EXHIBIT 4.2
Loan and Security Agreement
by and between
CONGRESS FINANCIAL CORPORATION (NEW ENGLAND)
as Lender
and
CLEAN HARBORS ENVIRONMENTAL SERVICES, INC.
CLEAN HARBORS TECHNOLOGY CORPORATION
CLEAN HARBORS KINGSTON FACILITY CORPORATION
CLEAN HARBORS OF BRAINTREE, INC.
CLEAN HARBORS OF CHICAGO, INC.
CLEAN HARBORS OF NATICK, INC.
CLEAN HARBORS OF CONNECTICUT, INC.
MURPHY'S WASTE OIL SERVICE, INC.
CLEAN HARBORS OF CLEVELAND, INC.
MR. FRANK, INC.
SPRING GROVE RESOURCE RECOVERY, INC.
as Borrowers
Dated: May 8, 1995
TABLE OF CONTENTS
-----------------
SECTION 1. DEFINITIONS............................................................ 2
SECTION 2. CREDIT FACILITIES...................................................... 12
2.1 Revolving Loans............................................................. 12
2.2 Letter of Credit Accommodations............................................. 13
2.3 Term Loan................................................................... 15
2.4 Availability Reserves....................................................... 15
Appointment of CHES as Agent for Requesting Loans and Receipt of Statements...... 15
SECTION 3. INTEREST AND FEES...................................................... 16
3.1 Interest.................................................................... 16
3.2 Closing Fee................................................................. 17
3.3 Servicing Fee............................................................... 18
3.4 Unused Line Fee............................................................. 18
3.5 Changes in Laws and Increased Costs of Loans................................ 18
SECTION 4. CONDITIONS PRECEDENT................................................... 19
4.1 Conditions Precedent to Initial Loans and Letter of Credit.................. 19
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations....... 21
SECTION 5 GRANT OF SECURITY INTEREST............................................. 21
SECTION 6. COLLECTION AND ADMINISTRATION.......................................... 22
6.1 Borrowers' Loan Account..................................................... 22
6.2 Statements.................................................................. 22
6.3 Collection of Accounts...................................................... 23
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6.4 Payments.................................................................... 24
6.5 Authorization to Make Loans................................................. 24
6.6 Use of Proceeds............................................................. 24
SECTION 7. COLLATERAL REPORTING AND COVENANTS..................................... 25
7.1 Collateral Reporting........................................................ 25
7.2 Accounts Covenants.......................................................... 25
7.3 Equipment Covenants......................................................... 27
7.4 Power of Attorney........................................................... 27
7.5 Right to Cure............................................................... 28
7.6 Access to Premises.......................................................... 28
SECTION 8. REPRESENTATIONS AND WARRANTIES......................................... 29
8.1 Corporate Existence, Power and Authority; Subsidiaries...................... 29
8.2 Financial Statements; No Material Adverse Change............................ 29
8.3 Chief Executive Office; Collateral Locations................................ 29
8.4 Priority of Liens; Title to Properties...................................... 30
8.5 Tax Returns................................................................. 30
8.6 Litigation.................................................................. 30
8.7 Compliance with Other Agreements and Applicable Laws........................ 30
8.8 Environmental Compliance.................................................... 30
8.9 Employee Benefits........................................................... 31
8.10 Interrelated Businesses.................................................... 32
8.11 Real Property.............................................................. 32
8.12 Accuracy and Completeness of Information................................... 32
8.13 Survival of Warranties; Cumulative......................................... 33
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SECTION 9 AFFIRMATIVE AND NEGATIVE COVENANTS..................................... 33
9.1 Maintenance of Existence.................................................... 33
9.2 New Collateral Locations.................................................... 33
9.3 Compliance with Laws, Regulations, Etc...................................... 33
9.4 Payment of Taxes and Claims................................................. 35
9.5 Insurance................................................................... 36
9.6 Financial Statements and Other Information.................................. 36
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc..................... 37
9.8 Encumbrances................................................................ 38
9.9 Indebtedness............................................................... 38
9.10 Loans, Investments, Guarantees, Etc........................................ 39
9.11 Dividends and Redemptions.................................................. 39
9.12 Transactions with Affiliates............................................... 40
9.13 Working Capital............................................................ 40
9.14 Adjusted Net Worth......................................................... 40
9.15 Compliance with ERISA...................................................... 40
9.16 Costs and Expenses......................................................... 41
9.17 Further Assurances......................................................... 41
9.18 Acquisition of Kimball, Nebraska Facility.................................. 42
SECTION 10. EVENTS OF DEFAULT AND REMEDIES........................................ 42
10.1 Events of Default.......................................................... 42
10.2 Remedies................................................................... 44
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW.......... 46
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver...... 46
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11.2 Waiver of Notices.......................................................... 47
11.3 Amendments and Waivers..................................................... 47
11.4 Waiver of Counterclaims.................................................... 48
11.5 Indemnification............................................................. 48
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS...................................... 48
12.1 Term....................................................................... 48
12.2 Notices.................................................................... 49
12.3 Partial Invalidity......................................................... 50
12.4 Successors................................................................. 50
12.5 Participant's Security Interest............................................ 50
12.6 Confidentiality............................................................ 50
12.8 Suretyship Waivers and Consents............................................ 51
12.9 Contribution Agreement..................................................... 54
12.10 PREJUDGEMENT REMEDIES..................................................... 54
12.11 Entire Agreement.......................................................... 54
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INDEX TO
EXHIBITS AND SCHEDULES
----------------------
Exhibit A Information Certificate for each Borrower
Exhibit B Compliance Certificate for Senior Unsecured Notes Covenant
Compliance
Schedule 8.4 Existing Liens
Schedule 9.11 Permitted Dividends and Other Distributions on Capital Stock
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LOAN AND SECURITY AGREEMENT
---------------------------
This Loan and Security Agreement dated May 8, 1995 is entered into by and
between Congress Financial Corporation (New England), a Massachusetts
corporation ("Lender") and Clean Harbors Environmental Services, Inc., a
Massachusetts corporation, Clean Harbors Technology Corporation, a Massachusetts
corporation, Clean Harbors Kingston Facility Corporation, a Massachusetts
corporation, Clean Harbors of Braintree, Inc., a Massachusetts corporation,
Clean Harbors of Chicago, Inc., a Massachusetts corporation, Clean Harbors of
Natick, Inc., a Massachusetts corporation, Clean Harbors of Connecticut, Inc., a
Connecticut corporation, Clean Harbors of Cleveland, Inc., a Massachusetts
corporation, Murphy's Waste Oil Service, Inc., a Massachusetts corporation, Mr.
Frank, Inc., an Illinois corporation and Spring Grove Resource Recovery, Inc., a
Delaware corporation (each, a "Borrower" and, collectively, the "Borrowers").
W I T N E S S E T H:
-------------------
WHEREAS, the Borrowers have requested that Lender enter into certain financing
arrangements with Borrowers pursuant to which Lender may make loans and provide
other financial accommodations to Borrowers; and
WHEREAS, Lender is willing to make such loans and provide such financial
accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
-----------
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural. All references to
Borrowers and Lender pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their respective successors
and assigns. The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced. An Event of Default shall exist or
continue or be continuing until such Event of Default is waived in accordance
with
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Section 11.3. Any accounting term used herein unless otherwise defined in
this Agreement shall have the meanings customarily given to such term in
accordance with GAAP. For purposes of this Agreement, the following terms shall
have the respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of each Borrower to
payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing the Eurodollar Rate for such Interest Period by a percentage equal to:
(i) one (1) minus (ii) the Reserve Percentage. For purposes hereof, "Reserve
Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining the
reserve requirement which is or would be applicable to deposits of United States
dollars in a non-United States or an international banking office of Reference
Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with
the proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.
1.3 "Adjusted Net Worth" shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its subsidiaries (if any), the amount
equal to: (a) the difference between: (i) the aggregate net book value of all
assets of such Person and its subsidiaries, after deducting from such book
values all appropriate reserves in accordance with GAAP (including all reserves
for doubtful receivables, obsolescence, depreciation and amortization) and (ii)
the aggregate amount of the indebtedness and other liabilities of such Person
and its subsidiaries (including tax and other proper accruals) plus (b)
indebtedness of such Person and its subsidiaries which is subordinated by
written agreement in right of payment to the full and final payment of all of
the Obligations on terms and conditions acceptable to Lender.
1.4 "Availability Reserves" shall mean the sum of (A) as of any date of
determination, such amounts as Lender may from time to time establish and revise
in good faith reducing the amount of Revolving Loans and Letter of Credit
Accommodations which would otherwise be available to Borrowers under the lending
formula(s) provided for herein: (a) to reflect events, conditions, contingencies
or risks which, as determined by Lender in good faith, (i) do affect or have a
reasonable likelihood of affecting either the Collateral or any other property
which is security for the Obligations or its value or the security interests and
other rights of Lender in the Collateral (including the enforceability,
perfection and priority thereof) (ii) have a reasonable likelihood of resulting
in or causing a material adverse change in the assets, business or prospects of
any Borrower or any Obligor or (b) to reflect Lender's good faith belief that
any collateral report or financial information furnished by or on behalf of any
Borrower or any Obligor to Lender is or may have been incomplete, inaccurate or
misleading in any material respect or (c) in respect of any state of facts which
Lender determines in good faith constitutes a Default or an Event of Default,
plus (B) $2,500,000, until such time as Lender receives an "in
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place business enterprise valuation" appraisal from Accuval of the Borrowers'
facilities located in Braintree, Massachusetts for an amount of not less than
$6,000,000 and in all other respects satisfactory to Lender, plus (C) $400,000,
until such time as the fluidized bed incinerator facility and all associated
real and personal property located in Kimball, Nebraska is purchased by Clean
Harbors Technology Corporation pursuant to the Purchase Agreements and all
conditions precedent thereunder are satisfied (and not waived except with
Lender's consent) and a Mortgage granting Lender a first priority lien on such
properties is duly recorded and a title insurance policy in form and amount
satisfactory to Lender is issued with respect thereto, plus (D) $600,000, until
such time as the transaction with Chemical Waste Management, Inc. for the
acquisition of equipment and lease of certain real property located in Chicago,
Illinois (as described in the Parent's Form 10-K for the year ended December 31,
1994) is consummated and all conditions precedent thereto are satisfied (and not
waived, except with the Lender's consent), plus (E) such amounts as Lender may
determine in good faith to be necessary to reserve for rent and other amounts
that may be payable from time to time to the owners of real property leased or
used by Borrowers which owners do not sign agreements satisfactory to Lender in
accordance with Section 4.1(j).
1.5 "Blocked Accounts" shall have the meaning set forth in Section 6.3 hereof.
1.6 "Business Day" shall mean (a) for the Prime Rate Loans, any day other than
a Saturday, Sunday, or other day on which commercial banks are authorized or
required to close under the laws of the Commonwealth of Massachusetts, State of
New York or the Commonwealth of Pennsylvania, and a day on which the Reference
Bank and Lender are open for the transaction of business, and (b) for all
Eurodollar Rate Loans, any such day as described in (a) above in this definition
of Business Day, excluding any day on which banks are closed for dealings in
dollar deposits in the London interbank market or other applicable Eurodollar
Rate market.
1.7 "CHES" shall mean Clean Harbors Environmental Services, Inc., a
Massachusetts corporation, and its successors and assigns.
1.8 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.9 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.10 "Default" shall mean any event or condition the occurrence of which
might, with notice, or the passage of time or both become an Event of Default.
1.11 "Eligible Accounts" shall mean Accounts created by CHES which are and
continue to be acceptable to Lender based on the criteria set forth below. In
general, Accounts of CHES shall be Eligible Accounts if:
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(a) such Accounts arise from the actual and bona fide sale and delivery
of goods by CHES or rendition of services by CHES in the ordinary course of its
business which transactions are completed in accordance with the terms and
provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days after the
date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect to such
Accounts is located in the United States of America, Canada or Puerto Rico or if
located in another jurisdiction, at Lender's option, either: (i) the account
debtor has delivered to CHES an irrevocable letter of credit issued or confirmed
by a bank satisfactory to Lender, sufficient to cover such Account, in form and
substance satisfactory to Lender and, if required by Lender, the original of
such letter of credit has been delivered to Lender or Lender's agent and the
issuer thereof notified of the assignment of the proceeds of such letter of
credit to Lender, or (ii) such Account is subject to credit insurance payable to
Lender issued by an insurer and on terms and in an amount acceptable to Lender,
or (iii) such Account is otherwise acceptable in all respects to Lender (subject
to such lending formula with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress billings, bill and hold
invoices or retainage invoices, except as to bill and hold invoices, unless
Borrower shall have received an agreement in writing from the account debtor, in
form and substance satisfactory to Lender, confirming the unconditional
obligation of the account debtor to pay such invoice;
(g) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and does not have, and does not engage in
transactions which may give rise to, any right of setoff against such Accounts
(but the portion of such Accounts that is verified to not be subject to such
counterclaim, defense, dispute or right of setoff may be deemed an Eligible
Account);
(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and perfected
security interest of Lender and any goods giving rise thereto are not, and were
not at the time of the sale thereof, subject to any liens except those permitted
in this Agreement;
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(j) neither the account debtor nor any officer or employee of the account
debtor with respect to such Accounts is affiliated with any Borrower directly or
indirectly by virtue of ownership or control;
(k) the account debtors with respect to such Accounts are not any foreign
government;
(l) such Accounts are Federal Government Accounts that satisfy the other
criteria for Eligible Accounts, provided that upon Lender's request, the Federal
Assignment of Claims Act of 1940, as amended shall be complied with in a manner
satisfactory to Lender;
(m) such Accounts are Municipal Government Accounts that satisfy the
other criteria for Eligible Accounts, provided that upon Lender's request, any
state or local law establishing filing or notification requirements for the
recognition of Lender's security interest shall be complied with in a manner
satisfactory to Lender;
(n) there are no proceedings or actions which are threatened or pending
against the account debtors with respect to such Accounts which might result in
any material adverse change in any such account debtor's financial condition;
(o) such Accounts of a single account debtor or its affiliates do not
constitute more than twenty (20%) percent of all otherwise Eligible Accounts
(but the portion of the Accounts not in excess of such percentage may be deemed
Eligible Accounts);
(p) such Accounts are not owed by an account debtor who has Accounts
unpaid more than ninety (90) days after the date of the original invoice for
them which constitute more than fifty (50%) percent of the total Accounts of
such account debtor;
(q) such Accounts are owed by account debtors whose total indebtedness to
CHES does not exceed the credit limit with respect to such account debtors as
determined by Lender from time to time (but the portion of the Accounts not in
excess of such credit limit may still be deemed Eligible Accounts); and
(r) such Accounts are owed by account debtors deemed creditworthy at all
times by Lender, as determined by Lender.
General criteria for Eligible Accounts may be established and revised from
time to time by Lender in good faith. Any Accounts which are not Eligible
Accounts shall nevertheless be part of the Collateral.
1.12 "Environmental Laws" shall mean all applicable federal, state, district,
local and foreign laws, rules, regulations, ordinances, and consent decrees
relating to health, safety, Hazardous Materials, pollution and environmental
matters, as now or at any time hereafter in effect, applicable to Borrowers'
businesses and facilities (whether or not owned), including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contamination,
6
chemicals, or hazardous, toxic or dangerous substances, materials or wastes into
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals, or
hazardous, toxic or dangerous substances, materials or wastes.
1.13 "ERISA" shall mean the United States Employee Retirement Income Security
Act of 1974, as the same now exists or may hereafter from time to time be
amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.14 "ERISA Affiliate" shall mean any person required to be aggregated with
any Borrower or any of their subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.15 "Excess Availability" shall mean the amount, as determined by Lender,
calculated at any time, equal to: (a) the lesser of (i) the amount of the
Revolving Loans available to Borrowers as of such time based on the applicable
lending formulas multiplied by the Net Amount of Eligible Accounts, as
determined by Lender, and subject to the sublimits and Availability Reserves
from time to time established by Lender hereunder and (ii) Revolving Credit
Limit (or such lesser amount as determined under Section 2.1(d)), minus (b) the
sum of: (i) the amount of all then outstanding and unpaid Obligations (but not
including for this purpose the then outstanding principal amount of the Term
Loan), plus (ii) the aggregate amount of all trade payables of Borrowers which
are more than sixty (60) days past due as of such time.
1.16 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Adjusted Eurodollar Rate in accordance with the
terms hereof.
1.17 "Eurodollar Rate" shall mean with respect to the Interest Period for a
Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrowers and approved by Lender) on or
about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement
of such Interest Period in amounts substantially equal to the principal amount
of the Eurodollar Rate Loans requested by and available to Borrowers in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by Borrowers.
1.18 "Equipment" shall mean all of Borrowers' now owned and hereafter acquired
equipment, machinery, computers and computer hardware and software (whether
owned or licensed), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever located.
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1.19 "Event of Default" shall mean the occurrence or existence of any event or
condition described in Section 10.1 hereof.
1.20 "Federal Government Account" shall mean an Account in which the account
debtor with respect to such Account is the United States of America or a
department, agency or instrumentality thereof.
1.21 "Financing Agreements" shall mean, collectively, this Agreement and all
notes, guarantees, Mortgages, security agreements and other agreements,
documents and instruments now or at any time hereafter executed and/or delivered
by any Borrower or any Obligor in connection with this Agreement, as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced. Financing Agreements also shall mean Loan
Documents.
1.22 "GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Boards which are applicable to the circumstances
as of the date of determination consistently applied, except that, for purposes
of Sections 9.13 and 9.14 hereof, GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent with those used in the
preparation of the audited financial statements delivered to Lender prior to the
date hereof.
1.23 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation any that are or become classified as hazardous or toxic under any
Environmental Law).
1.24 "Information Certificates" shall mean the Information Certificates of
Borrowers constituting Exhibit A hereto containing material information with
respect to Borrowers, their business and assets provided by or on behalf of
Borrowers to Lender in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.25 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), or three (3) months duration as Borrowers may
elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, Borrowers may
not elect an Interest Period which will end after the last day of the then-
current term of this Agreement.
8
1.26 "Interest Rate" shall mean, as to Prime Rate Loans, a rate of one and
one-half (1-1/2%) percent per annum in excess of the Prime Rate and, as to
Eurodollar Rate Loans, a rate of three (3.0%) percent per annum in excess of the
Adjusted Eurodollar Rate (based on the Eurodollar Rate applicable for the
Interest Period selected by Borrowers as in effect three (3) Business Days after
the date of receipt by Lender of the request of Borrowers for such Eurodollar
Rate Loans in accordance with the terms hereof, whether such rate is higher or
lower than any rate previously quoted to Borrower); provided, that, the Interest
Rate shall mean the rate of four (4.0%) percent per annum in excess of the Prime
Rate as to Prime Rate Loans and the rate of five and one-half (5.5%) percent per
annum in excess of the Adjusted Eurodollar Rate as to Eurodollar Rate Loans, at
Lender's option, without notice, (a) for the period on and after the date of
termination or non-renewal hereof, or the date of the occurrence of any Event of
Default or event which with notice or passage of time or both would constitute
an Event of Default, and for so long as such Event of Default or other event is
continuing as determined by Lender and until such time as all Obligations are
indefeasibly paid in full (notwithstanding entry of any judgment against any
Borrower) and (b) on the Revolving Loans at any time outstanding in excess of
the amounts available to Borrowers under Section 2 (whether or not such
excess(es), arise or are made with or without Lender's knowledge or consent and
whether made before or after an Event of Default).
1.27 "Inventory" shall mean all of Borrowers' now owned and hereafter existing
or acquired raw materials, work in process, finished goods and all other
inventory of whatsoever kind or nature, wherever located.
1.28 "Letter of Credit Accommodations" shall mean the letters of credit,
merchandise purchase or other guaranties which are from time to time either (a)
issued or opened by Lender for the account of any Borrower or any Obligor or (b)
with respect to which Lender has agreed to indemnify the issuer or guaranteed to
the issuer the performance by any Borrower of its obligations to such issuer.
1.29 "Loan Documents" shall mean the Financing Agreements.
1.30 "Loans" shall mean the Revolving Loans and the Term Loan.
1.31 "Maximum Credit" shall mean initially the amount of $35,000,000.00 and,
at such time as Lender notifies CHES that it has received participations for at
least $10,000,000.00, shall increase to an amount of $45,000,000.00.
1.32 "MCRC Notes" shall mean the Senior Convertible Notes due 1999 issued to
Massachusetts Capital Resource Company pursuant to an Exchange Agreement dated
as of August 4, 1994.
1.33 "Mortgages" shall mean, individually and collectively, each of the
mortgages or deeds of trust (as the same now exist or may hereafter be amended,
modified, supplemented,
9
extended, renewed, restated or replaced) by Borrowers in favor of Lender with
respect to the Real Property and related assets of Borrowers.
1.34 "Municipal Government Account" shall mean an Account in which the account
debtor with respect to such Account is a state or a political subdivision,
department, agency or instrumentality thereof.
1.35 "Net Amount of Eligible Accounts" shall mean the gross amount of Eligible
Accounts less (a) sales, excise or similar taxes included in the amount thereof
and (b) returns, discounts, claims, credits and allowances of any nature at any
time issued, owing, granted, outstanding, available or claimed with respect
thereto.
1.36 "Obligations" shall mean any and all Revolving Loans, the Term Loan,
Letter of Credit Accommodations and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by any Borrower to
Lender and/or its affiliates, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under this Agreement or otherwise,
whether now existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to any Borrower under the United States
Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts which would accrue and become due but for
the commencement of such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, and however acquired by Lender.
1.37 "Obligor" shall mean any guarantor, endorser, acceptor, surety or other
person liable on or with respect to the Obligations including, without
limitation, Parent and Clean Harbors of Baltimore, Inc., a Pennsylvania
corporation, or who is the owner of any property which is security for the
Obligations, other than Borrowers.
1.38 "Parent" shall mean Clean Harbors, Inc., a Massachusetts corporation, and
its successors and assigns.
1.39 "Participant" shall mean any person which at any time participates with
Lender in respect of the Loans, the Letter of Credit Accommodations or other
Obligations or any portion thereof.
1.40 "Payment Account" shall have the meaning set forth in Section 6.3 hereof.
1.41 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as amended),
business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency or instrumentality
or political subdivision thereof.
10
1.42 "Prime Rate" shall mean the rate from time to time publicly announced by
CoreStates Bank, N.A., or its successors, at its office in Philadelphia,
Pennsylvania, as its prime rate, whether or not such announced rate is the best
rate available at such bank.
1.43 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.44 "Purchase Agreements" shall mean, individually and collectively, the
Asset Purchase Agreement, dated March 31, 1995, between Clean Harbors Technology
Corporation ("Buyer"), Parent and Ecova Corporation ("Seller"), together with
bills of sale, quitclaim deeds, assignment and assumption agreements and such
other instruments of transfer as are referred to therein and all side letters
with respect thereto, and all agreements, documents and instruments executed
and/or delivered in connection therewith, as all of the foregoing now exist or
may hereafter be entered into, amended, modified, supplemented, extended,
renewed, restated or replaced; provided, that, the term "Purchase Agreements" as
used herein shall not include any of the "Financing Agreements" as such term is
defined herein.
1.45 "Real Property" shall mean all now owned and hereafter acquired real
property of Borrowers, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located, including
without limitation, the real property and related assets more particularly
described in the Mortgages.
1.46 "Records" shall mean all of Borrowers' present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrowers with respect to the
foregoing maintained with or by any other person).
1.47 "Reference Bank" shall mean CoreStates Bank, N.A., or such other bank as
Lender may from time to time designate.
1.48 "Revolving Credit Limit" shall mean initially the amount of
$25,000,000.00 and at such time as Lender notifies CHES that it has received
participations for at least $10,000,000.00, shall increase to an amount of
$35,000,000.00.
1.49 "Revolving Loans" shall mean the loans now or hereafter made by Lender to
or for the benefit of Borrowers on a revolving basis (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.50 "Senior Unsecured Notes" shall mean the 12 1/2% Senior Notes due 2001
issued pursuant to the Senior Unsecured Notes Indenture.
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1.51 "Senior Unsecured Notes Indenture" shall mean the Indenture dated as of
August 4, 1994 between Parent, certain of the Borrowers and Obligors, as
guarantors, and Shawmut Bank, N.A. as Trustee.
1.52 "Term Loan" shall mean the term loan made by Lender to Borrowers as
provided for in Section 2.3 hereof.
1.53 "Working Capital" shall mean as to any Person, at any time, in accordance
with GAAP, on a consolidated basis for such Person and its subsidiaries (if
any), the amount equal to the difference between: (a) the aggregate net book
value of all current assets of such Person and its subsidiaries (as determined
in accordance with GAAP), and (b) all current liabilities of such Person and its
subsidiaries (as determined in accordance with GAAP), provided, that, as to
Borrowers, for purposes of Section 9.13, the liabilities of Borrowers and their
subsidiaries to Lender under this Agreement shall not be considered current
liabilities (whether or not classified as current liabilities in accordance with
GAAP).
SECTION 2. CREDIT FACILITIES
-----------------
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions contained herein,
Lender agrees to make Revolving Loans to Borrowers from time to time in amounts
requested by CHES, as agent for Borrowers pursuant to Section 2.5, up to the
amount equal to the sum of:
(i) eighty (80%) percent of the Net Amount of Eligible Accounts
(including all Municipal Government Accounts that are Eligible Accounts), plus
(ii) sixty-five (65%) percent of the Net Amount of Federal Government
Accounts that are Eligible Accounts, less
(iii) one hundred (100%) percent of the then undrawn amounts of the
outstanding Letter of Credit Accommodations, less
(iv) any Availability Reserves;
(b) Lender may, in its discretion, from time to time, upon not less than
five (5) days prior notice to CHES, (i) reduce the lending formula with respect
to Eligible Accounts to the extent that Lender determines in good faith that:
(A) the dilution with respect to the Accounts for any period (based on the ratio
of (1) the aggregate amount of reductions in Accounts other than as a result of
payments in cash to (2) the aggregate amount of total sales) has increased in
any material respect or may be reasonably anticipated to increase in any
material respect above historical levels, or (B) the general creditworthiness of
account debtors has declined in any material respect. In determining whether to
reduce the lending formula(s), Lender may consider
12
events, conditions, contingencies or risks which are also considered in
determining Eligible Accounts or in establishing Availability Reserves.
(c) Except in Lender's discretion, the aggregate amount of the Revolving
Loans and the Letter of Credit Accommodations outstanding at any time shall not
exceed the lesser of (i) the Revolving Credit Limit or (ii) the amount
determined pursuant to Section 2.1(d) hereof. In the event that the outstanding
amount of any component of the Revolving Loans, or the aggregate amount of the
outstanding Revolving Loans and Letter of Credit Accommodations, exceed the
amounts available under the lending formulas, the sublimits for Letter of Credit
Accommodations set forth in Section 2.2(c) or the Revolving Credit Limit as
applicable, such event shall not limit, waive or otherwise affect any rights of
Lender in that circumstance or on any future occasions and Borrowers shall, upon
demand by Lender, which may be made at any time or from time to time,
immediately repay to Lender the entire amount of any such excess(es) for which
payment is demanded.
(d) In addition to the foregoing, the aggregate amount of Revolving Loans
outstanding, Letter of Credit Accommodations outstanding that would be deemed to
be "Debt" as defined under the Senior Unsecured Notes Indenture and the
outstanding principal amount of the Term Loan, shall not together with all other
indebtedness of the Borrowers outstanding at any time exceed the amount of
permitted "Debt" and/or "Bank Debt" (as such terms are defined under the Senior
Unsecured Notes Indenture). In the event such limitations are exceeded, such
event shall not limit, waive or otherwise affect any rights of Lender in that
circumstance or on any future occasions and Borrowers shall, immediately without
or notice demand by Lender, repay to Lender the entire amount of such excess and
the Revolving Credit Limit shall be reduced to an amount required to ensure that
Parent and Borrowers are in compliance with such limitations.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained herein, at
the request of CHES, as agent for Borrowers, Lender agrees to provide or arrange
for Letter of Credit Accommodations for the account of any Borrower containing
terms and conditions acceptable to Lender and the issuer thereof. Letters of
credit issued pursuant to Letter of Credit Accommodations shall be issued by
CoreStates Bank, N.A., Chemical Bank, N.A. or other banks acceptable to Lender
and CHES. Any payments made by Lender to any issuer thereof and/or related
parties in connection with the Letter of Credit Accommodations shall constitute
additional Revolving Loans to Borrowers pursuant to this Section 2.
(b) In addition to any charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations, Borrowers shall
pay to Lender a letter of credit fee at a rate equal to three (3%) percent per
annum on the daily outstanding balance of the Letter of Credit Accommodations
for the immediately preceding month (or part thereof), payable in arrears as of
the first day of each succeeding month. Such letter of credit fee shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed and the
13
obligation of Borrowers to pay such fee shall survive the termination or non-
renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available unless on the
date of the proposed issuance of any Letter of Credit Accommodations, the
Revolving Loans available to Borrowers (subject to the Revolving Credit Limit
and any Availability Reserves) are equal to or greater than an amount equal to
one hundred (100%) percent of the face amount thereof and all other commitments
and obligations made or incurred by Lender with respect thereto. Effective on
the issuance of each Letter of Credit Accommodation, the amount of Revolving
Loans which might otherwise be available to Borrowers shall be reduced by the
applicable amount set forth in this Section 2.2(c).
(d) Except in Lender's discretion, the amount of all outstanding Letter
of Credit Accommodations and all other commitments and obligations made or
incurred by Lender in connection therewith, shall not at any time exceed
$20,000,000.00. At any time an Event of Default exists or has occurred and is
continuing, upon Lender's request, Borrowers will either furnish cash collateral
to secure the reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to Lender for the
Letter of Credit Accommodations, and in either case, the Revolving Loans
otherwise available to Borrowers shall not be reduced as provided in Section
2.2(c) to the extent of such cash collateral.
(e) Borrowers shall indemnify and hold Lender harmless from and against
any and all losses, claims, damages, liabilities, costs and expenses which
Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including, but not limited to, any losses, claims, damages, liabilities, costs
and expenses due to any action taken by any issuer or correspondent with respect
to any Letter of Credit Accommodation. Borrowers assume all risks with respect
to the acts or omissions of the drawer under or beneficiary of any Letter of
Credit Accommodation and for such purposes the drawer or beneficiary shall be
deemed Borrowers' agent. Borrowers assume all risks for, and agree to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder. Borrowers hereby release and hold Lender harmless from
and against any acts, waivers, errors, delays or omissions, whether caused by
any Borrower, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation. The provisions of this Section
2.2(e) shall survive the payment of Obligations and the termination or non-
renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed to grant
Borrowers any right or authority to pledge the credit of Lender in any manner.
Lender shall have no liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Lender unless Lender has duly
executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrowers shall be bound by any interpretation made in good faith by Lender, or
any other issuer or correspondent under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be
14
inconsistent with any instructions of any Borrower. Lender shall have the sole
and exclusive right and authority to, and Borrowers shall not: (i) at any time
an Event of Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any instructions
as to acceptance or rejection of any documents or goods or (C) execute any and
all applications for steamship or airway guaranties, indemnities or delivery
orders, and (ii) at all times, (A) grant any extensions of the maturity of, time
of payment for, or time of presentation of, any drafts, acceptances, or
documents, and (B) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral.
Lender may take such actions either in its own name or in any Borrower's name.
(g) any rights, remedies, duties or obligations granted or undertaken by
Borrowers to any issuer or correspondent in any application for any Letter of
Credit Accommodations, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrowers to Lender. Any duties or
obligations undertaken by Lender to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Lender in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by all Borrowers to
Lender and to apply in all respects to all Borrowers.
2.3 Term Loan. Lender is making a Term Loan to Borrowers in the original
principal amount of $10,000,000.00. The Term Loan is (a) evidenced by a Term
Promissory Note in such original principal amount duly executed and delivered by
Borrower to Lender concurrently herewith; (b) to be repaid, together with
interest and other amounts, in accordance with this Agreement, the Term
Promissory Note, and the other Financing Agreements and (c) secured by all of
the Collateral.
2.4 Availability Reserves. All Revolving Loans otherwise available to
Borrowers pursuant to the lending formulas and subject to the Maximum Credit and
other applicable limits hereunder shall be subject to Lender's continuing right
to establish and revise Availability Reserves.
2.5 Appointment of CHES as Agent for Requesting Loans and Receipt of
Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes CHES as its
agent to request Revolving Loans, Letter of Credit Accommodations and the Term
Loan, to select the interest rates applicable to the Loans pursuant to Section 3
and to otherwise take action pursuant to this Agreement in the name or on behalf
of each of and all of the Borrowers. Lender may distribute Loans to such
Borrowers' account(s) or otherwise make such Loans to Borrowers as specified by
CHES, or as determined by Lender to pay Obligations, without notice to any other
Borrower or any Obligor.
15
(b) Each Borrower hereby irrevocably appoints and constitutes CHES as its
agent to receive statements of account and all other notices and materials from
Lender under this Agreement and the other Financing Agreements or otherwise in
connection with or related to the Obligations.
(c) No purported termination of the appointment of CHES as agent as
aforesaid shall be effective, except after thirty (30) business days prior
written notice to Lender and appointment of a substitute agent acceptable to
Lender in all respects.
SECTION 3. INTEREST AND FEES
-----------------
3.1 Interest.
(a) Borrowers shall pay to Lender interest on the outstanding principal
amount of the non-contingent Obligations at the Interest Rate. All interest
accruing hereunder on and after the date of any Event of Default or termination
or non-renewal hereof shall be payable on demand.
(b) CHES, as agent for Borrowers, may from time to time request that
Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing
Eurodollar Rate Loans continue for an additional Interest Period. Such request
from CHES shall specify the amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Lender of
such a request from CHES, such Prime Rate Loans shall be converted to Eurodollar
Rate Loans or such Eurodollar Rate Loans shall continue, as the case may be,
provided, that, (i) no Event of Default, or event which with notice or passage
of time or both would constitute an Event of Default exists or has occurred and
is continuing, (ii) no party hereto shall have sent any notice of termination or
non-renewal of this Agreement, (iii) Borrowers shall have complied with such
customary procedures as are established by Lender and specified by Lender to
Borrowers from time to time for requests by Borrowers for Eurodollar Rate Loans,
(iv) no more than four (4) Interest Periods may be in effect at any one time,
(v) the aggregate amount of the Eurodollar Rate Loans must be in an amount not
less than $5,000,000.00 or an integral multiple of $1,000,000.00 in excess
thereof, (vi) the maximum amount of the Eurodollar Rate Loans at any time
requested by Borrowers shall not exceed the amount equal to (A) the principal
amount of the Term Loan which it is anticipated will be outstanding as of the
last day of the applicable Interest Period plus (B) eighty (80%) percent of the
daily average of the principal amount of the Revolving Loans which it is
anticipated will be outstanding during the applicable Interest Period, in each
case as determined by Lender (but with no obligation of Lender to make such
Revolving Loans) and (vii) Lender shall have determined that the Interest Period
or Adjusted Eurodollar Rate is available to Lender through the Reference Bank
and can be readily determined as of the date of the request for such Eurodollar
Rate Loan by Borrowers. Any request by Borrowers to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans
16
shall be irrevocable. Notwithstanding anything to the contrary contained herein,
Lender and Reference Bank shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Lender and Reference Bank had purchased such deposits to
fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period, unless Lender has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Lender's option, upon notice by
Lender to Borrowers, convert to Prime Rate Loans in the event that (i) an Event
of Default or event which with the notice or passage of time or both would
constitute an Event of Default, shall exist, (ii) this Agreement shall terminate
or not be renewed, or (iii) the aggregate principal amount of the Prime Rate
Loans which have previously been converted to Eurodollar Rate Loans or existing
Eurodollar Rate Loans continued, as the case may be, at the beginning of an
Interest Period shall at any time during such Interest Period exceed either (A)
the aggregate principal amount of the Loans then outstanding, or (B) the sum of
the then outstanding principal amount of the Term Loan plus the Revolving Loans
then available to Borrowers under Section 2 hereof. Borrowers shall pay to
Lender, upon demand by Lender (or Lender may, at its option, charge any loan
account(s) of Borrowers) any amounts required to compensate Lender, the
Reference Bank or any participant with Lender for any loss (including loss of
anticipated profits), cost or expense incurred by such person, as a result of
the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of
the foregoing.
(d) Interest shall be payable by Borrowers to Lender monthly in arrears
not later than the first day of each calendar month and shall be calculated on
the basis of a three hundred sixty (360) day year and actual days elapsed. The
interest rate on non-contingent Obligations (other than Eurodollar Rate Loans)
shall increase or decrease by an amount equal to each increase or decrease in
the Prime Rate effective on the first day of the month after any change in such
Prime Rate is announced based on the Prime Rate in effect on the last day of the
month in which any such change occurs. In no event shall charges constituting
interest payable by Borrowers to Lender exceed the maximum amount or the rate
permitted under any applicable law or regulation, and if any such part or
provision of this Agreement is in contravention of any such law or regulation,
such part or provision shall be deemed amended to conform thereto.
3.2 Closing Fee. Borrowers shall pay to Lender as a closing fee the amount of
$275,000.00, which shall be fully earned as of and payable on the date hereof.
3.3 Servicing Fee. Borrowers shall pay to Lender a servicing fee in an amount
equal to $17,500.00 in respect of Lender's services for each calendar quarter
(or part thereof) while this Agreement remains in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be fully
earned as of and payable in advance on the date hereof and on the first day of
July, October, January and April hereafter.
17
3.4 Unused Line Fee. Borrower shall pay to Lender monthly an unused line fee
equal to one half of one (1/2 of 1%) percent per annum calculated upon the
amount by which Revolving Credit Limit exceeds the average daily principal
balance of the outstanding Revolving Loans and Letter of Credit Accommodations
during the immediately preceding month (or part thereof) while this Agreement is
in effect and for so long thereafter as any of the Obligations are outstanding,
which fee shall be payable on the first day of each month in arrears.
3.5 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Lender to CHES, convert to Prime
Rate Loans in the event that (i) any change in applicable law or regulation (or
the interpretation or administration thereof) shall either (A) make it unlawful
for Lender, Reference Bank or any Participant to make or maintain Eurodollar
Rate Loans or to comply with the terms hereof in connection with the Eurodollar
Rate Loans, by an amount deemed by Lender to be material, or (B) shall result in
the increase in the costs to Lender, Reference Bank or any Participant of making
or maintaining any Eurodollar Rate Loans or (C) reduce the amounts received or
receivable by Lender in respect thereof, by an amount deemed by Lender to be
material or (ii) the cost to Lender, Reference Bank or any Participant of making
or maintaining any Eurodollar Rate Loans shall otherwise increase by an amount
deemed by Lender to be material. Borrowers shall pay to Lender, upon demand by
Lender (or Lender may, at its option, charge any loan account of any Borrower)
any amounts required to compensate Lender, the Reference Bank or any Participant
with Lender for any loss (including loss of anticipated profits), cost or
expense incurred by such person as a result of the foregoing, including, without
limitation, any such loss, cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such person to make or
maintain the Eurodollar Rate Loans or any portion thereof. A certificate of
Lender setting forth the basis for the determination of such amount necessary to
compensate Lender as aforesaid shall be delivered to Borrowers and shall be
conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Lender other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of Collateral, Borrowers shall
pay to Lender upon demand by Lender (or Lender may, at its option, charge any
loan accounts of Borrowers) any amounts required to compensate Lender, the
Reference Bank or any participant with Lender for any additional loss (including
loss of anticipated profits), cost or expense incurred by such person as a
result of such prepayment or payment, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT
--------------------
18
4.1 Conditions Precedent to Initial Loans and Letter of Credit. Each of the
following is a condition precedent to Lender making the initial Loans and
providing the initial Letter of Credit Accommodations hereunder:
(a) Lender shall have received, in form and substance satisfactory to
Lender, all releases, terminations and such other documents as Lender may
request to evidence and effectuate the termination by the existing lender or
lenders to Borrowers of their respective financing arrangements with Borrowers
and the termination and release by it or them, as the case may be, of any
interest in and to any assets and properties of Borrowers and each Obligor, duly
authorized, executed and delivered by it or each of them, including, but not
limited to, (i) UCC termination statements for all UCC financing statements
previously filed by it or any of them or their predecessors, as secured party
and any Borrower or any Obligor, as debtor and (ii) satisfactions and discharges
of any mortgages, deeds of trust or deeds to secure debt by any Borrower or any
Obligor in favor of such existing lender or lenders, in form acceptable for
recording in the appropriate government office;
(b) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has valid perfected and first priority
security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Obligor
in respect thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements;
(c) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in form
and substance to Lender, and Lender shall have received all information and
copies of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or governmental authorities;
(d) no material adverse change shall have occurred in the assets,
business or prospects of any Borrower since the date of Lender's latest field
examination and no change or event shall have occurred which would impair the
ability of any Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Lender
to enforce the Obligations or realize upon the Collateral;
(e) Lender shall have completed a field review of the Records and such
other information with respect to the Collateral as Lender may require to
determine the amount of Revolving Loans available to Borrowers, the results of
which shall be satisfactory to Lender, not more than three (3) business days
prior to the date hereof;
(f) Lender shall have received, in form and substance satisfactory to
Lender, all consents, waivers, acknowledgments and other agreements from third
persons which Lender may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, acknowledgments by lessors,
19
mortgagees and warehousemen of Lender's security interests in the Collateral,
waivers by such persons of any security interests, liens or other claims by such
persons to the Collateral and agreements permitting Lender access to, and the
right to remain on, the premises to exercise its rights and remedies and
otherwise deal with the Collateral;
(g) the Excess Availability as determined by Lender, as of the date
hereof, shall be not less than $5,000,000.00 after giving effect to the initial
Loans made or to be made and Letter of Credit Accommodations issued or to be
issued in connection with the initial transactions hereunder;
(h) Lender shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Lender as loss payee;
(i) Lender shall have received, in form and substance satisfactory to
Lender, such opinion letters of counsel to Borrowers with respect to the
Financing Agreements and such other matters as Lender may request; and
(j) Lender shall have received, in form and substance satisfactory to
Lender, valid and effective title insurance policies issued by companies and
agents acceptable to Lender for each parcel of Real Property located in
Braintree, Massachusetts, Weymouth, Massachusetts, and Natick, Massachusetts and
subject to a Mortgage (i) insuring the priority, amount and sufficiency of the
Mortgages, (ii) insuring against matters that would be disclosed by surveys and
(iii) containing any legally available endorsements, assurances or affirmative
coverage requested by Lender for protection of its interests;
(k) Lender shall have received evidence, satisfactory to Lender, that
Borrowers have obtained and are in material compliance with all material
licenses, permits, certificates, approvals and similar authorizations that
Borrowers are required to obtain under Environmental Laws and that all such
licenses, permits, certificates, approvals and similar authorizations are in
full force and effect and Borrower shall have furnished to Lender a complete
listing of all operating permits and approvals for its waste processing, storage
and transportation facilities with the expiration dates thereof; and
(l) Lender shall have received the original certificates of title for all
motor vehicles and other rolling stock of Borrowers that are subject to state
certificate of title statutes and duly executed, undated applications and other
documents required to note Lender's lien thereon; and
(m) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
in form and substance satisfactory to Lender.
20
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to Lender making
Loans and/or providing Letter of Credit Accommodations to Borrowers, including
the initial Loans and Letter of Credit Accommodations and any future Loans and
Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the other
Financing Agreements shall be true and correct in all material respects (except
for changes permitted by the covenants in Section 9 hereof) with the same effect
as though such representations and warranties had been made on and as of the
date of the making of each such Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto; and
(b) no Event of Default and no event or condition which, with notice or
passage of time or both, would constitute an Event of Default, shall exist or
have occurred and be continuing on and as of the date of the making of such Loan
or providing each such Letter of Credit Accommodation and after giving effect
thereto.
SECTION 5. GRANT OF SECURITY INTEREST
--------------------------
To secure payment and performance of all Obligations, each Borrower hereby
grants to Lender a continuing security interest in, a lien upon, and a right of
set off against, and hereby assigns to Lender as security, the following
property and interests in property, whether now owned or hereafter acquired or
existing, and wherever located (collectively, the "Collateral"):
5.1 Accounts.
5.2 all present and future contract rights, general intangibles (including,
but not limited to, tax and duty refunds, registered and unregistered patents,
trademarks, service marks, copyrights, trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, permits, authorizations,
approvals and other similar rights, choses in action and other claims and
existing and future leasehold interests in equipment, real estate and fixtures),
chattel paper, documents, instruments, letters of credit, bankers' acceptances
and guaranties;
5.3 all present and future monies, securities, credit balances, deposits,
deposit accounts and other property of Borrower now or hereafter held or
received by or in transit to Lender or its affiliates or at any other depository
or other institution from or for the account of Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and all
present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Accounts and other Collateral, including,
without limitation, (a) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, (c) goods described in invoices, documents, contracts
or instruments with respect to, or otherwise
21
representing or evidencing, Accounts or other Collateral, including, without
limitation, returned, repossessed and reclaimed goods, and (d) deposits by and
property of account debtors or other persons securing the obligations of account
debtors;
5.4 Inventory
5.5 Equipment;
5.6 Real Property;
5.7 Records; and
5.8 all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and all claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
-----------------------------
6.1 Borrowers' Loan Account. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrowers and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s) shall
be made in accordance with Lender's customary practices as in effect from time
to time.
6.2 Statements. Lender shall render to CHES each month a statement setting
forth the balance in the Borrowers' loan account(s) maintained by Lender for
Borrowers pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrowers and conclusively binding
upon Borrowers as an account stated except to the extent that Lender receives a
written notice from Borrowers of any specific exceptions of Borrowers thereto
within thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to CHES a written statement as
provided above, the balance in Borrowers' loan account(s) shall be presumptive
evidence of the amounts due and owing to Lender by Borrowers.
6.3 Collection of Accounts.
(a) Borrowers shall establish and maintain, at their expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Lender may specify, with such banks as are acceptable to Lender
into which Borrowers shall promptly deposit and direct their account debtors to
directly remit all payments on Accounts and all payments constituting proceeds
of other Collateral in the identical form in which such payments are made,
whether by cash, check or other manner. The banks at which the Blocked Accounts
22
are established shall enter into an agreement, in form and substance
satisfactory to Lender, providing that all items received or deposited in the
Blocked Accounts are the property of Lender, that the depository bank has no
lien upon, or right to setoff against, the Blocked Accounts, the items received
for deposit therein, or the funds from time to time on deposit therein and that
the depository bank will wire, or otherwise transfer, in immediately available
funds, on a daily basis, all funds received or deposited into the Blocked
Accounts to such bank account of Lender as Lender may from time to time
designate for such purpose ("Payment Account"). Borrowers agree that all
payments made to such Blocked Accounts or other funds received and collected by
Lender, whether on the Accounts or as proceeds of other Collateral or otherwise
shall be the property of Lender.
(b) For purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final
collection) to the Obligations one (1) business day following the date of
receipt of immediately available funds by Lender in the Payment Account. For
purposes of calculating the amount of the Revolving Loans available to Borrowers
such payments will be applied (conditional upon final collection) to the
Obligations on the business day of receipt by Lender in the Payment Account, if
such payments are received within sufficient time (in accordance with Lender's
usual and customary practices as in effect from time to time) to credit
Borrowers' loan account on such day, and if not, then on the next business day.
(c) Borrowers and all of their affiliates, subsidiaries, shareholders,
directors, employees or agents shall, acting as trustee for Lender, receive, as
the property of Lender, any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Accounts or other Collateral which come into
their possession or under their control and immediately upon receipt thereof,
shall deposit or cause the same to be deposited in the Blocked Accounts, or
remit the same or cause the same to be remitted, in kind, to Lender. In no event
shall the same be commingled with Borrowers' own funds. Borrowers agree to
reimburse Lender on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in the
transfer of funds to or from the Blocked Accounts arising out of Lender's
payments to or indemnification of such bank or person. The obligation of
Borrowers to reimburse Lender for such amounts pursuant to this Section 6.3
shall survive the termination or non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lender may designate from time to
time. Lender may apply payments received or collected from Borrowers or for the
account of Borrowers (including, without limitation, the monetary proceeds of
collections or of realization upon any Collateral) to such of the Obligations,
whether or not then due, in such order and manner as Lender determines. At
Lender's option, all principal, interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Financing Agreements may be
charged directly to the loan account(s) of Borrowers. Borrowers shall make all
payments to Lender on the Obligations free and clear of, and without deduction
or withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of,
23
any of the Obligations, Lender is required to surrender or return such payment
or proceeds to any Person for any reason, then the Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and continue and this
Agreement shall continue in full force and effect as if such payment or proceeds
had not been received by Lender. Borrowers shall be liable to pay to Lender, and
do hereby indemnify and hold Lender harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4 shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon such payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
6.5 Authorization to Make Loans. Lender is authorized to make the Loans and
provide the Letter of Credit Accommodations based upon written or telephonic
(confirmed promptly in writing) instructions received from an authorized officer
of CHES or other authorized person (as initially set forth in the Information
Certificates) or, at the discretion of Lender, if such Loans are necessary to
satisfy any Obligations. All requests for Loans or Letter of Credit
Accommodations hereunder shall specify the date on which the requested advance
is to be made or Letter of Credit Accommodations established (which day shall be
a business day) and the amount of the requested Loan. Requests received after
11:00 a.m. Boston, Massachusetts time on any day shall be deemed to have been
made as of the opening of business on the immediately following business day.
All Loans and Letter of Credit Accommodations under this Agreement shall be
conclusively presumed to have been made to, and at the request of and for the
benefit of, Borrowers when deposited to the credit of Borrowers or otherwise
disbursed or established in accordance with the instructions of CHES or in
accordance with the terms and conditions of this Agreement.
6.6 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans
provided by Lender to Borrowers hereunder only for: (a) payments to each of the
persons listed in the disbursement direction letter furnished by Borrowers to
Lender on or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements. All other Loans made or Letter of
Credit Accommodations provided by Lender to Borrowers pursuant to the provisions
hereof shall be used by Borrowers only for general operating, working capital
and other proper corporate purposes of Borrowers not otherwise prohibited by the
terms hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of Regulation G
of the Board of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
----------------------------------
7.1 Collateral Reporting. Borrowers shall provide Lender with the following
documents in a form satisfactory to Lender: (a) on a regular basis as required
by Lender, a schedule of Accounts; (b) on a monthly basis or more frequently as
Lender may request, agings
24
of accounts payable, (c) upon Lender's request, (i) copies of customer
statements and credit memos, remittance advices and reports, and copies of
deposit slips and bank statements, (ii) copies of shipping and delivery
documents, and (iii) copies of purchase orders, invoices and delivery documents
for Equipment acquired by Borrower; (d) agings of accounts receivable on a
weekly basis or more frequently as Lender may request; and (e) such other
reports as to the Collateral as Lender shall request from time to time. If any
of Borrowers' records or reports of the Collateral are prepared or maintained by
an accounting service, contractor, shipper or other agent, Borrowers hereby
irrevocably authorize such service, contractor, shipper or agent to deliver such
records, reports, and related documents to Lender and to follow Lender's
instructions with respect to further services at any time that an Event of
Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrowers shall notify Lender promptly of: (i) any material delay in
any Borrower's performance of any of its obligations to any account debtor or
the assertion of any material claims, offsets, defenses or counterclaims by any
account debtor, or any disputes with account debtors, or any settlement,
adjustment or compromise thereof, (ii) all material adverse information known to
any Borrower relating to the financial condition of any account debtor and (iii)
any event or circumstance which, to any Borrower's knowledge would cause Lender
to consider any then existing Accounts as no longer constituting Eligible
Accounts. No credit, discount, allowance or extension or agreement for any of
the foregoing shall be granted to any account debtor without Lender's consent,
except in the ordinary course of Borrowers' business in accordance with
practices and policies previously disclosed in writing to Lender. So long as no
Event of Default exists or has occurred and is continuing, Borrowers shall
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists or has occurred and
is continuing, Lender shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to Lender or schedule thereof delivered to Lender shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Lender pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Lender in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of Borrowers' business in accordance with
practices and policies previously disclosed to Lender, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Lender in accordance with
the terms of this Agreement, (v) none of the transactions giving rise thereto
will violate any applicable State or Federal laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
25
(c) Lender shall have the right at any time or times, in Lender's name or
in the name of a nominee of Lender, to verify the validity, amount or any other
matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise. Lender will notify CHES of its conducting
telephone verifications after doing so.
(d) Borrowers shall deliver or cause to be delivered to Lender, with
appropriate endorsement and assignment, with full recourse to Borrowers, all
chattel paper and instruments which any Borrower now owns or may at any time
acquire immediately upon such Borrower's receipt thereof, except as Lender may
otherwise agree.
(e) Lender may, at any time or times that an Event of Default exists or
has occurred and is continuing, (i) notify any or all account debtors that the
Accounts have been assigned to Lender and that Lender has a security interest
therein and Lender may direct any or all accounts debtors to make payment of
Accounts directly to Lender, (ii) extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and upon
any terms or conditions, any and all Accounts or other obligations included in
the Collateral and thereby discharge or release the account debtor or any other
party or parties in any way liable for payment thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Accounts or
such other obligations, but without any duty to do so, and Lender shall not be
liable for its failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Lender may deem necessary or desirable for the protection
of its interests. At any time that an Event of Default exists or has occurred
and is continuing, at Lender's request, all invoices and statements sent to any
account debtor shall state that the Accounts and such other obligations have
been assigned to Lender and are payable directly and only to Lender and
Borrowers shall deliver to Lender such originals of documents evidencing the
sale and delivery of goods or the performance of services giving rise to any
Accounts as Lender may require.
7.3 Equipment Covenants. With respect to the Equipment: (a) upon Lender's
request, Borrowers shall, at their expense, at any time or times as Lender may
request on or after an Event of Default, deliver or cause to be delivered to
Lender written reports or appraisals as to the Equipment in form, scope and
methodology acceptable to Lender and by an appraiser acceptable to Lender; (b)
Borrowers shall keep the Equipment in good order, repair, running and marketable
condition (ordinary wear and tear excepted); (c) Borrowers shall use the
Equipment with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all applicable laws; (d) the
Equipment is and shall be used in Borrowers' business and not for personal,
family, household or farming use; (e) Borrowers shall not remove any Equipment
from the locations set forth or permitted herein, except to the extent necessary
to have any Equipment repaired or maintained in the ordinary course of the
business of Borrowers or to move Equipment directly from one location set forth
or permitted herein to another such location and except for the movement of
motor vehicles used by or for the benefit of Borrowers in the ordinary course of
business; (f) Borrowers shall (i) deliver to Lender certificates of title with
Lender's lien noted thereon for all motor vehicles or rolling stock acquired by
any Borrower after the date hereof and (ii) for all motor vehicles and rolling
stock owned by any Borrower on the date hereof, deliver to Lender all original
certificates of title for
26
all such motor vehicles and other rolling stock together with fully executed,
undated applications and all other documents required under applicable laws for
Lender to have its lien noted on all such certificates of title, which
applications may be filed by Lender at any time, in its discretion (A) upon and
following a Default or an Event of Default or (B) at any time that Excess
Availability is less than $4,500,000.00; (g) the Equipment is now and shall
remain personal property and Borrowers shall not permit any of the Equipment to
be or become a part of or affixed to real property; and (h) Borrowers assume all
responsibility and liability arising from the use of the Equipment.
7.4 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrowers' true and
lawful attorney-in-fact, and authorizes Lender, in any Borrowers' or Lender's
name, to: (a) at any time a Default or an Event of Default exists or has
occurred and is continuing (i) demand payment on Accounts or other proceeds of
Collateral, (ii) enforce payment of Accounts by legal proceedings or otherwise,
(iii) exercise all of Borrowers' rights and remedies to collect any Account or
other Collateral, (iv) sell or assign any Account upon such terms, for such
amount and at such time or times as the Lender deems advisable, (v) settle,
adjust, compromise, extend or renew an Account, (vi) discharge and release any
Account, (vii) prepare, file and sign Borrowers' name on any proof of claim in
bankruptcy or other similar document against an account debtor, (viii) notify
the post office authorities to change the address for delivery of Borrowers'
mail to an address designated by Lender, and open and dispose of all mail
addressed to any Borrower, and (ix) do all acts and things which are necessary,
in Lender's determination, to fulfill Borrower's obligations under this
Agreement and the other Financing Agreements and (b) at any time to (i) take
control in any manner of any item of payment or proceeds thereof, (ii) have
access to any lockbox into which any Borrower's mail is deposited, (iii) endorse
any Borrower's name upon any items of payment or proceeds thereof and deposit
the same in the Lender's account for application to the Obligations, (iv)
endorse any Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account or any goods
pertaining thereto or any other Collateral, (v) sign any Borrower's name on any
verification of Accounts and notices thereof to account debtors, (vi) execute in
any Borrower's name and file any UCC financing statements or amendments thereto
or any application or other document to note Lender's lien on any certificate of
title, and (viii) execute in any Borrower's name and file any application or
document necessary to obtain, extend, modify or amend any order, license,
permit, certificate, approval, or similar authorization necessary or appropriate
for the conduct of any Borrower's business. Each Borrower hereby releases Lender
and its officers, employees and designees from any liabilities arising from any
act or acts under this power of attorney and in furtherance thereof, whether of
omission or commission, except as a result of Lender's own gross negligence or
willful misconduct as determined pursuant to a final non-appealable order of a
court of competent jurisdiction.
7.5 Right to Cure. Lender may, at its option, (a) cure any default by any
Borrower under any agreement with a third party if such default might have a
material adverse effect on the business, operations or prospects of any Borrower
or pay or bond on appeal any judgment entered against any Borrower, if the
execution of such judgment is not effectively stayed, on appeal or otherwise,
(b) discharge taxes, liens, security interests or other encumbrances at any
27
time levied on or existing with respect to the Collateral and (c) pay any
amount, incur any expense or perform any act which, in Lender's judgment, is
necessary or appropriate to preserve, protect, insure or maintain the Collateral
and the rights of Lender with respect thereto. Lender may add any amounts so
expended to the Obligations and charge Borrowers' account(s) therefor, such
amounts to be repayable by Borrower(s) on demand. Lender shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing so,
be deemed to have assumed any obligation or liability of any Borrower. Any
payment made or other action taken by Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
7.6 Access to Premises. From time to time as requested by Lender, at the cost
and expense of Borrowers, (a) Lender or its designee shall have complete access
to all of Borrowers' premises during normal business hours and after notice to
CHES, or at any time and without notice to any Borrower if an Event of Default
exists or has occurred and is continuing, for the purposes of inspecting,
verifying and auditing the Collateral and all of Borrowers' books and records,
including, without limitation, the Records, and (b) Borrowers shall promptly
furnish to Lender such copies of such books and records or extracts therefrom as
Lender may request, and (c) use during normal business hours such of Borrowers'
personnel, equipment, supplies and premises as may be reasonably necessary for
the foregoing and if an Event of Default exists or has occurred and is
continuing for the collection of Accounts and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
------------------------------
Each Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition of the making of Loans and
providing Letter of Credit Accommodations by Lender to Borrowers:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Each Borrower is
a corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on any Borrower's financial condition,
results of operation or business or the rights of Lender in or to any of the
Collateral. The execution, delivery and performance of this Agreement, the other
Financing Agreements and the transactions contemplated hereunder and thereunder
are all within each Borrower's corporate powers, have been duly authorized and
are not in contravention of law or the terms of any Borrower's certificate of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which any Borrower is a party or by which any
Borrower or its property are bound. This Agreement and the other Financing
Agreements constitute legal, valid and binding obligations of each Borrower
enforceable in accordance with their respective terms. Borrowers do not have any
subsidiaries except as set forth on the Information Certificates.
28
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers which have been or may hereafter be delivered
by Borrowers to Lender have been prepared in accordance with GAAP and fairly
present the financial condition and the results of operation of Borrowers as at
the dates and for the periods set forth therein. Except as disclosed in any
interim financial statements furnished by Borrowers to Lender prior to the date
of this Agreement, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of Borrowers,
since the date of the most recent audited financial statements furnished by
Borrowers to Lender prior to the date of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief executive office
of each Borrower and Borrowers' Records concerning Accounts are located only at
the addresses set forth below and their only other places of business and the
only other locations of Collateral, if any, are the addresses set forth in the
Information Certificates, subject to the right of Borrowers to establish new
locations in accordance with Section 9.2 below. The Information Certificates
correctly identify any of such locations which are not owned by any Borrowers
and sets forth the owners and/or operators thereof.
8.4 Priority of Liens; Title to Properties. The security interests and liens
granted to Lender under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4
hereto and the other liens permitted under Section 9.8 hereof. Borrowers have
good and marketable title to all of their properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Lender and such others as are specifically listed
on Schedule 8.4 hereto or permitted under Section 9.8 hereof.
8.5 Tax Returns. Borrowers have filed, or caused to be filed, in a timely
manner all tax returns, reports and declarations which are required to be filed
by them (without requests for extension except as previously disclosed in
writing to Lender). All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Borrowers have
paid or caused to be paid all taxes due and payable or claimed due and payable
in any assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrowers and with respect to which adequate reserves have been set
aside on their books. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on the Information Certificates, there is
no present investigation by any governmental agency pending, or to the best of
Borrowers' knowledge threatened, against or affecting any Borrower, its assets
or business and there is no action, suit, proceeding or claim by any Person
pending, or to the best of Borrowers' knowledge threatened, against any Borrower
or its assets or goodwill, or against or affecting any transactions contemplated
by this Agreement, which if adversely determined against any Borrower would
result in any material adverse change in the assets, business or prospects of
such Borrower or would impair the ability of such Borrower to perform its
obligations hereunder or under any of
29
the other Financing Agreements to which it is a party or of Lender to enforce
any Obligations or realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable Laws. Borrowers are not
in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which any of them is a party or by which any of them or any
of their assets are bound and Borrowers are in compliance in all material
respects with all applicable provisions of laws, rules, regulations, licenses,
permits, approvals and orders of any foreign, Federal, State or local
governmental authority.
8.8 Environmental Compliance. Except as shown or reflected in the financial
statements of Borrowers previously furnished to Lender and to be furnished to
Lender under Section 9.6 hereof, unless such matters would not have a material
adverse effect upon the business, assets or prospects of the Borrowers on a
consolidated basis:
(a) No Borrower has generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates any applicable Environmental Law or any order, license, permit,
certificate, approval or similar authorization thereunder and the operations of
Borrowers comply in all material respects with all Environmental Laws and all
orders, licenses, permits, certificates, approvals and similar authorizations
thereunder.
(b) There has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any governmental authority or any other
person, nor is any pending, with respect to any non-compliance with or violation
of the requirements of any Environmental Law by any Borrower or the release,
spill or discharge, threatened or actual, of any Hazardous Material or any
properties at or from which any Borrower has transported, stored or disposed of
any Hazardous Materials, and all handling, production or disposal of any
Hazardous Materials by Borrowers has been conducted in compliance with all
applicable Environmental Laws, all laws and regulations relating to health and
safety matters and all orders, licenses, permits, certificates, approvals and
similar authorizations relating thereto.
(c) Borrowers have no material liability (contingent or otherwise) in
connection with (i) a release, spill or discharge, threatened or actual, of any
Hazardous Materials, (ii) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials or (iii) any service or remediation performed by any Borrower at any
location.
(d) Borrowers have obtained and are in material compliance with all
licenses, permits, certificates, approvals or similar authorizations required in
connection with the operations of Borrowers under any Environmental Law and, to
the best of Borrowers' knowledge, all of such licenses, permits, certificates,
approvals or similar authorizations are valid and in full force and effect.
30
8.9 Employee Benefits.
(a) Borrowers have not engaged in any transaction in connection with
which any Borrower or any of its ERISA Affiliates could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, including any accumulated funding deficiency described
in Section 8.9(c) hereof and any deficiency with respect to vested accrued
benefits described in Section 8.9(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has been or
is expected by Borrowers to be incurred with respect to any employee pension
benefit plan of any Borrower or any of its ERISA Affiliates. There has been no
reportable event (within the meaning of Section 4043(b) of ERISA) or any other
event or condition with respect to any employee pension benefit plan of any
Borrower or any of its ERISA Affiliates which presents a risk of termination of
any such plan by the Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which any Borrower or any
of its ERISA Affiliates is required under Section 302 of ERISA and Section 412
of the Code to have paid under the terms of each employee pension benefit plan
as contributions to such plan as of the last day of the most recent fiscal year
of such plan ended prior to the date hereof, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any employee pension benefit plan,
including any penalty or tax described in Section 8.9(a) hereof and any
deficiency with respect to vested accrued benefits described in Section 8.9(d)
hereof.
(d) The current value of all vested accrued benefits under all employee
pension benefit plans maintained by Borrowers that are subject to Title IV of
ERISA does not exceed the current value of the assets of such plans allocable to
such vested accrued benefits, including any penalty or tax described in Section
8.9(a) hereof and any accumulated funding deficiency described in Section 8.9(c)
hereof. The terms "current value" and "accrued benefit" have the meanings
specified in ERISA.
(e) No Borrower nor any ERISA Affiliates thereof is or has ever been
obligated to contribute to any "multiemployer plan" (as such term is defined in
Section 4001(a)(3) of ERISA) that is subject to Title IV of ERISA.
8.10 Interrelated Businesses. (a) Parent owns beneficially and of record all
the outstanding capital stock of each Borrower, subject to no liens or
encumbrances of any kind; (b) the financial condition and business prospects of
each Borrower are of direct economic benefit to the other Borrowers; and (c)
each Borrower's access to the financing arrangements through Lender
significantly enhances its own financial condition and business prospects and,
consequently, directly benefits all other Borrowers.
8.11 Real Property. Borrowers have not received any notice of nor do they have
any reason to believe that there is any basis for any claim by any third party
regarding any encroachment, boundary dispute or violation of any easement or
restriction on or serving any of
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the Real Property located in Braintree, Weymouth or Natick, Massachusetts.
Notwithstanding the foregoing, Lender reserves the right at any time in its
discretion, (a) upon and following a Default or an Event of Default, or (b) any
time that the Excess Availability is less than $4,500,000.00, to require that
Borrowers cause instrument surveys to be conducted with respect to such the Real
Property and that Borrowers obtain title insurance endorsements deleting the
survey exceptions from the title policies furnished to Lender on the date
hereof; provided, however, that Lender may at any time require an instrument
survey and such title insurance endorsements with respect to any parcel of Real
Property if any third party claim is made or threatened.
8.12 Accuracy and Completeness of Information. All information furnished by or
on behalf of Borrowers in writing to Lender in connection with this Agreement or
any of the other Financing Agreements or any transaction contemplated hereby or
thereby, including, without limitation, all information on the Information
Certificates is true and correct in all material respects on the date as of
which such information is dated or certified and does not omit any material
fact necessary in order to make such information not misleading. No event or
circumstance has occurred which has had or could reasonably be expected to have
a material adverse affect on the business, assets or prospects of Borrowers,
which has not been fully and accurately disclosed to Lender in writing.
8.13 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Lender on the date of each additional borrowing or other
credit accommodation hereunder and shall be conclusively presumed to have been
relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrowers shall now or hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
9.1 Maintenance of Existence. Each Borrower shall at all times preserve,
renew and keep in full force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted. Each Borrower shall give Lender thirty (30) days prior written notice
of any proposed change in its corporate name, which notice shall set forth the
new name and such Borrower shall deliver to Lender a copy of the amendment to
the Certificate of Incorporation, Articles of Organization or other charter
document of such Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation of Borrower as soon as
it is available.
9.2 New Collateral Locations. Borrowers may open any new location within the
continental United States provided (a) Borrowers give Lender written notice (i)
thirty (30) days
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prior to the intended opening of any such new location where the value of the
Collateral located or to be located at such location does or will equal or
exceed $100,000 and (ii) within ten (10) days of the opening of any new location
where the value of the Collateral located or to be located at such location is
less than $100,000 and (b) execute and deliver, or cause to be executed and
delivered, to Lender such agreements, documents, and instruments as Lender may
deem reasonably necessary or desirable to protect its interests in the
Collateral at such location, including, without limitation, UCC financing
statements.
9.3 Compliance with Laws, Regulations, Etc. Each Borrower shall, at all
times, comply in all material respects with all laws, rules, regulations,
licenses, permits, approvals and orders applicable to it and duly observe all
requirements of any Federal, State or local governmental authority, including,
without limitation, the Employee Retirement Security Act of 1974, as amended,
the Occupational Safety and Hazard Act of 1970, as amended, the Fair Labor
Standards Act of 1938, as amended, and all statutes, rules, regulations, orders,
permits and stipulations relating to environmental pollution and employee health
and safety, including, without limitation, all of the Environmental Laws, if
failure to so comply could result in the imposition of substantial fines or
penalties or otherwise materially and adversely affect the business, assets or
prospects of the Borrowers on a consolidated basis.
(a) Each Borrower shall establish and maintain, at its expense, a system
and policies to assure and monitor its continued compliance with all
Environmental Laws in all of its operations, which system and policies shall
include periodic reviews of such compliance by employees or agents of Borrowers
who are familiar with the requirements of the Environmental Laws. Copies of all
such periodic reviews shall be made available by Borrowers for inspection by
Lender and, upon Lender's request, copies of all environmental reviews, surveys,
audits, assessments, feasibility studies and results of remedial investigations
shall be promptly furnished, or caused to be furnished, by Borrowers to Lender.
Borrowers shall take prompt and appropriate action to respond to any non-
compliance with any of the Environmental Laws and shall regularly report to
Lender on such response.
(b) Borrowers shall give both oral and written notice to Lender promptly
upon any Borrower's receipt of any notice of, or any Borrower's otherwise
obtaining knowledge of, any of the following which could result in the
imposition of substantial fines or penalties or otherwise materially and
adversely affect the business, assets or prospects of the Borrowers on a
consolidated basis: (i) the occurrence of any event involving the release, spill
or discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by any Borrower or (B) the release, spill or discharge,
threatened or actual, of any Hazardous Material or (C) the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Material in a manner that is not in compliance with
Environmental Laws or any order, license, permit, certificate, approval or
similar authorization relating thereto, (D) any other environmental, health or
safety matter, which may materially and adversely affect any Borrower or its
business, operations or assets, or (E) any properties at which any Borrower
transported, stored or disposed of any Hazardous Materials.
33
(c) Without limiting the generality of the foregoing, whenever Lender
reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of any Borrower in order to avoid any
material non-compliance, with any Environmental Law which could result in the
imposition of substantial fines or penalties or otherwise materially and
adversely affect the business, assets or prospects of the Borrowers on a
consolidated basis, Borrowers shall, at Lender's request and Borrowers' expense:
(i) cause an independent environmental engineer acceptable to Lender to conduct
such assessments, investigations or tests of the site where any Borrower's non-
compliance or alleged non-compliance with such Environmental Laws has occurred
as to such non-compliance and prepare and deliver to Lender a report as to such
non-compliance setting forth the results of such tests, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof and (ii) provide to Lender a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
(d) Borrowers shall maintain in full force and effect all orders,
licenses, permits, certificates, approvals and similar authorizations necessary
or appropriate for the conduct of their business, unless the failure to have or
maintain the same will not have a material adverse effect on the business assets
or prospects of Borrowers on a consolidated basis, and shall promptly give
notice to Lender of any rescission, termination, lapse, breach (including all
citations, fines or notices of non-compliance), modification or amendment
thereof which might have a material adverse effect on the business, assets or
prospects of Borrowers on a consolidated basis.
(e) Each Borrower shall indemnify and hold harmless Lender, its
directors, officers, employees, agents, invitees, representatives, successors
and assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including attorneys' fees and legal expenses) directly or
indirectly arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal
or presence of a Hazardous Material, including, without limitation, the costs of
any required or necessary repair, cleanup or other remedial work with respect to
any property of any Borrower and the preparation and implementation of any
closure, remedial or other required plans or any actions of Lender relating
thereto.
(f) Borrowers acknowledge and agree that neither the Financing Agreements
or the actions of Lender pursuant thereto shall operate or be deemed (i) to
place upon Lender any responsibility for the operation, control, care, service,
management, maintenance or repair of property or facilities of Borrowers or (ii)
to make Lender the "owner" or "operator" of any property or facilities of
Borrowers or a "responsible party" within the meaning of applicable
Environmental Laws. For purposes of this Section 9.3, "substantial fines or
penalties" will be determined based upon fines or penalties that have been
assessed by governmental agencies or courts in other instances of noncompliance
or violation of Environmental Laws by similarly situated entities. All
representations, warranties, covenants and indemnifications in Sections 8.8
34
and 9.3 shall survive the payment of the Obligations and the termination or non-
renewal of this Agreement.
9.4 Payment of Taxes and Claims. Each Borrower shall duly pay and discharge
all taxes, assessments, contributions and governmental charges upon or against
it or its properties or assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrowers and with respect to which adequate reserves have been set
aside on its books. Borrowers shall be liable for any tax or penalties imposed
on Lender as a result of the financing arrangements provided for herein and
Borrowers agree to indemnify and hold Lender harmless with respect to the
foregoing, and to repay to Lender on demand the amount thereof, and until paid
by Borrowers such amount shall be added and deemed part of the Loans, provided,
that, nothing contained herein shall be construed to require Borrowers to pay
any income or franchise taxes attributable to the income of Lender from any
amounts charged or paid hereunder to Lender. The foregoing indemnity shall
survive the payment of the Obligations and the termination or non-renewal of
this Agreement.
9.5 Insurance. Borrowers shall, at all times, maintain with financially sound
and reputable insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts customarily
insured against or carried by corporations of established reputation engaged in
the same or similar businesses and similarly situated. Said policies of
insurance shall be satisfactory to Lender as to form, amount and insurer.
Borrowers shall furnish certificates, policies or endorsements to Lender as
Lender shall require as proof of such insurance, and, if Borrowers fail to do
so, Lender is authorized, but not required, to obtain such insurance at the
expense of Borrowers. All policies shall provide for at least thirty (30) days
prior written notice to Lender of any cancellation or reduction of coverage and
that Lender may act as attorney for Borrower in obtaining, and at any time an
Event of Default exists or has occurred and is continuing, adjusting, settling,
amending and canceling such insurance. Borrowers shall cause Lender to be named
as a loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and Borrowers shall obtain non-
contributory lender's loss payable endorsements to all insurance policies in
form and substance satisfactory to Lender. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Lender as its interests may appear and further specify that Lender shall be
paid regardless of any act or omission by Borrowers or any of their affiliates.
At its option, Lender may apply any insurance proceeds received by Lender at any
time to the cost of repairs or replacement of Collateral and/or to payment of
the Obligations, whether or not then due, in any order and in such manner as
Lender may determine or hold such proceeds as cash collateral for the
Obligations.
9.6 Financial Statements and Other Information.
(a) Borrowers shall keep proper books and records in which true and
complete entries shall be made of all dealings or transactions of or in relation
to the Collateral and the business of Borrowers and their and its subsidiaries
(if any) in accordance with GAAP and Borrowers shall furnish or cause to be
furnished to Lender: (i) within thirty (30) days after the end of each fiscal
month (or forty-five (45) days, if such month is the last month of a fiscal
35
quarter), monthly unaudited consolidated financial statements, and, unaudited
consolidating financial statements (including in each case balance sheets,
statements of income and loss and statements of shareholders' equity), all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Parent, Borrowers and their respective subsidiaries as of the
end of and through such fiscal month and (ii) within ninety (90) days after the
end of each fiscal year, audited consolidated financial statements and, audited
consolidating financial statements of Parent, Borrower and their subsidiaries
(including in each case balance sheets, statements of income and loss,
statements of cash flow and statements of shareholders' equity), and the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and the results of the operations of Parent, Borrowers and
their respective subsidiaries as of the end of and for such fiscal year,
together with the opinion of independent certified public accountants, which
accountants shall be an independent accounting firm selected by Parent and
Borrowers and reasonably acceptable to Lender, that such financial statements
have been prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Parent, Borrowers and their respective
subsidiaries as of the end of and for the fiscal year then ended.
(b) Borrowers shall promptly notify Lender in writing of the details of
(i) any material loss, damage, investigation, action, suit, proceeding or claim
relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in any
Borrower's business, properties, assets, goodwill or condition, financial or
otherwise and (ii) the occurrence of any Event of Default or event which, with
the passage of time or giving of notice or both, would constitute an Event of
Default.
(c) Borrowers shall promptly after the sending or filing thereof furnish
or cause to be furnished to Lender copies of all reports which Parent sends to
its stockholders generally and copies of all reports and registration statements
which Parent or any Borrower files with the Securities and Exchange Commission,
any national securities exchange or the National Association of Securities
Dealers, Inc.
(d) Borrowers shall furnish or cause to be furnished to Lender such
budgets, forecasts, projections and other information respecting the Collateral
and the business of Borrowers, as Lender may, from time to time, reasonably
request. Lender is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business of Borrowers to any
court or other government agency or to any participant or assignee or
prospective participant or assignee. Borrowers hereby irrevocably authorize and
direct all accountants or auditors to deliver to Lender, at Borrowers' expense,
copies of the financial statements of Borrowers and any reports or management
letters prepared by such accountants or auditors on behalf of Borrowers and to
disclose to Lender such information as they may have regarding the business of
Borrowers. Any documents, schedules, invoices or other papers delivered to
Lender may be destroyed or otherwise disposed of by Lender one (1) year after
the same are delivered to Lender, except as otherwise designated by Borrowers to
Lender in writing.
(e) Borrowers shall provide to Lender, on a monthly basis or more
frequently as Lender may request, a Compliance Certificate in the form attached
as Exhibit B hereto,
36
substantiating Parent's and Borrowers' continuing compliance (noncompliance)
with the covenants set forth in Sections 4.03, 4.04 and 4.05 of the Senior
Unsecured Notes Indenture.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrowers shall
not, directly or indirectly, (a) merge into or with or consolidate with any
other Person or permit any other Person to merge into or with or consolidate
with any Borrower (except for merger or consolidations among Borrowers and
mergers of subsidiaries of Borrowers into Borrowers), or (b) sell, assign,
lease, transfer, abandon or otherwise dispose of any stock or indebtedness to
any other Person or any of their assets to any other Person (except for the
disposition of worn-out or obsolete Equipment or Equipment no longer used in the
business of Borrowers so long as (i) if an Event of Default exists or has
occurred and is continuing, any proceeds are paid to Lender and (ii) such sales
do not involve Equipment having an aggregate fair market value in excess of
$500,000.00 for all such Equipment disposed of in any fiscal year of Borrowers),
or (c) form or acquire any subsidiaries, or (d) wind up, liquidate or dissolve
or (e) agree to do any of the foregoing.
9.8 Encumbrances. Borrowers shall not create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or other encumbrance
of any nature whatsoever on any of its assets or properties, including, without
limitation, the Collateral, except: (a) liens and security interests of Lender;
(b) liens securing the payment of taxes, either not yet overdue or the validity
of which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrowers and with respect to which adequate reserves
have been set aside on its books; (c) non-consensual statutory liens (other than
liens securing the payment of taxes or clean-up, containment, removal,
remediation or restoration of property of Borrowers or their subsidiaries under
any applicable Environmental Laws) arising in the ordinary course of Borrowers'
business to the extent: (i) such liens secure indebtedness which is not overdue
or (ii) such liens secure indebtedness relating to claims or liabilities which
(subject to normal deductibles) are fully insured and being defended at the sole
cost and expense and at the sole risk of the insurer or being contested in good
faith by appropriate proceedings diligently pursued and available to Borrowers,
in each case prior to the commencement of foreclosure or other similar
proceedings and with respect to which adequate reserves have been set aside on
their books; (d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of any Real Property which do not interfere in
any material respect with the use of such Real Property or ordinary conduct of
the business of Borrower as presently conducted thereon or materially impair the
value of the real property which may be subject thereto; (e) pledges or deposits
under workers' compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of indebtedness) or leases to which a Borrower is a
party, or deposits to secure public or statutory obligations of a Borrower or
deposits or cash or United States government bonds to secure surety or appeal
bonds to which a Borrower is a party, or deposits as security for contested
taxes or import duties or for the payment of rent, in each case incurred in the
ordinary course of business; (f) purchase money security interests in Equipment
(including capital leases) and purchase money mortgages on real estate not to
exceed $5,000,000 in the aggregate at any time outstanding so long as such
security interests and mortgages do not apply to any property of Borrower other
than the Equipment or real estate so acquired, and the indebtedness secured
thereby does not exceed the cost of the
37
Equipment or real estate so acquired, as the case may be; and (g) the security
interests and liens set forth on Schedule 8.4 hereto. This covenant is not
intended to restrict Borrowers from entering into operating leases, as
determined in accordance with GAAP.
9.9 Indebtedness. Borrowers shall not incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any indebtedness,
except (a) the Obligations; (b) trade obligations and normal accruals in the
ordinary course of business not yet due and payable, or with respect to which
the Borrowers are contesting in good faith the amount or validity thereof by
appropriate proceedings diligently pursued and available to Borrowers, and with
respect to which adequate reserves have been set aside on their books; (c) lease
obligations or purchase money indebtedness (including capital leases) to the
extent not incurred or secured by liens (including capital leases) in violation
of any other provision of this Agreement; (d) indebtedness to the Parent
(provided that the repayment thereof shall be subject to the limitations on
distributions set forth in Schedule 9.11 as if such payments were distributions)
and other Borrowers incurred in the ordinary course of Borrowers' business; (e)
guaranty, suretyship or indemnification obligations in connection with the
Borrowers' performance of services in the ordinary course of business; and (f)
obligations or indebtedness described in notes 9 and 10 to the audited financial
statements of the Parent for the year ended December 31, 1994 (exclusive of the
indebtedness described in such notes under the Borrowers' former revolving
credit agreement); provided, that, (i) Borrowers may only make regularly
scheduled payments of principal and interest in respect of such indebtedness in
accordance with the terms of the agreement or instrument evidencing or giving
rise to such indebtedness as in effect on the date hereof, (ii) Borrowers shall
not, directly or indirectly, (A) amend, modify, alter or change the terms of
such indebtedness or any agreement, document or instrument related thereto as in
effect on the date hereof, or (B) redeem, retire, defease, purchase or otherwise
acquire such indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose (except as otherwise permitted in this Agreement), and (iii)
Borrowers shall furnish to Lender all notices or demands in connection with such
indebtedness either received by any Borrower or on its behalf, promptly after
the receipt thereof, or sent by any Borrower or on its behalf, concurrently with
the sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc. Borrowers shall not, directly or
indirectly, make any loans or advance money or property to any person, or invest
in (by capital contribution, dividend or otherwise) or purchase or repurchase
the stock or indebtedness or all or a substantial part of the assets or property
of any person, or guarantee, assume, endorse, or otherwise become responsible
for (directly or indirectly) the indebtedness, performance, obligations or
dividends of any Person or agree to do any of the foregoing, except: (a) the
endorsement of instruments for collection or deposit in the ordinary course of
business; (b) investments in: (i) short-term direct obligations of the United
States Government, (ii) negotiable certificates of deposit issued by any bank
satisfactory to Lender, payable to the order of the Borrower or to bearer and
delivered to Lender, and (iii) commercial paper rated A1 or P1; provided, that,
as to any of the foregoing, unless waived in writing by Lender, Borrowers shall
take such actions as are deemed necessary by Lender to perfect the security
interest of Lender in such investments; (c) the guarantees set forth in the
Information Certificates; and (d) guarantees and loans among Borrowers entered
into in the ordinary course of Borrowers' business.
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9.11 Dividends and Redemptions. Borrowers shall not, directly or indirectly,
declare or pay any dividends on account of any shares of class of capital stock
of Borrower now or hereafter outstanding, or set aside or otherwise deposit or
invest any sums for such purpose, or redeem, retire, defease, purchase or
otherwise acquire any shares of any class of capital stock (or set aside or
otherwise deposit or invest any sums for such purpose) for any consideration
other than common stock or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing, except as set forth on Schedule 9.11
hereto.
9.12 Transactions with Affiliates. Borrowers shall not enter into any
transaction for the purchase, sale or exchange of property or the rendering of
any service to or by any affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of Borrowers' business and upon fair and
reasonable terms no less favorable to Borrowers than Borrowers would obtain in a
comparable arm's length transaction with an unaffiliated person.
9.13 Working Capital. Parent shall, from the date hereof to the Reset Date (as
herein defined), maintain Working Capital of not less than $12,500,000.00.
Parent shall, at all times from and following the Reset Date, maintain Working
Capital of not less than an amount, as determined by Lender, equal to (a) the
Working Capital of Parent as shown on its management prepared balance sheet as
at June 30, 1995, minus (b) the Borrowers' Excess Availability as at June 30,
1995. Borrower shall furnish such balance sheet to Lender on or before July 28,
1995. The Reset Date shall be the date on which Lender notifies CHES of its
determination of the changed Working Capital and Net Worth covenants under
Sections 9.13 and 9.14.
9.14 Adjusted Net Worth. Parent shall, from the date hereof to the Reset Date
(as herein defined), maintain Adjusted Net Worth of not less than
$20,000,000.00. Parent shall, at all times from and following the Reset Date,
maintain Adjusted Net Worth of not less than an amount, as determined by Lender,
equal to (a) the Adjusted Net Worth of Parent as shown on its management
prepared balance sheet as at June 30, 1995, minus (b) the Borrowers' Excess
Availability as at June 30, 1995.
9.15 Compliance with ERISA. Borrowers shall not with respect to any "employee
pension benefit plans" maintained by any Borrower or any of its ERISA
Affiliates:
(i) terminate any of such employee pension benefit plans so as to incur
any liability to the Pension Benefit Guaranty Corporation established pursuant
to ERISA, (ii) allow or suffer to exist any prohibited transaction involving any
of such employee pension benefit plans or any trust created thereunder which
would subject any Borrower or such ERISA Affiliate to a tax or penalty or other
liability on prohibited transactions imposed under Section 4975 of the Code or
ERISA, (iii) fail to pay to any such employee pension benefit plan any
contribution which it is obligated to pay under Section 302 of ERISA, Section
412 of the Code or the terms of such plan, (iv) allow or suffer to exist any
accumulated funding deficiency, whether or not waived, with respect to any such
employee pension benefit plan, (v) allow or suffer to exist any occurrence of a
reportable event or any other event or condition which presents a material risk
of
39
termination by the Pension Benefit Guaranty Corporation of any such employee
pension benefit plan that is a single employer plan, which termination could
result in any liability to the Pension Benefit Guaranty Corporation or (vi)
incur any withdrawal liability with respect to any multiemployer pension plan.
As used in this Section 9.15, the term "employee pension benefit plans,"
"employee benefit plans", "accumulated funding deficiency" and "reportable
event" shall have the respective meanings assigned to them in ERISA, and the
term "prohibited transaction" shall have the meaning assigned to it in Section
4975 of the Code and ERISA.
9.16 Costs and Expenses. Borrowers shall pay to Lender on demand all costs,
expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including, but not limited to: (a)
all costs and expenses of filing or recording (including Uniform Commercial Code
financing statement filing taxes and fees, documentary taxes, intangibles taxes
and mortgage recording taxes and fees, if applicable); (b) all title insurance
and other insurance premiums, environmental audits, surveys, assessments,
engineering reports and inspections, appraisal fees and search fees; (c) costs
and expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Lender's customary charges and fees with respect thereto; (d) customary
issuance, transfer and other charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations; (e) costs and
expenses of preserving and protecting the Collateral; (f) costs and expenses
paid or incurred in connection with obtaining payment of the Obligations,
enforcing the security interests and liens of Lender, selling or otherwise
realizing upon the Collateral, and otherwise enforcing the provisions of this
Agreement and the other Financing Agreements or defending any claims made or
threatened against Lender arising out of the transactions contemplated hereby
and thereby (including, without limitation, preparations for and consultations
concerning any such matters); (g) all out-of-pocket expenses and costs
heretofore and from time to time hereafter incurred by Lender during the course
of periodic field examinations of the Collateral and Borrower's operations, plus
a per diem charge at the rate of $600 per person per day for Lender's examiners
in the field and office; and (h) the fees and disbursements of counsel
(including legal assistants) to Lender and any Participant in connection with
any of the foregoing.
9.17 Further Assurances. At the request of Lender at any time and from time to
time, Borrowers shall, at their expense, duly execute and deliver, or cause to
be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Lender may
at any time and from time to time request a certificate from an officer of CHES
or any other Borrower representing that all conditions precedent to the making
of Loans and providing Letter of Credit
40
Accommodations contained herein are satisfied. In the event of such request by
Lender, Lender may, at its option, cease to make any further Loans or provide
any further Letter of Credit Accommodations until Lender has received such
certificate and, in addition, Lender has determined that such conditions are
satisfied. Where permitted by law, Borrowers hereby authorize Lender to execute
and file one or more UCC financing statements signed only by Lender.
9.18 Acquisition of Kimball, Nebraska Facility. Upon the acquisition by Buyer
pursuant to the Purchase Agreements of the facility and personal and real
property associated therewith in Kimball, Nebraska, Borrowers shall furnish to
Lender a Mortgage on such property, a title insurance policy satisfying the
conditions of Section 4.1(j) in the amount of $2,500,000 and such certificates
and documents as Lender may request confirming satisfaction of the conditions
precedent set forth in the Purchase Agreements.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
------------------------------
10.1 Events of Default. The occurrence or existence of any one or more of the
following events are referred to herein individually as an "Event of Default",
and collectively as "Events of Default":
(a) (i) Any Borrower fails to pay any of the Obligations (other than
third party fees and expenses as set forth in Section 10.1(a)(ii)) when the same
becomes due and payable, or (ii) any Borrower fails to pay any third party fees
or expenses of Lender within five (5) Business Days of the due date, or (iii)
any Borrower or any Obligor fails to perform any of the terms, covenants,
conditions or provisions contained in this Agreement or any of the other
Financing Agreements other than as described in Section 10.1(a)(i) or (ii) and
such failure shall continue for fourteen (14) days; provided, that, such
fourteen (14) day period shall not apply in the case of: (A) any failure to
observe any such term, covenant, condition or provision which is not capable of
being cured at all or within such fourteen (14) day period or which has been the
subject of a prior failure within a six (6) month period or (B) an intentional
breach by any Borrower or any Obligor of any such term, covenant, condition or
provision, or (C) the failure to observe or perform any of the covenants or
provisions contained in Sections 6, 7, 9.1, 9.5, 9.7, 9.13 or 9.14 of this
Agreement or any covenants or agreements covering substantially the same matters
as such specified sections in any of the other Financing Agreements; or
(b) any representation, warranty or statement of fact made by any
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of the terms,
covenants, conditions or provisions of any guarantee, endorsement or other
agreement of such party in favor of Lender;
41
(d) any judgment for the payment of money is rendered against any
Borrower or any Obligor in excess of $100,000.00 in any one case or in excess of
$250,000.00 in the aggregate (after deducting any undisputed insurance coverage)
and shall remain undischarged or unvacated for a period in excess of thirty (30)
days or execution shall at any time not be effectively stayed, or any judgment
other than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against Borrower or any Obligor or any of their assets
which has a material adverse effect on the business, assets or prospects of
Borrowers on a consolidated basis;
(e) any Borrower or any Obligor, which is a partnership or corporation,
dissolves or suspends or discontinues doing business;
(f) any Borrower or any Obligor becomes insolvent (however defined or
evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(g) a case or proceeding under the bankruptcy laws of the United States
of America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against any Borrower or any Obligor or all or any part of its properties
and such petition or application is not dismissed within thirty (30) days after
the date of its filing or any Borrower or any Obligor shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United States
of America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by any Borrower or any Obligor or for all or any part of its property; or
(i) any default by any Borrower or any Obligor under any agreement,
document or instrument relating to any indebtedness for borrowed money owing to
any person other than Lender, or any capitalized lease obligations, contingent
indebtedness in connection with any guarantee, letter of credit, indemnity or
similar type of instrument in favor of any person other than Lender, in any case
in an amount in excess of $100,000.00, which default continues for more than the
applicable cure period, if any, with respect thereto, or any default by any
Borrower or any Obligor under any material contract, lease, license or other
obligation to any person other than Lender, which default continues for more
than the applicable cure period, if any, with respect thereto;
(j) any change in the ownership of any Borrower or in the controlling
ownership of Parent;
42
(k) the indictment or threatened indictment of any Borrower or any
Obligor under any criminal statute, or commencement or threatened commencement
of criminal or civil proceedings against any Borrower or any Obligor, pursuant
to which statute or proceedings the penalties or remedies sought or available
include forfeiture of any of the property of any Borrower or such Obligor;
(l) there shall be a default under the Senior Unsecured Notes Indenture,
Senior Unsecured Notes or under any of the agreements, instruments or documents
relating thereto;
(m) there shall be a default under the MCRC Notes or the Exchange
Agreement pursuant to which the MCRC Notes were issued or under any of the
agreements, instruments or documents relating thereto;
(n) there shall be a material adverse change in the business, assets or
prospects of any Borrower or any Obligor after the date hereof; or
(o) there shall be an event of default under any of the other Financing
Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and
other applicable law, all of which rights and remedies may be exercised without
notice to or consent by any Borrower or any Obligor, except as such notice or
consent is expressly provided for hereunder or required by applicable law. All
rights, remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by any Borrower of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly against any Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrowers, at Borrowers' expense, to
assemble and make available to Lender any part or all of the Collateral at any
place and time designated by Lender, (iv) collect, foreclose, receive,
appropriate, setoff and
43
realize upon any and all Collateral, (v) remove any or all of the Collateral
from any premises on or in which the same may be located for the purpose of
effecting the sale, foreclosure or other disposition thereof or for any other
purpose, (vi) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including, without limitation, entering into contracts with
respect thereto, public or private sales at any exchange, broker's board, at any
office of Lender or elsewhere) at such prices or terms as Lender may deem
reasonable, for cash, upon credit or for future delivery, with the Lender having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
Borrowers, which right or equity of redemption is hereby expressly waived and
released by Borrowers and/or (vii) terminate this Agreement. If any of the
Collateral is sold or leased by Lender upon credit terms or for future delivery,
the Obligations shall not be reduced as a result thereof until payment therefor
is finally collected by Lender. If notice of disposition of Collateral is
required by law, five (5) days prior notice by Lender to Borrowers designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower waives any other notice. In the event
Lender institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, each Borrower waives the posting of any
bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually received by
Lender from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in such order as Lender
may elect, whether or not then due and regardless of the adequacy of any
Collateral. Borrowers shall remain liable to Lender for the payment of any
deficiency with interest at the highest rate provided for herein and all costs
and expenses of collection or enforcement, including attorneys' fees and legal
expenses.
(d) Without limiting the foregoing, upon the occurrence of a Default or
an Event of Default, Lender may, at its option, without notice, (i) cease making
Loans or arranging for Letter of Credit Accommodations or reduce the lending
formulas or amounts of Revolving Loans and Letter of Credit Accommodations
available to Borrowers and/or (ii) terminate any provision of this Agreement
providing for any future Loans or Letter of Credit Accommodations to be made by
Lender to Borrowers.
(e) Whether or not any Borrower is or all Borrowers are then insolvent,
and whether or not any deficiency balance is anticipated, any rights of the
Lender hereunder may be exercised by a court appointed receiver. In connection
therewith, such a receiver shall be appointed upon a petition, motion, or
application filed by the Lender with any court of competent jurisdiction and,
effective after the occurrence and during the continuation of an Event of
Default. Each Borrower hereby irrevocably consents to and approves, without
prior notice or hearing, the immediate appointment of a receiver (in connection
with a foreclosure action or otherwise) and waives any right to object thereto
without regard to the value of the Collateral or the adequacy of any Collateral.
(f) As the subject matter of this Agreement involves general intangibles
such as permits, licenses, certificates, approvals, and authorizations by
governmental authorities which by their nature are
44
unique, the Borrowers agree and acknowledge that their failure to observe the
provisions hereof will cause irreparable harm to the Lender for which there is
no adequate remedy at law and so the provisions hereof shall be specifically
enforceable by Lender in a court of equity by injunctive relief without any
requirement for Lender to provide a bond or other security or prove or allege
that its remedies at law are inadequate.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
------------------------------------------------------------
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the Commonwealth of Massachusetts
(without giving effect to principles of conflicts of law).
(b) each Borrower and Lender irrevocably consent and submit to the non-
exclusive jurisdiction of the Courts of the Commonwealth of Massachusetts and
the United States District Court for the District of Massachusetts and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Lender shall have the
right to bring any action or proceeding against any Borrower or its property in
the courts of any other jurisdiction which Lender deems necessary or appropriate
in order to realize on the Collateral or to otherwise enforce its rights against
Borrower or its property).
(c) Each Borrower hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified
mail (return receipt requested) directed to its address set forth on the
signature pages hereof and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Lender's option, by service upon Borrowers in any other manner provided under
the rules of any such courts. Within thirty (30) days after such service,
Borrowers shall appear in answer to such process, failing which Borrowers shall
be deemed in default and judgment may be entered by Lender against Borrowers for
the amount of the claim and other relief requested.
(d) EACH BORROWER AND LENDER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY
OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR
ANY
45
OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. EACH BORROWER AND LENDER HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT ANY BORROWER OR LENDER MAY FILE ANO
RIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(e) (i) Lender shall not have any liability to Borrowers (whether in
tort, contract, equity or otherwise) for losses suffered by any Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and non-
appealable judgment or court order binding on Lender, that the losses were the
result of acts or omissions constituting gross negligence or willful misconduct.
In any such litigation, Lender shall be entitled to the benefit of the
rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement.
(ii) The exercise by Lender of any one or more of the rights and
remedies set forth herein shall not operate or be deemed (A) to place upon
Lender any responsibility for the operation, control, care, service, management,
maintenance or repair of any property or facilities of Borrowers, or (B) make
Lender the "owner" or "operator" of any property or facilities of Borrowers or a
"responsible party" within the meaning of applicable Environmental Laws.
11.2 Waiver of Notices. Each Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on any Borrower which Lender may elect to give shall entitle any
Borrower to any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision hereof
shall be amended, modified, waived or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of Lender.
Lender shall not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its rights, powers and/or remedies unless
such waiver shall be in writing and signed by an authorized officer of Lender.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
46
11.4 Waiver of Counterclaims. Each Borrower waives all rights to interpose any
claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Each Borrower shall indemnify and hold Lender, and its
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses imposed on, incurred by
or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrowers shall pay the maximum portion which
it is permitted to pay under applicable law to Lender in satisfaction of
indemnified matters under this Section. The foregoing indemnity shall survive
the payment of the Obligations and the termination or non-renewal of this
Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
--------------------------------
12.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date three (3) years from the
date hereof (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof; provided, that, Lender may, at
its option, extend the Renewal Date to the date four (4) years from the date
hereof by giving Borrower notice at least one hundred twenty (120) days prior to
the third anniversary of this Agreement. Lender or Borrower (subject to Lender's
right to extend the Renewal Date as provided above) may terminate this Agreement
and the other Financing Agreements effective on the Renewal Date or on the
anniversary of the Renewal Date in any year by giving to the other party at
least one hundred twenty (120) days prior written notice; provided, that, this
Agreement and all other Financing Agreements must be terminated simultaneously.
Upon the effective date of termination or non-renewal of the Financing
Agreements, Borrower shall pay to Lender, in full, all outstanding and unpaid
Obligations and shall furnish cash collateral or a letter of credit, from a bank
and in form acceptable to Lender, to Lender in such amounts as Lender determines
are reasonably necessary to secure Lender from loss, cost, damage or expense,
including attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Lender has not yet received final and indefeasible payment. Such cash
collateral shall be remitted by wire transfer in Federal funds to such bank
account of Lender, as Lender may, in its discretion, designate in writing to
Borrower
47
for such purpose. Interest shall be due until and including the next business
day, if the amounts so paid by Borrower to the bank account designated by Lender
are received in such bank account later than 12:00 noon, Boston, Massachusetts
time.
(b) No termination of this Agreement or the other Financing Agreements
shall relieve or discharge Borrower of its respective duties, obligations and
covenants under this Agreement or the other Financing Agreements until all
Obligations have been fully and finally discharged and paid, and Lender's
continuing security interest in the Collateral and the rights and remedies of
Lender hereunder, under the other Financing Agreements and applicable law, shall
remain in effect until all such Obligations have been fully and finally
discharged and paid.
(c) If for any reason this Agreement is terminated prior to the end of
the then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's lost
profits as a result thereof, Borrower agrees to pay to Lender, upon the
effective date of such termination, an early termination fee in the amount set
forth below if such termination is effective in the period indicated:
Amount Period
------ ------
(i) 3% of Revolving Credit Limit May 8, 1995 to and including May 8, 1996
(ii) 2% of Revolving Credit Limit May 9, 1996 to and including May 8, 1997
(iii) 1% of Revolving Credit Limit May 9, 1997 to and including May 8, 1998
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower agrees
that it is reasonable under the circumstances currently existing. The
refinancing and repayment of the Term Loan through the issuance of pollution
control authority industrial revenue bonds shall not trigger the payment of the
early termination fee. The early termination fee provided for in this Section
12.1 shall be deemed included in the Obligations.
12.2 Notices. All notices, requests and demands hereunder shall be in writing
and (a) made to Lender at its address set forth below and to Borrowers at the
addresses set forth below, or to such other address as either party may
designate by written notice to the other in accordance with this provision, and
(b) deemed to have been given or made: if delivered in person, immediately upon
delivery; if by facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing.
12.3 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
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12.4 Successors. This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to the
benefit of and be enforceable by Lender, Borrowers and their respective
successors and assigns, except that Borrowers may not assign their rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Lender. Lender may,
after notice to Borrowers, assign its rights and delegate its obligations under
this Agreement and the other Financing Agreements and further may assign, or
sell participations in, all or any part of the Loans, the Letter of Credit
Accommodations or any other interest herein to another financial institution or
other person, in which event, the assignee or participant shall have, to the
extent of such assignment or participation, the same rights and benefits as it
would have if it were the Lender hereunder, except as otherwise provided by the
terms of such assignment or participation.
12.5 Participant's Security Interest. If a Participant shall at any time
participate with Lender in the Loans, Letter of Credit Accommodations or other
Obligations, Borrowers hereby grant to such Participant and such Participant
shall have and is hereby given, a continuing lien on and security interest in
any money, securities and other property of Borrowers in the custody or
possession of the Participant, including the right of setoff, to the extent of
the Participant's participation in the Obligations and regardless of the
adequacy of any Collateral, and such Participant shall be deemed to have the
same right of setoff to the extent of its participation in the Obligations, as
it would have if it were a direct lender.
12.6 Confidentiality.
(a) Lender shall use all reasonable efforts to keep confidential, in
accordance with its customary procedures for handling confidential information
and safe and sound lending practices, any non-public information supplied to it
by Borrower pursuant to this Agreement which is clearly and conspicuously marked
as confidential at the time such information is furnished by Borrowers to
Lender, provided, that, nothing contained herein shall limit the disclosure of
any such information: (i) to the extent required by statute, rule, regulation,
subpoena or court order, (ii) to bank examiners and other regulators, auditors
and/or accountants, (iii) in connection with any litigation to which Lender is a
party, (iv) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee or
participant) shall have first agreed in writing to treat such information as
confidential in accordance with this Section 12.6, or (v) to counsel for Lender
or any participant or assignee (or prospective participant or assignee).
(b) In no event shall this Section 12.6 or any other provision of this
Agreement or applicable law be deemed: (i) to apply to or restrict disclosure of
information that has been or is made public by Borrowers or any third party
without breach of this Section 12.6 or otherwise become generally available to
the public other than as a result of a disclosure in violation hereof, (ii) to
apply to or restrict disclosure of information that was or becomes available to
Lender on a non-confidential basis from a person other than Borrowers, (iii)
require
49
Lender to return any materials furnished by Borrowers to Lender or (iv) prevent
Lender from responding to routine informational requests in accordance with the
Code of Ethics for the Exchange of Credit Information promulgated by The Robert
Morris Associates or other applicable industry standards relating to the
exchange of credit information. The obligations of Lender under this Section
12.6 shall supersede and replace the obligations of Lender under any
confidentiality letter signed prior to the date hereof.
12.7 Joint and Several Liability. All Loans made hereunder are made to or for
the benefit of each of the Borrowers. The Borrowers are jointly and severally,
directly and primarily liable for the full and indefeasible payment when due and
performance of all Obligations and for the prompt and full payment and
performance of all of the promises, covenants, representations, and warranties
made or undertaken by each Borrower under the Financing Agreements and Borrowers
agree that such liability is independent of the duties, obligations, and
liabilities of each of the joint and several Borrowers. In furtherance of the
foregoing, each Borrower jointly and severally, absolutely and unconditionally
guaranties to Lender and agrees to be liable for the full and indefeasible
payment and performance when due of all the Obligations.
12.8 Suretyship Waivers and Consents.
(a) Each Borrower acknowledges that the obligations of such Borrower
undertaken herein might be construed to consist, at least in part, of the
guaranty of obligations of persons other than such Borrower (including the other
Borrowers) and, in full recognition of that fact, each Borrower consents and
agrees that Lender may, at any time and from time to time, without notice or
demand (except as provided in and in accordance with the terms of this
Agreement), whether before or after any actual or purported termination,
repudiation or revocation of this Agreement by any Borrower, and without
affecting the enforceability or continuing effectiveness hereof as to each
Borrower: (i) increase, extend, or otherwise change the time for payment or the
terms of the Obligations or any part thereof; (ii) supplement, restate, modify,
amend, increase, decrease, or waive, or enter into or give any agreement,
approval or consent with respect to, the Obligations or any part thereof, or any
of the Financing Agreements or any additional security or guarantees, or any
condition, covenant, default, remedy, right, representation, or term thereof or
thereunder; (iii) accept new or additional instruments, documents, or agreements
in exchange for or relative to any of the Financing Agreements or the
Obligations or any part thereof; (iv) accept partial payments on the
Obligations; (v) receive and hold additional security or guarantees for the
Obligations or any part thereof; (vi) release, reconvey, terminate, waive,
abandon, fail to perfect, subordinate, exchange, substitute, transfer, or
enforce any security or guarantees, and apply any security and direct the order
or manner of sale thereof as Lender in its sole and absolute discretion may
determine; (vii) release any person from any personal liability with respect to
the Obligations or any part thereof; (viii) settle, release on terms
satisfactory to Lender or by operation of applicable laws or otherwise liquidate
or enforce any Obligations and any security therefor or guaranty thereof in any
manner, consent to the transfer of any security and bid and purchase at any
sale; or (ix) consent to the merger, change, or any other restructuring or
termination of the corporate or partnership existence of any Borrower, and
correspondingly restructure the Obligations, and any such merger, change,
restructuring, or termination shall not affect the liability of any Borrower or
the continuing
50
effectiveness hereof, or the enforceability hereof with respect to all or any
part of the Obligations.
(b) Lender may enforce this Agreement independently as to each Borrower
and independently of any other remedy or security Lender at any time may have or
hold in connection with the Obligations, and it shall not be necessary for
Lender to marshal assets in favor of any Borrower or any Obligor or to proceed
upon or against or exhaust any security or remedy before proceeding to enforce
this Agreement. Each Borrower expressly waives any right to require Lender to
marshal assets in favor of any Borrower or any guarantor of the Obligations or
to proceed against any other Borrower, and agrees that Lender may proceed
against Borrowers or any Collateral in such order as Lender shall determine in
its sole and absolute discretion.
(c) Lender may file a separate action or actions against any Borrower,
whether such action is brought or prosecuted with respect to any security or
against any guarantor of the Obligations, or whether any other person is joined
in any such action or actions. Each Borrower agrees that Lender and each
Borrower and any affiliate of any Borrower may deal with each other in
connection with the Obligations or otherwise, or alter any contracts or
agreements now or hereafter existing between any of them, in any manner
whatsoever, all without in any way altering or affecting the continuing efficacy
of this Agreement. Each Borrower, as a joint and several Borrower hereunder,
expressly waives the benefit of any statute of limitations affecting its joint
and several liability hereunder (but not its primary liability) or the
enforcement of the Obligations or any rights of Lender created or granted
herein.
(d) Lender's rights hereunder shall be reinstated and revived, and the
enforceability of this Agreement shall continue, with respect to any amount at
any time paid on account of the Obligations which thereafter shall be required
to be restored or returned by Lender, all as though such amount had not been
paid. The rights of Lender created or granted herein and the enforceability of
this Agreement at all times shall remain effective to cover the full amount of
all the Obligations even though the Obligations, including any part thereof or
any other security or guaranty therefor, may be or hereafter may become invalid
or otherwise unenforceable as against any Borrower and whether or not any
Borrower shall have any personal liability with respect thereto.
(e) Each Borrower expressly waives any and all defenses now or hereafter
arising or asserted by reason of (i) any disability or other defense of the
other Borrower with respect to the Obligations; (ii) the unenforceability or
invalidity of any security or guaranty for the Obligations or the lack of
perfection or continuing perfection or failure of priority of any security for
the Obligations; (iii) the cessation for any cause whatsoever of the liability
of the any Borrower (other than by reason of the full payment and performance of
all Obligations); (iv) any failure of Lender to marshall assets in favor of any
Borrower; (v) any failure of Lender to give notice to any Borrower of sale or
other disposition of Collateral of another Borrower or any defect in any notice
that may be given in connection with any such sale or disposition of Collateral
of any Borrower securing the Obligations; (vi) any failure of Lender to comply
with applicable law in connection with the sale or other disposition of any
Collateral or other security of any Borrower, for any Obligation, including any
failure of Lender to conduct a commercially
51
reasonable sale or other disposition of any Collateral or other security of the
other Borrower for any Obligation; (vii) any act or omission of Lender or others
that directly or indirectly results in or aids the discharge or release of the
other Borrower or the Obligations of the other Borrower or any security or
guaranty therefor by operation of law or otherwise; (viii) any law which
provides that the obligation of a surety or guarantor must neither be larger in
amount nor in other respects more burdensome than that of the principal or which
reduces a surety's or guarantor's obligation in proportion to the principal
obligation; (ix) any failure of Lender to file or enforce a claim in any
bankruptcy or other proceeding with respect to any Borrower; (x) the avoidance
of any lien or security interest in assets of the other Borrower in favor of
Lender for any reason; or (xi) any action taken by Lender that is authorized by
this section or any other provision of any Loan Document. Until such time, if
any, as all of the Obligations have been indefeasibly paid and performed in full
and no portion of any commitment of Lender to Borrowers under any Financing
Agreement remains in effect, Borrowers' rights of subrogation, contribution,
reimbursement, or indemnity against the other shall be fully and completely
subordinated to the indefeasible repayment in full of the Obligations, and each
Borrower expressly waives any right to enforce any remedy that it now has or
hereafter may have against any other Person and waives the benefit of, or any
right to participate in, any Collateral now or hereafter held by Lender.
(f) To the fullest extent permitted by applicable law, each Borrower
expressly waives and agrees not to assert, any and all defenses in its favor
based upon an election of remedies by Lender which destroys, diminishes, or
affects such Borrower's subrogation rights against the other Borrowers, or
against any Obligor, and/or (except as explicitly provided for herein) any
rights to proceed against each other Borrower, or any other party liable to
Lender, for reimbursement, contribution, indemnity, or otherwise.
(g) Borrowers and each of them warrant and agree that each of the waivers
and consents set forth herein are made after consultation with legal counsel and
with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy, or otherwise adversely affect rights which Borrowers
otherwise may have against each other, Lender, or others, or against Collateral,
and that, under the circumstances, the waivers and consents herein given are
reasonable and not contrary to public policy or law. If any of the waivers or
consents herein are determined to be contrary to any applicable law or public
policy, such waivers and consents shall be effective to the maximum extent
permitted by law.
12.9 Contribution Agreement. As an inducement to Lender to enter into the
Financing Agreements and to make the loans and extend credit to the Borrowers,
each Borrower and each Obligor agrees to indemnify and hold the other harmless
from and each shall have a continuing right of contribution against the other
Borrowers and any Obligors, if and to the extent that a Borrower makes or is
caused to make disproportionate payments in excess of that Borrower's
Proportionate Share of the Loans or contributions (from dispositions of its
assets or otherwise) to the repayment and satisfaction of the Obligations. These
indemnification and contribution obligations shall be unconditional and
continuing obligations of the Borrowers and Obligors and shall not be waived,
rescinded, modified, limited or terminated in any way whatsoever without the
prior written consent of Lender, in its sole discretion.
52
12.10 PREJUDGEMENT REMEDIES. EACH BORROWER HEREBY WAIVES SUCH RIGHTS AS IT MAY
HAVE TO NOTICE AND/OR HEARING UNDER ANY APPLICABLE FEDERAL OR STATE LAWS
INCLUDING, WITHOUT LIMITATION, CONNECTICUT GENERAL STATUTES SECTIONS 52-278A,
ET-SEQ., AS AMENDED, PERTAINING TO THE EXERCISE BY LENDER OF SUCH RIGHTS AS THE
LENDER MAY HAVE INCLUDING, BUT NOT LIMITED TO, THE RIGHT TO SEEK PREJUDGMENT
REMEDIES AND/OR DEPRIVE ANY BORROWER OF OR AFFECT THE USE OF OR POSSESSION OR
ENJOYMENT OF A BORROWER'S PROPERTY PRIOR TO THE RENDITION OF A FINAL JUDGMENT
AGAINST A BORROWER. EACH BORROWER FURTHER WAIVES ANY RIGHT IT MAY HAVE TO
REQUIRE LENDER TO PROVIDE A BOND OR OTHER SECURITY AS A PRECONDITION TO OR IN
CONNECTION WITH ANY PREJUDGMENT REMEDY SOUGHT BY LENDER.
12.11 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written.
IN WITNESS WHEREOF, Lender and Borrowers have caused these presents to be duly
executed as of the day and year first above written.
[SIGNATURES CONTINUED ON NEXT PAGE]
53
LENDER BORROWERS
------ ---------
CONGESS FINANCIAL CORPORATION CLEAN HARBORS ENVIRON-
(NEW ENGLAND) MENTAL SERVICES, INC.
By: __________________________ By: ______________________
Name:_____________________ Name: James A. Pitts
Title:____________________ Title: Vice President
Address: Chief Executive Office:
------- ----------------------
One Post Office Square 325 Wood Road
Boston, MA 02109 Braintree, MA 02184
CLEAN HARBORS TECHNOLOGY
CORPORATION
By: ______________________
Name: James A. Pitts
Title: Vice President
Chief Executive Office:
325 Wood Road
Braintree, MA 02184
CLEAN HARBORS KINGSTON
FACILITY CORPORATION
By: ______________________
Name: James A. Pitts
Title: Vice President
Chief Executive Office:
Joseph Street
Kingston, MA 02364
54
CLEAN HARBORS OF
BRAINTREE, INC.
By: ______________________
Name: James A. Pitts
Title: Vice President
Chief Executive Office:
325 Wood Road
Braintree, MA 02184
CLEAN HARBORS OF
CHICAGO, INC.
By: ______________________
Name: James A. Pitts
Title: Vice President
Chief Executive Office:
11800 South Stony Island Avenue
Chicago, IL 60617
CLEAN HARBORS OF NATICK, INC.
By: ______________________
Name: James A. Pitts
Title: Vice President
Chief Executive Office:
10 Mercer Road
Natick, MA 01760
55
CLEAN HARBORS OF
CONNECTICUT, INC.
By: ______________________
Name: James A. Pitts
Title: Vice President
Chief Executive Office:
51 Broderick Road
Bristol, CT 06010
MURPHY'S WASTE OIL
SERVICE, INC.
By: ______________________
Name: James A. Pitts
Title: Vice President
Chief Executive Office:
252 Salem Street
Woburn, MA 01801
CLEAN HARBORS OF
CLEVELAND, INC.
By: ______________________
Name: James A. Pitts
Title: Vice President
Chief Executive Office:
11800 South Stony Island Avenue
Chicago, IL 60617
56
MR. FRANK, INC.
By: ______________________
Name: James A. Pitts
Title: Vice President
Chief Executive Office:
21900 South Central Avenue
Matteson, IL 60443
SPRING GROVE RESOURCE
RECOVERY, INC.
By: ______________________
Name: James A. Pitts
Title: Vice President
Chief Executive Office:
4879 Spring Grove Avenue
Cincinnati, OH 45214
57
SCHEDULE 9.11
PERMITTED DIVIDENDS AND DISTRIBUTIONS
So long as no Default or Event of Default exists, Borrowers may make
distributions to Parent from time to time as required for Parent to pay:
(a) regularly scheduled payments of principal and interest due on the Senior
Unsecured Notes, the MCRC Notes, the Junior Subordinated Promissory Note dated
June 30, 1992 issued to Southdown Environmental Treatment Systems, Inc. and
other indebtedness for borrowed money of Parent (including leases) (but not any
amount due upon the acceleration thereof or otherwise);
(b) regularly scheduled dividends on Series B Preferred Stock of Parent;
(c) prepayments of principal with respect to the indebtedness referred to in
clause (a) and payments for the redemption of Series B Preferred Stock referred
to in clause (b) provided that, in either case, such payments may only be made
to the extent of 50% of Excess Cash Flow of Borrowers for the prior twelve (12)
month period;
(d) amounts necessary to make acquisitions of additional subsidiaries in
accordance with Section 5.7 of the Security Agreement between Parent and Lender;
and
(e) actual out-of-pocket costs and expenses incurred by Parent from time to
time in the ordinary course of business;
provided that on each of the sixty (60) consecutive days prior to the making
of any such distribution and on the date thereof after giving effect thereto,
Borrowers shall maintain Excess Availability of not less than $4,500,000.00.
For purposes of this Schedule 9.11, Excess Cash Flow shall mean the net income
(loss) of Borrowers from continuing operations plus income tax and interest
expenses for such period, plus depreciation and amortization expenses for such
period less all current maturities of long term debt and capital expenditures
incurred during such period, all as determined in accordance with GAAP.
58