have
contracted for, reserved, received, retained or charged had the interest been
calculated for the full term of the Obligations at the Highest Lawful Rate. On
each day, if any, that the interest rate (the "Stated Rate") called for under
this Agreement or any other Loan Document exceeds the Highest Lawful Rate, the
rate at which interest shall accrue shall automatically be fixed by operation of
this sentence at the Highest Lawful Rate for that day, and shall remain fixed at
the Highest Lawful Rate for each day thereafter until the total amount of
interest accrued equals the total amount of interest which would have accrued if
there were no such ceiling rate as is imposed by this sentence. Thereafter,
interest shall accrue at the Stated Rate unless and until the Stated Rate again
exceeds the Highest Lawful Rate when the provisions of the immediately preceding
sentence shall again automatically operate to limit the interest accrual rate.
The daily interest rates to be used in calculating interest at the Highest
Lawful Rate shall be determined by dividing the applicable Highest Lawful Rate
per annum by the number of days in the calendar year for which such calculation
is being made. None of the terms and provisions contained in this Agreement or
in any other Loan Document which directly or indirectly relate to interest shall
ever be construed without reference to this Section 2.21, or be construed to
create a contract to pay for the use, forbearance or detention of money at an
interest rate in excess of the Highest Lawful Rate. If the term of any
Obligation is shortened by reason of acceleration of maturity as a result of any
Default or by any other cause, or by reason of any required or permitted
prepayment, and if for that (or any other) reason any Lender at any time,
including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the Highest Lawful
Rate, then and in any such event all of any such excess interest shall be
canceled automatically as of the date of such acceleration, prepayment or other
event which produces the excess, and, if such excess interest has been paid
34
to such Lender, it shall be credited pro tanto against the then-outstanding
principal balance of the Borrower's obligations to such Lender, effective as of
the date or dates when the event occurs which causes it to be excess interest,
until such excess is exhausted or all of such principal has been fully paid and
satisfied, whichever occurs first, and any remaining balance of such excess
shall be promptly refunded to its payor.
ARTICLE III
YIELD PROTECTION; TAXES
3.1. Yield Protection. If, on or after the date of this Agreement, the
adoption of any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
change in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or
applicable Lending Installation or the LC Issuer with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) subjects any Lender or any applicable Lending Installation or the LC
Issuer to any Taxes, or changes the basis of taxation of payments (other than
with respect to Excluded Taxes) to any Lender or the LC Issuer in respect of its
Eurodollar Loans, Facility LCs or participations therein, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation or the LC Issuer (other than reserves and
assessments taken into account in determining the interest rate applicable to
Eurodollar Advances), or
(iii) imposes any other condition the result of which is to increase the
cost to any Lender or any applicable Lending Installation or the LC Issuer of
making, funding or maintaining its Eurodollar Loans, or of issuing or
participating in Facility LCs, reduces any amount receivable by any Lender or
any applicable Lending Installation or the LC Issuer in connection with its
Eurodollar Loans, Facility LCs or participations therein, or requires any Lender
or any applicable Lending Installation or the LC Issuer to make any payment
calculated by reference to the amount of Eurodollar Loans, Facility LCs or
participations therein held or interest or LC Fees received by it, by an amount
deemed material by such Lender or the LC Issuer as the case may be,
and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation or the LC Issuer, as the case may be, of making
or maintaining its Eurodollar Loans or Commitment or of issuing or participating
in Facility LCs or to reduce the return received by such Lender or applicable
Lending Installation or the LC Issuer, as the case may be, in connection with
such Eurodollar Loans, Commitment, Facility LCs or participations therein, then,
within 15 days of demand by such Lender or the LC Issuer, as the case may be,
the
35
Borrower shall pay such Lender or the LC Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the LC Issuer, as
the case may be, for such increased cost or reduction in amount received.
3.2. Changes in Capital Adequacy Regulations. If a Lender or the LC Issuer
determines the amount of capital required or expected to be maintained by such
Lender or the LC Issuer, any Lending Installation of such Lender or the LC
Issuer, or any corporation controlling such Lender or the LC Issuer is increased
as a result of a Change, then, within 15 days of demand by such Lender or LC
Issuer, the Borrower shall pay such Lender or the LC Issuer the amount necessary
to compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender or the LC Issuer determines is attributable
to this Agreement, its Outstanding Credit Exposure or its Commitment to make
Loans and issue or participate in Facility LCs, as the case may be, hereunder
(after taking into account such Lender's or the LC Issuer's policies as to
capital adequacy). "Change" means (i) any change after the date of this
Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change
in any other law, governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the force of law)
after the date of this Agreement which affects the amount of capital required or
expected to be maintained by any Lender or the LC Issuer or any Lending
Installation or any corporation controlling any Lender or the LC Issuer.
"Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in
effect in the United States on the date of this Agreement, including transition
rules, and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of the
Basle Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
3.3. Availability of Types of Advances. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (i) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available or (ii) the interest rate applicable to Eurodollar Advances does not
accurately reflect the cost of making or maintaining Eurodollar Advances, then
the Agent shall suspend the availability of Eurodollar Advances and require any
affected Eurodollar Advances to be repaid or converted to Floating Rate
Advances, subject to the payment of any funding indemnification amounts required
by Section 3.4.
3.4. Funding Indemnification. If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not
made on the date specified by the Borrower for any reason other than default by
the Lenders, the Borrower will indemnify each Lender for any loss or cost
incurred by it resulting therefrom, including, without limitation, any loss or
cost in liquidating or employing deposits acquired to fund or maintain such
Eurodollar Advance.
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3.5. Taxes. (i) All payments by the Borrower to or for the account of any
Lender, the LC Issuer or the Agent hereunder or under any Note or Facility LC
Application shall be made free and clear of and without deduction for any and
all Taxes. If the Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to any Lender, the LC Issuer or the
Agent, (a) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 3.5) such Lender, the LC Issuer or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (b) the Borrower shall make such deductions, (c) the
Borrower shall pay the full amount deducted to the relevant authority in
accordance with applicable law and (d) the Borrower shall furnish to the Agent
the original copy of a receipt evidencing payment thereof within 30 days after
such payment is made.
(ii) In addition, the Borrower hereby agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any Note or
Facility LC Application or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note or Facility LC Application ("Other
Taxes").
(iii) The Borrower hereby agrees to indemnify the Agent, the LC Issuer and
each Lender for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed on amounts payable under this
Section 3.5) paid by the Agent, the LC Issuer or such Lender as a result of its
Commitment, any Loans made by it hereunder, or otherwise in connection with its
participation in this Agreement and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto. Payments due under this
indemnification shall be made within 30 days of the date the Agent, the LC
Issuer or such Lender makes demand therefor pursuant to Section 3.6.
(iv) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof (each a "Non-U.S. Lender") agrees that it
will, not more than ten Business Days after the date of this Agreement, (i)
deliver to the Agent two duly completed copies of United States Internal Revenue
Service Form W-8BEN or W-8ECI, certifying in either case that such Lender is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, and (ii) deliver to the
Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and
certify that it is entitled to an exemption from United States backup
withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of
the Borrower and the Agent (x) renewals or additional copies of such form (or
any successor form) on or before the date that such form expires or becomes
obsolete, and (y) after the occurrence of any event requiring a change in the
most recent forms so delivered by it, such additional forms or amendments
thereto as may be reasonably requested by the Borrower or the Agent. All forms
or amendments described in the preceding sentence shall certify that such Lender
is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form or amendment with
respect to it and
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such Lender advises the Borrower and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.
(v) For any period during which a Non-U.S. Lender has failed to provide the
Borrower with an appropriate form pursuant to clause (iv), above (unless such
failure is due to a change in treaty, law or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under
this Section 3.5 with respect to Taxes imposed by the United States; provided
that, should a Non-U.S. Lender which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its failure
to deliver a form required under clause (iv), above, the Borrower shall take
such steps as such Non-U.S. Lender shall reasonably request to assist such
Non-U.S. Lender to recover such Taxes.
(vi) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall deliver to
the Borrower (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate.
(vii) If the U.S. Internal Revenue Service or any other governmental
authority of the United States or any other country or any political subdivision
thereof asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered or properly completed, because such Lender failed to notify
the Agent of a change in circumstances which rendered its exemption from
withholding ineffective, or for any other reason), such Lender shall indemnify
the Agent fully for all amounts paid, directly or indirectly, by the Agent as
tax, withholding therefor, or otherwise, including penalties and interest, and
including taxes imposed by any jurisdiction on amounts payable to the Agent
under this subsection, together with all costs and expenses related thereto
(including attorneys fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent). The obligations of the Lenders under
this Section 3.5(vii) shall survive the payment of the Obligations and
termination of this Agreement.
3.6. Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrower to such
Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of
Eurodollar Advances under Section 3.3, so long as such designation is not, in
the judgment of such Lender, disadvantageous to such Lender. Each Lender shall
deliver a written statement of such Lender to the Borrower (with a copy to the
Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such
written statement shall set forth in reasonable detail the calculations upon
which such Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of manifest error. Determination of
amounts payable under such Sections in connection with a Eurodollar Loan shall
be calculated as though each Lender funded its Eurodollar Loan through the
purchase of a deposit of the type and maturity corresponding to the deposit used
as a reference in determining the Eurodollar Rate
38
applicable to such Loan, whether in fact that is the case or not. Unless
otherwise provided herein, the amount specified in the written statement of any
Lender shall be payable on demand after receipt by the Borrower of such written
statement. The obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5
shall survive payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Credit Extension. The Lenders shall not be required to make
the initial Credit Extension hereunder unless the following conditions have been
satisfied and/or the Borrower has furnished to the Agent with sufficient copies
for the Lenders:
(i) Copies of the articles or certificate of incorporation of the Borrower
and each Subsidiary, together with all amendments, and a certificate of good
standing, each certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of the
Borrower and each Subsidiary, of its by-laws and of its Board of Directors'
resolutions and of resolutions or actions of any other body authorizing the
execution of the Loan Documents to which the Borrower or Subsidiary is a party.
(iii) An incumbency certificate, executed by the Secretary or Assistant
Secretary of the Borrower and each Subsidiary, which shall identify by name and
title and bear the signatures of the Authorized Officers and any other officers
of the Borrower and each Subsidiary authorized to sign the Loan Documents to
which the Borrower and each Subsidiary is a party, upon which certificate the
Agent and the Lenders shall be entitled to rely until informed of any change in
writing by the Borrower.
(iv) A certificate, signed by the chief financial officer of the Borrower,
stating that on the initial Credit Extension Date no Default or Unmatured
Default has occurred and is continuing.
(v) A written opinion of the Borrower's counsel, addressed to the Lenders
in substantially the form of Exhibit A.
(vi) Any Notes requested by a Lender pursuant to Section 2.13 payable to
the order of each such requesting Lender.
(vii) Written money transfer instructions, in substantially the form of
Exhibit D, addressed to the Agent and signed by an Authorized Officer, together
with such other related money transfer authorizations as the Agent may have
reasonably requested.
39
(viii) The Security Agreements, creating a first priority security interest
on the Collateral.
(xix) The Pledged Shares.
(x) The UCC-1 Financing Statements.
(xi) The UCC Lien Searches.
(xii) The Vehicle Titles
(xiii) The Vehicle Lien Entry Forms
(xiv) The Mortgaged Properties Documents.
(xv) The Mortgaged Properties Security Instruments, including without
limitation Environmental Audits and Environmental Reports acceptable to Agent
and Lenders.
(xvi) The Guaranty Agreements.
(xvii) Appraisals, satisfactory to the Agent, prepared by an independent
appraiser engaged directly by the Agent, of each parcel of real property or
interest in real property described in the Mortgaged Properties Security
Instruments which appraisals satisfy the requirements of the Financial
Institutions Reform, Recovery and Enforcement Act, as amended, and the
regulations promulgated thereunder, if applicable, and which shall evidence
compliance with the supervisory loan-to-value limits set forth in the Federal
Deposit Insurance Corporation Improvement Act of 1991, as amended, and the
regulations promulgated thereunder, if applicable, together with evidence of
compliance with applicable federal regulations governing loans in areas having
special flood hazards.
(xviii) The insurance certificate described in Section 5.21.
(xix) The Agent shall have determined that (i) since August 31, 2002, there
is an absence of any material adverse change or disruption in primary or
secondary loan syndication markets, financial markets or in capital markets
generally that would likely impair syndication of the Loans hereunder and (ii)
the Borrower and Subsidiaries have fully cooperated with the Agent's syndication
efforts including, without limitation, by providing the Agent with information
regarding the Borrower's and Subsidiaries' operations and prospects and such
other information as the Agent deems necessary to successfully syndicate the
Loans hereunder.
(xx) If the initial Credit Extension will be the Issuance of a Facility LC,
a properly completed Facility LC Application.
(xxi) Assurance satisfactory to Agent of the completion of the Hake Group
Acquisition.
40
(xxii) Such other documents as any Lender or its counsel may have
reasonably requested.
(xxiii) Pro forma opening financial statements, giving effect to the Hake
Group Acquisition, and projections updating the projections dated February 11,
2003, previously provided to the Lenders, together with such other information
as the Agent and Lenders may reasonably request to confirm the tax, legal and
business assumptions made in such statements and projections.
(xxiv) Funding under the Hake Group Acquisition shall have occurred by
March 31, 2003.
(xxv) Copies of the resolutions of the Borrower and Skyview Partners, LLC
authorizing the execution and performance under the Hake Acquisition Documents,
together with respective shareholder approval, if necessary.
(xxvi) The Hake Acquisition Documents must be in form and content
acceptable to the Agent and Lenders, and Agent and Lenders must receive an
opinion of counsel as to the enforceability thereof and compliance with all
applicable laws.
4.2 Each Credit Extension. The Lenders shall not (except as otherwise set
forth in Section 2.20.4) be required to make any Credit Extension unless on the
applicable Credit Extension Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are
true and correct as of such Credit Extension Date except to the extent
any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall have
been true and correct on and as of such earlier date.
(iii) All legal matters incident to the making of such Credit
Extension shall be satisfactory to the Lenders and their counsel.
Each Borrowing Notice or request for issuance of a Facility LC or Swing
Line Borrowing Notice, as the case may be, with respect to each such Credit
Extension shall constitute a representation and warranty by the Borrower that
the conditions contained in Sections 4.2(i) and (ii) have been satisfied. Any
Lender may require a duly completed compliance certificate in substantially the
form of Exhibit B as a condition to making a Credit Extension.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
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The Borrower represents and warrants to the Lenders that:
5.1. Existence and Standing. Each of the Borrower and its Subsidiaries is
an entity duly and properly incorporated or organized, as the case may be,
validly existing and (to the extent such concept applies to such entity) in good
standing under the laws of its jurisdiction of incorporation or organization as
set forth on Schedule "7" hereto, and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted; subject to the
Subsidiaries described on Schedule "8" hereto, which Borrower presently intends
to dissolve.
5.2. Authorization and Validity. The Borrower has the power and authority
and legal right to execute and deliver the Loan Documents to which it is a party
and to perform its obligations thereunder. The execution and delivery by the
Borrower of the Loan Documents to which it is a party and the performance of its
obligations thereunder have been duly authorized by proper corporate
proceedings, and the Loan Documents to which the Borrower is a party constitute
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and delivery by
the Borrower of the Loan Documents to which it is a party, nor the consummation
of the transactions therein contemplated, nor compliance with the provisions
thereof will violate (i) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its Subsidiaries
or (ii) the Borrower's or any Subsidiary's articles or certificate of
incorporation, partnership agreement, certificate of partnership, articles or
certificate of organization, by-laws, or operating or other management
agreement, as the case may be, or (iii) the provisions of any indenture,
instrument or agreement to which the Borrower or any of its Subsidiaries is a
party or is subject, or by which it, or its Property, is bound, or conflict with
or constitute a default thereunder, or result in, or require, the creation or
imposition of any Lien in, of or on the Property of the Borrower or a Subsidiary
pursuant to the terms of any such indenture, instrument or agreement. No order,
consent, adjudication, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, or other action in
respect of any governmental or public body or authority, or any subdivision
thereof, which has not been obtained by the Borrower or any of its Subsidiaries,
is required to be obtained by the Borrower or any of its Subsidiaries in
connection with the execution and delivery of the Loan Documents, the borrowings
under this Agreement, the payment and performance by the Borrower of the
Obligations or the legality, validity, binding effect or enforceability of any
of the Loan Documents.
5.4. Financial Statements. The November 30, 2002 consolidated financial
statements of the Borrower and its Subsidiaries (but the June 30, 2002 audited
financial statements as to Hake Group) heretofore delivered to the Lenders were
prepared in accordance with generally accepted accounting principles in effect
on the date such statements were prepared and fairly present the consolidated
financial condition and operations of the Borrower and its Subsidiaries at such
date and the consolidated results of their operations for the period then ended.
42
5.5. Material Adverse Change. Since November 30, 2002 there has been no
change in the business, Property, condition (financial or otherwise), prospects
or results of operations of the Hake Group which is not covered by the purchase
price holdback or of the Borrower and its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed all United States
federal tax returns and all other tax returns which are required to be filed and
have paid all taxes due pursuant to said returns or pursuant to any assessment
received by the Borrower or any of its Subsidiaries, except such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
provided in accordance with Agreement Accounting Principles and as to which no
Lien exists. The United States income tax returns of the Borrower and its
Subsidiaries have been audited by the Internal Revenue Service through the
fiscal year ended May 31, 1998 as to the Borrower, and January 31, 1997 as to
the Hake Group. No tax liens have been filed and no claims are being asserted
with respect to any such taxes. The charges, accruals and reserves on the books
of the Borrower and its Subsidiaries in respect of any taxes or other
governmental charges are adequate.
5.7. Litigation and Contingent Obligations. Except as set forth on Schedule
"9", there is no litigation, arbitration, governmental investigation, proceeding
or inquiry pending or, to the knowledge of any of their officers, threatened
against or affecting the Borrower or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect or which seeks to
prevent, enjoin or delay the making of any Credit Extensions. Other than any
liability incident to any litigation, arbitration or proceeding which (i) could
not reasonably be expected to have a Material Adverse Effect or (ii) is set
forth on Schedule "9", the Borrower has no material contingent obligations not
provided for or disclosed in the financial statements referred to in Section
5.4.
5.8. Subsidiaries. Schedule "10" contains an accurate list of all
Subsidiaries of the Borrower as of the date of this Agreement, setting forth
their respective jurisdictions of organization and the percentage of their
respective capital stock or other ownership interests owned by the Borrower or
other Subsidiaries. All of the issued and outstanding shares of capital stock or
other ownership interests of such Subsidiaries have been (to the extent such
concepts are relevant with respect to such ownership interests) duly authorized
and issued and are fully paid and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not in
the aggregate exceed $500,000. Neither the Borrower nor any other member of the
Controlled Group has incurred, or is reasonably expected to incur, any
withdrawal liability to Multiemployer Plans in excess of $500,000 in the
aggregate. Each Plan complies in all material respects with all applicable
requirements of law and regulations, no Reportable Event has occurred with
respect to any Plan, neither the Borrower nor any other member of the Controlled
Group has withdrawn from any Plan or initiated steps to do so, and no steps have
been taken to reorganize or terminate any Plan.
5.10. Accuracy of Information. No information, exhibit or report furnished
by the Borrower or any of its Subsidiaries to the Agent or to any Lender in
connection with the
43
negotiation of, or compliance with, the Loan Documents contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U) constitutes
less than 25% of the value of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge, or other restriction
hereunder.
5.12. Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect or (ii) any
agreement or instrument evidencing or governing Indebtedness.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have complied
with all applicable statutes, rules, regulations, orders and restrictions of any
domestic or foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property except for any failure to comply with any of the
foregoing which could not reasonably be expected to have a Material Adverse
Effect.
5.14. Ownership of Properties. Except as set forth on Schedule "2", on the
date of this Agreement, the Borrower and its Subsidiaries will have good title,
free of all Liens other than those permitted by Section 6.15, to all of the
Property and assets reflected in the Borrower's most recent consolidated
financial statements provided to the Agent as owned by the Borrower and its
Subsidiaries.
5.15. Plan Assets; Prohibited Transactions. The Borrower is not an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. ss. 2510.3-101 of
an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA or any plan (within the meaning of Section 4975 of the
Code), and neither the execution of this Agreement nor the making of Credit
Extensions hereunder gives rise to a prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Code.
5.16. Environmental Matters. Except as discussed on Schedule "11" hereto,
in the ordinary course of its business, the officers of the Borrower consider
the effect of Environmental Laws on the business of the Borrower and its
Subsidiaries, in the course of which they identify and evaluate potential risks
and liabilities accruing to the Borrower due to Environmental Laws. On the basis
of this consideration, the Borrower has concluded that Environmental Laws cannot
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any Subsidiary has received any notice to the effect that its operations are
not in material compliance with any of the requirements of applicable
Environmental Laws or are the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release of
44
any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.
5.17. Investment Company Act. Neither the Borrower nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
5.18. Public Utility Holding Company Act. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
5.19. Subordinated Indebtedness. The Obligations constitute senior
indebtedness which is entitled to the benefits of the subordination provisions
of all outstanding Subordinated Indebtedness.
5.20. Post-Retirement Benefits. The present value of the expected cost of
post-retirement medical and insurance benefits payable by the Borrower and its
Subsidiaries to its employees and former employees, as estimated by the Borrower
in accordance with procedures and assumptions deemed reasonable by the Required
Lenders, does not exceed $500,000.
5.21. Insurance. The certificate signed by the President or Chief Financial
Officer of the Borrower, that attests to the existence and adequacy of, and
summarizes, the property and casualty insurance program carried by the Borrower
with respect to itself and its Subsidiaries and that has been furnished by the
Borrower to the Agent and the Lenders, is complete and accurate. This summary
includes the insurer's or insurers' name(s), policy number(s), expiration
date(s), amount(s) of coverage, type(s) of coverage, exclusion(s), and
deductibles. This summary also includes similar information, and describes any
reserves, relating to any self-insurance program that is in effect.
5.22. Solvency. (i) Immediately after the consummation of the transactions
to occur on the date hereof and immediately following the making of each Loan,
if any, made on the date hereof and after giving effect to the application of
the proceeds of such Loans, (a) the fair value of the assets of the Borrower and
its Subsidiaries on a consolidated basis, at a fair valuation, will exceed the
debts and liabilities, subordinated, contingent or otherwise, of the Borrower
and its Subsidiaries on a consolidated basis; (b) the present fair saleable
value of the Property of the Borrower and its Subsidiaries on a consolidated
basis will be greater than the amount that will be required to pay the probable
liability of the Borrower and its Subsidiaries on a consolidated basis on their
debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (c) the Borrower and
its Subsidiaries on a consolidated basis will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) the Borrower and its
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the businesses in which they are engaged as such
businesses are now conducted and are proposed to be conducted after the date
hereof.
45
(ii) The Borrower does not intend to, or to permit any of its Subsidiaries
to, and does not believe that it or any of its Subsidiaries will, incur debts
beyond its ability to pay such debts as they mature, taking into account the
timing of and amounts of cash to be received by it or any such Subsidiary and
the timing of the amounts of cash to be payable on or in respect of its
Indebtedness or the Indebtedness of any such Subsidiary.
5.23. Payment and Performance Bonds. Attached hereto as Schedule "12" are
representative copies of payment and performance bonds utilized by the Borrower
and Subsidiaries. No such bonds (or any application or related documents)
currently, or in the future will, evidence any collateral or security of any
kind or nature in favor of the surety.
5.24. Acquisition. All conditions precedent for the completion of the Hake
Acquisition have been satisfied.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial and other Reporting. The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Agent:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified (except for qualifications relating to changes in accounting
principles or practices reflecting changes in generally accepted accounting
principles and required or approved by the Borrower's independent certified
public accountants) audit report (or its 10-K) certified by independent
certified public accountants acceptable to the Lenders, prepared in accordance
with Agreement Accounting Principles on a consolidated for itself and its
Subsidiaries, including balance sheets as of the end of such period, related
profit and loss and reconciliation of surplus statements, and a statement of
cash flows, accompanied by (a) any management letter prepared by said
accountants, and (b) a certificate of said accountants that, in the course of
their examination necessary for their certification of the foregoing, they have
obtained no knowledge of any Default or Unmatured Default, or if, in the opinion
of such accountants, any Default or Unmatured Default shall exist, stating the
nature and status thereof.
(ii) Within 45 days after the close of the first three quarterly periods of
each of its fiscal years, for itself and its Subsidiaries, consolidated
unaudited balance sheets (or its 10-Q) as at the close of each such period and
consolidated profit and loss and reconciliation of surplus statements and a
statement of cash flows for the period from the beginning of such fiscal year to
the end of such quarter, all certified by its chief financial officer, or its
10-Q's.
46
(iii) Together with the financial statements required under Sections 6.1(i)
and (ii), a compliance certificate in substantially the form of Exhibit B signed
by its chief financial officer showing the calculations necessary to determine
compliance with this Agreement and stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists, stating the nature and
status thereof.
(iv) If applicable, within 270 days after the close of each Plan year, a
statement of the Unfunded Liabilities of each Single Employer Plan, certified as
correct by an actuary enrolled under ERISA.
(v) As soon as possible and in any event within 10 days after the Borrower
knows that any Reportable Event has occurred with respect to any Plan, a
statement, signed by the chief financial officer of the Borrower, describing
said Reportable Event and the action which the Borrower proposes to take with
respect thereto.
(vi) As soon as possible and in any event within 10 days after receipt by
the Borrower, a copy of (a) any notice or claim to the effect that the Borrower
or any of its Subsidiaries is or may be liable to any Person as a result of the
release by the Borrower, any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the environment, and (b) any notice
alleging any violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any of its Subsidiaries, which, in
either case, could reasonably be expected to have a Material Adverse Effect.
(vii) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy statements so
furnished, if not previously delivered to Agent.
(viii) Promptly upon the filing thereof, copies of all annual, quarterly,
monthly or other regular reports which the Borrower or any of its Subsidiaries
files with the Securities and Exchange Commission, if not previously delivered
to Agent.
(ix) On each yearly anniversary of the Closing Date, a certificate of good
standing for the Borrower and each other Person which has pledged collateral in
support of the Obligations from the appropriate governmental officer in its
jurisdiction of incorporation or organization.
(x) Such other information (including non-financial information) as the
Agent or any Lender may from time to time reasonably request.
(xi) Within thirty (30) days after the end of each calendar month, a
completed Borrowing Base Certificate, prepared as of the end of such month and
certified by the chief financial officer of the Borrower, including comments as
to any Accounts ninety (90) days or more past due and over $1,000,000.
(xii) Within thirty (30) days after the end of each calendar month,
accounts receivable aging reports in form and content satisfactory to Agent.
47
(xiii) Within thirty (30) days after the end of each fiscal quarter of the
Borrower, work in process report summaries and backlog reports, in form and
content satisfactory to Agent.
(xiv) Promptly provide Agent written notice of any change order(s) or other
action(s) as to any Account resulting in a reduction in excess of $500,000.
6.2. Use of Proceeds. The Borrower will, and will cause each Subsidiary to,
use the proceeds of the Credit Extensions for general corporate purposes and for
the Hake Group Acquisition. The Borrower will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Advances to purchase or carry any
"margin stock" (as defined in Regulation U).
6.3. Notice of Default. The Borrower will, and will cause each Subsidiary
to, give prompt notice in writing to the Lenders of the occurrence of (i) any
Default or Unmatured Default, and (ii) any other development, financial or
otherwise, which could reasonably be expected to have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each Subsidiary
to, carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted and do
all things necessary to remain duly incorporated or organized, validly existing
and (to the extent such concept applies to such entity) in good standing as a
domestic corporation, partnership or limited liability company in its
jurisdiction of incorporation or organization, as the case may be, and maintain
all requisite authority to conduct its business in each jurisdiction in which
its business is conducted.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to, timely
file complete and correct United States federal and applicable foreign, state
and local tax returns required by law and pay when due all taxes, assessments
and governmental charges and levies upon it or its income, profits or Property,
except those which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been set aside in accordance
with Agreement Accounting Principles. At any time that any Subsidiary is
organized as a limited liability company, each such limited liability company
will qualify for partnership tax treatment under United States federal tax law.
6.6. Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
all their Property in such amounts and covering such risks as is consistent with
sound business practice, and the Borrower will furnish to any Lender upon
request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, materially comply with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject
including, without limitation, all Environmental Laws.
6.8. Maintenance of Properties. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and
48
replacements so that its business carried on in connection therewith may be
properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each Subsidiary to,
permit the Agent and the Lenders, by their respective representatives and
agents, to inspect any of the Property, books and financial records of the
Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each Subsidiary
with, and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Agent or any Lender may designate.
6.10. Dividends. The Borrower will not, nor will it permit any Subsidiary
to, declare or pay any dividends or make any distributions on its capital stock
(other than dividends payable in its own capital stock) or redeem, repurchase or
otherwise acquire or retire any of its capital stock at any time outstanding, in
excess of $1,000,000 during any given fiscal year, except that (i) the Borrower
may declare and pay dividends (not to exceed fifty percent (50%) of cumulative
net income) on its capital stock, and (ii) Subsidiaries may make unlimited
dividends to the Borrower, provided that no Default or Unmatured Default shall
exist before or after giving effect to such dividends or be created as a result
thereof.
6.11. Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loans and the Reimbursement Obligations.
(ii) Indebtedness existing on the date hereof and described in Schedule
"13".
(iii) Indebtedness arising in connection with transactions permitted by
Section 6.15(vii).
(iv) Unsecured Indebtedness for general operating purposes not to exceed
$1,000,000 during any given Fiscal Year.
(v) Capital Leases not to exceed $1,000,000 outstanding at any given time.
6.12. Merger. The Borrower will not, nor will it permit any Subsidiary to,
merge or consolidate with or into any other Person, except that a Subsidiary may
merge into the Borrower or a Wholly-Owned Subsidiary.
6.13. Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property to any other
Person, except:
(i) Sales of inventory in the ordinary course of business.
(ii) Leases, sales or other dispositions of its Property (other than those
Properties described on Schedule "15" hereto) that, together with all other
Property of the Borrower and its
49
Subsidiaries previously leased, sold or disposed of (other than inventory in the
ordinary course of business) as permitted by this Section during the
twelve-month period ending with the month in which any such lease, sale or other
disposition occurs, do not constitute a Substantial Portion of the Property of
the Borrower and its Subsidiaries.
6.14. Investments and Acquisitions. The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments (excluding
without limitation, in the ordinary course of business consistent with past
practices, loans and advances to, and other Investments in, Subsidiaries a party
to a Security Agreement), or commitments therefor, or to create any Subsidiary
or to become or remain a partner in any partnership or joint venture, or to make
any Acquisition of any Person, except:
(i) Cash Equivalent Investments.
(ii) Existing Investments in Subsidiaries and other Investments in
existence on the date hereof and described in Schedule "10".
(iii) Acquisitions limited to $5,000,000 per acquisition and $10,000,000 in
the aggregate per fiscal year.
(iv) In addition to the Radner Hake Joint Venture, project specific joint
ventures conducting business similar to Borrower, not to exceed Investment of
$3,000,000 per venture during any given fiscal year.
6.15. Liens. The Borrower will not, nor will it permit any Subsidiary to,
create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies on its
Property if the same shall not at the time be delinquent or thereafter can be
paid without penalty, or are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with Agreement
Accounting Principles shall have been set aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and mechanics'
liens and other similar liens arising in the ordinary course of business which
secure payment of obligations not more than 60 days past due or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's compensation
laws, unemployment insurance, old age pensions, or other social security or
retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other encumbrances
or charges against real property as are of a nature generally existing with
respect to properties of a similar character and which do not in any material
way affect the marketability of the same or interfere with the use thereof in
the business of the Borrower or its Subsidiaries.
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(v) Liens existing on the date hereof and described in Schedule "2".
(vi) Liens in favor of the Agent, for the benefit of the Lenders, granted
pursuant to any Collateral Document.
(vii) Purchase money liens not to exceed $500,000 during any given fiscal
year.
(viii) Liens relating to Capital Leases permitted under Section 6.11(v).
6.16. Capital Expenditures. The Borrower will not, nor will it permit any
Subsidiary to, expend, or be committed to expend, in excess of $12,500,000 for
Capital Expenditures during any one fiscal year (commencing with the fiscal year
2004) on a non-cumulative basis in the aggregate for the Borrower and its
Subsidiaries, excluding up to $4,000,000 for the fiscal year ending 2004, with
respect to Capital Expenditures for completion of construction of the Port of
Catoosa property located at 1105 West Main Parkway.
6.17. Rentals. The Borrower will not, nor will it permit any Subsidiary to,
create, incur or suffer to exist obligations for Rentals in excess of $3,500,000
during any one fiscal year on a non-cumulative basis in the aggregate for the
Borrower and its Subsidiaries.
6.18. Affiliates. The Borrower will not, and will not permit any Subsidiary
to, enter into any transaction (including, without limitation, the purchase or
sale of any Property or service) with, or make any payment or transfer to, any
Affiliate except (i) in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or such Subsidiary's business and upon
fair and reasonable terms consistent with past practices between the Borrower or
such Subsidiary (provided, that transfers for tax related purposes from Borrower
to Subsidiaries and from Subsidiary to Subsidiary shall be permitted), and (ii)
transactions between the Borrower or any Subsidiary, on the one hand, and any
Subsidiary or other special-purpose entity created to engage solely in a
Qualified Receivables Transaction.
6.19. Amendments to Agreements. The Borrower will not, and will not permit
any Subsidiary to, amend or terminate any agreement or contract which could
cause a Material Adverse Effect.
6.20. Subordinated Indebtedness. The Borrower will not, and will not permit
any Subsidiary to, make any amendment or modification to the indenture, note or
other agreement evidencing or governing any Subordinated Indebtedness, or
directly or indirectly voluntarily prepay, defease or in substance defease,
purchase, redeem, retire or otherwise acquire, any Subordinated Indebtedness.
6.21. Operating Leases. The Borrower will not, nor will it permit any
Subsidiary to, enter into or remain liable upon any Operating Lease, which have
Operating Lease Obligations more than $15,000,000 in the aggregate at any one
time outstanding. Current Operating Leases include those set forth on Schedule
"16" hereto.
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6.22. Sale of Accounts. The Borrower will not, nor will it permit any
Subsidiary to, sell or otherwise dispose of any notes receivable or accounts
receivable, with or without recourse.
6.23. Sale and Leaseback Transactions and other Off-Balance Sheet
Liabilities. The Borrower will not, nor will it permit any Subsidiary to, enter
into or suffer to exist any (i) Sale and Leaseback Transaction or (ii) any other
transaction pursuant to which it incurs or has incurred Off-Balance Sheet
Liabilities, except for (a) Rate Management Obligations permitted in this
Agreement.
6.24. Contingent Obligations. The Borrower will not, nor will it permit any
Subsidiary to, make or suffer to exist any Contingent Obligation (including,
without limitation, any Contingent Obligation with respect to the obligations of
a Subsidiary), except (i) by endorsement of instruments for deposit or
collection in the ordinary course of business, (ii) the Reimbursement
Obligations, (iii) the Guaranty, (iv) bonds (i.e., bid, payment, performance),
(v) performance as may be required under contractor licenses, and (vi) the
guaranty of Subsidiary obligations incurred in the ordinary course of business
(e.g., accounts payable and payroll).
6.25. Letters of Credit. The Borrower will not, nor will it permit any
Subsidiary to, apply for or become liable upon or in respect of any Letter of
Credit other than Facility LCs.
6.26. Financial Contracts. The Borrower will not, nor will it permit any
Subsidiary to, enter into or remain liable upon any Financial Contract, except
Rate Management Transactions.
6.27. Financial Covenants.
6.27.1. Fixed Charge Coverage Ratio. The Borrower will not permit the
ratio, determined as of the end of each of its fiscal quarters, of (i)
Consolidated EBITDA for the then most recently ended fiscal four quarters,
minus dividends and distributions made or paid during the same period,
minus cash taxes paid during the same period and minus Capital Expenditures
(excluding $7,500,000 of Capital Expenditures attributable to the Port
facility during the ensuing twelve (12) months), to (ii) scheduled current
maturities long-term debt according to generally accepted accounting
practices for the ensuing four fiscal quarters, plus Consolidated Interest
Expense (excluding non-cash interest accrued on the Hake Acquisition
deferred purchase price) for the then most recently ended four fiscal
quarters, to be less than 1.40 to 1.0 through February 28, 2005, and
thereafter 1.50 to 1.0.
6.27.2. Leverage Ratio. The Borrower will not permit the ratio,
determined as of the end of each of its fiscal quarters, of (i)
Consolidated Funded Indebtedness (including without limitation the face
value of any deferred purchase price or holdback in connection with the
acquisition of the Hake Group, but excluding issued but unfunded Letters of
Credit or outstanding but unfunded payment and performance bonds), to (ii)
Consolidated EBITDA, to be greater than 2.50 to 1.0 through February 28,
2004; 2.25 to 1.0 through February 28, 2005, and thereafter 2.00 to 1.0.
52
6.27.3. Minimum Net Worth. The Borrower will at all times maintain
Consolidated Net Worth (plus fifty percent 50% of quarterly positive net
income on a cumulative basis) of not less than $60,000,000.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
7.1. Any representation or warranty made or deemed made by or on behalf of
the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in
connection with this Agreement, any Credit Extension, or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall be materially false on the date as of which made.
7.2. Nonpayment of principal of any Loan when due, nonpayment of any
Reimbursement Obligations within one Business Day after the same becomes due, or
nonpayment of interest upon any Loan or of any commitment fee, LC Fee or other
obligations under any of the Loan Documents within five days after the same
becomes due.
7.3. The breach by the Borrower (other than a breach which constitutes a
Default under another Section of this Article VII) of any of the terms or
provisions of this Agreement which is not remedied within (i) ten (10) days as
to monetary Defaults other than under 7.2., or (ii) thirty (30) days as to
non-monetary Defaults, after written notice from the Agent or any Lender.
7.4. Failure of the Borrower or any of its Subsidiaries to pay when due any
Material Indebtedness; or the default by the Borrower or any of its Subsidiaries
or any Guarantor in the performance (beyond the applicable grace period with
respect thereto, if any) of any term, provision or condition contained in any
Material Indebtedness Agreement, or any other event shall occur or condition
exist, the effect of which default, event or condition is to cause, or to permit
the holder(s) of such Material Indebtedness or the lender(s) under any Material
Indebtedness Agreement to cause, such Material Indebtedness to become due prior
to its stated maturity or any commitment to lend under any Material Indebtedness
Agreement to be terminated prior to its stated expiration date; or any Material
Indebtedness of the Borrower or any of its Subsidiaries or any Guarantor shall
be declared to be due and payable or required to be prepaid or repurchased
(other than by a regularly scheduled payment) prior to the stated maturity
thereof; or the Borrower or any of its Subsidiaries or any Guarantor shall not
pay, or admit in writing its inability to pay, its debts generally as they
become due.
7.5. The Borrower or any of its Subsidiaries or any Guarantor shall (i)
have an order for relief entered with respect to it under the Federal bankruptcy
laws as now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an
53
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (v)
take any corporate or partnership action to authorize or effect any of the
foregoing actions set forth in this Section 7.5 or (vi) fail to contest in good
faith any appointment or proceeding described in Section 7.6.
7.6. Without the application, approval or consent of the Borrower or any of
its Subsidiaries, or any Guarantor a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any of its Subsidiaries
or any Guarantor or any Substantial Portion of its Property, or a proceeding
described in Section 7.5(iv) shall be instituted against the Borrower or any of
its Subsidiaries or any Guarantor and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of 30 consecutive
days.
7.7. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of the Borrower or any of its Subsidiaries or any Guarantor which, when
taken together with all other Property of the Borrower and its Subsidiaries or
any Guarantor so condemned, seized, appropriated, or taken custody or control
of, during the twelve-month period ending with the month in which any such
action occurs, constitutes a Substantial Portion.
7.8. The Borrower or any of its Subsidiaries shall fail within 30 days to
pay, bond or otherwise discharge one or more (i) judgments or orders for the
payment of $1,000,000 or more in excess of insurance coverage (or the equivalent
thereof in currencies other than U.S. Dollars) in the aggregate, or (ii)
nonmonetary judgments or orders which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, which judgment(s), in
any such case, is/are not stayed on appeal or otherwise being appropriately
contested in good faith.
7.9. The Unfunded Liabilities of all Single Employer Plans shall exceed in
the aggregate $500,000 or any Reportable Event shall occur in connection with
any Plan.
7.10. Nonpayment by the Borrower or any Subsidiary of any Rate Management
Obligation when due or the breach by the Borrower or any Subsidiary of any term,
provision or condition contained in any Rate Management Transaction or any
transaction of the type described in the definition of "Rate Management
Transactions," whether or not any Lender or Affiliate of a Lender is a party
thereto.
7.11. Any Change in Control shall occur, except with respect to a merger
which does not cause a Material Adverse Effect.
7.12. The Borrower or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be
54
paid to Multiemployer Plans by the Borrower or any other member of the
Controlled Group has withdrawal liability (determined as of the date of such
notification), exceeds $2,000,000 or requires payments exceeding $1,000,000 per
annum, and such liability has not been fully satisfied within forty-five (45)
days of receipt of such notification.
7.13. The Borrower or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of Title IV
of ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of the Borrower and the other members of the Controlled
Group (taken as a whole) to all Multiemployer Plans which are then in
reorganization or being terminated have been or will be increased over the
amounts contributed to such Multiemployer Plans for the respective plan years of
each such Multiemployer Plan immediately preceding the plan year in which the
reorganization or termination occurs by an amount exceeding $2,000,000, and such
liability has not been fully satisfied within forty-five (45) days of receipt of
such notification.
7.14. The Borrower or any of its Subsidiaries shall (i) be the subject of
any proceeding or investigation pertaining to the release by the Borrower, any
of its Subsidiaries or any other Person of any toxic or hazardous waste or
substance into the environment which results in remediation liability in excess
of $750,000 not covered by insurance or indemnified under the Hake Group
Acquisition Documents, or (ii) violate any Environmental Law, which, in the case
of an event described in clause (i) or clause (ii), could reasonably be expected
to have a Material Adverse Effect.
7.15. The occurrence of any "default", as defined in any Loan Document
(other than this Agreement) or the breach of any of the terms or provisions of
any Loan Document (other than this Agreement), which default or breach continues
beyond any period of grace therein provided.
7.16. Any Guaranty (other than a Guaranty of a Subsidiary which has been
dissolved pursuant to the provisions of Schedule "8" hereof) shall fail to
remain in full force or effect or any action shall be taken to discontinue or to
assert the invalidity or unenforceability of any Guaranty, or any Guarantor
shall fail to comply with any of the terms or provisions of any Guaranty to
which it is a party, or any Guarantor shall deny that it has any further
liability under any Guaranty to which it is a party, or shall give notice to
such effect.
7.17. Any Collateral Document shall for any reason fail to create a valid
and perfected first priority security interest in any collateral purported to be
covered thereby, except as to equipment which has become obsolete or which is
otherwise permitted to become released under the terms of any Collateral
Document; or any Collateral Document shall fail to remain in full force or
effect or any action shall be taken to discontinue or to assert the invalidity
or unenforceability of any Collateral Document, or the Borrower shall fail to
comply with any of the terms or provisions of any Collateral Document.
7.18. The representations and warranties set forth in Section 5.15 (Plan
Assets; Prohibited Transactions") shall at any time not be true and correct.
55
7.19. The Borrower or any Subsidiary shall fail to pay when due any
Operating Lease Obligation, obligation with respect to a Letter of Credit,
obligation under a Sale and Leaseback Transaction or Contingent Obligation,
which in the opinion of the Lenders could cause a Material Adverse Effect.
7.20. If the Borrower or any Subsidiary (other than the entities described
on Schedule "8") shall discontinue its business or make any material change in
the nature of or manner in which it conducts its business, except as permitted
under Section 6.4 hereof; or
7.21. If the Borrower or any Subsidiary (other than the entities set forth
on Schedule "8") shall fail to maintain, or if any action, suit, proceeding or
investigation shall be commenced seeking to cancel, terminate, or alter any
permit (i) which is necessary for it to carry on its business now being
conducted or as contemplated to be conducted, (ii) which is necessary for it to
own and operate its Properties (other than the Properties to be released and
described on Schedule "15" hereto), or (iii) which if not obtained would have a
Material Adverse Effect; or
7.22. If Borrower should default under the terms of the Port of Catoosa
Lease or receive notification from the City of Tulsa-Rogers County Port
Authority that the leasehold interest of Borrower under the Port Lease is being
terminated.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration; Facility LC Collateral Account. (i) If any Default
described in Section 7.5, 7.6 or 7.7 occurs with respect to the Borrower or any
of its Subsidiaries, the obligations of the Lenders to make Loans hereunder and
the obligation and power of the LC Issuer to issue Facility LCs shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent, the LC Issuer
or any Lender and the Borrower will be and become thereby unconditionally
obligated, without any further notice, act or demand, to pay to the Agent an
amount in immediately available funds, which funds shall be held in the Facility
LC Collateral Account, equal to the difference of (x) the amount of LC
Obligations at such time, less (y) the amount on deposit in the Facility LC
Collateral Account at such time which is free and clear of all rights and claims
of third parties and has not been applied against the Obligations (such
difference, the "Collateral Shortfall Amount"). If any other Default occurs, the
Required Lenders (or the Agent with the consent of the Required Lenders) may (a)
terminate or suspend the obligations of the Lenders to make Loans hereunder and
the obligation and power of the LC Issuer to issue Facility LCs, or declare the
Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives, and (b)
upon notice to the Borrower and in addition to the continuing right to demand
payment of all amounts payable under this Agreement, make demand on the Borrower
to pay, and the Borrower will, forthwith upon such
56
demand and without any further notice or act, pay to the Agent the Collateral
Shortfall Amount, which funds shall be deposited in the Facility LC Collateral
Account.
(ii) If at any time while any Default is continuing, the Agent determines
that the Collateral Shortfall Amount at such time is greater than zero, the
Agent may make demand on the Borrower to pay, and the Borrower will, forthwith
upon such demand and without any further notice or act, pay to the Agent the
Collateral Shortfall Amount, which funds shall be deposited in the Facility LC
Collateral Account.
(iii) The Agent may at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to the payment
of the Obligations and any other amounts as shall from time to time have become
due and payable by the Borrower to the Lenders or the LC Issuer under the Loan
Documents.
(iv) At any time while any Default is continuing, neither the Borrower nor
any Person claiming on behalf of or through the Borrower shall have any right to
withdraw any of the funds held in the Facility LC Collateral Account. After all
of the Obligations have been indefeasibly paid in full and the Aggregate
Commitment has been terminated, any funds remaining in the Facility LC
Collateral Account shall be returned by the Agent to the Borrower or paid to
whomever may be legally entitled thereto at such time.
(v) If, within thirty 30 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans and
the obligation and power of the LC Issuer to issue Facility LCs hereunder as a
result of any Default (other than any Default as described in Section 7.5, 7.6
or 7.7 with respect to the Borrower) and before any judgment or decree for the
payment of the Obligations due shall have been obtained or entered, the Required
Lenders (in their sole discretion) shall so direct, the Agent shall, by notice
to the Borrower, rescind and annul such acceleration and/or termination.
8.2. Amendments. Subject to the provisions of this Section 8.2, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of all of the Lenders:
(i) Extend the final maturity of any Loan, or extend the expiry date of any
Facility LC to a date after the Facility Termination Date or postpone any
regularly scheduled payment of principal of any Loan or forgive all or any
portion of the principal amount thereof or any Reimbursement Obligation related
thereto, or reduce the rate or extend the time of payment of interest or fees
thereon or Reimbursement Obligations related thereto.
(ii) Reduce the percentage specified in the definition of Required Lenders.
(iii) Extend the Facility Termination Date, or reduce the amount or extend
the payment date for, the mandatory payments required under Section 2.2, or
increase the amount of
57
the Aggregate Commitment, the Commitment of any Lender hereunder or the
commitment to issue Facility LCs, or permit the Borrower to assign its rights
under this Agreement.
(iv) Amend this Section 8.2.
(v) Release any Guarantor or, except as provided in the Collateral
Documents or as to the companies set forth on Schedule "8" or the Properties set
forth on Schedule "15", release more than a Substantial Portion of the
Collateral.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent, no amendment of any
provision relating to the LC Issuer shall be effective without the written
consent of the LC Issuer, and no amendment of any provision of this Agreement
relating to the Swing Line Lender or any Swing Line Loans shall be effective
without written consent of the Swing Line Lender. The Agent may waive payment of
the fee required under Section 12.3.2 without obtaining the consent of any other
party to this Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders, the LC
Issuer or the Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Credit Extension notwithstanding the existence of a
Default or the inability of the Borrower to satisfy the conditions precedent to
such Credit Extension shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment or
other variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Lenders required
pursuant to Section 8.2, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available to the Agent, the LC
Issuer and the Lenders until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and warranties of the
Borrower contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, either the LC Issuer nor any Lender shall be obligated
to extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
58
9.3. Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.4. Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent, the LC Issuer and the Lenders and
supersede all prior agreements and understandings among the Borrower, the Agent,
the LC Issuer and the Lenders relating to the subject matter thereof other than
those contained in the fee letter described in Section 10.13 which shall survive
and remain in full force and effect during the term of this Agreement.
9.5. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns, provided, however, that the parties
hereto expressly agree that the Arranger shall enjoy the benefits of the
provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth
therein and shall have the right to enforce such provisions on its own behalf
and in its own name to the same extent as if it were a party to this Agreement.
9.6. Expenses; Indemnification. (i) The Borrower shall reimburse the Agent
and the Arranger for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent) paid or incurred by the Agent or the
Arranger in connection with the preparation, negotiation, execution, delivery,
syndication, distribution (including, without limitation, via the internet),
review, amendment, modification, and administration of the Loan Documents. The
Borrower also agrees to reimburse the Agent, the Arranger, the LC Issuer and the
Lenders for any costs, internal charges and out-of-pocket expenses (including
attorneys' fees and time charges of attorneys for the Agent, the Arranger, the
LC Issuer and the Lenders, which attorneys may be employees of the Agent, the
Arranger, the LC Issuer or the Lenders) paid or incurred by the Agent, the
Arranger, the LC Issuer or any Lender in connection with the collection and
enforcement of the Loan Documents. Expenses being reimbursed by the Borrower
under this Section include, without limitation, the cost and expense of
obtaining an appraisal of each parcel of real property or interest in real
property described in the relevant Collateral Documents, which appraisal shall
be in conformity with the applicable requirements of any law or any governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any interpretation thereof, including, without limitation, the
provisions of Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended, reformed or otherwise modified from time to
time, and any rules promulgated to implement such provisions and costs and
expenses incurred in connection with the Reports described in the following
sentence. The Borrower acknowledges that from time to time Bank One may prepare
and may distribute to the Lenders (but shall have no obligation or duty to
prepare or to distribute to the Lenders) certain audit reports (the "Reports")
pertaining to the Borrower's assets for internal use by Bank One
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from information furnished to it by or on behalf of the Borrower, after Bank One
has exercised its rights of inspection pursuant to this Agreement.
(ii) The Borrower hereby further agrees to indemnify the Agent, the
Arranger, the LC Issuer and each Lender, its directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Agent, the Arranger, the LC Issuer or
any Lender is a party thereto) which any of them may pay or incur arising out of
or relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Credit Extension hereunder except to the
extent that they are determined in a final non-appealable judgment by a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the party seeking indemnification. The obligations of the Borrower
under this Section 9.6 shall survive the termination of this Agreement.
9.7. Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Agent with sufficient counterparts
so that the Agent may furnish one to each of the Lenders.
9.8. Accounting. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with Agreement Accounting Principles,
except that any calculation or determination which is to be made on a
consolidated basis shall be made for the Borrower and all its Subsidiaries,
including those Subsidiaries, if any, which are unconsolidated on the Borrower's
audited financial statements.
9.9. Severability of Provisions. Any provision in any Loan Document that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as
to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.10. Nonliability of Lenders. The relationship between the Borrower on the
one hand and the Lenders, the LC Issuer and the Agent on the other hand shall be
solely that of borrower and lender. Neither the Agent, the Arranger, the LC
Issuer nor any Lender shall have any fiduciary responsibilities to the Borrower.
Neither the Agent, the Arranger, the LC Issuer nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations. The Borrower
agrees that neither the Agent, the Arranger, the LC Issuer nor any Lender shall
have liability to the Borrower (whether sounding in tort, contract or otherwise)
for losses suffered by the Borrower in connection with, arising out of, or in
any way related to, the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-appealable judgment
by a court of competent jurisdiction that such losses resulted from the gross
negligence or willful misconduct of the party from which recovery is sought.
Neither the Agent, the Arranger, the LC Issuer nor any Lender shall have any
liability with respect to, and the Borrower
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hereby waives, releases and agrees not to sue for, any special, indirect or
consequential damages suffered by the Borrower in connection with, arising out
of, or in any way related to the Loan Documents or the transactions contemplated
thereby.
9.11. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrower pursuant to this Agreement in
confidence, except for disclosure (i) to its Affiliates and to other Lenders and
their respective Affiliates, (ii) to legal counsel, accountants, and other
professional advisors to such Lender or to a Transferee, (iii) to regulatory
officials, (iv) to any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with any legal
proceeding to which such Lender is a party, (vi) to such Lender's direct or
indirect contractual counterparties in swap agreements or to legal counsel,
accountants and other professional advisors to such counterparties, (vii)
permitted by Section 12.4 and (viii) to rating agencies if requested or required
by such agencies in connection with a rating relating to the Advances hereunder.
9.12. Nonreliance. Each Lender hereby represents that it is not relying on
or looking to any margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) for the repayment of the Credit
Extensions provided for herein.
9.13. Disclosure. The Borrower and each Lender hereby (i) acknowledge and
agree that (a) one or more Affiliates of Bank One are or may become direct or
indirect equity investors in Borrower, and (b) Bank One and/or its Affiliates
from time to time may hold other investments in, make other loans to or have
other relationships with Borrower, and (ii) waive any liability of Bank One or
such Affiliate to the Borrower or any Lender, respectively, arising out of or
resulting from such investments, loans or relationships other than liabilities
arising out of the gross negligence or willful misconduct of Bank One or its
Affiliates.
ARTICLE X
THE AGENT
10.1. Appointment; Nature of Relationship. Bank One, Oklahoma, NA is hereby
appointed by each of the Lenders as its contractual representative (herein
referred to as the "Agent") hereunder and under each other Loan Document, and
each of the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this Article
X. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the contractual representative
of the Lenders with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative, the Agent (i) does not hereby assume any fiduciary
duties to any of the Lenders, (ii) is a "representative" of the Lenders within
the meaning of the term "secured party" as defined in the Oklahoma Uniform
Commercial Code and (iii) is acting as an independent contractor, the rights and
duties of which
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are limited to those expressly set forth in this Agreement and the other Loan
Documents. Each of the Lenders hereby agrees to assert no claim against the
Agent on any agency theory or any other theory of liability for breach of
fiduciary duty, all of which claims each Lender hereby waives.
10.2. Powers. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
to the extent such action or inaction is determined in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Person.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (a) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered solely to the Agent; (d) the existence
or possible existence of any Default or Unmatured Default; (e) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; (f) the
value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the Borrower or any
guarantor of any of the Obligations or of any of the Borrower's or any such
guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to
the Lenders information that is not required to be furnished by the Borrower to
the Agent at such time, but is voluntarily furnished by the Borrower to the
Agent (either in its capacity as Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders (or, if required in this Agreement, the Lenders), and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders. The Lenders hereby acknowledge that the Agent
shall be under no duty to take any discretionary action permitted to be taken by
it pursuant to the provisions of this Agreement or any other Loan Document
unless it shall be requested in writing to do so by the Required Lenders. The
Agent shall be fully justified in failing or refusing to take any action
hereunder and under any other Loan Document unless it shall first be indemnified
to its satisfaction by the Lenders pro rata against any and all liability, cost
and expense that it may incur by reason of taking or continuing to take any such
action.
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10.6. Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the Lenders
and all matters pertaining to the Agent's duties hereunder and under any other
Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under the Loan Documents, (ii) for any other expenses incurred by
the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents
(including, without limitation, for any expenses incurred by the Agent in
connection with any dispute between the Agent and any Lender or between two or
more of the Lenders) and (iii) for any 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 the Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or the
transactions contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Agent in connection with any dispute
between the Agent and any Lender or between two or more of the Lenders), or the
enforcement of any of the terms of the Loan Documents or of any such other
documents, provided that (i) no Lender shall be liable for any of the foregoing
to the extent any of the foregoing is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the Agent and (ii) any indemnification required
pursuant to Section 3.5(vii) shall, notwithstanding the provisions of this
Section 10.8, be paid by the relevant Lender in accordance with the provisions
thereof. The obligations of the Lenders under this Section 10.8 shall survive
payment of the Obligations and termination of this Agreement.
10.9. Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Unmatured Default hereunder unless
the Agent has received written notice from a Lender or the Borrower referring to
this Agreement describing such Default or Unmatured Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders.
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10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document with respect to its Commitment and its Loans as any Lender and may
exercise the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, at any time when the Agent is a Lender, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent and
its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower or
any of its Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person. The Agent, in its
individual capacity, is not obligated to remain a Lender.
10.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Arranger or any other
Lender and based on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, the Arranger or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
10.12. Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, such resignation to be effective
upon the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or without cause
by written notice received by the Agent from the Required Lenders, such removal
to be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrower and the Lenders, a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders within thirty days after
the resigning Agent's giving notice of its intention to resign, then the
resigning Agent may appoint, on behalf of the Borrower and the Lenders, a
successor Agent. Notwithstanding the previous sentence, the Agent may at any
time without the consent of the Borrower or any Lender, appoint any of its
Affiliates which is a commercial bank as a successor Agent hereunder. If the
Agent has resigned or been removed and no successor Agent has been appointed,
the Lenders may perform all the duties of the Agent hereunder and the Borrower
shall make all payments in respect of the Obligations to the applicable Lender
and for all other purposes shall deal directly with the Lenders. No successor
Agent shall be deemed to be appointed hereunder until such successor Agent has
accepted the appointment. Any such successor Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning or removed Agent. Upon
the effectiveness of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations hereunder and
under the Loan Documents. After the effectiveness of the resignation or removal
of an Agent, the provisions of this Article X shall continue in effect for the
benefit of such Agent in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent hereunder and under the other Loan
Documents. In
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the event that there is a successor to the Agent by merger, or the
Agent assigns its duties and obligations to an Affiliate pursuant to this
Section 10.12, then the term "Prime Rate" as used in this Agreement shall mean
the prime rate, base rate or other analogous rate of the new Agent.
10.13. Agent and Arranger Fees. The Borrower agrees to pay to the Agent and
the Arranger, for their respective accounts, the fees agreed to by the Borrower,
the Agent and the Arranger pursuant to that certain letter agreement dated
January 17, 2003, or as otherwise agreed from time to time.
10.14. Delegation to Affiliates. The Borrower and the Lenders agree that
the Agent may delegate any of its duties under this Agreement to any of its
Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents
and employees) which performs duties in connection with this Agreement shall be
entitled to the same benefits of the indemnification, waiver and other
protective provisions to which the Agent is entitled under Articles IX and X.
10.15. Execution of Collateral Documents. The Lenders hereby empower and
authorize the Agent to execute and deliver to the Borrower on their behalf the
Security Agreement(s) and all related financing statements and any financing
statements, agreements, documents or instruments as shall be necessary or
appropriate to effect the purposes of the Security Agreement(s).
10.16. Collateral Releases. The Lenders hereby empower and authorize the
Agent to execute and deliver to the Borrower on their behalf any agreements,
documents or instruments as shall be necessary or appropriate to effect any
releases of Collateral which shall be permitted by the terms hereof or of any
other Loan Document or which shall otherwise have been approved by the Required
Lenders (or, if required by the terms of Section 8.2, all of the Lenders) in
writing.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender or
any Affiliate of any Lender to or for the credit or account of the Borrower may
be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Outstanding Credit Exposure (other than payments
received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than
that received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a portion of the Aggregate Outstanding Credit Exposure held by the
other Lenders so that after such purchase each Lender will hold its Pro Rata
Share of the Aggregate Outstanding Credit Exposure. If any Lender, whether in
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connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their respective Pro Rata Shares of the
Aggregate Outstanding Credit Exposure. In case any such payment is disturbed by
legal process, or otherwise, appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns permitted hereby, except
that (i) the Borrower shall not have the right to assign its rights or
obligations under the Loan Documents without the prior written consent of each
Lender, (ii) any assignment by any Lender must be made in compliance with
Section 12.3, and (iii) any transfer by Participation must be made in compliance
with Section 12.2. Any attempted assignment or transfer by any party not made in
compliance with this Section 12.1 shall be null and void, unless such attempted
assignment or transfer is treated as a participation in accordance with Section
12.3.2. The parties to this Agreement acknowledge that clause (ii) of this
Section 12.1 relates only to absolute assignments and this Section 12.1 does not
prohibit assignments creating security interests, including, without limitation,
(x) any pledge or assignment by any Lender of all or any portion of its rights
under this Agreement and any Note to a Federal Reserve Bank or (y) in the case
of a Lender which is a Fund, any pledge or assignment of all or any portion of
its rights under this Agreement and any Note to its trustee in support of its
obligations to its trustee; provided, however, that no such pledge or assignment
creating a security interest shall release the transferor Lender from its
obligations hereunder unless and until the parties thereto have complied with
the provisions of Section 12.3. The Agent may treat the Person which made any
Loan or which holds any Note as the owner thereof for all purposes hereof unless
and until such Person complies with Section 12.3; provided, however, that the
Agent may in its discretion (but shall not be required to) follow instructions
from the Person which made any Loan or which holds any Note to direct payments
relating to such Loan or Note to another Person. Any assignee of the rights to
any Loan or any Note agrees by acceptance of such assignment to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of the rights to any Loan (whether or not a
Note has been issued in evidence thereof), shall be conclusive and binding on
any subsequent holder or assignee of the rights to such Loan.
12.2. Participations.
12.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("Participants")
participating interests in any Outstanding Credit Exposure of such Lender,
any Note held by such Lender, any Commitment of such
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Lender or any other interest of such Lender under the Loan Documents. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall
remain the owner of its Outstanding Credit Exposure and the holder of any
Note issued to it in evidence thereof for all purposes under the Loan
Documents, all amounts payable by the Borrower under this Agreement shall
be determined as if such Lender had not sold such participating interests,
and the Borrower and the Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations
under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Credit Extension
or Commitment in which such Participant has an interest which would require
consent of all of the Lenders pursuant to the terms of Section 8.2 or of
any other Loan Document.
12.2.3. Benefit of Certain Provisions. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section
11.1 in respect of its participating interest in amounts owing under the
Loan Documents to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under the Loan Documents,
provided that each Lender shall retain the right of setoff provided in
Section 11.1 with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in Section
11.1, agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance
with Section 11.2 as if each Participant were a Lender. The Borrower
further agrees that each Participant shall be entitled to the benefits of
Sections 3.1, 3.2, 3.4 and 3.5 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to Section 12.3,
provided that (i) a Participant shall not be entitled to receive any
greater payment under Section 3.1, 3.2 or 3.5 than the Lender who sold the
participating interest to such Participant would have received had it
retained such interest for its own account, unless the sale of such
interest to such Participant is made with the prior written consent of the
Borrower, and (ii) any Participant not incorporated under the laws of the
United States of America or any State thereof agrees to comply with the
provisions of Section 3.5 to the same extent as if it were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the ordinary course
of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part of
its rights and obligations under the Loan Documents. Such assignment shall
be substantially in the form of Exhibit C or in such other form as may be
agreed to by the parties thereto. The consent of the Borrower, the Agent
and the LC Issuer shall be required prior to an assignment becoming
effective with
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respect to a Purchaser which is not a Lender or an Affiliate thereof;
provided, however, that if a Default has occurred and is continuing, the
consent of the Borrower shall not be required. Such consent shall not be
unreasonably withheld or delayed. Each such assignment with respect to a
Purchaser which is not a Lender or an Affiliate thereof shall (unless each
of the Borrower and the Agent otherwise consents) be in an amount not less
than the lesser of (i) $5,000,000 or (ii) the remaining amount of the
assigning Lender's Commitment (calculated as at the date of such
assignment) or outstanding Loans (if the applicable Commitment has been
terminated).
12.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit I to
Exhibit C (a "Notice of Assignment"), together with any consents required
by Section 12.3.1, and (ii) payment of a $3,500 fee to the Agent for
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser to the effect
that none of the consideration used to make the purchase of the Commitment
and Outstanding Credit Exposure under the applicable assignment agreement
are "plan assets" as defined under ERISA and that the rights and interests
of the Purchaser in and under the Loan Documents will not be "plan assets"
under ERISA. On and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this Agreement and
any other Loan Document executed by or on behalf of the Lenders and shall
have all the rights and obligations of a Lender under the Loan Documents,
to the same extent as if it were an original party hereto, and no further
consent or action by the Borrower, the Lenders or the Agent shall be
required to release the transferor Lender with respect to the percentage of
the Aggregate Commitment and Outstanding Credit Exposure assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser pursuant
to this Section 12.3.2, the transferor Lender, the Agent and the Borrower
shall, if the transferor Lender or the Purchaser desires that its Loans be
evidenced by Notes, make appropriate arrangements so that new Notes or, as
appropriate, replacement Notes are issued to such transferor Lender and new
Notes or, as appropriate, replacement Notes, are issued to such Purchaser,
in each case in principal amounts reflecting their respective Commitments,
as adjusted pursuant to such assignment.
12.3.3. Register. The Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at one of its offices in Tulsa,
Oklahoma a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and
the Commitments of, and principal amounts of the Loans owing to, each
Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and the Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.
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12.4. Dissemination of Information. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries, including
without limitation any information contained in any Reports; provided that each
Transferee and prospective Transferee agrees to be bound by Section 9.11 of this
Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is transferred to
any Transferee which is not incorporated under the laws of the United States or
any State thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply with the
provisions of Section 3.5(iv).
ARTICLE XIII
NOTICES
13.1. Notices. Except as otherwise permitted by Section 2.14 with respect
to borrowing notices, all notices, requests and other communications to any
party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of the Borrower or the Agent, at its address or facsimile number set
forth on the signature pages hereof, (y) in the case of any Lender, at its
address or facsimile number set forth below its signature hereto or in its
administrative questionnaire, or (z) in the case of any party, at such other
address or facsimile number as such party may hereafter specify for the purpose
by notice to the Agent and the Borrower in accordance with the provisions of
this Section 13.1. Each such notice, request or other communication shall be
effective (i) if given by facsimile transmission, when transmitted to the
facsimile number specified in this Section and confirmation of receipt is
received, (ii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid, or (iii)
if given by any other means, when delivered (or, in the case of electronic
transmission, received) at the address specified in this Section; provided that
notices to the Agent under Article II shall not be effective until received.
13.2. Change of Address. The Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this
69
Agreement by signing any such counterpart. This Agreement shall be effective
when it has been executed by the Borrower, the Agent, the LC Issuer and the
Lenders and each party has notified the Agent by facsimile transmission or
telephone that it has taken such action.
ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
15.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF OKLAHOMA, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
15.2. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR OKLAHOMA STATE
COURT SITTING IN TULSA, OKLAHOMA IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE AGENT, THE LC ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST
THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
THE BORROWER AGAINST THE AGENT, THE LC ISSUER OR ANY LENDER OR ANY AFFILIATE OF
THE AGENT, THE LC ISSUER OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN TULSA, OKLAHOMA.
15.3. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE LC ISSUER AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
70
IN WITNESS WHEREOF, the Borrower, the Lenders, the LC Issuer and the Agent
have executed this Agreement as of the date first above written.
MATRIX SERVICE COMPANY
By:
--------------------------------------
Michael J. Hall, Vice President
Notice Address: 10701 East Ute Street
Tulsa, OK 74116
Attention: Michael J. Hall,
Vice President
Telephone: (918) 838-8822
FAX: (918) 838-8810
71
Commitments
Revolving Loan: $15,085,714.00 BANK ONE, OKLAHOMA, NA
Term Loan: $8,914,286.00 Individually and as Agent and LC Issuer
By:
-------------------------------------
David G. Page, First Vice President
Notice Address: 4th Floor OK2-6110
15 East Fifth Street
Tulsa, OK 74103
Attention: David G. Page,
First Vice President
Telephone: (918) 586-5430
FAX: (918) 586-5474
72
Commitments
Revolving Loan: $9,428,571.00 LOCAL OKLAHOMA BANK, NA
Term Loan: $5,571,429.00
By:
-------------------------------------
Larry Jemison, Senior Vice President
Notice Address: 2250 East 73rd Street
Suite 200
Tulsa, OK 74136
Attention: Larry Jemison,
Senior Vice President
Telephone: (918) 497-2421
FAX: (918) 497-2497
73
Commitments
Revolving Loan: $9,428,571.00 WACHOVIA BANK,
Term Loan: $5,571,429.00 NATIONAL ASSOCIATION
By:
--------------------------------------
Stephen T. Dorosh, Vice President
Notice Address: 123 South Broad Street
14th Floor - PA1202
Phillidelphia, PA 19109
Attention: Stephen T. Dorosh,
Vice President
Telephone: (215) 670-6577
FAX: (215) 670-6543
74
Commitments
Revolving Loan: $6,285,714.00 UMB BANK, N.A.
Term Loan: $3,714,286.00
By:
--------------------------------------
Richard J. Lehrter, Community Bank President
Notice Address: 1437 South Boulder Avenue
Suite 150
Tulsa, OK 74119
Attention: Richard J. Lehrter, President
Telephone: (918) 295-2000
FAX: (918) 295-2020
75
Commitments
Revolving Loan: $14,771,430.00 WELLS FARGO BANK TEXAS, NA
Term Loan: $8,728,570.00
By:
--------------------------------------
Brad S. Thompson, Vice President
Notice Address: 3rd Floor MACT5303-031
1445 Ross Avenue
Dallas, TX 75202
Attention: Brad S. Thompson,
Vice President
Telephone: (214) 740-1545
FAX: (214) 969-0368
76
PRICING SCHEDULE
APPLICABLE MARGIN (BPS) LETTERS
----------------------------------- OF
LEVERAGE EURODOLLAR ABR SWING LINE CREDIT COMMITMENT
RATIO LOANS*(+) LOANS*(+) LOANS(+) FEE(bps) FEE (bps)
- -------- ---------- --------- ---------- -------- ----------
>2.50x 250.0 25.0 25.0 250.0 50.0
<=2.50x 225.0 00.0 00.0 225.0 50.0
<=2.00x 200.0 -25.0 -25.0 200.0 37.5
<=1.50x 175.0 -50.0 -50.0 175.0 32.5
* Term Loan pricing shall be .25% higher
The Applicable Margin and Applicable Fee Rate shall be determined in
accordance with the foregoing table based on the Leverage Ratio as reflected in
the then most recent Financials. Adjustments, if any, to the Applicable Margin
or Applicable Fee Rate shall be effective five Business Days after the Agent has
received the applicable Financials. If the Borrower fails to deliver the
Financials to the Agent at the time required pursuant to Section 6.1, then the
Applicable Margin and Applicable Fee Rate shall be the highest Applicable Margin
and Applicable Fee Rate set forth in the foregoing table until five (5) Business
Days after such Financials are so delivered.
The term "Financials" means the annual or quarterly consolidated financial
statements of the Borrower and its Subsidiaries.
In the event the Applicable Margin is negative, it shall only be deducted
to the extent that the ABR is being calculated based upon the Prime Rate.
For the six month period following the execution date of the Credit
Agreement, the Borrower's pricing shall be deemed to be no cheaper than the
pricing based on Leverage Ratio = 2.50 to 1.00. Thereafter, the Applicable
Margin and Applicable Fee Rate shall be determined in accordance with the
foregoing table based on the Leverage Ratio as reflected in the then most recent
Financials. Adjustments, if any, to the Applicable Margin or Applicable Fee Rate
shall be effective five (5) Business Days after the Agent has received the
applicable Financials
77
EXHIBIT A
FORM OF OPINION
The Agent, the LC Issuer and the Lenders who are parties to the Credit Agreement
described below.
Gentlemen/Ladies:
We are counsel for (the "Borrower"), and have represented the
------------
Borrower in connection with its execution and delivery of a Credit Agreement
dated as of March , 2003 (the "Agreement") among the Borrower, the Lenders
---
named therein, and Bank One, Oklahoma, NA, as Agent and as LC Issuer, and
providing for Credit Extensions in an aggregate principal amount not exceeding
$32,500,000 at any one time outstanding. All capitalized terms used in this
opinion and not otherwise defined herein shall have the meanings attributed to
them in the Agreement.
We have examined the Borrower's **[describe constitutive documents of
Borrower and appropriate evidence of authority to enter into the transaction]**,
the Loan Documents and such other matters of fact and law which we deem
necessary in order to render this opinion. Based upon the foregoing, it is our
opinion that:
l.Each of the Borrower and its Subsidiaries is a corporation,
partnership or limited liability company duly and properly incorporated or
organized, as the case may be, validly existing and (to the extent such concept
applies to such entity) in good standing under the laws of its jurisdiction of
incorporation or organization and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.
2.The execution and delivery by the Borrower of the Loan Documents
**[to which it is a party]** and the performance by the Borrower of its
obligations thereunder have been duly authorized by proper corporate proceedings
on the part of the Borrower and will not:
(a) require any consent of the Borrower's shareholders or members
(other than any such consent as has already been given and remains in full
force and effect);
(b) violate (i) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its
Subsidiaries or (ii) the Borrower's or any Subsidiary's articles or
certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, or operating
or other management agreement, as the case may be, or (iii) the provisions
of any indenture, instrument or agreement to which the Borrower or any of
its Subsidiaries is a party or is
78
subject, or by which it, or its Property,is bound, or conflict with or
constitute a default thereunder; or
(c) result in, or require, the creation or imposition of any Lien in,
of or on the Property of the Borrower or a Subsidiary pursuant to the terms
of any indenture, instrument or agreement binding upon the Borrower or any
of its Subsidiaries.
3.The Loan Documents **[to which the Borrower is a party]** have
been duly executed and delivered by the Borrower and constitute legal, valid and
binding obligations of the Borrower enforceable against the Borrower in
accordance with their terms except to the extent the enforcement thereof may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and subject also to the availability of equitable
remedies if equitable remedies are sought. **[NOTE: If there are Loan Documents
executed by related entities other than the Borrower, separate provisions of the
opinion or additional opinions should cover those documents and their
enforceability against such parties.]**
4.There is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the best of our knowledge after due
inquiry, threatened against the Borrower or any of its Subsidiaries which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.
5.No order, consent, adjudication, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by the Borrower or any of its
Subsidiaries, is required to be obtained by the Borrower or any of its
Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under the Agreement, the payment and performance by
the Borrower of the Obligations, or the legality, validity, binding effect or
enforceability of any of the Loan Documents.
**[6. The Obligations constitute senior indebtedness which is entitled to
the benefits of the subordination provisions of all outstanding Subordinated
Indebtedness.]**
**[7.The provisions of the Collateral Documents are sufficient to
create in favor of the Lenders and, to the extent they have entered into Rate
Management Transactions with the Borrower, the Lenders' Affiliates, a security
interest in all right, title and interest of the Borrower in those items and
types of collateral described in the Collateral Documents in which a security
interest may be created under Article 9 of the Uniform Commercial Code as in
effect on the date hereof in Oklahoma. Financing statements on Form UCC-1's have
been duly executed by the Borrower and have been duly filed in each filing
office indicated in Exhibit A hereto under the Uniform Commercial Code in effect
in each state in which said filing offices are located. The description of the
collateral set forth in said financing statements is sufficient to perfect a
security interest in the items and types of collateral described therein in
which a security interest may be perfected by the filing of a financing
statement under the Uniform Commercial Code as in effect in such states. Such
filings are sufficient to perfect the security interest created by the
Collateral Documents in all right, title and interest of the Borrower in those
items and types of
79
collateral described in the Collateral Documents in which a security interest
may be perfected by the filing of a financing statement under the Uniform
Commercial Code in such states, except that we express no opinion as to personal
property affixed to real property in such manner as to become a fixture under
the laws of any state in which the collateral may be located and we call your
attention to the fact that the Lenders' (and, if applicable, their Affiliates')
security interest in certain of such collateral may not be perfected by filing
financing statements under the Uniform Commercial Code.]**
This opinion may be relied upon by the Agent, the LC Issuer, the Lenders
and their participants, assignees and other transferees.
Very truly yours,
80
EXHIBIT B
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of March 7, 2003 (as amended, modified, renewed or extended
from time to time, the "Agreement") among the Matrix Service Company (the
"Borrower"), the lenders party thereto and Bank One, Oklahoma, NA, as Agent for
the Lenders and as LC Issuer. Unless otherwise defined herein, capitalized terms
used in this Compliance Certificate have the meanings ascribed thereto in the
Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of the Borrower;
--------------
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower's compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct.
5. Schedule II hereto sets forth the determination of the interest rates to
be paid for Advances, the LC Fee rates and the commitment fee rates commencing
on the fifth day following the delivery hereof.
6. Schedule III attached hereto sets forth the various reports and
deliveries which are required at this time under the Credit Agreement, the
Security Agreement and the other Loan Documents and the status of compliance.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
---------------------------------------------------------------------------
81
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The foregoing certifications, together with the computations set forth in
Schedule I and Schedule II hereto and the financial statements delivered with
this Certificate in support hereof, are made and delivered this day of
---
,
- --------- ---
MATRIX SERVICE COMPANY
By
-----------------------
Name
---------------------
Title
--------------------
82
SCHEDULE I TO COMPLIANCE CERTIFICATE
Compliance as of with
---------, ----
Provisions of and of
--- ---
the Agreement
83
SCHEDULE II TO COMPLIANCE CERTIFICATE
Borrower's Applicable Margin Calculation
84
SCHEDULE III TO COMPLIANCE CERTIFICATE
Reports and Deliveries Currently Due
85
EXHIBIT C
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption (the "Assignment and Assumption") is dated
as of the Effective Date set forth below and is entered into by and between
(the "Assignor") and (the "Assignee").
- ------------------ -----------------
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement identified below (as amended, the "Credit
Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee.
The Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed
to and incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Agent as contemplated below, the interest in and to all of the Assignor's
rights and obligations in its capacity as a Lender under the Credit Agreement
and any other documents or instruments delivered pursuant thereto that
represents the amount and percentage interest identified below of all of the
Assignor's outstanding rights and obligations under the respective facilities
identified below (including without limitation any letters of credit, guaranties
and swingline loans included in such facilities and, to the extent permitted to
be assigned under applicable law, all claims (including without limitation
contract claims, tort claims, malpractice claims, statutory claims and all other
claims at law or in equity), suits, causes of action and any other right of the
Assignor against any Person whether known or unknown arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby) (the
"Assigned Interest"). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.
1. Assignor:
----------------------------------------
2. Assignee: [and is an
------------------------------
Affiliate/Approved Fund of [identify Lender]/1/
3. Borrower: Matrix Service Company
4. Agent: Bank One, Oklahoma, NA, as the agent under the Credit Agreement.
5. Credit Agreement: The $ Credit Agreement dated as of March ,
----------- ----
2003 among Matrix Service Company, the Lenders party thereto, Bank One,
Oklahoma, NA, as Agent, and the other agents party thereto.
86
6. Assigned Interest:
Aggregate Amount of Amount of Percentage Assigned
Commitment/Loans for all Commitment/Loans of
Facility Assigned Lenders* Assigned* Commitment/Loans/2/
- ----------------- ------------------------ ---------------- -------------------
/3/ $ $
- ------------ -------%
$ $
- ------------ -------%
$ $
- ------------ -------%
7. Trade Date: /4/
-------------------------------------
Effective Date: 20 [TO BE INSERTED BY AGENT AND WHICH
--------------------, --
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE AGENT.]
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
-----------------------------------
By:
--------------------------------
Title:
ASSIGNEE
-----------------------------------
By:
--------------------------------
Title:
[Consented to and]/5/ Accepted:
Bank One, Oklahoma, NA, as Agent
By:
-------------------------------
Title:
----------------------------
Consented to and Accepted:. Consented to and Accepted:
Bank One, Oklahoma, NA, Matrix Service Company,
as LC Issuer Borrower
By: By:
------------------------------- -----------------------------
Title: Title:
---------------------------- --------------------------
87
*Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.
/2/ Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans
of all Lenders thereunder.
/3/ Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g. "Revolving
Credit Commitment," "Term Loan Commitment,", etc.)
88
ANNEX 1
TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby. Neither the Assignor nor any of its officers,
directors, employees, agents or attorneys shall be responsible for (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency, perfection, priority,
collectibility, or value of the Loan Documents or any collateral thereunder,
(iii) the financial condition of the Borrower, any of its Subsidiaries or
Affiliates or any other Person obligated in respect of any Loan Document, (iv)
the performance or observance by the Borrower, any of its Subsidiaries or
Affiliates or any other Person of any of their respective obligations under any
Loan Documents, (v) inspecting any of the property, books or records of the
Borrower, or any guarantor, or (vi) any mistake, error of judgment, or action
taken or omitted to be taken in connection with the Loans or the Loan Documents.
1.2. Assignee. The Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement as a Lender thereunder and, to the extent
of the Assigned Interest, shall have the obligations of a Lender thereunder,
(iii) agrees that its payment instructions and notice instructions are as set
forth in Schedule 1 to this Assignment and Assumption, (iv) confirms that none
of the funds, monies, assets or other consideration being used to make the
purchase and assumption hereunder are "plan assets" as defined under ERISA and
that its rights, benefits and interests in and under the Loan Documents will not
be "plan assets" under ERISA, (v) agrees to indemnify and hold the Assignor
harmless against all losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee's non-performance of
the obligations assumed under this Assignment and Assumption, (vi) it has
received a copy of the Credit Agreement, together with copies of financial
statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the Agent
or any other Lender, and (vii) attached as Schedule 1 to this Assignment and
Assumption is any documentation required to be delivered by the Assignee with
respect to its tax status pursuant to the terms of the Credit Agreement, duly
completed and executed by the Assignee and (b) agrees that (i) it will,
independently and without reliance on the Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action
89
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.
2. Payments. The Assignee shall pay the Assignor, on the Effective
Date, the amount agreed to by the Assignor and the Assignee. From and after the
Effective Date, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the Effective Date
and to the Assignee for amounts which have accrued from and after the Effective
Date.
3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of Oklahoma.
90
ADMINISTRATIVE QUESTIONAIRE
(Administrative Questionaire shall be delivered by the Agent
to the Lenders and Assignee for completion, separate and apart herefrom)
91
US AND NON-US TAX INFORMATION REPORTING REQUIREMENTS
(Reporting Requirements Schedule shall be delivered by the Agent
to the Lenders and Assignee for completion, separate and apart herefrom)
92
EXHIBIT D
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To Bank One, Oklahoma, NA,
as Agent (the "Agent") under the Credit Agreement
Described Below.
Re: Credit Agreement, dated March 7, 2003 (as the same may be amended or
modified, the "Credit Agreement"), among Matrix Service Company (the
"Borrower"), the Lenders named therein, the LC Issuer and the Agent.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned thereto in the Credit Agreement.
The Agent is specifically authorized and directed to act upon the following
standing money transfer instructions with respect to the proceeds of Advances or
other extensions of credit from time to time until receipt by the Agent of a
specific written revocation of such instructions by the Borrower, provided,
however, that the Agent may otherwise transfer funds as hereafter directed in
writing by the Borrower in accordance with Section 13.1 of the Credit Agreement
or based on any telephonic notice made in accordance with Section 2.14 of the
Credit Agreement.
Facility Identification Number(s)
-----------------------------------------------
Customer/Account Name
-----------------------------------------------------------
Transfer Funds To
---------------------------------------------------------------
- --------------------------------------------------------------------------------
For Account No.
-----------------------------------------------------------------
Reference/Attention To
----------------------------------------------------------
Authorized Officer (Customer Representative) Date
---------------------
- ------------------------------------------- ---------------------------
(Please Print) Signature
Bank Officer Name Date
----------------------
- ------------------------------------------- ---------------------------
(Please Print) Signature
(Deliver Completed Form to Credit Support Staff For Immediate Processing)
93
EXHIBIT E-1
REVOLVING NOTE
March , 2003
---
The undersigned promises (jointly and severally promise) to pay to the
order of ("Lender"), with payments made to Bank One, Oklahoma, NA,
------------
as Agent (the "Agent"), the aggregate unpaid principal amount of all Revolving
Loans made by the Lender to the undersigned pursuant to Section 2.1.1 of the
Agreement (as hereinafter defined), in immediately available funds at the place
specified pursuant to Article II of the Agreement, together with interest on the
unpaid principal amount hereof at the rates and on the dates set forth in the
Agreement. The undersigned shall pay the principal of and accrued and unpaid
interest on the Revolving Loans in full on the Revolving Credit Termination
Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Revolving Loan and the date and amount of each
principal payment hereunder.
This Revolving Note is one of the Notes issued pursuant to, and is entitled
to the benefits of, the Credit Agreement dated as of March , 2003 (which, as
----
it may be amended or modified and in effect from time to time, is herein called
the "Agreement"), among Matrix Service Company, certain other Credit Parties,
the Agent, the Lender, and certain other lenders to which Agreement reference is
hereby made for a statement of the terms and conditions governing this Revolving
Note, including the terms and conditions under which this Revolving Note may be
prepaid or its maturity date accelerated. Capitalized terms used herein and not
otherwise defined herein are used with the meanings attributed to them in the
Agreement.
"Borrower"
MATRIX SERVICE COMPANY
By:
----------------------------------
Print Name:
--------------------------
Title:
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94
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF ,
--------
DATED ,
-----
Principal Maturity of Principal
Date Amount of Loan Interest Period Amount Paid Unpaid Balance
---- -------------- --------------- ----------- --------------
95
EXHIBIT E-2
TERM NOTE
March , 2003
---
The undersigned promises (jointly and severally promise) to pay to the
order of (the "Lender") with payments made to Bank One,
--------------------
Oklahoma, NA, as Agent ("Agent"), the aggregate unpaid principal amount of the
Term Loan made by the Lender to the undersigned pursuant to Section 2.1.2 of the
Agreement (as hereinafter defined), in immediately available funds at the place
specified pursuant to Article II of the Agreement, together with interest on the
unpaid principal amount hereof at the rates and on the dates set forth in the
Agreement. The undersigned shall pay the principal of and accrued and unpaid
interest on the Term Loans in full on the Term Loan Maturity Date and shall make
such mandatory pre-payments as are required to be made under the terms of
Article II of the Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of such Term Loan and the date and amount of each principal
payment hereunder.
This Term Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the Credit Agreement dated as of March , 2003 (which, as it
----
may be amended or modified and in effect from time to time, is herein called the
"Agreement"), among Matrix Service Company, the Agent, the Lender, and certain
other lenders, to which Agreement reference is hereby made for a statement of
the terms and conditions governing this Note, including the terms and conditions
under which this Note may be prepaid or its maturity date accelerated.
Capitalized terms used herein and not otherwise defined herein are used with the
meanings attributed to them in the Agreement.
"Borrower"
MATRIX SERVICE COMPANY
By:
----------------------------------
Print Name:
--------------------------
Title:
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SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF ,
--------
DATED ,
-----
Principal Maturity of Principal
Date Amount of Loan Interest Period Amount Paid Unpaid Balance
---- -------------- --------------- ----------- --------------
97
EXHIBIT E-3
SWING LINE NOTE
$5,000,000.00
March , 2003
----
The undersigned promises (jointly and severally promise) to pay to the
order of BANK ONE, OKLAHOMA, NA (the "Lender") the aggregate unpaid principal
amount of all Swing Line Loans made by the Lender to the undersigned pursuant to
Section 2.1.3 of the Agreement (as hereinafter defined), in immediately
available funds at the place specified pursuant to Article II of the Agreement,
together with interest on the unpaid principal amount hereof at the rates and on
the dates set forth in the Agreement. The undersigned shall repay the entire
outstanding principal amount of the Swing Line Loans in full on the Swing Line
Loan Payment Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Swing Line Loan and the date and amount of each
principal payment hereunder.
This Swing Line Note is one of the Swing Line Notes issued pursuant to, and
is entitled to the benefits of, the Credit Agreement, dated as of March ,
----
2003 (which, as it may be amended or modified and in effect from time to time,
is herein called the "Agreement") among Matrix Service Company, certain other
Credit Parties, the Lender, and certain other parties, to which Agreement
reference is hereby made for a statement of the terms and conditions governing
this Swing Line Note, including the terms and conditions under which this Swing
Line Note may be prepaid or its maturity date accelerated. Capitalized terms
used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
"Borrower"
MATRIX SERVICE COMPANY
By:
----------------------------------
Print Name:
--------------------------
Title:
-------------------------------
98
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO SWING LINE NOTE
DATED ,
-------
Principal Maturity of Principal
Date Amount of Loan Interest Period Amount Paid Unpaid Balance
---- -------------- --------------- ----------- --------------
99
EXHIBIT F
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (this "Guaranty") is made as of the day of
---
March, 2003, by MATRIX SERVICE INC., an Oklahoma corporation; MATRIX SERVICE
MID-CONTINENT, INC., an Oklahoma corporation; MATRIX SERVICE, INC. CANADA, an
Ontario, Canada corporation; HAKE ACQUISITION CORP., a Delaware corporation;
HAKE GROUP, INC., a Delaware corporation; BOGAN, INC. (including Fiberspec, a
division), a Pennsylvania corporation; FRANK W. HAKE, INC., a Pennsylvania
corporation; HOVER SYSTEMS, INC., a Pennsylvania corporation; I & S, INC., a
Pennsylvania corporation; MCBISH MANAGEMENT, INC., a Pennsylvania corporation;
MECHANICAL CONSTRUCTION, INC., a Delaware corporation; MID-ATLANTIC
CONSTRUCTORS, INC., a Pennsylvania corporation; TALBOT REALTY, INC., a
Pennsylvania corporation; BISH INVESTMENTS, INC., a Delaware corporation; and I
& S JOINT VENTURE, L.L.C., a Pennsylvania limited liability company
(collectively, the "Subsidiary Guarantors") in favor of the Agent, for the
benefit of the Lenders, under the Credit Agreement referred to below;
WITNESSETH:
WHEREAS, MATRIX SERVICE COMPANY, a Delaware corporation (the "Principal")
and BANK ONE, OKLAHOMA, NA, a national banking association having its principal
office in Tulsa, Oklahoma, as Agent (the "Agent"), and certain other Lenders
from time to time party thereto have entered into a certain Credit Agreement
dated as of even date herewith (as same may be amended or modified from time to
time, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit to be made by the Lenders to the Principal;
WHEREAS, it is a condition precedent to the Agent and the Lenders the
Credit Agreement that each of the Subsidiary Guarantors execute and deliver this
Guaranty executing whereby each of the Subsidiary Guarantors shall guarantee the
payment when due, subject to Section 9 hereof, of all Guaranteed Obligations, as
defined below; and
WHEREAS, in consideration of the financial and other support that the
Principal has provided, and such financial and other support as the Principal
may in the future provide, to the Subsidiary Guarantors, and in order to induce
the Lenders and the Agent to enter into the Credit Agreement, and the Lenders
and their Affiliates to enter into one or more Rate Management Transactions with
the Principal, and because each Subsidiary Guarantor has determined that
executing this Guaranty is in its interest and to its financial benefit, each of
the Subsidiary Guarantors is willing to guarantee the obligations of the
Principal under the Credit Agreement, any Note, any Rate Management Transaction,
and the other Loan Documents;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
100
SECTION l.1. Selected Terms Used Herein.
"Guaranteed Obligations" is defined in Section 3 below.
"Rate Management Transaction" means any transaction (including an agreement
with respect thereto) now existing or hereafter entered into between the
Principal and any Lender or Affiliate thereof which is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions) or any combination
thereof, whether linked to one or more interest rates, foreign currencies,
commodity prices, equity prices or other financial measures.
"Rate Management Obligations" means any and all obligations of the
Principal, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.
SECTION 1.2. Terms in Credit Agreement. Other capitalized terms used herein
but not defined herein shall have the meaning set
forth in the Credit Agreement.
SECTION 2.1. Representations and Warranties. Each of the Subsidiary
Guarantors represents and warrants (which representations and warranties shall
be deemed to have been renewed upon each Borrowing Date under the Credit
Agreement) that:
(a) It is a corporation, partnership or limited liability company duly
and properly incorporated or organized, as the case may be, validly existing and
(to the extent such concept applies to such entity) in good standing under the
laws of its jurisdiction of incorporation or organization and has all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted.
(b) It has the power and authority and legal right to execute and
deliver this Guaranty and to perform its obligations hereunder. The execution
and delivery by it of this Guaranty and the performance of its obligations
hereunder have been duly authorized by proper corporate proceedings, and this
Guaranty constitutes a legal, valid and binding obligation of such Subsidiary
Guarantor enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
(c) Neither the execution and delivery by it of this Guaranty, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof will violate (i) any law, rule, regulation, order, writ,
judgment, injunction, decree or award
101
binding on it or any of its subsidiaries or (ii) its articles or certificate of
incorporation, partnership agreement, certificate of partnership, articles or
certificate of organization, by-laws, or operating or other management
agreement, as the case may be, or (iii) the provisions of any indenture,
instrument or agreement to which it or any of its subsidiaries is a party or is
subject, or by which it, or its Property, is bound, or conflict with or
constitute a default thereunder, or result in, or require, the creation or
imposition of any Lien in, of or on the Property of such Subsidiary Guarantor or
a subsidiary thereof pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, adjudication, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by it or any of its
subsidiaries, is required to be obtained by it or any of its subsidiaries in
connection with the execution and delivery of this Guaranty or the performance
by it of its obligations hereunder or the legality, validity, binding effect or
enforceability of this Guaranty.
SECTION 2.2. Covenants. Each of the Subsidiary Guarantors covenants that,
so long as any Lender has any Commitment outstanding under the Credit Agreement,
any Rate Management Transaction remains in effect or any of the Guaranteed
Obligations shall remain unpaid, that it will, and, if necessary, will enable
the Principal to, fully comply with those covenants and agreements set forth in
the Credit Agreement.
SECTION 3. The Guaranty. Subject to Section 9 hereof, each of the
Subsidiary Guarantors hereby absolutely and unconditionally guarantees, as
primary obligor and not as surety, the full and punctual payment (whether at
stated maturity, upon acceleration or early termination or otherwise, and at all
times thereafter) and performance of the Obligations and the Rate Management
Obligations, including without limitation any such Obligations or Rate
Management Obligations incurred or accrued during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, whether or not
allowed or allowable in such proceeding (collectively, subject to the provisions
of Section 9 hereof, being referred to collectively as the "Guaranteed
Obligations"). Upon failure by the Principal to pay punctually any such amount,
each of the Subsidiary Guarantors agrees that it shall forthwith on demand pay
to the Agent for the benefit of the Lenders and, if applicable, their
Affiliates, the amount not so paid at the place and in the manner specified in
the Credit Agreement, any Note, any Rate Management Transaction or the relevant
Loan Document, as the case may be. This Guaranty is a guaranty of payment and
not of collection. Each of the Subsidiary Guarantors waives any right to require
the Lender to sue the Principal, any other guarantor, or any other person
obligated for all or any part of the Guaranteed Obligations, or otherwise to
enforce its payment against any collateral securing all or any part of the
Guaranteed Obligations.
SECTION 4. Guaranty Unconditional. Subject to Section 9 hereof, the
obligations of each of the Subsidiary Guarantors hereunder shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or release in
respect of any of the Guaranteed Obligations, by operation of law or
otherwise, or any obligation of any
102
other guarantor of any of the Guaranteed Obligations, or any default,
failure or delay, willful or otherwise, in the payment or performance of
the Guaranteed Obligations;
(ii) any modification or amendment of or supplement to the Credit
Agreement, any Note, any Rate Management Transaction or any other Loan
Document;
(iii) any release, nonperfection or invalidity of any direct or indirect
security for any obligation of the Principal under the Credit Agreement,
any Note, the Security Agreement any Rate Management Transaction, any other
Loan Document, or any obligations of any other guarantor of any of the
Guaranteed Obligations, or any action or failure to act by the Agent, any
Lender or any Affiliate of any Lender with respect to any collateral
securing all or any part of the Guaranteed Obligations;
(iv) any change in the corporate existence, structure or ownership of the
Principal or any other guarantor of any of the Guaranteed Obligations, or
any insolvency, bankruptcy, reorganization or other similar proceeding
affecting the Principal, or any other guarantor of the Guaranteed
Obligations, or its assets or any resulting release or discharge of any
obligation of the Principal, or any other guarantor of any of the
Guaranteed Obligations;
(v) the existence of any claim, setoff or other rights which the Subsidiary
Guarantors may have at any time against the Principal, any other guarantor
of any of the Guaranteed Obligations, the Agent, any Lender or any other
Person, whether in connection herewith or any unrelated transactions;
(vi) any invalidity or unenforceability relating to or against the
Principal, or any other guarantor of any of the Guaranteed Obligations, for
any reason related to the Credit Agreement, any Rate Management
Transaction, any other Loan Document, or any provision of applicable law or
regulation purporting to prohibit the payment by the Principal, or any
other guarantor of the Guaranteed Obligations, of the principal of or
interest on any Note or any other amount payable by the Principal under the
Credit Agreement, any Note, any Rate Management Transaction or any other
Loan Document; or
(vii) any other act or omission to act or delay of any kind by the
Principal, any other guarantor of the Guaranteed Obligations, the Agent,
any Lender or any other Person or any other circumstance whatsoever which
might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of any Subsidiary Guarantor's obligations hereunder.
SECTION 5. Discharge Only Upon Payment In Full: Reinstatement In Certain
Circumstances. Each of the Subsidiary Guarantor's obligations hereunder shall
remain in full force and effect until all Guaranteed Obligations shall have been
indefeasibly paid in full, the Commitments under the Credit Agreement shall have
terminated or expired and all Rate Management Transactions have terminated or
expired. If at any time any payment of the principal of or interest on any Note
or any other amount payable by the Principal or any other party under the Credit
Agreement, any Rate Management Transaction or any other Loan Document is
rescinded or
103
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Principal or otherwise, each of the Subsidiary Guarantor's
obligations hereunder with respect to such payment shall be reinstated as though
such payment had been due but not made at such time.
SECTION 6. Waivers. Each of the Subsidiary Guarantors irrevocably waives
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any requirement
that at any time any action be taken by any Person against the Principal, any
other guarantor of any of the Guaranteed Obligations, or any other Person.
SECTION 7. Subrogation. Each of the Subsidiary Guarantors hereby agrees not
to assert any right, claim or cause of action, including, without limitation, a
claim for subrogation, reimbursement, indemnification or otherwise, against the
Principal arising out of or by reason of this Guaranty or the obligations
hereunder, including, without limitation, the payment or securing or purchasing
of any of the Guaranteed Obligations by any of the Subsidiary Guarantors unless
and until the Guaranteed Obligations are indefeasibly paid in full, any
commitment to lend under the Credit Agreement and any other Loan Documents is
terminated and all Rate Management Transactions have terminated or expired.
SECTION 8. Stay of Acceleration. If acceleration of the time for payment of
any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Principal, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, any Note, any Rate
Management Transaction or any other Loan Document shall nonetheless be payable
by each of the Subsidiary Guarantors hereunder forthwith on demand by the Agent
made at the request of the Required Lenders.
SECTION 9. Limitation on Obligations. (a) The provisions of this Guaranty
are severable, and in any action or proceeding involving any state corporate
law, or any state, federal or foreign bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of any
Subsidiary Guarantor under this Guaranty would otherwise be held or determined
to be avoidable, invalid or unenforceable on account of the amount of such
Subsidiary Guarantor's liability under this Guaranty, then, notwithstanding any
other provision of this Guaranty to the contrary, the amount of such liability
shall, without any further action by the Subsidiary Guarantors, the Agent or any
Lender, be automatically limited and reduced to the highest amount that is valid
and enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Subsidiary Guarantor's "Maximum
Liability"). This Section 9(a) with respect to the Maximum Liability of the
Subsidiary Guarantors is intended solely to preserve the rights of the Agent
hereunder to the maximum extent not subject to avoidance under applicable law,
and neither the Subsidiary Guarantor nor any other person or entity shall have
any right or claim under this Section 9(a) with respect to the Maximum
Liability, except to the extent necessary so that the obligations of the
Subsidiary Guarantor hereunder shall not be rendered voidable under applicable
law.
(b) Each of the Subsidiary Guarantors agrees that the Guaranteed
Obligations may at any time and from time to time exceed the Maximum Liability
of each Subsidiary Guarantor, and may exceed the aggregate Maximum Liability of
all other Subsidiary Guarantors, without impairing
104
this Guaranty or affecting the rights and remedies of the Agent hereunder.
Nothing in this Section 9(b) shall be construed to increase any Subsidiary
Guarantor's obligations hereunder beyond its Maximum Liability.
(c) In the event any Subsidiary Guarantor (a "Paying Subsidiary Guarantor")
shall make any payment or payments under this Guaranty or shall suffer any loss
as a result of any realization upon any collateral granted by it to secure its
obligations under this Guaranty, each other Subsidiary Guarantor (each a
"Non-Paying Subsidiary Guarantor") shall contribute to such Paying Subsidiary
Guarantor an amount equal to such Non-Paying Subsidiary Guarantor's "Pro Rata
Share" of such payment or payments made, or losses suffered, by such Paying
Subsidiary Guarantor. For the purposes hereof, each Non-Paying Subsidiary
Guarantor's "Pro Rata Share" with respect to any such payment or loss by a
Paying Subsidiary Guarantor shall be determined as of the date on which such
payment or loss was made by reference to the ratio of (i) such Non-Paying
Subsidiary Guarantor's Maximum Liability as of such date (without giving effect
to any right to receive, or obligation to make, any contribution hereunder) or,
if such Non-Paying Subsidiary Guarantor's Maximum Liability has not been
determined, the aggregate amount of all monies received by such Non-Paying
Subsidiary Guarantor from the Principal after the date hereof (whether by loan,
capital infusion or by other means) to (ii) the aggregate Maximum Liability of
all Subsidiary Guarantors hereunder (including such Paying Subsidiary Guarantor)
as of such date (without giving effect to any right to receive, or obligation to
make, any contribution hereunder), or to the extent that a Maximum Liability has
not been determined for any Subsidiary Guarantors, the aggregate amount of all
monies received by such Subsidiary Guarantors from the Principal after the date
hereof (whether by loan, capital infusion or by other means). Nothing in this
Section 9 (c) shall affect any Subsidiary Guarantor's several liability for the
entire amount of the Guaranteed Obligations (up to such Subsidiary Guarantor's
Maximum Liability). Each of the Subsidiary Guarantors covenants and agrees that
its right to receive any contribution under this Guaranty from a Non-Paying
Subsidiary Guarantor shall be subordinate and junior in right of payment to all
the Guaranteed Obligations. The provisions of this Section 9(c) are for the
benefit of both the Agent and the Subsidiary Guarantors and may be enforced by
any one, or more, or all of them in accordance with the terms hereof.
SECTION 10. Application of Payments. All payments received by the Agent
hereunder shall be applied by the Agent to payment of the Guaranteed Obligations
in the following order unless a court of competent jurisdiction shall otherwise
direct:
(a) FIRST, to payment of all costs and expenses of the Agent incurred
in connection with the collection and enforcement of the Guaranteed
Obligations or of any security interest granted to the Agent in connection
with any collateral securing the Guaranteed Obligations;
(b) SECOND, to payment of that portion of the Guaranteed Obligations
constituting accrued and unpaid interest and fees, pro rata among the
Lenders and their Affiliates in accordance with the amount of such accrued
and unpaid interest and fees owing to each of them;
105
(c) THIRD, to payment of the principal of the Guaranteed Obligations
and the net early termination payments and any other Rate Management
Obligations then due and unpaid from the Borrower to any of the Lenders or
their Affiliates, pro rata among the Lenders and their Affiliates in
accordance with the amount of such principal and such net early termination
payments and other Rate Management Obligations then due and unpaid owing to
each of them; and
(d) FOURTH, to payment of any Guaranteed Obligations (other than those
listed above) pro rata among those parties to whom such Guaranteed
Obligations are due in accordance with the amounts owing to each of them.
SECTION 11. Notices. All notices, requests and other communications to any
party hereunder shall be given or made by telecopier or other writing and
telecopied, or mailed or delivered to the intended recipient at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for such purpose by
notice to the Agent in accordance with the provisions of Article XIII of the
Credit Agreement. Except as otherwise provided in this Guaranty, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice sent by
certified mail return-receipt requested, on the date set forth on the receipt
(provided, that any refusal to accept any such notice shall be deemed to be
notice thereof as of the time of any such refusal), in each case given or
addressed as aforesaid.
SECTION 12. No Waivers. No failure or delay by the Agent or any Lenders in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Guaranty, the Credit Agreement, any
Note, any Rate Management Transaction and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 13. No Duty to Advise. Each of the Subsidiary Guarantors assumes
all responsibility for being and keeping itself informed of the Principal's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that each of the Subsidiary Guarantors assumes and incurs
under this Guaranty, and agrees that neither the Agent nor any Lender has any
duty to advise any of the Subsidiary Guarantors of information known to it
regarding those circumstances or risks.
SECTION 14. Successors and Assigns. This Guaranty is for the benefit of the
Agent and the Lenders and their respective successors and permitted assigns and
in the event of an assignment of any amounts payable under the Credit Agreement,
any Note, any Rate Management Transaction, or the other Loan Documents, the
rights hereunder, to the extent applicable to the indebtedness so assigned,
shall be transferred with such indebtedness. This Guaranty shall be binding upon
each of the Subsidiary Guarantors and their respective successors and permitted
assigns.
106
SECTION 15. Changes in Writing. Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each of the Subsidiary Guarantors and the Agent with the
consent of the Required Lenders.
SECTION 16. Costs of Enforcement. Each of the Subsidiary Guarantors agrees
to pay all costs and expenses including, without limitation, all court costs and
attorneys' fees and expenses paid or incurred by the Agent or any Lender or any
Affiliate of any Lender in endeavoring to collect all or any part of the
Guaranteed Obligations from, or in prosecuting any action against, the
Principal, the Subsidiary Guarantors or any other guarantor of all or any part
of the Guaranteed Obligations.
SECTION 17. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF OKLAHOMA. EACH OF THE SUBSIDIARY GUARANTORS HEREBY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA AND OF ANY OKLAHOMA STATE COURT SITTING IN TULSA,
OKLAHOMA AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS GUARANTY (INCLUDING, WITHOUT LIMITATION, ANY OF THE OTHER LOAN DOCUMENTS)
OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE SUBSIDIARY GUARANTORS
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
SUBSIDIARY GUARANTORS, AND THE AGENT AND THE LENDERS ACCEPTING THIS GUARANTY,
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 18. Taxes. etc. All payments required to be made by any of the
Subsidiary Guarantors hereunder shall be made without setoff or counterclaim and
free and clear of and without deduction or withholding for or on account of, any
present or future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by any government or any political or taxing authority thereof
(but excluding Excluded Taxes), provided, however, that if any of the Subsidiary
Guarantors is required by law to make such deduction or withholding, such
Subsidiary Guarantor shall forthwith (i) pay to the Agent or any Lender, as
applicable, such additional amount as results in the net amount received by the
Agent or any Lender, as applicable, equaling the full amount which would have
been received by the Agent or any Lender, as applicable, had no such deduction
or withholding been made, (ii) pay the full amount deducted to the relevant
authority in accordance with applicable law, and (iii) furnish to the Agent or
any Lender, as applicable, certified copies of official receipts evidencing
payment of such withholding taxes within 30 days after such payment is made.
107
SECTION 19. Setoff. Without limiting the rights of the Agent or the Lenders
under applicable law, if all or any part of the Guaranteed Obligations is then
due, whether pursuant to the occurrence of a Default or otherwise, then the
Guarantor authorizes the Agent and the Lenders to apply any sums standing to the
credit of the Guarantor with the Agent or any Lender or any Lending Installation
of the Agent or any Lender toward the payment of the Guaranteed Obligations.
108
IN WITNESS WHEREOF, each of the Subsidiary Guarantors has caused this
Guaranty to be duly executed, under seal, by its authorized officer as of the
day and year first above written.
MATRIX SERVICE INC.,
an Oklahoma corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
109
MATRIX SERVICE MID-CONTINENT,
INC., an Oklahoma corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
110
MATRIX SERVICE, INC. CANADA,
an Ontario, Canada corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
111
HAKE ACQUISITION CORP.,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
112
HAKE GROUP, INC.,
a Delaware corporation
By:
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
113
BOGAN, INC. (including Fiberspec, a
division), a Pennsylvania corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
114
FRANK W. HAKE, INC.,
a Pennsylvania corporation
By:
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
115
HOVER SYSTEMS, INC.,
a Pennsylvania corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
116
I & S, INC.,
a Pennsylvania corporation
By:
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Name:
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Title:
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117
MCBISH MANAGEMENT, INC.,
a Pennsylvania corporation
By:
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Name:
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Title:
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118
MECHANICAL CONSTRUCTION, INC.,
a Delaware corporation
By:
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Name:
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Title:
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119
MID-ATLANTIC CONSTRUCTORS, INC.,
a Pennsylvania corporation
By:
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Name:
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Title:
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120
TALBOT REALTY, INC.,
a Pennsylvania corporation
By:
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Name:
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Title:
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121
BISH INVESTMENTS, INC.,
a Delaware corporation
By:
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Name:
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Title:
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122
I & S JOINT VENTURE, L.L.C., a
Pennsylvania limited liability company
By:
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Name:
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Title:
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123
EXHIBIT G
PLEDGE AND SECURITY AGREEMENT
(Borrower)
THIS PLEDGE AND SECURITY AGREEMENT is entered into as of March , 2003 by
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and between MATRIX SERVICE COMPANY, a Delaware corporation (the "Borrower"),
and BANK ONE, OKLAHOMA, NA, a national banking association having its principal
office in Tulsa, Oklahoma, in its capacity as agent (the "Agent") for the
lenders party to the Credit Agreement referred to below.
PRELIMINARY STATEMENT
The Borrower, the Agent and the Lenders are entering into a Credit
Agreement dated as of March , 2003 (as it may be amended or modified from
----
time to time, the "Credit Agreement"). The Borrower is entering into this Pledge
and Security Agreement (as it may be amended or modified from time to time, the
"Security Agreement") in order to induce the Lenders to enter into and extend
credit to the Borrower under the Credit Agreement.
ACCORDINGLY, the Borrower and the Agent, on behalf of the Lenders, hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Terms Defined in Credit Agreement. All capitalized terms used herein
and not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.
1.2 Terms Defined in Oklahoma Uniform Commercial Code. Terms defined in the
Oklahoma UCC which are not otherwise defined in this Security Agreement are used
herein as defined in the Oklahoma UCC.
1.3 Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
"Accounts" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Article" means a numbered article of this Security Agreement, unless
another document is specifically referenced.
"Chattel Paper" shall have the meaning set forth in Article 9 of the
Oklahoma UCC.
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"Collateral" means all Accounts, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments,
Inventory, Investment Property, Pledged Deposits, and Other Collateral, wherever
located, in which the Borrower now has or hereafter acquires any right or
interest, and the Proceeds (including Stock Rights), insurance proceeds and
products thereof, together with all books and records, customer lists, credit
files, computer files, programs, printouts and other computer materials and
records related thereto.
"Commercial Tort Claims" means existing or subsequently arising commercial
tort claims of the Borrower, including without limitation those set forth on
Exhibit "F" hereto.
"Control" shall have the meaning set forth in Article 8 or, if applicable,
in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the Oklahoma UCC.
"Default" means an event described in Section 5.1.
"Deposit Accounts" shall have the meaning set forth in Article 9 of the
Oklahoma UCC.
"Documents" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Equipment" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Exhibit" refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.
"Fixtures" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"General Intangibles" shall have the meaning set forth in Article 9 of the
Oklahoma UCC.
"Oklahoma UCC" means the Oklahoma Uniform Commercial Code as in effect from
time to time.
"Instruments" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Inventory" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Investment Property" shall have the meaning set forth in Article 9 of the
Oklahoma UCC.
"Lenders" means the lenders party to the Credit Agreement and their
successors and assigns.
"Obligations" means any and all existing and future indebtedness,
obligation and liability of every kind, nature and character, direct or
indirect, absolute or contingent (including all renewals, extensions and
modifications thereof and all fees, costs and expenses incurred by the
125
Agent or the Lenders in connection with the preparation, administration,
collection or enforcement thereof), of the Company to the Agent or any Lender or
any branch, subsidiary or affiliate thereof, arising under or pursuant to this
Security Agreement, the Credit Agreement and any promissory note or notes now or
hereafter issued under the Credit Agreement.
"Other Collateral" means any property of the Borrower, other than real
estate, not included within the defined terms Accounts, Chattel Paper,
Commercial Tort Claims, Documents, Equipment, Fixtures, General Intangibles,
Instruments, Inventory, Investment Property and Pledged Deposits, including,
without limitation, all cash on hand, letter-of-credit rights, letters of
credit, Stock Rights and Deposit Accounts or other deposits (general or special,
time or demand, provisional or final) with any bank or other financial
institution, it being intended that the Collateral include all property of the
Borrower other than real estate.
"Pledged Deposits" means all time deposits of money (other than Deposit
Accounts and Instruments), whether or not evidenced by certificates, which the
Borrower may from time to time designate as pledged to the Agent or to any
Lender as security for any Obligation, and all rights to receive interest on
said deposits.
"Proceeds" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Receivables" means the Accounts, Chattel Paper, Documents, Investment
Property, Instruments or Pledged Deposits, and any other rights or claims to
receive money which are General Intangibles or which are otherwise included as
Collateral.
"Required Secured Parties" means (x) prior to an acceleration of the
obligations under the Credit Agreement, the Required Lenders, (y) after an
acceleration of the obligations under the Credit Agreement but prior to the date
upon which the Credit Agreement has terminated by its terms and all of the
obligations thereunder have been paid in full, Lenders and their Affiliates
holding in the aggregate at least 66 2/3% of the total of (i) the unpaid
principal amount of outstanding Advances and (ii) the aggregate net early
termination payments and all other amounts then due and unpaid from the Company
to the Lenders or their Affiliates under Rate Management Transactions, as
determined by the Agent in its reasonable discretion, and (z) after the Credit
Agreement has terminated by its terms and all of the obligations thereunder have
been paid in full (whether or not the obligations under the Credit Agreement
were ever accelerated), Lenders and their Affiliates holding in the aggregate at
least 66 2/3% of the aggregate net early termination payments and all other
amounts then due and unpaid from the Company to the Lenders or their Affiliates
under Rate Management Transactions, as determined by the Agent in its reasonable
discretion.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Secured Obligations" means the Obligations and Rate Management Obligations
entered into with one or more of the Lenders or their Affiliates.
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"Security" has the meaning set forth in Article 8 of the Oklahoma UCC.
"Stock Rights" means any securities, dividends or other distributions and
any other right or property which the Borrower shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral and any securities, any right to receive securities and
any right to receive earnings, in which the Borrower now has or hereafter
acquires any right, issued by an issuer of such securities.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
GRANT OF SECURITY INTEREST
The Borrower hereby pledges, assigns and grants to the Agent, on behalf of
and for the ratable benefit of the Lenders and (to the extent specifically
provided herein) their Affiliates, a security interest in all of the Borrower's
right, title and interest in and to the Collateral to secure the prompt and
complete payment and performance of the Secured Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the Lenders that:
3.1. Title, Authorization, Validity and Enforceability. The Borrower
has good and valid rights in or the power to transfer the Collateral and title
to the Collateral with respect to which it has purported to grant a security
interest hereunder, free and clear of all Liens except for Liens permitted under
Section 4.1.6, and has full power and authority to grant to the Agent the
security interest in such Collateral pursuant hereto. The execution and delivery
by the Borrower of this Security Agreement has been duly authorized by proper
corporate proceedings, and this Security Agreement constitutes a legal, valid
and binding obligation of the Borrower and creates a security interest which is
enforceable against the Borrower in all now owned and hereafter acquired
Collateral. When financing statements have been filed in the appropriate offices
against the Borrower in the locations listed on Exhibit "F", the Agent will have
a fully perfected first priority security interest in that Collateral in which a
security interest may be perfected by filing, subject only to Liens permitted
under Section 4.1.6.
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3.2. Conflicting Laws and Contracts. Neither the execution and delivery by
the Borrower of this Security Agreement, the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Borrower or the Borrower's
articles or certificate of incorporation or by-laws or other origination
documents, the provisions of any indenture, instrument or agreement to which the
Borrower is a party or is subject, or by which it, or its property, is bound, or
conflict with or constitute a default thereunder, or result in the creation or
imposition of any Lien pursuant to the terms of any such indenture, instrument
or agreement (other than any Lien of the Agent on behalf of the Lenders).
3.3. Type and Jurisdiction of Organization. The Borrower is a corporation
organized under the laws of the State of Delaware.
3.4. Principal Location. The Borrower's mailing address and the location of
its place of business (if it has only one) or its chief executive office is
disclosed in Exhibit "A"; the Borrower has no other places of business except
those set forth in Exhibit "A".
3.5. Property Locations. Upon request by Agent, Borrower shall deliver to
Agent a current list of the locations of all Inventory, Equipment and Fixtures.
All of said locations must be owned by the Borrower except for locations (i)
which are leased by the Borrower as lessee and designated in Part B of Exhibit
"A" and (ii) at which Inventory is held in a public warehouse or is otherwise
held by a bailee or on consignment as designated in Part C of Exhibit "A", with
respect to which Inventory the Borrower has delivered bailment agreements,
warehouse receipts, financing statements or other documents satisfactory to the
Lenders to protect the Agent's and the Lenders' security interest in such
Inventory.
3.6. No Other Names. The Borrower has not conducted business under any name
except the name in which it has executed this Security Agreement, which is the
exact name as it appears in the Borrower's organizational documents, as amended,
as filed with the Borrower's jurisdiction of organization.
3.7. No Default. No Default or Unmatured Default exists.
3.8. Accounts and Chattel Paper. The names of the obligors, amounts owing,
due dates and other information with respect to the Accounts and Chattel Paper
are and will be correctly stated in all records of the Borrower relating thereto
and in all invoices and reports with respect thereto furnished to the Agent by
the Borrower from time to time. As of the time when each Account or each item of
Chattel Paper arises, the Borrower shall be deemed to have represented and
warranted that such Account or Chattel Paper, as the case may be, and all
records relating thereto, are genuine and in all respects what they purport to
be.
3.9. Filing Requirements. None of the Equipment is covered by any
certificate of title, except for the vehicles described in Part A of Exhibit
"B". None of the Collateral is of a type for which security interests or liens
may be perfected by filing under any federal statute except for
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(i) the vehicles described in Part B of Exhibit "B" and (ii) patents, trademarks
and copyrights held by the Borrower and described in Part C of Exhibit "B". The
legal description, county and street address of the property on which any
Fixtures are located is set forth in Exhibit "C" together with the name and
address of the record owner of each such property.
3.10. No Financing Statements. No financing statement describing all or any
portion of the Collateral which has not lapsed or been terminated naming the
Borrower as debtor has been filed in any jurisdiction except (i) financing
statements naming the Agent on behalf of the Lenders as the secured party, (ii)
as described in Exhibit "D", and (iii) as permitted by Section 4.1.6.
3.11. Federal Employer Identification Number. The Borrower's Federal
employer identification number is .
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3.12. State Organization Number. If the Borrower is a registered
organization, the Borrower's State organization number is .
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3.13. Pledged Securities and Other Investment Property. Exhibit "E" sets
forth a complete and accurate list of the Instruments, Securities and other
Investment Property delivered to the Agent. The Borrower is the direct and
beneficial owner of each Instrument, Security and other type of Investment
Property listed on Exhibit "E" as being owned by it, free and clear of any
Liens, except for the security interest granted to the Agent for the benefit of
the Lenders hereunder. The Grantor further represents and warrants that (i) all
such Instruments, Securities or other types of Investment Property which are
shares of stock in a corporation or ownership interests in a partnership or
limited liability company have been (to the extent such concepts are relevant
with respect to such Instrument, Security or other type of Investment Property)
duly and validly issued, are fully paid and non-assessable and (ii) with respect
to any certificates delivered to the Agent representing an ownership interest in
a partnership or limited liability company, either such certificates are
Securities as defined in Article 8 of the Uniform Commercial Code of the
applicable jurisdiction as a result of actions by the issuer or otherwise, or,
if such certificates are not Securities, the Grantor has so informed the Agent
so that the Agent may take steps to perfect its security interest therein as a
General Intangible.
ARTICLE IV
COVENANTS
From the date of this Security Agreement, and thereafter until this
Security Agreement is terminated:
4.1. General.
4.1.1. Inspection. The Borrower will permit the Agent or any Lender,
by its representatives and agents (i) to inspect the Collateral, (ii) to
examine and make copies of the records of the Borrower relating to the
Collateral and (iii) to discuss the Collateral
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and the related records of the Borrower with, and to be advised as to the
same by, the Borrower's officers and employees (and, in the case of any
Receivable, with any person or entity which is or may be obligated
thereon), all at such reasonable times and intervals as the Agent or such
Lender may determine, and all at the Borrower's expense.
4.1.2. Taxes. The Borrower will pay when due all taxes, assessments
and governmental charges and levies upon the Collateral, except those which
are being contested in good faith by appropriate proceedings and with
respect to which no Lien exists.
4.1.3. Records and Reports; Notification of Default. The Borrower will
maintain complete and accurate books and records with respect to the
Collateral, and furnish to the Agent, with sufficient copies for each of
the Lenders, such reports relating to the Collateral as the Agent shall
from time to time request. The Borrower will give prompt notice in writing
to the Agent and the Lenders of the occurrence of any Default or Unmatured
Default and of any other development, financial or otherwise, which might
materially and adversely affect the Collateral.
4.1.4. Financing Statements and Other Actions; Defense of Title. The
Borrower hereby authorizes the Agent to file electronically or otherwise,
and if requested will execute and deliver to the Agent, all financing
statements and other documents and take such other actions as may from time
to time be requested by the Agent in order to maintain a first perfected
security interest in and, if applicable, Control of, the Collateral. The
Borrower will take any and all actions necessary to defend title to the
Collateral against all persons and to defend the security interest of the
Agent in the Collateral and the priority thereof against any Lien not
expressly permitted hereunder.
4.1.5. Disposition of Collateral. The Borrower will not sell, lease or
otherwise dispose of the Collateral except (i) prior to the occurrence of a
Default or Unmatured Default, dispositions specifically permitted pursuant
to Section 6.13 of the Credit Agreement, (ii) until such time following the
occurrence of a Default as the Borrower receives a notice from the Agent
instructing the Borrower to cease such transactions, sales or leases of
Inventory in the ordinary course of business, and (iii) until such time as
the Borrower receives a notice from the Agent pursuant to Article VII,
proceeds of Inventory and Accounts collected in the ordinary course of
business.
4.1.6. Liens. The Borrower will not create, incur, or suffer to exist
any Lien on the Collateral except (i) the security interest created by this
Security Agreement, (ii) existing Liens described in Exhibit "D" and (iii)
other Liens permitted pursuant to Section 6.15 of the Credit Agreement.
4.1.7. Change in Corporate Existence, Type or Jurisdiction of
Organization, Location, Name. The Borrower will:
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(a) preserve its existence as a corporation and not, in one
transaction or a series of related transactions, merge into or
consolidate with any other entity, or sell all or substantially
all of its assets;
(b) not change its state of organization;
unless the Borrower shall have given the Agent not less than 30 days' prior
written notice of such event or occurrence and the Agent shall have either
(x) determined that such event or occurrence will not adversely affect the
validity, perfection or priority of the Agent's security interest in the
Collateral, or (y) taken such steps (with the cooperation of the Borrower
to the extent necessary or advisable) as are necessary or advisable to
properly maintain the validity, perfection and priority of the Agent's
security interest in the Collateral.
4.1.8. Other Financing Statements. The Grantor will not sign or
authorize the signing on its behalf or the filing of any financing
statement naming it as debtor covering all or any portion of the
Collateral, except as permitted by Section 4.1.6.
4.2 Receivables.
4.2.1. Certain Agreements on Receivables. The Borrower will not make
or agree to make any change order(s), discount, credit, rebate or other
reduction in the original amount owing on a Receivable (other than those
reasonably deemed necessary and appropriate by Borrower which would not
cause a Mandatory Prepayment under Section 2.7.2(iv) of the Credit
Agreement) or accept in satisfaction of a Receivable less than the original
amount thereof, except that, prior to the occurrence of a Default, the
Borrower may reduce the amount of Accounts arising from the sale of
Inventory in accordance with its present policies and in the ordinary
course of business.
4.2.2. Collection of Receivables. Except as otherwise provided in this
Security Agreement, the Borrower will collect and enforce, at the
Borrower's sole expense, all amounts due or hereafter due to the Borrower
under the Receivables.
4.2.3. Delivery of Invoices. The Borrower will deliver to the Agent
immediately upon its request after the occurrence of a Default duplicate
invoices with respect to each Account bearing such language of assignment
as the Agent shall specify.
4.2.4. Disclosure of Counterclaims on Receivables. If (i) any
discount, credit or agreement permitted in Section 4.2.1. to make a rebate
or to otherwise reduce the amount owing on a Receivable exists or (ii) if,
to the knowledge of the Borrower, any dispute, setoff, claim, counterclaim
or defense exists or has been asserted or threatened with respect to a
Receivable, the Borrower will disclose such fact to the Agent in writing in
connection with the inspection by the Agent of any record of the Borrower
relating to such Receivable and in connection with any invoice or report
furnished by the Borrower to the Agent relating to such Receivable.
131
4.3 Inventory and Equipment.
4.3.1. Maintenance of Goods. The Borrower will do all things necessary
to maintain, preserve, protect and keep the Inventory and the Equipment in
good repair and working and saleable condition.
4.3.2. Insurance. The Borrower will (i) maintain fire and extended
coverage insurance on the Inventory and Equipment containing a lender's
loss payable clause in favor of the Agent, on behalf of the Lenders, and
providing that said insurance will not be terminated except after at least
30 days' written notice from the insurance company to the Agent, (ii)
maintain such other insurance on the Collateral for the benefit of the
Agent as the Agent shall from time to time request, (iii) furnish to the
Agent upon the request of the Agent from time to time the originals of all
policies of insurance on the Collateral and certificates with respect to
such insurance and (iv) maintain general liability insurance naming the
Agent, on behalf of the Lenders, as an additional insured.
4.3.3. Titled Vehicles. The Borrower will give the Agent notice of its
acquisition of any vehicle covered by a certificate of title and deliver to
the Agent, upon request, the original of any vehicle title certificate and
do all things necessary to have the Lien of the Agent noted on any such
certificate.
4.4. Instruments, Securities, Chattel Paper, Documents and Pledged
Deposits. The Borrower will (i) deliver to the Agent immediately upon execution
of this Security Agreement the originals of all Chattel Paper, Securities and
Instruments constituting Collateral (if any then exist), (ii) hold in trust for
the Agent upon receipt and immediately thereafter deliver to the Agent any
Chattel Paper, Securities and Instruments constituting Collateral, (iii) upon
the designation of any Pledged Deposits (as set forth in the definition
thereof), deliver to the Agent such Pledged Deposits which are evidenced by
certificates included in the Collateral endorsed in blank, marked with such
legends and assigned as the Agent shall specify, and (iv) upon the Agent's
request, after the occurrence and during the continuance of a Default, deliver
to the Agent (and thereafter hold in trust for the Agent upon receipt and
immediately deliver to the Agent) any Document evidencing or constituting
Collateral.
4.5. Uncertificated Securities and Certain Other Investment Property. The
Borrower will permit the Agent from time to time to cause the appropriate
issuers (and, if held with a securities intermediary, such securities
intermediary) of uncertificated securities or other types of Investment Property
not represented by certificates which are Collateral to mark their books and
records with the numbers and face amounts of all such uncertificated securities
or other types of Investment Property not represented by certificates and all
rollovers and replacements therefor to reflect the Lien of the Agent granted
pursuant to this Security Agreement. The Borrower will take any actions
necessary to cause (i) the issuers of uncertificated securities which are
Collateral and which are Securities and (ii) any financial intermediary which is
the holder of any Investment Property, to cause the Agent to have and retain
Control over such Securities or other Investment Property. Without limiting the
foregoing, the Borrower will, with respect to
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Investment Property held with a financial intermediary, cause such financial
intermediary to enter into a control agreement with the Agent in form and
substance satisfactory to the Agent.
4.6. Stock and Other Ownership Interests.
4.6.1. Changes in Capital Structure of Issuers. Except as permitted in
the Credit Agreement, the Borrower will not (i) permit or suffer any issuer
of privately held corporate securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral to dissolve, liquidate, retire any of its capital
stock or other Instruments or Securities evidencing ownership, reduce its
capital or merge or consolidate with any other entity, or (ii) vote any of
the Instruments, Securities or other Investment Property in favor of any of
the foregoing.
4.6.2. Issuance of Additional Securities. The Borrower will not permit
or suffer the issuer of privately held corporate securities or other
ownership interests in a corporation, partnership, joint venture or limited
liability company constituting Collateral to issue any such securities or
other ownership interests, any right to receive the same or any right to
receive earnings, except to the Borrower.
4.6.3. Registration of Pledged Securities and other Investment
Property. The Borrower will permit any registerable Collateral to be
registered in the name of the Agent or its nominee at any time at the
option of the Required Secured Parties.
4.6.4. Exercise of Rights in Pledged Securities and other Investment
Property. The Borrower will permit the Agent or its nominee at any time
after the occurrence of a Default, without notice, to exercise all voting
and corporate rights relating to the Collateral, including, without
limitation, exchange, subscription or any other rights, privileges, or
options pertaining to any corporate securities or other ownership interests
or Investment Property in or of a corporation, partnership, joint venture
or limited liability company constituting Collateral and the Stock Rights
as if it were the absolute owner thereof.
4.7. Pledged Deposits. The Borrower will not withdraw all or any portion of
any Pledged Deposit or fail to rollover said Pledged Deposit without the prior
written consent of the Agent.
4.8. Deposit Accounts. The Borrower will (i) upon the Agent's request,
cause each bank or other financial institution in which it maintains (a) a
Deposit Account to enter into a control agreement with the Agent, in form and
substance satisfactory to the Agent in order to give the Agent Control of the
Deposit Account or (b) other deposits (general or special, time or demand,
provisional or final) to be notified of the security interest granted to the
Agent hereunder and cause each such bank or other financial institution to
acknowledge such notification in writing and (ii) upon the Agent's request
[after the occurrence and during the continuance of a Default], deliver to each
such bank or other financial institution a letter, in form and substance
acceptable to the Agent, transferring ownership of the Deposit Account to the
133
Agent or transferring dominion and control over each such other deposit to the
Agent until such time as no Default exists. In the case of deposits maintained
with Lenders, the terms of such letter shall be subject to the provisions of the
Credit Agreement regarding setoffs.
4.9. Letter-of-Credit Rights. The Borrower will upon the Agent's request,
cause each issuer of a letter of credit, to consent to the assignment of
proceeds of the letter of credit in order to give the Agent Control of the
letter-of-credit rights to such letter of credit.
4.10. Federal, State or Municipal Claims. The Grantor will notify the Agent
of any Collateral which constitutes a claim against the United States government
or any state or local government or any instrumentality or agency thereof, the
assignment of which claim is restricted by federal, state or municipal law.
ARTICLE V
DEFAULT
5.1. The occurrence of any one or more of the following events shall
constitute a Default:
5.1.1. Any representation or warranty made by or on behalf of the
Borrower under or in connection with this Security Agreement shall be
materially false as of the date on which made.
5.1.2. The breach by the Borrower of any of the terms or provisions of
Article IV or Article VII.
5.1.3. The breach by the Borrower (other than a breach which
constitutes a Default under Section 5.1.1 or 5.1.2) of any of the terms or
provisions of this Security Agreement which is not remedied within 10 days
after the giving of written notice to the Borrower by the Agent.
5.1.4. Any material portion of the Collateral shall be transferred or
otherwise disposed of, either voluntarily or involuntarily, in any manner
not permitted by Section 4.1.5 or 8.7 or shall be lost, stolen, damaged or
destroyed.
5.1.5. Any Secured Obligation shall not be paid when due, whether at
stated maturity, upon acceleration, or otherwise.
5.1.6. The occurrence of any "Default" under, and as defined in, the
Credit Agreement.
5.1.7. Any limited partnership interests or ownership interests in a
limited liability company which are included within the Collateral shall at
any time constitute a Security or the issuer of any such interests shall
take any action to have such interests
134
treated as a Security unless (i) all certificates or other documents
constituting such Security have been delivered to the Agent and such
Security is properly defined as such under Article 8 of the Uniform
Commercial Code of the applicable jurisdiction, whether as a result of
actions by the issuer thereof or otherwise, or (ii) the Agent has entered
into a control agreement with the issuer of such Security or with a
securities intermediary relating to such Security and such Security is
defined as such under Article 8 of the Uniform Commercial Code of the
applicable jurisdiction, whether as a result of actions by the issuer
thereof or otherwise.
5.2. Acceleration and Remedies. Upon the acceleration of the obligations
under the Credit Agreement pursuant to Section 8.1 thereof, the Obligations and,
to the extent provided for under the Rate Management Transactions evidencing the
same, the Rate Management Obligations, shall immediately become due and payable
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, and the Agent may, with the concurrence or at the
direction of the Required Secured Parties, exercise any or all of the following
rights and remedies:
5.2.1. Those rights and remedies provided in this Security Agreement,
the Credit Agreement, or any other Loan Document, provided that this
Section 5.2.1 shall not be understood to limit any rights or remedies
available to the Agent and the Lenders prior to a Default.
5.2.2. Those rights and remedies available to a secured party under
the Oklahoma UCC (whether or not the Oklahoma UCC applies to the affected
Collateral) or under any other applicable law (including, without
limitation, any law governing the exercise of a bank's right of setoff or
bankers' lien) when a debtor is in default under a security agreement.
5.2.3. Without notice except as specifically provided in Section 8.1
or elsewhere herein, sell, lease, assign, grant an option or options to
purchase or otherwise dispose of the Collateral or any part thereof in one
or more parcels at public or private sale, for cash, on credit or for
future delivery, and upon such other terms as the Agent may deem
commercially reasonable.
The Agent, on behalf of the secured parties, may comply with any applicable
state or federal law requirements in connection with a disposition of the
Collateral and compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.
If, after the Credit Agreement has terminated by its terms and all of the
Obligations have been paid in full, there remain Rate Management Obligations
outstanding, the Required Secured Parties may exercise the remedies provided in
this Section 5.2 upon the occurrence of any event which would allow or require
the termination or acceleration of any Rate Management Obligations pursuant to
the terms of the agreement governing any Rate Management Transaction.
135
5.3. Debtor's Obligations Upon Default. Upon the request of the Agent after
the occurrence of a Default, the Borrower will:
5.3.1. Assembly of Collateral. Assemble and make available to the
Agent the Collateral and all records relating thereto at any place or
places specified by the Agent.
5.3.2. Secured Party Access. Permit the Agent, by the Agent's
representatives and agents, to enter any premises where all or any part of
the Collateral, or the books and records relating thereto, or both, are
located, to take possession of all or any part of the Collateral and to
remove all or any part of the Collateral.
5.4. License. The Agent is hereby granted a license or other right to use,
following the occurrence and during the continuance of a Default, without
charge, the Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, customer lists and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral, and, following the occurrence and during the continuance of a
Default, the Borrower's rights under all licenses and all franchise agreements
shall inure to the Agent's benefit. In addition, the Borrower hereby irrevocably
agrees that the Agent may, following the occurrence and during the continuance
of a Default, sell any of the Borrower's Inventory directly to any person,
including without limitation persons who have previously purchased the
Borrower's Inventory from the Borrower and in connection with any such sale or
other enforcement of the Agent's rights under this Agreement, may sell Inventory
which bears any trademark owned by or licensed to the Borrower and any Inventory
that is covered by any copyright owned by or licensed to the Borrower and the
Agent may finish any work in process and affix any trademark owned by or
licensed to the Borrower and sell such Inventory as provided herein.
ARTICLE VI
WAIVERS, AMENDMENTS AND REMEDIES
No delay or omission of the Agent or any Lender to exercise any right or
remedy granted under this Security Agreement shall impair such right or remedy
or be construed to be a waiver of any Default or an acquiescence therein, and
any single or partial exercise of any such right or remedy shall not preclude
any other or further exercise thereof or the exercise of any other right or
remedy. No waiver, amendment or other variation of the terms, conditions or
provisions of this Security Agreement whatsoever shall be valid unless in
writing signed by the Agent with the concurrence or at the direction of the
Lenders required under Section 8.2 of the Credit Agreement and then only to the
extent in such writing specifically set forth. All rights and remedies contained
in this Security Agreement or by law afforded shall be cumulative and all shall
be available to the Agent and the Lenders until the Secured Obligations have
been paid in full.
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ARTICLE VII
PROCEEDS; COLLECTION OF RECEIVABLES
7.1. Lockboxes. Upon request of the Agent after the occurrence of a Default
or Unmatured Default, the Borrower shall execute and deliver to the Agent
irrevocable lockbox agreements in the form provided by or otherwise acceptable
to the Agent, which agreements shall be accompanied by an acknowledgment by the
bank where the lockbox is located of the Lien of the Agent granted hereunder and
of irrevocable instructions to wire all amounts collected therein to a special
collateral account at the Agent.
7.2. Collection of Receivables. The Agent may at any time after the
occurrence of a Default, by giving the Borrower written notice, elect to require
that the Receivables be paid directly to the Agent for the benefit of the
Lenders. In such event, the Borrower shall, and shall permit the Agent to,
promptly notify the account debtors or obligors under the Receivables of the
Lenders' interest therein and direct such account debtors or obligors to make
payment of all amounts then or thereafter due under the Receivables directly to
the Agent. Upon receipt of any such notice from the Agent, the Borrower shall
thereafter hold in trust for the Agent, on behalf of the Lenders, all amounts
and proceeds received by it with respect to the Receivables and Other Collateral
and immediately and at all times thereafter deliver to the Agent all such
amounts and proceeds in the same form as so received, whether by cash, check,
draft or otherwise, with any necessary endorsements. The Agent shall hold and
apply funds so received as provided by the terms of Sections 7.3 and 7.4.
7.3. Special Collateral Account. The Agent may require all cash proceeds of
the Collateral to be deposited in a special non-interest bearing cash collateral
account with the Agent and held there as security for the Secured Obligations.
The Borrower shall have no control whatsoever over said cash collateral account.
If no Default or Unmatured Default has occurred or is continuing, the Agent
shall from time to time deposit the collected balances in said cash collateral
account into the Borrower's general operating account with the Agent. If any
Default or Unmatured Default has occurred and is continuing, the Agent may (and
shall, at the direction of the Required Lenders, from time to time, apply the
collected balances in said cash collateral account to the payment of the Secured
Obligations whether or not the Secured Obligations shall then be due.
7.4. Application of Proceeds. The proceeds of the Collateral shall be
applied by the Agent to payment of the Secured Obligations in the following
order unless a court of competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all costs and expenses of the Agent incurred
in connection with the collection and enforcement of the Secured
Obligations or of the security interest granted to the Agent pursuant to
this Security Agreement;
(b) SECOND, to payment of that portion of the Secured Obligations
constituting accrued and unpaid interest and fees, pro rata among the
Lenders and their
137
Affiliates in accordance with the amount of such accrued and unpaid
interest and fees owing to each of them;
(c) THIRD, to payment of the principal of the Secured Obligations and
the net early termination payments and any other Rate Management
Obligations then due and unpaid from the Borrower to any of the Lenders or
their Affiliates, pro rata among the Lenders and their Affiliates in
accordance with the amount of such principal and such net early termination
payments and other Rate Management Obligations then due and unpaid owing to
each of them;
(d) FOURTH, to payment of any Secured Obligations (other than those
listed above) pro rata among those parties to whom such Secured Obligations
are due in accordance with the amounts owing to each of them; and
(e) FIFTH, the balance, if any, after all of the Secured Obligations
have been satisfied, shall be deposited by the Agent into the Borrower's
general operating account with the Agent.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Notice of Disposition of Collateral; Condition of Collateral. The
Borrower hereby waives notice of the time and place of any public sale or the
time after which any private sale or other disposition of all or any part of the
Collateral may be made. To the extent such notice may not be waived under
applicable law, any notice made shall be deemed reasonable if sent to the
Borrower, addressed as set forth in Article IX, at least ten days prior to (i)
the date of any such public sale or (ii) the time after which any such private
sale or other disposition may be made. Agent shall have no obligation to
clean-up or otherwise prepare the Collateral for sale.
8.2. Compromises and Collection of Collateral. The Borrower and the Agent
recognize that setoffs, counterclaims, defenses and other claims may be asserted
by obligors with respect to certain of the Receivables, that certain of the
Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable. In view of the foregoing, the Borrower agrees that the Agent
may at any time and from time to time, if a Default has occurred and is
continuing, compromise with the obligor on any Receivable, accept in full
payment of any Receivable such amount as the Agent in its sole discretion shall
determine or abandon any Receivable, and any such action by the Agent shall be
commercially reasonable so long as the Agent acts in good faith based on
information known to it at the time it takes any such action.
8.3. Secured Party Performance of Debtor Obligations. Without having any
obligation to do so, the Agent may perform or pay any obligation which the
Borrower has agreed to perform or pay in this Security Agreement and the
Borrower shall reimburse the Agent for any
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amounts paid by the Agent pursuant to this Section 8.3. The Borrower's
obligation to reimburse the Agent pursuant to the preceding sentence shall be a
Secured Obligation payable on demand.
8.4. Authorization for Secured Party to Take Certain Action. The Borrower
irrevocably authorizes the Agent at any time and from time to time in the sole
discretion of the Agent and appoints the Agent as its attorney in fact (i) to
execute on behalf of the Borrower as debtor and to file financing statements
necessary or desirable in the Agent's sole discretion to perfect and to maintain
the perfection and priority of the Agent's security interest in the Collateral,
(ii) to indorse and collect any cash proceeds of the Collateral, (iii) to file a
carbon, photographic or other reproduction of this Security Agreement or any
financing statement with respect to the Collateral as a financing statement and
to file any other financing statement or amendment of a financing statement
(which does not add new collateral or add a debtor) in such offices as the Agent
in its sole discretion deems necessary or desirable to perfect and to maintain
the perfection and priority of the Agent's security interest in the Collateral,
(iv) to contact and enter into one or more agreements with the issuers of
uncertificated securities which are Collateral and which are Securities or with
financial intermediaries holding other Investment Property as may be necessary
or advisable to give the Agent Control over such Securities or other Investment
Property, (v) subject to the terms of Section 4.1.5, to enforce payment of the
Receivables in the name of the Agent or the Borrower, (vi) to apply the proceeds
of any Collateral received by the Agent to the Secured Obligations as provided
in Article VII and (vii) to discharge past due taxes, assessments, charges, fees
or Liens on the Collateral (except for such Liens as are specifically permitted
hereunder), and the Borrower agrees to reimburse the Agent on demand for any
payment made or any expense incurred by the Agent in connection therewith,
provided that this authorization shall not relieve the Borrower of any of its
obligations under this Security Agreement or under the Credit Agreement.
8.5. Specific Performance of Certain Covenants. The Borrower acknowledges
and agrees that a breach of any of the covenants contained in Sections 4.1.5,
4.1.6, 4.4, 5.3, or 8.7 or in Article VII will cause irreparable injury to the
Agent and the Lenders, that the Agent and Lenders have no adequate remedy at law
in respect of such breaches and therefore agrees, without limiting the right of
the Agent or the Lenders to seek and obtain specific performance of other
obligations of the Borrower contained in this Security Agreement, that the
covenants of the Borrower contained in the Sections referred to in this Section
8.5 shall be specifically enforceable against the Borrower.
8.6. Use and Possession of Certain Premises. Upon the occurrence of a
Default, the Agent shall be entitled to occupy and use any premises owned or
leased by the Borrower where any of the Collateral or any records relating to
the Collateral are located until the Secured Obligations are paid or the
Collateral is removed therefrom, whichever first occurs, without any obligation
to pay the Borrower for such use and occupancy.
8.7. Dispositions Not Authorized. The Borrower is not authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.1.5 and
notwithstanding any course of dealing between the Borrower and the Agent or
other conduct of the Agent, no authorization to sell or otherwise dispose of the
Collateral (except as set forth in Section 4.1.5) shall be binding
139
upon the Agent or the Lenders unless such authorization is in writing signed by
the Agent with the consent or at the direction of the Required Lenders.
8.8. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Agent and the Lenders and their respective successors and assigns (including all
persons who become bound as a debtor to this Security Agreement), except that
the Borrower shall not have the right to assign its rights or delegate its
obligations under this Security Agreement or any interest herein, without the
prior written consent of the Agent.
8.9. Survival of Representations. All representations and warranties of the
Borrower contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.
8.10. Taxes and Expenses. Any taxes (including income taxes) payable or
ruled payable by Federal or State authority in respect of this Security
Agreement shall be paid by the Borrower, together with interest and penalties,
if any. The Borrower shall reimburse the Agent for any and all out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Agent) paid or incurred by the Agent
in connection with the preparation, execution, delivery, administration,
collection and enforcement of this Security Agreement and in the audit,
analysis, administration, collection, preservation or sale of the Collateral
(including the expenses and charges associated with any periodic or special
audit of the Collateral). Any and all costs and expenses incurred by the
Borrower in the performance of actions required pursuant to the terms hereof
shall be borne solely by the Borrower.
8.11. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
8.12. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of the Agent or the
Lenders which would give rise to any Secured Obligations are outstanding.
8.13. Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between the Borrower and the Agent relating to the
Collateral and supersedes all prior agreements and understandings between the
Borrower and the Agent relating to the Collateral.
8.14. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF OKLAHOMA, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
140
8.15. Distribution of Reports. The Borrower authorizes the Agent, as the
Agent may elect in its sole discretion, to discuss with and furnish to its
affiliates and to the Lenders or to any other person or entity having an
interest in the Secured Obligations (whether as a guarantor, pledgor of
collateral, participant or otherwise) all financial statements, audit reports
and other information pertaining to the Borrower and its Subsidiaries whether
such information was provided by the Borrower or prepared or obtained by the
Agent. Neither the Agent nor any of its employees, officers, directors or agents
makes any representation or warranty regarding any audit reports or other
analyses of the Borrower's and its Subsidiaries' condition which the Agent may
in its sole discretion prepare and elect to distribute, nor shall the Agent or
any of its employees, officers, directors or agents be liable to any person or
entity receiving a copy of such reports or analyses for any inaccuracy or
omission contained in or relating thereto.
8.16. Indemnity. The Borrower hereby agrees to indemnify the Agent and the
Lenders, and their respective successors, assigns, agents and employees, from
and against any and all liabilities, damages, penalties, suits, costs, and
expenses of any kind and nature (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or any Lender is a
party thereto) imposed on, incurred by or asserted against the Agent or the
Lenders, or their respective successors, assigns, agents and employees, in any
way relating to or arising out of this Security Agreement, or the manufacture,
purchase, acceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of any Collateral
(including, without limitation, latent and other defects, whether or not
discoverable by the Agent or the Lenders or the Borrower, and any claim for
patent, trademark or copyright infringement).
ARTICLE IX
NOTICES
9.1. Sending Notices. Any notice required or permitted to be given under
this Security Agreement shall be sent (and deemed received) in the manner and to
the addresses set forth in Article XIII of the Credit Agreement.
9.2. Change in Address for Notices. Each of the Borrower, the Agent and the
Lenders may change the address for service of notice upon it by a notice in
writing to the other parties.
ARTICLE X
THE AGENT
Bank One, Oklahoma, NA has been appointed Agent for the Lenders hereunder
pursuant to Article X of the Credit Agreement. It is expressly understood and
agreed by the parties to this Security Agreement that any authority conferred
upon the Agent hereunder is subject to the terms of the delegation of authority
made by the Lenders to the Agent pursuant to the Credit Agreement, and that the
Agent has agreed to act (and any successor Agent shall act) as such
141
hereunder only on the express conditions contained in such Article X. Any
successor Agent appointed pursuant to Article X of the Credit Agreement shall be
entitled to all the rights, interests and benefits of the Agent hereunder.
IN WITNESS WHEREOF, the Borrower and the Agent have executed this Security
Agreement as of the date first above written.
MATRIX SERVICE COMPANY,
a Delaware corporation
By:
----------------------------------
Title:
-------------------------------
BANK ONE, OKLAHOMA, NA,
as Agent
By:
----------------------------------
Title:
-------------------------------
STATE OF )
-------------------------
) SS
COUNTY OF )
------------------------
The foregoing instrument was acknowledged before me this day of March,
---
2003, by , a of , on behalf of said
------ ------------
Notary Public
My commission expires:
142
EXHIBIT "A"
(See Sections 3.3, 3.4, 3.5, 4.1.7 and 9.1 of Security Agreement)
Place of Business (if it has only one) or Chief Executive Office (if more than
one place of business) and Mailing Address:
---------------------
---------------------
---------------------
---------------------
Attention:
-----------
Locations of Inventory and Equipment and Fixtures:
A. Properties Owned by the Borrower:
B. Properties Leased by the Borrower (Include Landlord's Name):
C. Public Warehouses or other Locations pursuant to Bailment or Consignment
Arrangements (include name of Warehouse Operator or other Bailee or Consignee):
143
EXHIBIT "B"
(See Section 3.9 of Security Agreement)
A. Vehicles subject to certificates of title:
Description Title Number & State Where Issued
----------- ---------------------------------
B. Aircraft/engines, ships, railcars and other vehicles governed by federal
statute:
Description Registration Number
----------- -------------------
C. Patents, copyrights, trademarks protected under federal law*:
- ----------
*For (i) trademarks, show the trademark itself, the registration date and the
registration number; (ii) trademark applications, show the trademark applied
for, the application filing date and the serial number of the application; (iii)
patents, show the patent number, issue date and a brief description of the
subject matter of the patent; and (iv) patent applications, show the serial
number of the application, the application filing date and a brief description
of the subject matter of the patent applied for. Any licensing agreements for
patents or trademarks should be described on a separate schedule.
144
EXHIBIT "C"
(See Section 3.9 of Security Agreement)
Legal description, county and street address of property on which Fixtures
are located:
Name and Address of Record Owner:
--------------
--------------
--------------
--------------
145
EXHIBIT "D"
(See Sections 3.10 and 4.1.6 of Security Agreement)
EXISTING LIENS ON THE COLLATERAL
Secured Party Collateral Principal Balance Maturity
- ------------- ---------- ----------------- --------
146
EXHIBIT "E"
List of Pledged Securities
(See Section 3.13 of Security Agreement)
A. STOCKS:
Issuer Certificate Number Number of Shares
- ------ ------------------ ----------------
B. BONDS:
Issuer Number Face Amount Coupon Rate Maturity
- ------ ------ ----------- ----------- --------
C. GOVERNMENT SECURITIES:
Issuer Number Type Face Amount Coupon Rate Maturity
- ------ ------ ---- ----------- ----------- --------
D. OTHER SECURITIES OR OTHER INVESTMENT PROPERTY (CERTIFICATED AND
UNCERTIFICATED):
Issuer
Interest Description of Collateral Percentage Ownership
- -------- ------------------------- --------------------
147
EXHIBIT "F"
COMMERCIAL TORT CLAIMS
148
PLEDGE AND SECURITY AGREEMENT
(Subsidiary)
THIS PLEDGE AND SECURITY AGREEMENT is entered into as of March , 2003
----
by and between , a corporation (the
------------------------ ----------
"Grantor"), and BANK ONE, OKLAHOMA, NA, a national banking association having
its principal office in Tulsa, Oklahoma, in its capacity as agent (the "Agent")
for the Lenders party to the Credit Agreement referred to below.
PRELIMINARY STATEMENT
MATRIX SERVICE COMPANY, a Delaware corporation ("Company"), the Agent and
the Lenders are entering into a Credit Agreement dated as of March , 2003
----
(as it may be amended or modified from time to time, the "Credit Agreement").
The Grantor is entering into this Pledge and Security Agreement (as it may be
amended or modified from time to time, the "Security Agreement") in order to
induce the Lenders to enter into and extend credit to the Company under the
Credit Agreement.
ACCORDINGLY, the Grantor and the Agent, on behalf of the Lenders, hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1. Terms Defined in Credit Agreement. All capitalized terms used herein
and not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.
1.2. Terms Defined in Oklahoma Uniform Commercial Code. Terms defined in
the Oklahoma UCC which are not otherwise defined in this Security Agreement are
used herein as defined in the Oklahoma UCC.
1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
"Accounts" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Article" means a numbered article of this Security Agreement, unless
another document is specifically referenced.
"Chattel Paper" shall have the meaning set forth in Article 9 of the
Oklahoma UCC.
149
"Collateral" means all Accounts, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments,
Inventory, Investment Property, Pledged Deposits, and Other Collateral, wherever
located, in which the Grantor now has or hereafter acquires any right or
interest, and the Proceeds (including Stock Rights), insurance proceeds and
products thereof, together with all books and records, customer lists, credit
files, computer files, programs, printouts and other computer materials and
records related thereto.
"Commercial Tort Claims" means existing or subsequently arising commercial
tort claims of the Grantor, including without limitation those set forth on
Exhibit "F" hereto.
"Control" shall have the meaning set forth in Article 8 or, if applicable,
in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the Oklahoma UCC.
"Default" means an event described in Section 5.1.
"Deposit Accounts" shall have the meaning set forth in Article 9 of the
Oklahoma UCC.
"Documents" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Equipment" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Exhibit" refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.
"Fixtures" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"General Intangibles" shall have the meaning set forth in Article 9 of the
Oklahoma UCC.
"Oklahoma UCC" means the Oklahoma Uniform Commercial Code as in effect from
time to time.
"Instruments" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Inventory" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Investment Property" shall have the meaning set forth in Article 9 of the
Oklahoma UCC.
"Lenders" means the lenders party to the Credit Agreement and their
successors and assigns.
"Obligations" means any and all existing and future indebtedness,
obligation and liability of every kind, nature and character, direct or
indirect, absolute or contingent (including all
150
renewals, extensions and modifications thereof and all fees, costs and expenses
incurred by the Agent or the Lenders in connection with the preparation,
administration, collection or enforcement thereof), of the Company to the Agent
or any Lender or any branch, subsidiary or affiliate thereof, arising under or
pursuant to this Security Agreement, the Credit Agreement and any promissory
note or notes now or hereafter issued under the Credit Agreement.
"Other Collateral" means any property of the Grantor, other than real
estate, not included within the defined terms Accounts, Chattel Paper,
Commercial Tort Claims, Documents, Equipment, Fixtures, General Intangibles,
Instruments, Inventory, Investment Property and Pledged Deposits, including,
without limitation, all cash on hand, letter-of-credit rights, letters of
credit, Stock Rights and Deposit Accounts or other deposits (general or special,
time or demand, provisional or final) with any bank or other financial
institution, it being intended that the Collateral include all property of the
Grantor other than real estate.
"Pledged Deposits" means all time deposits of money (other than Deposit
Accounts and Instruments), whether or not evidenced by certificates, which the
Grantor may from time to time designate as pledged to the Agent or to any Lender
as security for any Obligation, and all rights to receive interest on said
deposits.
"Proceeds" shall have the meaning set forth in Article 9 of the Oklahoma
UCC.
"Receivables" means the Accounts, Chattel Paper, Documents, Investment
Property, Instruments or Pledged Deposits, and any other rights or claims to
receive money which are General Intangibles or which are otherwise included as
Collateral.
"Required Secured Parties" means (x) prior to an acceleration of the
obligations under the Credit Agreement, the Required Lenders, (y) after an
acceleration of the obligations under the Credit Agreement but prior to the date
upon which the Credit Agreement has terminated by its terms and all of the
obligations thereunder have been paid in full, Lenders and their Affiliates
holding in the aggregate at least 66 2/3% of the total of (i) the unpaid
principal amount of outstanding Advances and (ii) the aggregate net early
termination payments and all other amounts then due and unpaid from the Company
to the Lenders or their Affiliates under Rate Management Transactions, as
determined by the Agent in its reasonable discretion, and (z) after the Credit
Agreement has terminated by its terms and all of the obligations thereunder have
been paid in full (whether or not the obligations under the Credit Agreement
were ever accelerated), Lenders and their Affiliates holding in the aggregate at
least 66 2/3% of the aggregate net early termination payments and all other
amounts then due and unpaid from the Company to the Lenders or their Affiliates
under Rate Management Transactions, as determined by the Agent in its reasonable
discretion.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Secured Obligations" means the Obligations and Rate Management Obligations
entered into with one or more of the Lenders or their Affiliates.
151
"Security" has the meaning set forth in Article 8 of the Oklahoma UCC.
"Stock Rights" means any securities, dividends or other distributions and
any other right or property which the Grantor shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral and any securities, any right to receive securities and
any right to receive earnings, in which the Grantor now has or hereafter
acquires any right, issued by an issuer of such securities.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
GRANT OF SECURITY INTEREST
The Grantor hereby pledges, assigns and grants to the Agent, on behalf of
and for the ratable benefit of the Lenders and (to the extent specifically
provided herein) their Affiliates, a security interest in all of the Grantor's
right, title and interest in and to the Collateral to secure the prompt and
complete payment and performance of the Secured Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantor represents and warrants to the Agent and the Lenders that:
3.1. Title, Authorization, Validity and Enforceability. The Grantor has
good and valid rights in or the power to transfer the Collateral and title to
the Collateral with respect to which it has purported to grant a security
interest hereunder, free and clear of all Liens except for Liens permitted under
Section 4.1.6, and has full power and authority to grant to the Agent the
security interest in such Collateral pursuant hereto. The execution and delivery
by the Grantor of this Security Agreement has been duly authorized by proper
corporate proceedings, and this Security Agreement constitutes a legal, valid
and binding obligation of the Grantor and creates a security interest which is
enforceable against the Grantor in all now owned and hereafter acquired
Collateral. When financing statements have been filed in the appropriate offices
against the Grantor in the locations listed on Exhibit "F", the Agent will have
a fully perfected first priority
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security interest in that Collateral in which a security interest may be
perfected by filing, subject only to Liens permitted under Section 4.1.6.
3.2. Conflicting Laws and Contracts. Neither the execution and delivery by
the Grantor of this Security Agreement, the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Grantor or the Grantor's
articles or certificate of incorporation or by-laws or other origination
documents, the provisions of any indenture, instrument or agreement to which the
Grantor is a party or is subject, or by which it, or its property, is bound, or
conflict with or constitute a default thereunder, or result in the creation or
imposition of any Lien pursuant to the terms of any such indenture, instrument
or agreement (other than any Lien of the Agent on behalf of the Lenders).
3.3. Type and Jurisdiction of Organization. The Borrower is a corporation
organized under the laws of the State of Delaware.
3.4. Principal Location. The Grantor's mailing address and the location of
its place of business (if it has only one) or its chief executive office is
disclosed in Exhibit "A"; the Grantor has no other places of business except
those set forth in Exhibit "A".
3.5. Property Locations. Upon request by Agent, Borrower shall deliver to
Agent a current list of the locations of all Inventory, Equipment and Fixtures.
All of said locations must be owned by the Grantor except for locations (i)
which are leased by the Grantor as lessee and designated in Part B of Exhibit
"A" and (ii) at which Inventory is held in a public warehouse or is otherwise
held by a bailee or on consignment as designated in Part C of Exhibit "A", with
respect to which Inventory the Grantor has delivered bailment agreements,
warehouse receipts, financing statements or other documents satisfactory to the
Lenders to protect the Agent's and the Lenders' security interest in such
Inventory.
3.6. No Other Names. The Grantor has not conducted business under any name
except the name in which it has executed this Security Agreement, which is the
exact name as it appears in the Grantor's organizational documents, as amended,
as filed with the Grantor's jurisdiction of organization.
3.7. No Default. No Default or Unmatured Default exists.
3.8. Accounts and Chattel Paper. The names of the obligors, amounts owing,
due dates and other information with respect to the Accounts and Chattel Paper
are and will be correctly stated in all records of the Grantor relating thereto
and in all invoices and reports with respect thereto furnished to the Agent by
the Grantor from time to time. As of the time when each Account or each item of
Chattel Paper arises, the Grantor shall be deemed to have represented and
warranted that such Account or Chattel Paper, as the case may be, and all
records relating thereto, are genuine and in all respects what they purport to
be.
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3.9. Filing Requirements. None of the Equipment is covered by any
certificate of title, except for the vehicles described in Part A of Exhibit
"B". None of the Collateral is of a type for which security interests or liens
may be perfected by filing under any federal statute except for (i) the vehicles
described in Part B of Exhibit "B" and (ii) patents, trademarks and copyrights
held by the Grantor and described in Part C of Exhibit "B". The legal
description, county and street address of the property on which any Fixtures are
located is set forth in Exhibit "C" together with the name and address of the
record owner of each such property.
3.10. No Financing Statements. No financing statement describing all or any
portion of the Collateral which has not lapsed or been terminated naming the
Grantor as debtor has been filed in any jurisdiction except (i) financing
statements naming the Agent on behalf of the Lenders as the secured party, (ii)
as described in Exhibit "D", and (iii) as permitted by Section 4.1.6.
3.11. Federal Employer Identification Number. The Grantor's Federal
employer identification number is .
-----------
3.12. State Organization Number. If the Grantor is a registered
organization, the Grantor's State organization number is .
-------------
3.13. Pledged Securities and Other Investment Property. Exhibit "E" sets
forth a complete and accurate list of the Instruments, Securities and other
Investment Property delivered to the Agent. The Grantor is the direct and
beneficial owner of each Instrument, Security and other type of Investment
Property listed on Exhibit "E" as being owned by it, free and clear of any
Liens, except for the security interest granted to the Agent for the benefit of
the Lenders hereunder. The Grantor further represents and warrants that (i) all
such Instruments, Securities or other types of Investment Property which are
shares of stock in a corporation or ownership interests in a partnership or
limited liability company have been (to the extent such concepts are relevant
with respect to such Instrument, Security or other type of Investment Property)
duly and validly issued, are fully paid and non-assessable and (ii) with respect
to any certificates delivered to the Agent representing an ownership interest in
a partnership or limited liability company, either such certificates are
Securities as defined in Article 8 of the Uniform Commercial Code of the
applicable jurisdiction as a result of actions by the issuer or otherwise, or,
if such certificates are not Securities, the Grantor has so informed the Agent
so that the Agent may take steps to perfect its security interest therein as a
General Intangible.
ARTICLE IV
COVENANTS
From the date of this Security Agreement, and thereafter until this
Security Agreement is terminated:
4.1. General.
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4.1.1. Inspection. The Grantor will permit the Agent or any Lender, by
its representatives and agents (i) to inspect the Collateral, (ii) to
examine and make copies of the records of the Grantor relating to the
Collateral and (iii) to discuss the Collateral and the related records of
the Grantor with, and to be advised as to the same by, the Grantor's
officers and employees (and, in the case of any Receivable, with any person
or entity which is or may be obligated thereon), all at such reasonable
times and intervals as the Agent or such Lender may determine, and all at
the Grantor's expense.
4.1.2. Taxes. The Grantor will pay when due all taxes, assessments and
governmental charges and levies upon the Collateral, except those which are
being contested in good faith by appropriate proceedings and with respect
to which no Lien exists.
4.1.3. Records and Reports; Notification of Default. The Grantor will
maintain complete and accurate books and records with respect to the
Collateral, and furnish to the Agent, with sufficient copies for each of
the Lenders, such reports relating to the Collateral as the Agent shall
from time to time request. The Grantor will give prompt notice in writing
to the Agent and the Lenders of the occurrence of any Default or Unmatured
Default and of any other development, financial or otherwise, which might
materially and adversely affect the Collateral.
4.1.4. Financing Statements and Other Actions; Defense of Title. The
Grantor hereby authorizes the Agent to file electronically or otherwise,
and if requested will execute and deliver to the Agent, all financing
statements and other documents and take such other actions as may from time
to time be requested by the Agent in order to maintain a first perfected
security interest in and, if applicable, Control of, the Collateral. The
Grantor will take any and all actions necessary to defend title to the
Collateral against all persons and to defend the security interest of the
Agent in the Collateral and the priority thereof against any Lien not
expressly permitted hereunder.
4.1.5. Disposition of Collateral. The Grantor will not sell, lease or
otherwise dispose of the Collateral except (i) prior to the occurrence of a
Default or Unmatured Default, dispositions specifically permitted pursuant
to Section 6.13 of the Credit Agreement, (ii) until such time following the
occurrence of a Default as the Grantor receives a notice from the Agent
instructing the Grantor to cease such transactions, sales or leases of
Inventory in the ordinary course of business, and (iii) until such time as
the Grantor receives a notice from the Agent pursuant to Article VII,
proceeds of Inventory and Accounts collected in the ordinary course of
business.
4.1.6. Liens. The Grantor will not create, incur, or suffer to exist
any Lien on the Collateral except (i) the security interest created by this
Security Agreement, (ii) existing Liens described in Exhibit "D" and (iii)
other Liens permitted pursuant to Section 6.15 of the Credit Agreement.
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4.1.7. Change in Corporate Existence, Type or Jurisdiction of
Organization, Location, Name. The Grantor will:
(c) preserve its existence as a corporation and not, in one
transaction or a series of related transactions, merge into or
consolidate with any other entity, or sell all or substantially
all of its assets;
(d) not change its state of organization;
unless the Grantor shall have given the Agent not less than 30 days' prior
written notice of such event or occurrence and the Agent shall have either
(x) determined that such event or occurrence will not adversely affect the
validity, perfection or priority of the Agent's security interest in the
Collateral, or (y) taken such steps (with the cooperation of the Grantor to
the extent necessary or advisable) as are necessary or advisable to
properly maintain the validity, perfection and priority of the Agent's
security interest in the Collateral.
4.1.8. Other Financing Statements. The Grantor will not sign or
authorize the signing on its behalf or the filing of any financing
statement naming it as debtor covering all or any portion of the
Collateral, except as permitted by Section 4.1.6.
4.2. Receivables.
4.2.1. Certain Agreements on Receivables. The Grantor will not make or
agree to make any change order(s), discount, credit, rebate or other
reduction in the original amount owing on a Receivable (other than those
reasonably deemed necessary and appropriate by Grantor which would not
cause a Mandatory Prepayment under Section 2.7.2(iv) of the Credit
Agreement) or accept in satisfaction of a Receivable less than the original
amount thereof, except that, prior to the occurrence of a Default, the
Grantor may reduce the amount of Accounts arising from the sale of
Inventory in accordance with its present policies and in the ordinary
course of business.
4.2.2. Collection of Receivables. Except as otherwise provided in this
Security Agreement, the Grantor will collect and enforce, at the Grantor's
sole expense, all amounts due or hereafter due to the Grantor under the
Receivables.
4.2.3. Delivery of Invoices. The Grantor will deliver to the Agent
immediately upon its request after the occurrence of a Default duplicate
invoices with respect to each Account bearing such language of assignment
as the Agent shall specify.
4.2.4. Disclosure of Counterclaims on Receivables. If (i) any
discount, credit or agreement permitted in Section 4.2.1. to make a rebate
or to otherwise reduce the amount owing on a Receivable exists or (ii) if,
to the knowledge of the Grantor, any dispute, setoff, claim, counterclaim
or defense exists or has been asserted or threatened with respect to a
Receivable, the Grantor will disclose such fact to the Agent in writing in
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connection with the inspection by the Agent of any record of the Grantor
relating to such Receivable and in connection with any invoice or report
furnished by the Grantor to the Agent relating to such Receivable.
4.3. Inventory and Equipment.
4.3.1. Maintenance of Goods. The Grantor will do all things necessary
to maintain, preserve, protect and keep the Inventory and the Equipment in
good repair and working and saleable condition.
4.3.2. Insurance. The Grantor will (i) maintain fire and extended
coverage insurance on the Inventory and Equipment containing a lender's
loss payable clause in favor of the Agent, on behalf of the Lenders, and
providing that said insurance will not be terminated except after at least
30 days' written notice from the insurance company to the Agent, (ii)
maintain such other insurance on the Collateral for the benefit of the
Agent as the Agent shall from time to time request, (iii) furnish to the
Agent upon the request of the Agent from time to time the originals of all
policies of insurance on the Collateral and certificates with respect to
such insurance and (iv) maintain general liability insurance naming the
Agent, on behalf of the Lenders, as an additional insured.
4.3.3. Titled Vehicles. The Grantor will give the Agent notice of its
acquisition of any vehicle covered by a certificate of title and deliver to
the Agent, upon request, the original of any vehicle title certificate and
do all things necessary to have the Lien of the Agent noted on any such
certificate.
4.4. Instruments, Securities, Chattel Paper, Documents and Pledged
Deposits. The Grantor will (i) deliver to the Agent immediately upon execution
of this Security Agreement the originals of all Chattel Paper, Securities and
Instruments constituting Collateral (if any then exist), (ii) hold in trust for
the Agent upon receipt and immediately thereafter deliver to the Agent any
Chattel Paper, Securities and Instruments constituting Collateral, (iii) upon
the designation of any Pledged Deposits (as set forth in the definition
thereof), deliver to the Agent such Pledged Deposits which are evidenced by
certificates included in the Collateral endorsed in blank, marked with such
legends and assigned as the Agent shall specify, and (iv) upon the Agent's
request, after the occurrence and during the continuance of a Default, deliver
to the Agent (and thereafter hold in trust for the Agent upon receipt and
immediately deliver to the Agent) any Document evidencing or constituting
Collateral.
4.5. Uncertificated Securities and Certain Other Investment Property. The
Grantor will permit the Agent from time to time to cause the appropriate issuers
(and, if held with a securities intermediary, such securities intermediary) of
uncertificated securities or other types of Investment Property not represented
by certificates which are Collateral to mark their books and records with the
numbers and face amounts of all such uncertificated securities or other types of
Investment Property not represented by certificates and all rollovers and
replacements therefor to reflect the Lien of the Agent granted pursuant to this
Security Agreement. The Grantor will take any actions necessary to cause (i) the
issuers of uncertificated securities which are Collateral and
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which are Securities and (ii) any financial intermediary which is the holder of
any Investment Property, to cause the Agent to have and retain Control over such
Securities or other Investment Property. Without limiting the foregoing, the
Grantor will, with respect to Investment Property held with a financial
intermediary, cause such financial intermediary to enter into a control
agreement with the Agent in form and substance satisfactory to the Agent.
4.6. Stock and Other Ownership Interests.
4.6.1. Changes in Capital Structure of Issuers. Except as permitted in
the Credit Agreement, the Grantor will not (i) permit or suffer any issuer
of privately held corporate securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral to dissolve, liquidate, retire any of its capital
stock or other Instruments or Securities evidencing ownership, reduce its
capital or merge or consolidate with any other entity, or (ii) vote any of
the Instruments, Securities or other Investment Property in favor of any of
the foregoing.
4.6.2. Issuance of Additional Securities. The Grantor will not permit
or suffer the issuer of privately held corporate securities or other
ownership interests in a corporation, partnership, joint venture or limited
liability company constituting Collateral to issue any such securities or
other ownership interests, any right to receive the same or any right to
receive earnings, except to the Grantor.
4.6.3. Registration of Pledged Securities and other Investment
Property. The Grantor will permit any registerable Collateral to be
registered in the name of the Agent or its nominee at any time at the
option of the Required Secured Parties.
4.6.4. Exercise of Rights in Pledged Securities and other Investment
Property. The Grantor will permit the Agent or its nominee at any time
after the occurrence of a Default, without notice, to exercise all voting
and corporate rights relating to the Collateral, including, without
limitation, exchange, subscription or any other rights, privileges, or
options pertaining to any corporate securities or other ownership interests
or Investment Property in or of a corporation, partnership, joint venture
or limited liability company constituting Collateral and the Stock Rights
as if it were the absolute owner thereof.
4.7. Pledged Deposits. The Grantor will not withdraw all or any portion of
any Pledged Deposit or fail to rollover said Pledged Deposit without the prior
written consent of the Agent.
4.8. Deposit Accounts. The Grantor will (i) upon the Agent's request, cause
each bank or other financial institution in which it maintains (a) a Deposit
Account to enter into a control agreement with the Agent, in form and substance
satisfactory to the Agent in order to give the Agent Control of the Deposit
Account or (b) other deposits (general or special, time or demand, provisional
or final) to be notified of the security interest granted to the Agent hereunder
and cause each such bank or other financial institution to acknowledge such
notification in writing
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and (ii) upon the Agent's request [after the occurrence and during the
continuance of a Default], deliver to each such bank or other financial
institution a letter, in form and substance acceptable to the Agent,
transferring ownership of the Deposit Account to the Agent or transferring
dominion and control over each such other deposit to the Agent until such time
as no Default exists. In the case of deposits maintained with Lenders, the terms
of such letter shall be subject to the provisions of the Credit Agreement
regarding setoffs.
4.10. Letter-of-Credit Rights. The Grantor will upon the Agent's request,
cause each issuer of a letter of credit, to consent to the assignment of
proceeds of the letter of credit in order to give the Agent Control of the
letter-of-credit rights to such letter of credit.
4.10. Federal, State or Municipal Claims. The Grantor will notify the Agent
of any Collateral which constitutes a claim against the United States government
or any state or local government or any instrumentality or agency thereof, the
assignment of which claim is restricted by federal, state or municipal law.
ARTICLE V
DEFAULT
5.1. The occurrence of any one or more of the following events shall
constitute a Default:
5.1.1. Any representation or warranty made by or on behalf of the
Grantor under or in connection with this Security Agreement shall be
materially false as of the date on which made.
5.1.2. The breach by the Grantor of any of the terms or provisions of
Article IV or Article VII.
5.1.3. The breach by the Grantor (other than a breach which
constitutes a Default under Section 5.1.1 or 5.1.2) of any of the terms or
provisions of this Security Agreement which is not remedied within 10 days
after the giving of written notice to the Grantor by the Agent.
5.1.4. Any material portion of the Collateral shall be transferred or
otherwise disposed of, either voluntarily or involuntarily, in any manner
not permitted by Section 4.1.5 or 8.7 or shall be lost, stolen, damaged or
destroyed.
5.1.5. Any Secured Obligation shall not be paid when due, whether at
stated maturity, upon acceleration, or otherwise.
5.1.6. The occurrence of any "Default" under, and as defined in, the
Credit Agreement.
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5.1.7. Any limited partnership interests or ownership interests in a
limited liability company which are included within the Collateral shall at
any time constitute a Security or the issuer of any such interests shall
take any action to have such interests treated as a Security unless (i) all
certificates or other documents constituting such Security have been
delivered to the Agent and such Security is properly defined as such under
Article 8 of the Uniform Commercial Code of the applicable jurisdiction,
whether as a result of actions by the issuer thereof or otherwise, or (ii)
the Agent has entered into a control agreement with the issuer of such
Security or with a securities intermediary relating to such Security and
such Security is defined as such under Article 8 of the Uniform Commercial
Code of the applicable jurisdiction, whether as a result of actions by the
issuer thereof or otherwise.
5.2. Acceleration and Remedies. Upon the acceleration of the obligations
under the Credit Agreement pursuant to Section 8.1 thereof, the Obligations and,
to the extent provided for under the Rate Management Transactions evidencing the
same, the Rate Management Obligations, shall immediately become due and payable
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, and the Agent may, with the concurrence or at the
direction of the Required Secured Parties, exercise any or all of the following
rights and remedies:
5.2.1. Those rights and remedies provided in this Security Agreement,
the Credit Agreement, or any other Loan Document, provided that this
Section 5.2.1 shall not be understood to limit any rights or remedies
available to the Agent and the Lenders prior to a Default.
5.2.2. Those rights and remedies available to a secured party under
the Oklahoma UCC (whether or not the Oklahoma UCC applies to the affected
Collateral) or under any other applicable law (including, without
limitation, any law governing the exercise of a bank's right of setoff or
bankers' lien) when a debtor is in default under a security agreement.
5.2.3. Without notice except as specifically provided in Section 8.1
or elsewhere herein, sell, lease, assign, grant an option or options to
purchase or otherwise dispose of the Collateral or any part thereof in one
or more parcels at public or private sale, for cash, on credit or for
future delivery, and upon such other terms as the Agent may deem
commercially reasonable.
The Agent, on behalf of the secured parties, may comply with any applicable
state or federal law requirements in connection with a disposition of the
Collateral and compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.
If, after the Credit Agreement has terminated by its terms and all of the
Obligations have been paid in full, there remain Rate Management Obligations
outstanding, the Required Secured Parties may exercise the remedies provided in
this Section 5.2 upon the occurrence of any event which would allow or require
the termination or acceleration of any Rate Management
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Obligations pursuant to the terms of the agreement governing any Rate Management
Transaction.
5.3. Debtor's Obligations Upon Default. Upon the request of the Agent after
the occurrence of a Default, the Grantor will:
5.3.1. Assembly of Collateral. Assemble and make available to the
Agent the Collateral and all records relating thereto at any place or
places specified by the Agent.
5.3.2. Secured Party Access. Permit the Agent, by the Agent's
representatives and agents, to enter any premises where all or any part of
the Collateral, or the books and records relating thereto, or both, are
located, to take possession of all or any part of the Collateral and to
remove all or any part of the Collateral.
5.4. License. The Agent is hereby granted a license or other right to use,
following the occurrence and during the continuance of a Default, without
charge, the Grantor's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, customer lists and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral, and, following the occurrence and during the continuance of a
Default, the Grantor's rights under all licenses and all franchise agreements
shall inure to the Agent's benefit. In addition, the Grantor hereby irrevocably
agrees that the Agent may, following the occurrence and during the continuance
of a Default, sell any of the Grantor's Inventory directly to any person,
including without limitation persons who have previously purchased the Grantor's
Inventory from the Grantor and in connection with any such sale or other
enforcement of the Agent's rights under this Agreement, may sell Inventory which
bears any trademark owned by or licensed to the Grantor and any Inventory that
is covered by any copyright owned by or licensed to the Grantor and the Agent
may finish any work in process and affix any trademark owned by or licensed to
the Grantor and sell such Inventory as provided herein.
ARTICLE VI
WAIVERS, AMENDMENTS AND REMEDIES
No delay or omission of the Agent or any Lender to exercise any right or
remedy granted under this Security Agreement shall impair such right or remedy
or be construed to be a waiver of any Default or an acquiescence therein, and
any single or partial exercise of any such right or remedy shall not preclude
any other or further exercise thereof or the exercise of any other right or
remedy. No waiver, amendment or other variation of the terms, conditions or
provisions of this Security Agreement whatsoever shall be valid unless in
writing signed by the Agent with the concurrence or at the direction of the
Lenders required under Section 8.2 of the Credit Agreement and then only to the
extent in such writing specifically set forth. All rights and remedies contained
in this Security Agreement or by law afforded shall be cumulative and all shall
be available to the Agent and the Lenders until the Secured Obligations have
been paid in full.
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ARTICLE VII
PROCEEDS; COLLECTION OF RECEIVABLES
7.1. Lockboxes. Upon request of the Agent after the occurrence of a Default
or Unmatured Default, the Grantor shall execute and deliver to the Agent
irrevocable lockbox agreements in the form provided by or otherwise acceptable
to the Agent, which agreements shall be accompanied by an acknowledgment by the
bank where the lockbox is located of the Lien of the Agent granted hereunder and
of irrevocable instructions to wire all amounts collected therein to a special
collateral account at the Agent.
7.2. Collection of Receivables. The Agent may at any time after the
occurrence of a Default, by giving the Grantor written notice, elect to require
that the Receivables be paid directly to the Agent for the benefit of the
Lenders. In such event, the Grantor shall, and shall permit the Agent to,
promptly notify the account debtors or obligors under the Receivables of the
Lenders' interest therein and direct such account debtors or obligors to make
payment of all amounts then or thereafter due under the Receivables directly to
the Agent. Upon receipt of any such notice from the Agent, the Grantor shall
thereafter hold in trust for the Agent, on behalf of the Lenders, all amounts
and proceeds received by it with respect to the Receivables and Other Collateral
and immediately and at all times thereafter deliver to the Agent all such
amounts and proceeds in the same form as so received, whether by cash, check,
draft or otherwise, with any necessary endorsements. The Agent shall hold and
apply funds so received as provided by the terms of Sections 7.3 and 7.4.
7.3. Special Collateral Account. The Agent may require all cash proceeds of
the Collateral to be deposited in a special non-interest bearing cash collateral
account with the Agent and held there as security for the Secured Obligations.
The Grantor shall have no control whatsoever over said cash collateral account.
If no Default or Unmatured Default has occurred or is continuing, the Agent
shall from time to time deposit the collected balances in said cash collateral
account into the Grantor's general operating account with the Agent. If any
Default or Unmatured Default has occurred and is continuing, the Agent may (and
shall, at the direction of the Required Lenders, from time to time, apply the
collected balances in said cash collateral account to the payment of the Secured
Obligations whether or not the Secured Obligations shall then be due.
7.4. Application of Proceeds. The proceeds of the Collateral shall be
applied by the Agent to payment of the Secured Obligations in the following
order unless a court of competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all costs and expenses of the Agent incurred
in connection with the collection and enforcement of the Secured
Obligations or of the security interest granted to the Agent pursuant to
this Security Agreement;
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(b) SECOND, to payment of that portion of the Secured Obligations
constituting accrued and unpaid interest and fees, pro rata among the
Lenders and their Affiliates in accordance with the amount of such accrued
and unpaid interest and fees owing to each of them;
(c) THIRD, to payment of the principal of the Secured Obligations and
the net early termination payments and any other Rate Management
Obligations then due and unpaid from the Grantor to any of the Lenders or
their Affiliates, pro rata among the Lenders and their Affiliates in
accordance with the amount of such principal and such net early termination
payments and other Rate Management Obligations then due and unpaid owing to
each of them;
(d) FOURTH, to payment of any Secured Obligations (other than those
listed above) pro rata among those parties to whom such Secured Obligations
are due in accordance with the amounts owing to each of them; and
(e) FIFTH, the balance, if any, after all of the Secured Obligations
have been satisfied, shall be deposited by the Agent into the Grantor's
general operating account with the Agent.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Notice of Disposition of Collateral; Condition of Collateral. The
Grantor hereby waives notice of the time and place of any public sale or the
time after which any private sale or other disposition of all or any part of the
Collateral may be made. To the extent such notice may not be waived under
applicable law, any notice made shall be deemed reasonable if sent to the
Grantor, addressed as set forth in Article IX, at least ten days prior to (i)
the date of any such public sale or (ii) the time after which any such private
sale or other disposition may be made. Agent shall have no obligation to
clean-up or otherwise prepare the Collateral for sale.
8.2. Compromises and Collection of Collateral. The Grantor and the Agent
recognize that setoffs, counterclaims, defenses and other claims may be asserted
by obligors with respect to certain of the Receivables, that certain of the
Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable. In view of the foregoing, the Grantor agrees that the Agent may
at any time and from time to time, if a Default has occurred and is continuing,
compromise with the obligor on any Receivable, accept in full payment of any
Receivable such amount as the Agent in its sole discretion shall determine or
abandon any Receivable, and any such action by the Agent shall be commercially
reasonable so long as the Agent acts in good faith based on information known to
it at the time it takes any such action.
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8.3. Secured Party Performance of Debtor Obligations. Without having any
obligation to do so, the Agent may perform or pay any obligation which the
Grantor has agreed to perform or pay in this Security Agreement and the Grantor
shall reimburse the Agent for any amounts paid by the Agent pursuant to this
Section 8.3. The Grantor's obligation to reimburse the Agent pursuant to the
preceding sentence shall be a Secured Obligation payable on demand.
8.4. Authorization for Secured Party to Take Certain Action. The Grantor
irrevocably authorizes the Agent at any time and from time to time in the sole
discretion of the Agent and appoints the Agent as its attorney in fact (i) to
execute on behalf of the Grantor as debtor and to file financing statements
necessary or desirable in the Agent's sole discretion to perfect and to maintain
the perfection and priority of the Agent's security interest in the Collateral,
(ii) to indorse and collect any cash proceeds of the Collateral, (iii) to file a
carbon, photographic or other reproduction of this Security Agreement or any
financing statement with respect to the Collateral as a financing statement and
to file any other financing statement or amendment of a financing statement
(which does not add new collateral or add a debtor) in such offices as the Agent
in its sole discretion deems necessary or desirable to perfect and to maintain
the perfection and priority of the Agent's security interest in the Collateral,
(iv) to contact and enter into one or more agreements with the issuers of
uncertificated securities which are Collateral and which are Securities or with
financial intermediaries holding other Investment Property as may be necessary
or advisable to give the Agent Control over such Securities or other Investment
Property, (v) subject to the terms of Section 4.1.5, to enforce payment of the
Receivables in the name of the Agent or the Grantor, (vi) to apply the proceeds
of any Collateral received by the Agent to the Secured Obligations as provided
in Article VII and (vii) to discharge past due taxes, assessments, charges, fees
or Liens on the Collateral (except for such Liens as are specifically permitted
hereunder), and the Grantor agrees to reimburse the Agent on demand for any
payment made or any expense incurred by the Agent in connection therewith,
provided that this authorization shall not relieve the Grantor of any of its
obligations under this Security Agreement or under the Credit Agreement.
8.5. Specific Performance of Certain Covenants. The Grantor acknowledges
and agrees that a breach of any of the covenants contained in Sections 4.1.5,
4.1.6, 4.4, 5.3, or 8.7 or in Article VII will cause irreparable injury to the
Agent and the Lenders, that the Agent and Lenders have no adequate remedy at law
in respect of such breaches and therefore agrees, without limiting the right of
the Agent or the Lenders to seek and obtain specific performance of other
obligations of the Grantor contained in this Security Agreement, that the
covenants of the Grantor contained in the Sections referred to in this Section
8.5 shall be specifically enforceable against the Grantor.
8.6. Use and Possession of Certain Premises. Upon the occurrence of a
Default, the Agent shall be entitled to occupy and use any premises owned or
leased by the Grantor where any of the Collateral or any records relating to the
Collateral are located until the Secured Obligations are paid or the Collateral
is removed therefrom, whichever first occurs, without any obligation to pay the
Grantor for such use and occupancy.
164
8.7. Dispositions Not Authorized. The Grantor is not authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.1.5 and
notwithstanding any course of dealing between the Grantor and the Agent or other
conduct of the Agent, no authorization to sell or otherwise dispose of the
Collateral (except as set forth in Section 4.1.5) shall be binding upon the
Agent or the Lenders unless such authorization is in writing signed by the Agent
with the consent or at the direction of the Required Lenders.
8.8. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantor, the
Agent and the Lenders and their respective successors and assigns (including all
persons who become bound as a debtor to this Security Agreement), except that
the Grantor shall not have the right to assign its rights or delegate its
obligations under this Security Agreement or any interest herein, without the
prior written consent of the Agent.
8.9. Survival of Representations. All representations and warranties of the
Grantor contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.
8.10. Taxes and Expenses. Any taxes (including income taxes) payable or
ruled payable by Federal or State authority in respect of this Security
Agreement shall be paid by the Grantor, together with interest and penalties, if
any. The Grantor shall reimburse the Agent for any and all out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Agent) paid or incurred by the Agent
in connection with the preparation, execution, delivery, administration,
collection and enforcement of this Security Agreement and in the audit,
analysis, administration, collection, preservation or sale of the Collateral
(including the expenses and charges associated with any periodic or special
audit of the Collateral). Any and all costs and expenses incurred by the Grantor
in the performance of actions required pursuant to the terms hereof shall be
borne solely by the Grantor.
8.11. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
8.12. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of the Agent or the
Lenders which would give rise to any Secured Obligations are outstanding.
8.13. Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between the Grantor and the Agent relating to the
Collateral and supersedes all prior agreements and understandings between the
Grantor and the Agent relating to the Collateral.
165
8.14. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF OKLAHOMA, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
8.15. Distribution of Reports. The Grantor authorizes the Agent, as the
Agent may elect in its sole discretion, to discuss with and furnish to its
affiliates and to the Lenders or to any other person or entity having an
interest in the Secured Obligations (whether as a guarantor, pledgor of
collateral, participant or otherwise) all financial statements, audit reports
and other information pertaining to the Grantor and its Subsidiaries whether
such information was provided by the Grantor or prepared or obtained by the
Agent. Neither the Agent nor any of its employees, officers, directors or agents
makes any representation or warranty regarding any audit reports or other
analyses of the Grantor's and its Subsidiaries' condition which the Agent may in
its sole discretion prepare and elect to distribute, nor shall the Agent or any
of its employees, officers, directors or agents be liable to any person or
entity receiving a copy of such reports or analyses for any inaccuracy or
omission contained in or relating thereto.
8.16. Indemnity. The Grantor hereby agrees to indemnify the Agent and the
Lenders, and their respective successors, assigns, agents and employees, from
and against any and all liabilities, damages, penalties, suits, costs, and
expenses of any kind and nature (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or any Lender is a
party thereto) imposed on, incurred by or asserted against the Agent or the
Lenders, or their respective successors, assigns, agents and employees, in any
way relating to or arising out of this Security Agreement, or the manufacture,
purchase, acceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of any Collateral
(including, without limitation, latent and other defects, whether or not
discoverable by the Agent or the Lenders or the Grantor, and any claim for
patent, trademark or copyright infringement).
ARTICLE IX
NOTICES
9.1. Sending Notices. Any notice required or permitted to be given under
this Security Agreement shall be sent (and deemed received) in the manner and to
the addresses set forth in Article XIII of the Credit Agreement.
9.2. Change in Address for Notices. Each of the Grantor, the Agent and
the Lenders may change the address for service of notice upon it by a notice in
writing to the other parties.
ARTICLE X
THE AGENT
166
Bank One, Oklahoma, NA has been appointed Agent for the Lenders hereunder
pursuant to Article X of the Credit Agreement. It is expressly understood and
agreed by the parties to this Security Agreement that any authority conferred
upon the Agent hereunder is subject to the terms of the delegation of authority
made by the Lenders to the Agent pursuant to the Credit Agreement, and that the
Agent has agreed to act (and any successor Agent shall act) as such hereunder
only on the express conditions contained in such Article X. Any successor Agent
appointed pursuant to Article X of the Credit Agreement shall be entitled to all
the rights, interests and benefits of the Agent hereunder.
IN WITNESS WHEREOF, the Grantor and the Agent have executed this Security
Agreement as of the date first above written.
----------------------------------
By:
------------------------------
Title:
---------------------------
BANK ONE, OKLAHOMA, NA,
as Agent
By:
------------------------------
Title:
---------------------------
STATE OF )
------------------------
) SS
COUNTY OF )
------------------------
The foregoing instrument was acknowledged before me this day of March,
---
2003, by , a of , on behalf of said
---- -------------
Notary Public
My commission expires:
167
EXHIBIT "A"
(See Sections 3.3, 3.4, 3.5, 4.1.7 and 9.1 of Security Agreement)
Place of Business (if it has only one) or Chief Executive Office (if more than
one place of business) and Mailing Address:
-------------------------
-------------------------
-------------------------
-------------------------
Attention:
---------------
Locations of Inventory and Equipment and Fixtures:
A. Properties Owned by the Grantor:
B. Properties Leased by the Grantor (Include Landlord's Name):
C. Public Warehouses or other Locations pursuant to Bailment or Consignment
Arrangements (include name of Warehouse Operator or other Bailee or Consignee):
168
EXHIBIT "B"
(See Section 3.9 of Security Agreement)
A. Vehicles subject to certificates of title:
Description Title Number & State Where Issued
----------- ---------------------------------
B. Aircraft/engines, ships, railcars and other vehicles governed by federal
statute:
Description Registration Number
----------- -------------------
C. Patents, copyrights, trademarks protected under federal law*:
- ----------
*For (i) trademarks, show the trademark itself, the registration date and the
registration number; (ii) trademark applications, show the trademark applied
for, the application filing date and the serial number of the application; (iii)
patents, show the patent number, issue date and a brief description of the
subject matter of the patent; and (iv) patent applications, show the serial
number of the application, the application filing date and a brief description
of the subject matter of the patent applied for. Any licensing agreements for
patents or trademarks should be described on a separate schedule.
169
EXHIBIT "C"
(See Section 3.9 of Security Agreement)
Legal description, county and street address of property on which
Fixtures are located:
Name and Address of Record Owner:
-------------
-------------
-------------
-------------
170
EXHIBIT "D"
(See Sections 3.10 and 4.1.6 of Security Agreement)
EXISTING LIENS ON THE COLLATERAL
Secured Party Collateral Principal Balance Maturity
- ------------- ---------- ----------------- --------
171
EXHIBIT "E"
List of Pledged Securities
(See Section 3.13 of Security Agreement)
A. STOCKS:
Issuer Certificate Number Number of Shares
- ------ ------------------ ----------------
B. BONDS:
Issuer Number Face Amount Coupon Rate Maturity
- ------ ------ ----------- ----------- --------
C. GOVERNMENT SECURITIES:
Issuer Number Type Face Amount Coupon Rate Maturity
- ------ ------ ---- ----------- ----------- --------
D. OTHER SECURITIES OR OTHER INVESTMENT PROPERTY
(CERTIFICATED AND UNCERTIFICATED):
Issuer
Interest Description of Collateral Percentage Ownership
- -------- ------------------------- --------------------
172
EXHIBIT "F"
COMMERCIAL TORT CLAIMS
173
EXHIBIT H
BORROWING BASE CERTIFICATE
MATRIX SERVICE COMPANY ("Borrower") pursuant to the Credit Agreement (the
"Agreement") dated March 7, 2003, among Borrower, Agent and the Lenders party
thereto, hereby certifies to Agent and Lenders that the following Borrowing Base
is true and correct as of the close of business on , 20 is:
---------- ----
1. Total Accounts as of $_______________
----------------
2. Less (a) Invoices over 90 days old $_______________
(b) Contra Accounts $_______________
(c) Accounts tainted by 10% >90 days old $_______________
(d) Accounts evidenced by a third party lien $_______________
(e) Accounts in Bankruptcy $_______________
(f) Affiliate Accounts $_______________
(g) Foreign Accounts other than allowed Canadian Accounts $_______________
(h) Retainage Accounts $_______________
(i) Concentrations in excess of 25% $_______________
(j) Other Ineligibles as defined by the Credit Agreement $_______________
3. Eligible Accounts (Line 1 less 2 a-j) $_______________
(a) Less: Amount that Billings in Excess exceeds Costs in Excess $_______________
(b) Amount in the aggregate in excess of $10,000,000 $_______________
from bonded Accounts
4. Restated Eligible Accounts (Line 3 less Lines 3(a) and 3(b)) $_______________
5. Borrowing Base (Line 4 x .80) (Maximum of $55,000,000) $_______________
174
6. Revolving Loan Balance $_______________
7. Letters of Credit (Maximum of $25,000,000) $_______________
8. Total Outstanding (Line 6 + Line 7) $_______________
9. Excess/Deficit Collateral Margin (Line 5 less Line 8) $_______________
10. Available Credit (Lesser of Line 9 or $55,000,000) $_______________
MATRIX SERVICE COMPANY
By:
-------------------------------
Michael J. Hall, Vice President
175
EXHIBIT I
UCC-1 FINANCING STATEMENT
176
EXHIBIT J
MORTGAGED PROPERTIES SECURITY INSTRUMENTS
177
SCHEDULE 1
HAKE GROUP
178
SCHEDULE 2
MORTGAGED PROPERTIES
TULSA COUNTY:
- --------------------------------------------------------------------------------
PROPERTY ADDRESS LEGAL DESCRIPTION
- --------------------------------------------------------------------------------
Matrix Service, Inc. Lot Fifteen (15), Block One (1), WOLF POINT INDUSTRIAL
10701 E. Ute Street PARKWAY, WEST, an Addition in the City of Tulsa, Tulsa
Tulsa, OK 74116 County, State of Oklahoma, according to the recorded
plat thereof.
- --------------------------------------------------------------------------------
Matrix Service, Inc. The Northeast Quarter of the Northwest Quarter of the
Pine & 143rd E. Avenue Northeast Quarter (NE/4 NW/4 NE/4) of Section
Tulsa, Oklahoma Thirty-three (33), Township Twenty (20) North, Range
Fourteen (14) East of the Indian Base and Meridian,
according to the U. S. Government Survey thereof, Tulsa
County, State of Oklahoma, less and except the
Northerly 289.93 feet of the easterly 176.45 feet
thereof.
AND
Commencing at the Northeast Corner of said Section 33;
thence South 89(degree)36'25" West along the northerly
line of said Section 33 for 1262.47 feet to the point
of beginning of said tract of land; thence South
0(degree)11'15" East a distance of 769.93 feet; thence
South 89(degree)48'45"West for 59.95 feet; thence North
0(degree)11'15" West for 769.71 feet to a point on the
northerly line of said Section 33; thence North
89(degree)36'25" East along said northerly line for
59.95 feet to the point of beginning of said tract of
land, less and except the northerly 289.93 feet
thereof.
- --------------------------------------------------------------------------------
Matrix Service Company Tract I:
4300 E. 36th Street
North All that part of the North Half of the Northwest
Tulsa, OK 74115 Quarter of the Northeast Quarter (N/2 NW/4 NE/4), lying
North of the Atchison, Topeka and Santa Fe Railway
Right-of Way, in Section Twenty-One (21), Township
Twenty (20) North, Range Thirteen (13) East of the
Indian Base and Meridian, Tulsa County, State of
Oklahoma, according to the United States Government
Survey thereof, LESS AND EXCEPT the following tract,
more particularly describes as follows:
- --------------------------------------------------------------------------------
179
- --------------------------------------------------------------------------------
BEGINNING at the Northeast corner of said NW/4 NE/4;
thence West along the North boundary of said NE/4 NE/4
a distance of 143.97 feet to the center line of Toledo
Avenue; thence South 0(degree)53'03' West along the
center line of Toledo Avenue, a distance of 301.2 feet
to a point in the northerly right-of-way line of the
Atchison, Topeka and Santa Fe Railway Right-of-Way;
thence North 81(degree)26'00" East long the northerly
right-of-way line of the Atchison, Topeka and Santa Fe
Railway Right-of-Way a distance of 150.92 feet to a
point in the East boundary line of said NE/4 NE/4;
thence North 0(S)04'00" East along the Easterly
boundary line of said NW/4 NE/4 a distance of 278.56
feet to the Point of Beginning.
AND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4300 E. 36th Street TRACT II
North
Continued... A parcel of land in the County of Tulsa, State of
Oklahoma, lying in the Northwest Quarter of the
Northeast Quarter (NW/4 NE/4) of Section Twenty-one
(21), Township Twenty (20) North, Range Thirteen (13)
East of the Indian Meridian, being that portion of that
certain Tract Number 2 and that portion of that certain
Tract Number 3 described in award of referees entitled
"In the United States Court for the Indian Territory,
Northern District at Claremore. The Atchison, Topeka
and Santa Fe Railway Company, Plaintiff -vs- Pierce P.
Butler, Daniel R. Butler, Kathleen P. Butler and the
Cherokee Nation or Tribe of Indians, Defendants," filed
of record December 21, 1910 and recorded in Record 76,
Page 527, records of said County described as follows:
Beginning at the Northwesterly corner of said Tract
Number 3, said corner being distant South 0 deg. 01'
52" West along the Westerly line of said Northwest
Quarter 426.85 feet from the Northwest corner of said
Northwest Quarter; thence along the boundary of said
Tract Number 3 and along the boundary of said Tract
Number 2 the following Three (3) courses: (1) North 81
deg. 32' 24" East, 820.10 feet; thence (2) South 8 deg.
27' 36" East, 50.00 feet; thence (3) North 81 deg. 32'
24" East 330.09 feet to a line
- --------------------------------------------------------------------------------
180
- --------------------------------------------------------------------------------
parallel with and distant Westerly 25.0 feet measured
at Right Angles from that certain center line course
described in easement Deed dated July 5, 1960, from W.
D. Clark and Mary C. Patchin to Tulsa County, State of
Oklahoma, recorded April 29, 1946 in Book 1428, Page
622, records of said County, as "North and parallel to
the North and South center line of Section 21 a
distance of 409.4 feet more or less to the South
Right-of-Way line of the County Highway"; thence South
1 deg. 03' 12" West along said parallel line, 76.05
feet to a line parallel with and distant Northerly 25.7
feet measured at right angles from the center line of
that certain railroad track designated in the records
of said Railway Company as the "Illinois Division,
Tulsa Subdivision, Main Line Track at Mohawk Station";
thence South 81 deg. 32' 24" West along last said
parallel line 1156.29 feet to the Westerly boundary of
said Tract Number 3 said Westerly boundary being along
said Westerly line of said Northwest Quarter, thence
North 0 deg. 01' 52" East along said Westerly boundary
126.39 feet to the Point of Beginning.
- --------------------------------------------------------------------------------
181
ROGERS COUNTY:
- --------------------------------------------------------------------------------
PROPERTY ADDRESS LEGAL DESCRIPTION
- --------------------------------------------------------------------------------
Matrix Service Company A tract of land that is part of the Southeast Quarter
1105 W. Main Parkway (SE/4) of Section Six (6), part of the Northeast
Catoosa, OK 74015 Quarter (NE/4) of Section Seven (7), and part of the
Northwest Quarter (NW/4) of Section Eight 8, all in
Township Twenty (20 North, Range Fifteen (15) East of
the Indian Base and Meridian, Rogers County, State of
Oklahoma, according to the United States Government
Survey thereof, said tract of land being described as
follows, to wit:
Starting at the Southeast corner of said Section 6;
thence due West for 1,268.58 feet; thence due South for
877.98 feet to the Point of Beginning of said tract of
land; thence North 08(degree)23'24" East for 2,075.19
feet; thence South 36(degree)59'43" East for 2,675.12
feet to a point of curve; thence Southeasterly along a
curve to the right with a central angle of
22(degree)22'51" and a radius of 611.62 feet, for
238.91 feet; thence North 81(degree)36'36" West for
2,037.69 feet to the point of Beginning of said tract
of land.
- --------------------------------------------------------------------------------
Matrix Service Company A tract of land in the west half of Section 8 and East
1045 Keystone Avenue half of Section 7, Township 20 North, Range 15 East of
Catoosa, OK 74015 the Indian and Meridian, Rogers County, Oklahoma, more
particularly described as follows, to wit:
Beginning at a point 212.10 feet due east and 2315.65
feet due south of the northeast corner of said Section
7; thence due South a distance of 615.00 feet; thence
due West a distance of 900.00 feet; thence
N45(degree)00'00"W a distance of 14.14 feet; thence due
north a distance of 605.00 feet; thence due east a
distance of 910.00 feet to the point of beginning;
Containing 12.85 acres, more or less.
- --------------------------------------------------------------------------------
STATE OF CALIFORNIA:
- --------------------------------------------------------------------------------
PROPERTY ADDRESS LEGAL DESCRIPTION
- --------------------------------------------------------------------------------
Matrix Service, Inc. All that certain land situated in the State of
500 West Collins California, County of Orange, City of Orange, described
Avenue Orange as follows:
California
Parcel 1 as shown on a Map filed in Book 5, Page 23
of Parcel Maps in the Office of the County Recorder
of Orange County, California.
- --------------------------------------------------------------------------------
182
STATE OF MICHIGAN:
- --------------------------------------------------------------------------------
PROPERTY ADDRESS LEGAL DESCRIPTION
- --------------------------------------------------------------------------------
Matrix Service Land in the Township of Bedford, Monroe County,
Mid-Continent, Inc. Michigan described as:
6945 Crabb Road Part of the Southeast quarter and the Northeast
Temperance, Michigan quarter of Section 35, Town 8 South, Range 7 East,
48182 described as: Beginning at the East quarter corner of
said Section 35, and proceeding thence along the East
line of Section 35, also being the centerline of
Crabb Road, South 00 degrees 27 minutes 30 seconds
West 390.53 feet; thence North 89 degrees 40 minutes
05 seconds West 676.00 feet; thence North 00 degree
27 minutes 30 seconds East 458.59 feet; thence South
89 degrees 32 minutes 30 seconds East 676.00 feet;
thence along the East line of Section 35, also being
the centerline of Crabb Road, South 00 degree 27
minutes 30 seconds West 66.57 feet to the East
quarter corner of said Section 35, also being the
point of beginning.
- --------------------------------------------------------------------------------
STATE OF TEXAS:
- --------------------------------------------------------------------------------
PROPERTY ADDRESS LEGAL DESCRIPTION
- --------------------------------------------------------------------------------
Matrix Service, Inc. All that certain tract or parcel of land containing
6.4866 acres, more or less, being the combination of
7021 Gregdale two (2) separate tracts of land, TRACT ONE (1) of said
Houston, Texas 77049 separate tracts being a five (5) acre tract out of
Tract No. 16 of the J. W. MOODY SURVEY, Harris County,
Texas, as recorded in Volume 754, Page 272 of the Deed
Records of Harris County, Texas, and TRACT TWO (2) of
said separate tracts being a part of a six and one-half
(6 1/2) acre tract out of said J. W. MOODY SURVEY, said
TRACT TWO (2) being conveyed by Maurice Haydis et ux to
Jeanette Mintz, et vir., by Deed dated August 18, 1944
and recorded in Volume 1343, Page 241 of the Harris
County Deed Records; said 6.4866 acre tract being more
particularly described by metes and bounds as follows:
BEGINNING at a 5/8 inch iron rod (set) with a fence
post (found) for reference in the West margin of
Gregdale Road, based on a right-of-way; said iron rod
also being the Southeast corner of the Ella J. Juden 10
acre tract; THENCE North 89(degree) 00' 17" West, along
the South line of the Ella J. Juden 10 acre tract, a
distance of 475.37 feet to a 5/8 inch iron rod (set)
for a corner in the East line of the G. Hargrave tract
of land; THENCE South 00(degree)54'54" West, a distance
of 233.56 feet to a point for corner; THENCE
- --------------------------------------------------------------------------------
183
- --------------------------------------------------------------------------------
North 88(degree)49'24" West, a distance of 491.30 feet
to a 5/8 inch iron rod (set) for a corner; THENCE South
00(degree)5'45" West, a distance of 177.24 feet to a
3/4 inch iron pipe (found) in the North line of the 14
acre McCullough Tract; THENCE South 89(degree)00'36"
East, a distance of 8973.46 feet to 5/8 inch iron rod
(set) in the West line of Gregdale Road; THENCE North
along said West line of Gregdale Road a distance of
209.22 feet back to the POINT OF BEGINNING of the
herein described tract.
- --------------------------------------------------------------------------------
184
STATE OF WASHINGTON:
- --------------------------------------------------------------------------------
PROPERTY ADDRESS LEGAL DESCRIPTION
- --------------------------------------------------------------------------------
Matrix Service, Inc. Parcel A:
Parcel 6, as delineated on Henefin Industrial Tracts
3810 Bakerview Spur specific Binding Site Plan No. 2, Whatcom County,
Bellingham Washington Washington, according to the plat thereof, recorded in
98226 Volume 1 of Binding Site Plans, Page 51, under
Auditor's File No. 891103002, Records of Whatcom
County, Washington. Except for that portion deeded to
the City of Bellingham by deed recorded under Whatcom
County Auditor's File No. 1980600758.
Situate in Whatcom County, Washington
Parcel B:
Parcel 7, as delineated on Henefin Industrial Tracts
specific Binding Site Plan No. 2, Whatcom County,
Washington, according to the plat thereof, recorded in
Volume 1 of Binding Site Plans, Page 51, under
Auditor's File No. 891103002, Records of Whatcom
County, Washington. Except for that portion deeded to
the City of Bellingham by deed recorded under Whatcom
County Auditor's File No. 1980600758.
Situate in Whatcom County, Washington
Parcel C:
A 60 foot wide easement for ingress, egress, utilities
and drainage as delineated on Henifin Industrial Tracts
specific Binding Site Plan No. 2, Whatcom County,
Washington, according to the plat thereof recorded in
Volume 1 of Binding Site Plans, Page 51, under
Auditor's File No. 891103002, records of Whatcom
County, Washington
Situated in Whatcom County, Washington.
- --------------------------------------------------------------------------------
185
STATE OF PENNSYLVANIA:
- --------------------------------------------------------------------------------
PROPERTY ADDRESS LEGAL DESCRIPTION
- --------------------------------------------------------------------------------
The Hake Group, Inc.
ALL THAT CERTAIN tract or parcel of land situate in the
Holmes PA Township of Ridley, County of Delaware and Commonwealth
of Pennsylvania, being known and designated as Parcel
Number 1, as shown on a Lot Consolidation Plan by J. C.
Park Associates, Inc., Engineers and Surveyors,
Washington Crossing, PA dated November 30, 1994, Job
No. 6271-1, being more particularly described as
follows, to wit:
BEGINNING at a point, said point being the intersection
of the centerline of vacated Talbot Avenue (40 feet
wide) with the Northerly right of way line of the
Baltimore and Ohio Railroad, said point being distant
20.25 feet measured on a bearing of South 65 degrees 00
minutes 00 seconds West from a monument (found) at the
intersection of the Easterly right of way line of said
Baltimore and Ohio Railroad, and running, thence: (1)
South 65 degrees 00 minutes 00 seconds West a distance
of 313.13 feet crossing over a monument (found) at
20.25 feet from the beginning of this course, along the
Northerly right of way line of said Baltimore and Ohio
Railroad to a point in the Easterly right of way line
of Price Avenue (50 feet wide), thence: (2) North 25
degrees 00 minutes 00 seconds West a distance of 325.00
feet along said right of way of Price Avenue to a
point, said point being the Southwesterly corner of
lands now or late of John and Teresa Snow, thence: (3)
North 65 degrees 00 minutes 00 seconds East a distance
of 125.00 feet along lands of said John and Teresa Snow
to a point, thence: (4) South 25 degrees 00 minutes 00
seconds East a distance of 85.00 feet along lands now
or late of Edward and Dolores Laurelli to a point, said
point being the Southwesterly corner of said Edward and
Dolores Laurelli, thence: (5) North 65 degrees 00
minutes 00 seconds East a distance of 150.40 feet along
said lands of Edward and Dolores Laurelli to a point in
the centerline of said Talbot Avenue at its terminus,
thence: (6) South 33 degrees 56 minuets 00 seconds East
a distance of 242.94 feet along the centerline of said
vacated portion of Talbot Avenue to the first mentioned
point and place of beginning.
CONTAINING 81,244 square feet of land, more or less.
- --------------------------------------------------------------------------------
The Hake Group BEING known as Folio No. 38-03-01883-00 and part of the
vacated bed of Talbot Avenue, as shown on the above
mentioned plan.
- --------------------------------------------------------------------------------
186
- --------------------------------------------------------------------------------
Homes, PA continued Talbot Avenue, as shown on the above mentioned plan.
Together with and subject to the "Proposed Access
Easement" (8,401 square feet or 0.193 acre) bounded and
described as follows:
ALL THAT CERTAIN easement situate in the Township of
Ridley, County of Delaware and Commonwealth of
Pennsylvania, bounded and described according to a Lot
Consolidation Plan of Nelson Company Site prepared by
J.C. Park Associates, Inc., Engineers and Surveyors,
Washington Crossing, PA dated November 30, 1994 Job
number 6271-1 as follows, to wit:
BEGINNING at a point, said point being the
Southeasterly corner at the terminus of Talbot Avenue
(40 feet wide) being distant 167.78 feet measured on a
bearing of South 33 degrees 56 minutes 00 seconds East
from the intersection of the Southerly right of way
line of Amosland Road (48 feet wide) with the
Northeasterly right of way line of Talbot Avenue, and
running, thence: (1) South 33 degrees 56 minutes 00
seconds East, a distance of 7.83 feet along the vacated
Northeasterly right of way line of Talbot Avenue to a
point on the face of a 2-story masonry building,
thence: (2) South 55 degrees 49 minutes 32 seconds West
a distance of 9.39 feet along said face of building to
a point; thence: (3) South 34 degrees 10 minutes 20
seconds East a distance of 66.08 feet continuing along
said face of building to a point, thence: (4) North 55
degrees 49 minutes 32 seconds East a distance of 9.11
feet continuing along said face of building to a point
in the said vacated right of way line, thence: (5)
South 33 degrees 56 minutes 00 seconds East a distance
of 23.86 feet along said vacated right of way line to a
point on the face of said building, thence: (6) South
56 degrees 03 minutes 36 seconds West a distance of
13.64 feet along said face of building to a point,
thence: (7) South 33 degrees 56 minutes 24 seconds East
a distance of 27.43 feet along said face of building to
a point, thence: (8) North 56 degrees 03 minutes 36
seconds East a distance of 4.00 feet along said face of
building to a point, thence: (9) South 33 degrees 56
minutes 24 seconds East a distance of 9.00 feet along
said face of building to a point, thence: (10) North 56
degrees 03 minutes 36 seconds East a distance of 9.64
feet along said face of building to a point in the said
vacated right of way line, thence: (11) South 33
degrees 56 minutes 00 seconds East a distance of 108.74
feet along said vacated right of way line
- --------------------------------------------------------------------------------
187
- --------------------------------------------------------------------------------
to a monument (found) said monument being the
intersection of the said vacated Northeasterly right of
way line with the Northerly right of way line of the
Baltimore and Ohio Railroad, thence: (12) South 65
degrees 00 minutes 00 seconds West a distance of 40.49
feet along said right of way line to a monument (found)
said monument being the intersection of the said
Northerly right of way line of the Baltimore and Ohio
Railroad with the Southwesterly right of way line of
said vacated Talbot Avenue, thence: (13) North 33
degrees 56 minutes 00 seconds West a distance of 73.69
feet along said vacated right of way line to a point on
the face of a 2-story masonry building, thence: (14)
North 25 degrees 09 minutes 59 seconds West a distance
of 56.22 feet along said face of building to a point;
thence: (15) South 64 degrees 55 minutes 19 seconds
West a distance of 8.67 feet along said face of
building to a point in the said vacated right of way
line, thence: (16) North 33 degrees 56 minutes 00
seconds West a distance of 112.34 feet along said
vacated right of way line to a point, said point being
the Southwesterly corner at the terminus of Talbot
Avenue, thence: (17) North 65 degrees 00 minutes 00
seconds East a distance of 40.49 feet to the first
mentioned point and place of beginning. CONTAINING
8,401 square feet of land more or less.
- --------------------------------------------------------------------------------
SCHEDULE 3
TITLE INSURANCE AMOUNT
PROPERTY ADDRESS TITLE INSURANCE AMOUNT
---------------- ----------------------
10701 E. Ute Street $ 700,000
Tulsa, OK
1045 Keystone Avenue $2,100,000
Catoosa, OK
4300 E. 36th Street North $1,140,000
Tulsa, OK
1105 West Main Parkway $8,500,000
Catoosa, OK
14200 E. Pine Street $ 240,000
Tulsa, OK
188
6945 Crabb Road $ 680,000
Temperance, MI
500 West Collins Avenue $6,400,000
Orange, CA
3810 Bakerview Spur $2,100,000
Bellingham, WA
7021 Gregdale $ 600,000
Houston, TX
$ 325,000
- ----------
Holmes, PA
189
SCHEDULE 4
UCC LIEN SEARCH
190
SCHEDULE 5
VEHICLES
191
SCHEDULE 6
VEHICLE TITLES
192
SCHEDULE 7
EXISTENCE AND STANDING
193
SCHEDULE 8
DISSOLVING SUBSIDIARIES
194
SCHEDULE 9
LITIGATION
- -------------------------------------------------------------------------------------------------------------------
Matrix Service Title of Anticipated
Location Plaintiff Defendant Action Venue Cost/Value
- -------------------------------------------------------------------------------------------------------------------
East Coast Matrix Service Artic Slope Matrix v. Artic California $293K (owed to
Mid-Continent, Construction Slope State Court Matrix)
Inc. Construction
- -------------------------------------------------------------------------------------------------------------------
Plant Services Matrix Service, Tosco Matrix v. Tosco California $800K (owed to
Inc. Refining Refining Company State Court Matrix)
Company
- -------------------------------------------------------------------------------------------------------------------
Construction Services Plains Resources Matrix Plains Claim only - No $390K (Insured
Service, Inc. Resources v. litigation claim with $50K
Matrix Deductible)
- -------------------------------------------------------------------------------------------------------------------
Corporate Zurich Matrix Zurich v. Matrix Federal (Okla.) $194K (insured
Service, Inc. claim with $50K
Deductible)
- -------------------------------------------------------------------------------------------------------------------
Construction Services Industra / Matrix Pope & Talbot Industra / Oregon State $2.3 Million
JV Matrix Joint Court
Venture v. Pope
& Talbot
- -------------------------------------------------------------------------------------------------------------------
Tank Construction Johnny Ryder Matrix Johnny Ryder Texas State no more than
Service, Inc. vs. BVZ JV, Court $100K (Zurich
Zachary provides
Construction indemnity to
Tenaska & Matrix MTRX but does
not provide
indemnity to
our customer -
BVZ J.V.)
- -------------------------------------------------------------------------------------------------------------------
Houston Matrix Service, Tecon Matrix v. Tecon Texas State $300K (owed to
Inc. Services, Inc. Services, Court Matrix)
Inc.(Teppco)
- -------------------------------------------------------------------------------------------------------------------
Houston Michael Matrix Michael Texas $50K deductible
Schuenemann Service, Inc. Schuenemann v. (maximum- If
Teppco Crude MTRX is
Pipeline and indemnified =
Matrix Service, $0)
Inc.
- -------------------------------------------------------------------------------------------------------------------
Houston Matrix Service, Evanston Matrix v. Texas State $0(same amount
Inc. Insurance Evanston Court in Michael
Company Insurance Schuenemann v.
(Teppco) Company (Teppco) Teppco )
- -------------------------------------------------------------------------------------------------------------------
Houston Penny Edwards Shell Pipeline Penny Edwards Texas $50K deductible
v. Shell (max)
Pipeline
(Action over)
- -------------------------------------------------------------------------------------------------------------------
Corporate Matrix Service Mutual Risk Matrix v. Tulsa County, $0
- -------------------------------------------------------------------------------------------------------------------
195
- -------------------------------------------------------------------------------------------------------------------
Mutual Risk et OK
Company Management al.
- -------------------------------------------------------------------------------------------------------------------
Construction Services Brett Ayers Matrix Brett Ayers v. Washington $25K
Service, Inc. Matrix State Court
- -------------------------------------------------------------------------------------------------------------------
Construction Services Gary West Matrix West v. Colt Washington $5K
Service, Inc. Matrix State Court
- -------------------------------------------------------------------------------------------------------------------
The Hake Group Barbosa Hake, Bogan, Barbosa v. Pennsylvania $5k deductible
H.SI, MCI, State Court
MAC.
- -------------------------------------------------------------------------------------------------------------------
The Hake Group Stepp Hake, Bogan, Stepp Pennsylvania $5k deductible
H.SI, MCI, State Court
MAC.
- -------------------------------------------------------------------------------------------------------------------
Construction Services Matrix Service, AIG Matrix v. AIG Tulsa County, Threatened
Inc. (Plains OK ? litigation
Resources claim) ($390K Plains
Resources claim)
- -------------------------------------------------------------------------------------------------------------------
Construction Services Matrix Service, CUIC Matrix v. CUIC Tulsa County, Threatened
Inc. (Plains OK ? litigation
Resources claim) ($390K Plains
Resources claim)
- -------------------------------------------------------------------------------------------------------------------
Construction Services Matrix Service, Legion Matrix v. Tulsa County, Threatened
Inc. Legion [GL] OK ? litigation
(Plains ($390K Plains
Resources claim) Resources claim)
- -------------------------------------------------------------------------------------------------------------------
Construction Services Matrix Service, Guthrie Matrix v. Tulsa County, Threatened
Inc. Coatings Guthrie OK ? litigation
Coatings ($390K Plains
(Plains Resources claim)
Resources claim)
- -------------------------------------------------------------------------------------------------------------------
Corporate Matrix Service Air Products, Matrix v. Air Tulsa County, Threatened
Company Inc. Products & OK ? litigation
Solkatronics (same as Port
claim)
- -------------------------------------------------------------------------------------------------------------------
Corporate Matrix Service Port of Matrix v. Port Tulsa County, Threatened
Company Catoosa of Catoosa OK ? litigation -
$955K owed to
Matrix
- -------------------------------------------------------------------------------------------------------------------
Orange BP Western Matrix BP Western California Threatened
Refining Service, Inc. Refining vs State Court or litigation -
Matrix Federal Court? unknown value
- -------------------------------------------------------------------------------------------------------------------
Orange Matrix Service, BP Western Matrix v. BP California Threatened
Inc. Refining Western Refining State Court or litigation -
Federal Court? unknown value
- -------------------------------------------------------------------------------------------------------------------
Discontinued (SLT) Valencia Water SLT & WCIC Valencia Water California Threatened
District v. SLT (Matrix District v. SLT State Court litigation -
(Matrix) Service, Inc.) (Matrix) $50K deductible
- -------------------------------------------------------------------------------------------------------------------
Michigan Matrix Service Fluor Daniel Matrix New York law Threatened
Mid-Continent, (Newton, NH) Service Mid- governs litigation,
- -------------------------------------------------------------------------------------------------------------------
196
- -------------------------------------------------------------------------------------------------------------------
Inc. Continent, contract $426K owed
Inc. v. Fluor Matrix
Daniel
- -------------------------------------------------------------------------------------------------------------------
Michigan Matrix Service GE (Ragnar Matrix Service Alt. Dispute Threatened
Mid-Continent, Benson- Mid-Continent, Resolution litigation
Inc. Shelocta, PA) Inc. v. GE Process $643K owed to
(contractual) Matrix
- -------------------------------------------------------------------------------------------------------------------
Michigan Matrix Service NEPCO (Enron) Matrix Service IL Bankruptcy Threatened
Mid-Continent, Mid-Continent, Court litigation
Inc. Inc. v. NEPCO $121K owed to
Matrix ($18K
forthcoming by
March 7, 2003)
- -------------------------------------------------------------------------------------------------------------------
197
SCHEDULE 10
SUBSIDIARIES AND OTHER INVESTMENTS
(See Section 5.8)
STATE OF OWNERSHIP
SUBSIDIARY INCORPORATION/ORGANIZATION PERCENTAGE
---------- -------------------------- ----------
Matrix Service Inc. Oklahoma 100%
Matrix Service Mid-Continent, Inc. Oklahoma 100%
Matrix Service, Inc. Canada Ontario, Canada 100%
Hake Acquisition Corp. Delaware 100%
Hake Group, Inc. Delaware 100%
Bogan, Inc. (including Fiberspec, a Pennsylvania 100%
division)
Frank W. Hake, Inc. Pennsylvania 100%
Hover Systems, Inc. Pennsylvania 100%
I & S, Inc. Pennsylvania 100%
McBish Management, Inc. Pennsylvania 100%
Mechanical Construction, Inc. Delaware 100%
Mid-Atlantic Constructors, Inc. Pennsylvania 100%
Talbot Realty, Inc. Pennsylvania 100%
Bish Investments, Inc. Delaware 100%
I & S Joint Venture, L.L.C. Pennsylvania 100%
198
SCHEDULE 11
ENVIRONMENTAL DISCLOSURES
(See Section 5.16)
Matrix is a participant in certain environmental activities in various
stages involving assessment studies, cleanup operations and/or remedial
processes.
In connection with the Company's sale of Brown and affiliated entities in
1999, an environmental assessment was conducted at Brown's Newnan, Georgia
facilities. The assessment turned up a number of deficiencies relating to storm
water permitting, air permitting and waste handling and disposal. An inspection
of the facilities also showed friable asbestos that needed to be removed. In
addition, Phase II soil testing indicated a number of volatile organic
compounds, semi-volatile organic compounds and metals above the state of Georgia
notification limits. Ground water testing also indicated a number of
contaminants above the State of Georgia notification limits.
Appropriate State of Georgia agencies have been notified of the findings
and corrective and remedial actions have been completed, are currently underway,
or plans for such actions have been submitted to the State of Georgia for
approval on the remaining property. The current estimated total cost for cleanup
and remediation is $2,100,000, $100,000 of which remains accrued at May 31,
2002. Additional testing, however, could result in greater costs for cleanup and
remediation than is currently accrued.
Matrix closed or sold the business operations of its San Luis Tank Piping
Construction Company, Inc. and West Coast Industrial Coatings, Inc.
subsidiaries, which are located in California. Although Matrix does not own the
land or building, it would be liable for any environmental exposure while
operating at the facility, a period from June 1, 1991 to the present. At the
present time, the environmental liability that could result from the testing is
unknown, however, Matrix has purchased a pollution liability insurance policy
with $5,000,000 of coverage for all operations.
199
SCHEDULE 12
PAYMENT AND PERFORMANCE BONDS
(See Section 5.23)
200
SCHEDULE 13
INDEBTEDNESS
(See Section 6.11(ii))
1. The Term Loan
2. The Revolving Loan
3. The Hake Group Acquisition carry-back financing not to exceed $10,000,000
201
SCHEDULE 14
HAKE GROUP HISTORICAL EBITDA CALCULATIONS
"AMRR" means, for the purposes of calculating Consolidated EBITDA, the average
monthly run rate for the Hake Group, equaling the six (6) month period ending
December 31, 2002 plus the two (2) month period ending February 28, 2003,
divided by eight (8).
EBITDA for the Hake Group shall be determined for the periods described below as
follows:
1. For the period ending May 31, 2003, AMRR times nine (9), plus the three (3)
month EBITDA calculation from February 28, 2003 to May 31, 2003.
2. For the period ending August 31, 2003, AMRR times six (6), plus the six (6)
month EBITDA calculation from February 23, 2003 to August 31, 2003.
3. For the period ending November 30, 2003, AMRR times three (3), plus the nine
(9) month EBITDA calculation from February 28, 2003 to November 30, 2003.
Commencing with the February 28, 2004 calculations, AMRR shall be disregarded.
202
SCHEDULE 15
SALE PROPERTIES
Matrix Service, Inc.
10701 E. Ute Street
Tulsa, OK 74116
Matrix Service Company
4300 E. 36th Street North
Tulsa, OK 74115
Matrix Service, Inc.
Pine & 143rd E. Avenue
Tulsa, Oklahoma
Matrix Service Company
1045 Keystone Avenue
Catoosa, OK 74015
203
SCHEDULE 16
OPERATING LEASES
(limited to annual rental payments of $50,000 or greater)
Hake Group
Required Minimum Lease Arrangements as February 21st 2003
Payee Description Location Serial # / Identifier Plate/Tag #
- ---------- ----------- -------- --------------------- -----------
Enterprise Vehicle Hake 224648 PA DRK4416
Enterprise Vehicle Hake 312124 PA DXN1388
Enterprise Vehicle Hake 181250 PA DRM3451
Enterprise Vehicle Hake 182218 PA DRM3452
Enterprise Vehicle Hake C84623 PA YCG2872
Enterprise Vehicle Hake C84624 PA YCG2878
Enterprise Vehicle Hake C84625 PA YCG2875
Enterprise Vehicle Hake B04732 PA YDZ1901
Enterprise Vehicle Hake A27137 PA YBJ5143
Enterprise Vehicle Hake B70159 PA YDF1829
Enterprise Vehicle Hake C09342 PA YDF1854
Enterprise Vehicle Hake C09341 PA YDF1855
Enterprise Vehicle Hake D78554 PA YFE9058
Enterprise Vehicle Hake D78557 PA YFE9052
Enterprise Vehicle Hake B61024 PA YLE7144
Enterprise Vehicle Hake B65469 PA YBN1460
Enterprise Vehicle Hake A26487 PA YDK4013
Enterprise Vehicle Hake A26488 PA VDK4014
Enterprise Vehicle Hake A26486 PA YCG2888
Enterprise Vehicle Hake C63746 PA YBV9959
Enterprise Vehicle Hake D78558 PA VFE9067
Enterprise Vehicle Hake 111060 PA EJF9272
Enterprise Vehicle Hake 103317 PA DNF4910
Enterprise Vehicle Hake 215691 PA DTM9050
Enterprise Vehicle Hake 146286 PA
Enterprise Vehicle Hake 109116 PA
Enterprise Vehicle Hake C67035 PA YCG2892
Enterprise Vehicle Hake B52383 PA YHR7687
Enterprise Vehicle Hake A27140 PA YBJ5146
Enterprise Vehicle Hake A27141 PA YBJ5147
Enterprise Vehicle Hake A27142 PA YBJ5149
Enterprise Vehicle Hake B02837 PA YFH0247
Enterprise Vehicle Hake A09900 PA YDF1870
Enterprise Vehicle Hake B74448 PA YFE9041
Enterprise Vehicle Hake B74447 PA YFE9040
Enterprise Vehicle Hake D65192 PA YFE9039
Enterprise Vehicle Hake D65191 PA YFE9038
204
Enterprise Vehicle Hake D78555 PA YFE9059
Enterprise Vehicle Hake D78556 PA YFE9051
Enterprise Vehicle Hake B83002 PA YJY2804
Enterprise Vehicle Hake B83001 PA YJY2802
Enterprise Vehicle Hake C79057 PA YJY2861
Enterprise Vehicle Hake C79055 PA YJY2863
Enterprise Vehicle Hake C79056 PA YJY2862
Enterprise Vehicle Hake B96200 PA YFX4245
Enterprise Vehicle Hake B99887 PA YFX4237
Enterprise Vehicle Hake E64842 PA YDK4228
Enterprise Vehicle Hake B31156 PA
Enterprise Vehicle Hake B31155 PA
Enterprise Vehicle Hake E19003 PA YFH0220
Enterprise Vehicle Hake E19004 PA YFH0219
Enterprise Vehicle Hake C16457 PA YDF1878
Enterprise Vehicle Hake C79058 PA YJY2944
Enterprise Vehicle Hake 284274 PA DXN1238
Enterprise Vehicle Hake B89515 PA EDE2891
Enterprise Vehicle Hake 316587 PA DFB6764
Enterprise Vehicle Hake 183997 PA DRM3460
Enterprise Vehicle Hake 640840 PA DXJ4413
Enterprise Vehicle Hake 249692 PA DNH3941
Enterprise Vehicle Hake 719121 PA EDR9054
Enterprise Vehicle Hake 365248 PA EPP7798
Enterprise Vehicle Hake 176396 PA EZH5997
Enterprise Vehicle Hake A37802 PA DNF4919
Enterprise Vehicle Hake 147284 PA
Enterprise Vehicle Hake 116882 PA
Enterprise Vehicle Hake 189588 PA
Enterprise Vehicle Hake B99745 PA YJY2839
Enterprise Vehicle Hake 142781 PA YDL1101
Enterprise Vehicle Hake 114934 PA YBN1459
Enterprise Vehicle Hake 255616 PA DZG0814
Enterprise Vehicle Hake 213376 PA DRK4414
Enterprise Vehicle Hake 283462 PA DXN1239
Enterprise Vehicle Hake 180250 PA DYL6033
Enterprise Vehicle Hake 263497 PA DZG9057
Enterprise Vehicle Hake 181544 PA EKV6605
Enterprise Vehicle Hake 308201 PA EPL0849
Enterprise Vehicle Hake 195610 PA EPP8488
Enterprise Vehicle Hake 104750 PA DZG1603
Enterprise Vehicle Hake 104940 PA DZG1601
Enterprise Vehicle Hake 553391 PA
Enterprise Vehicle Hake 146160 PA
Enterprise Vehicle Hake C84622 PA YCG2871
Enterprise Vehicle Hake C84621 PA YCG2870
Enterprise Vehicle Hake D85634 PA YHR7743
Enterprise Vehicle Hake A27138 PA YBJ5144
Enterprise Vehicle Hake A27144 PA YBJ5151
205
Enterprise Vehicle Hake A27145 PA YBJ5152
Enterprise Vehicle Hake A16234 PA YBJ5240
Enterprise Vehicle Hake A16231 PA YBJ5239
Enterprise Vehicle Hake A55171 PA YFE8929
Enterprise Vehicle Hake A55172 PA YFE8917
Enterprise Vehicle Hake B74757 PA YFE9073
Enterprise Vehicle Hake B74756 PA YFE9068
Enterprise Vehicle Hake B74755 PA YFE9069
Enterprise Vehicle Hake B74754 PA YFE9070
Enterprise Vehicle Hake B74753 PA YFE9072
Enterprise Vehicle Hake B74752 PA YFE9071
Enterprise Vehicle Hake B39079 PA YJY2852
Enterprise Vehicle Hake A57047 PA
Enterprise Vehicle Hake A57046 PA
Enterprise Vehicle Hake B39080 PA YJY2850
Enterprise Vehicle Hake B92687 PA YLN9037
Enterprise Vehicle Hake B92688 PA YLN9038
Enterprise Vehicle Hake B62767 PA YDK4133
Enterprise Vehicle Hake B62768 PA YDK4134
Enterprise Vehicle Hake B24415 PA YJY2845
Enterprise Vehicle Hake B24416 PA YJY2844
Enterprise Vehicle Hake A77354 PA
Enterprise Vehicle Hake C84627 PA YCG2875
Enterprise Vehicle Hake A69227 PPA YBG1229
Enterprise Vehicle Hake 158907 PA YBG1224
Enterprise Vehicle Hake 156528 PA YBG1225
Enterprise Vehicle Hake A56609 PA YHF8687
Enterprise Vehicle Hake A90626 PA YDF1871
Enterprise Vehicle Hake A88770 PA YFE8952
Enterprise Vehicle Hake A26620 PA YFE8950
Enterprise Vehicle Hake A26618 PA YFE8951
Enterprise Vehicle Hake 186450 PA YFH3327
Enterprise Vehicle Hake 186601 PA YFH0225
Enterprise Vehicle Hake 185238 PA DNF4905
Enterprise Vehicle Hake 306132 PA DXN1366
Enterprise Vehicle Hake 120719 PA
Enterprise Vehicle Hake C84626 PA YCG2874
Enterprise Vehicle Hake A27143 PA YBJ5150
Enterprise Vehicle Hake B39320 PA YDF0951
Enterprise Vehicle Hake C09343 PA YFX4186
Enterprise Vehicle Hake B83004 PA YJY2803
Enterprise Vehicle Hake B83005 PA YJY2806
Enterprise Vehicle Hake B83003 PA YJY2805
Enterprise Vehicle Hake E64839 PA YFH0238
Enterprise Vehicle Hake B56842 PA YJY2807
Enterprise Vehicle Hake 309740 PA DXN1389
Enterprise Vehicle Hake 517113 PA DFR6583
Enterprise Vehicle Hake 265873 PA DTMB997
Enterprise Vehicle Hake 255718 PA DYJ0693
206
Enterprise Vehicle Hake 102627 PA ECT0352
Enterprise Vehicle Hake 147422 PA
Enterprise Vehicle Hake 148471 PA
Enterprise Vehicle Hake A19692 PA VFX4243
Enterprise Vehicle Hake A08721 TN P173475
Enterprise Vehicle Hake C84619 PA VCG2877
Enterprise Vehicle Hake C84618 PA VDT1834
Enterprise Vehicle Hake C84620 PA VCG2876
Enterprise Vehicle Hake D85633 PA YHR7745
Enterprise Vehicle Hake D85635 PA VHR7746
Enterprise Vehicle Hake A27139 PA VBJ5145
Enterprise Vehicle Hake B70160 PA VDF1830
Enterprise Vehicle Hake B70161 PA VDF1828
Enterprise Vehicle Hake A88681 PA VDF1800
Enterprise Vehicle Hake D49852 PA YFE9024
Enterprise Vehicle Hake A09135 PA YLN9041
Enterprise Vehicle Hake A49905 PA
Enterprise Vehicle Hake 152884 PA YJY3611
Enterprise Vehicle Hake C21901 PA VCA3584
Enterprise Vehicle Hake D31915 PA YBG1228
Enterprise Vehicle Hake E64840 PA YFH0237
Enterprise Vehicle Hake B30389 PA
Enterprise Vehicle Hake B30390 PA
Enterprise Vehicle Hake B30391 PA
Enterprise Vehicle Hake A77355 PA
Enterprise Vehicle Hake B31300 PA
Enterprise Vehicle Hake B31299 PA
Enterprise Vehicle Hake B58894 PA VHR7744
Trailer Leases Trailer Hake 351072
Trailer Leases Trailer Hake 331033
Trailer Leases Trailer Hake 331032
Trailer Leases Trailer Hake 337000
Trailer Leases Trailer Hake Q52079
Trailer Leases Trailer Hake N50198
Trailer Leases Trailer Hake N50197
Trailer Leases Trailer Hake N50194
Trailer Leases Trailer Hake N50195
Trailer Leases Trailer Hake N50196
Trailer Leases Trailer Hake N50191
Trailer Leases Trailer Hake N50192
Trailer Leases Trailer Hake N50193
Trailer Leases Trailer Hake N50199
Trailer Leases Trailer Hake N50200
Trailer Leases Trailer Hake M50017
Trailer Leases Trailer Hake 331023
Trailer Leases Trailer Hake 351052
207
Tractor Lease Tractor Hake 218759
Tractor Lease Tractor Hake 218762
Tractor Lease Tractor Hake 218763
Tractor Lease Tractor Hake 218764
Tractor Lease Tractor Hake 218767
Tractor Lease Tractor Hake 218768
Building Lease (After closing will be at FMV)
Cannon Copier Copier Hake NP6221 Eddystone
Cannon Copier Copier Hake NP6085 Eddystone
Cannon Copier Copier Hake NP6221 Holmes
Cannon Copier Copier Hake GP200 Eddystone
Cannon Copier Copier Hake GP200 Eddystone
Cannon Copier Copier Hake NP6300 Chester
Cannon Copier Copier Hake IR400S Eddystone
Cannon Fax Fax Hake LC2060 Chester
Cannon Fax Fax Hake LC3170 Eddystone
Cannon Fax Fax Hake LC3170
Cannon Fax Fax Hake LC2060 Holmes
PB - Postage Meter Postage Meter Hake F9M0 Eddystone
Sharp Copier Copier Hake AR650 Eddystone
Sharp Copier Copier Hake AR407 Eddystone
Sharp Copier Copier Hake AR407 Eddystone
Xerox Fax Fax Hake 685 Eddystone
Enterprise Vehicle Hake JL1736
Enterprise Vehicle Hake JL1737
Enterprise Vehicle Hake JL1735
Enterprise Vehicle Hake JL1734
Enterprise Vehicle Hake JL1701
Enterprise Vehicle Hake KL1700
Enterprise Vehicle Hake JL1723
Enterprise Vehicle Hake JL1892
Enterprise Vehicle Hake JL1699
Enterprise Vehicle Hake JL1751
Enterprise Vehicle Hake JL1733
Enterprise Vehicle Hake JL1732
Enterprise Vehicle Hake JL1714
Enterprise Vehicle Hake JL1891
Enterprise Vehicle Hake JL1707
Enterprise Vehicle Hake JL1706
Enterprise Vehicle Hake JL1705
Enterprise Vehicle Hake JL1708
Enterprise Vehicle Hake JL1702
Enterprise Vehicle Hake JL1715
Enterprise Vehicle Hake JL1704
208
Enterprise Vehicle Hake JL1703
Matrix
1997 Dodge Ram 1500
Chrysler Financial PU Orange 1B7HC16Z0VS103470
1997 Dodge Ram 1500
Chrysler Financial PU Orange 1B7HC16Y7VJ526446
1997 Dodge Ram 1500
Chrysler Financial PU Orange 1B7HC16Y2VJ526449
1997 Dodge Ram 1500
Chrysler Financial PU Orange 1B7HC16Y9VJ540140
1997 Plymouth Voyager
Chrysler Financial SE Orange 2P4GP453XVR304630
Tennant Financial
Services Sweeper Orange 65006590
Pitney Bowes Postage Meter Orange B900/E210/N500
Mita Copiers 37000231 /
Kyocera Mita Financial (6060/4040/4090) Orange 37009460/37007459
Mita Financial Mita Copier (3010) Baypoint
Pitney Bowes Credit
Corporation Postage Meter Ati - Bethlehem SPZL
Kyocera Mita Financial
Services Mita Copiers (4) Bellingham
Pitney Bowes Credit
Corporation Postage Meter Bellingham 33684/8320057/14539
William Scottsman Inc. 1 x 11 Modular Bellingham
Pitney Bowes Credit
Corporation Postage Meter EC
William Scottsman Inc. 32x8 Stor-A-Van EC
Pitney Bowes Credit
Corporation Postage Meter EC - Delaware
Fidelity Leasing Mita Copier (3245) EC - Bristol 9870484
Fidelity Leasing Mita Copier (3245) EC - Delaware 2B19870283
William Scottsman Inc. 36 x 8 Fab ELD06702
Sharp 405
New Court Financial Copier/Finisher Michigan
US Bancorp Office
Equip Minolta D6420 Copier Michigan
Panasonic Credit
Company Panasonic Fax MachineMSC - HR 1981001124
Panasonic Credit
Company Panasonic Fax MachineMSC - Risk 10005000006
60 X 48 Modular Product Div IMC98355/SMI32139/S
William Scottsman Inc. Offices (Eng) MI32140/SMI32149
Tank
Pitney Bowes Postage Meter Construction
4 Copiers/3 Fax Various--See Lease
Kyocera Mita Financial Machines MSC-Corp Agreement
Other
209
Baypoint
Hugh Gregg Building Tulsa Region
3800 St. Investment
Company Building EC-Del
HLH Properties #3810 0Ati - Bethlehem
Liberty Property Trust
#2156 0Fab
Port of Catoosa Land Corporate
Port of Catoosa Land EC - Bristol
STD Assoc #2164 Property Salt Lake City
Century East Business
Center LLC Property St. Louis
Larry R. Manns Property
Property Lease SLT/WCIC
MatrixTotal
Rental
Expense not
1995 Ford F250 considered
Emkay SuperCab PU Leases 1FTHX25F65KB65355
Mita Copiers - 13
Mita Financial (5050/6500) Baypoint 37004437/37002298
Mita Copiers - 13
Mita Financial (5050/6500) MSC 37004437/37002298
Pitney Bowes Credit
Corporation Postage Meter MSC
William Scottsman Inc. 60 X 12 Houston
Fab
GRAND TOTAL
210