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EXHIBIT 4.6(a)
LOAN AND SECURITY AGREEMENT
DATED AS OF JUNE 17, 1997
AMONG PIONEER AMERICAS ACQUISITION CORP., AS BORROWER,
BANK OF AMERICA ILLINOIS, AS AGENT AND A LENDER,
AND
THE OTHER LENDERS PARTY HERETO
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TABLE OF CONTENTS
Page
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1. DEFINITIONS AND OTHER TERMS..........................................................1
1.1. Definitions...............................................................1
1.2. Other Definitional Provisions............................................20
1.3. Interpretation of Agreement..............................................20
1.4. Compliance with Financial Restrictions...................................21
2. LOANS; LETTERS OF CREDIT; OTHER MATTERS.............................................21
2.1. Loans....................................................................21
2.2. Letters of Credit........................................................23
2.3. Loan Account; Demand Deposit Account.....................................25
2.4. Interest and Fees........................................................25
2.5. Requests for Loans; Borrowing Base Certificates; Other Information.......26
2.6. Statements...............................................................27
2.7. Overdraft Loans..........................................................27
2.8. Over Advances............................................................28
2.9. All Loans One Obligation.................................................28
2.10. Making of Payments; Application of Collections; Charging of Accounts....28
2.11. Agent's Election Not to Enforce.........................................30
2.12. Reaffirmation...........................................................30
2.13. Setoff..................................................................30
2.14. Upfront Closing Fee.....................................................31
2.15. Settlements, Distributions and Apportionment of Payments................31
3. COLLATERAL..........................................................................32
3.1. Grant of Security Interest...............................................32
3.2. Accounts Receivable......................................................33
3.3. Inventory................................................................36
3.4. Supplemental Documentation...............................................37
3.5. Collateral for the Benefit of Agent and Lenders..........................37
3.6. Certain Intellectual Property............................................37
3.7. Landlord's Agreements....................................................37
4. REPRESENTATIONS AND WARRANTIES......................................................38
4.1. Organization.............................................................38
4.2. Authorization............................................................38
4.3. No Conflicts.............................................................39
4.4. Validity and Binding Effect..............................................39
4.5. No Default...............................................................39
4.6. Financial Statements.....................................................39
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4.7. Insurance................................................................40
4.8. Litigation; Contingent Liabilities.......................................40
4.9. Liens....................................................................40
4.10. Subsidiaries............................................................41
4.11. Partnerships; Joint Ventures............................................41
4.12. Business and Collateral Locations.......................................41
4.13. Senior Secured Notes....................................................42
4.14. Term Loans..............................................................42
4.15. Eligibility of Collateral...............................................43
4.16. Patents, Trademarks, etc................................................43
4.17. Solvency................................................................43
4.18. Contracts; Labor Matters................................................43
4.19. Pension and Welfare Plans...............................................44
4.20. Regulations G, U and X..................................................44
4.21. Compliance..............................................................44
4.22. Taxes...................................................................45
4.23. Investment Company Act Representation...................................45
4.24. Public Utility Holding Company Act Representation.......................45
4.25. Environmental and Safety and Health Matters.............................45
4.26. Related Agreements and Transaction Documents............................46
4.27. Capitalized Lease Obligations...........................................47
4.28. Other Transactions......................................................47
4.29. Holding Companies.......................................................47
5. BORROWER COVENANTS..................................................................48
5.1. Financial Statements and Other Reports...................................48
5.2. Notices..................................................................50
5.3. Existence................................................................52
5.4. Nature of Business.......................................................53
5.5. Books, Records and Access................................................53
5.6. Insurance................................................................53
5.7. Repair...................................................................54
5.8. Taxes....................................................................54
5.9. Compliance...............................................................55
5.10. Pension Plans...........................................................55
5.11. Merger, Purchase and Sale...............................................55
5.12. Restricted Payments.....................................................56
5.13. Stock...................................................................57
5.14. Indebtedness............................................................57
5.15. Liens...................................................................58
5.16. Guaranties..............................................................58
5.17. Investments.............................................................59
5.18. Designated Subsidiaries.................................................59
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5.19. Loans to Designated Subsidiaries.................................59
5.20. Change in Accounts Receivable....................................60
5.21. Environmental Issues.............................................60
5.22. Related Agreements...............................................60
5.23. Unconditional Purchase Options...................................60
5.24. Use of Proceeds..................................................61
5.25. Transactions with Related Parties................................61
5.26. Amendment of Documents...........................................61
5.27. Designated Subsidiary............................................62
5.28. Limitation on Applicability of Covenants.........................62
5.29. Merger...........................................................62
5.30. Holding Companies................................................62
5.31. Banking Relationships............................................62
6. DEFAULT......................................................................63
6.1. Event of Default..................................................63
6.2. Effect of Event of Default; Remedies..............................65
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND AGENT'S RIGHTS................66
7.1. Notice of Disposition of Collateral...............................66
7.2. Application of Proceeds of Collateral.............................66
7.3. Care of Collateral................................................67
7.4. Performance of Borrower's Obligations.............................67
7.5. Agent's Rights....................................................67
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER MATTERS................68
8.1. Conditions Precedent to Initial Loans and Letters of Credit.......68
8.2. Continuing Conditions Precedent to all Loans; Certification.......70
9. INDEMNITY....................................................................70
9.1. Environmental and Safety and Health Indemnity.....................70
9.2. General Indemnity.................................................71
9.3. Capital Adequacy..................................................72
10. AGENT.......................................................................72
10.1. Appointment of Agent.............................................72
10.2. Nature of Duties of Agent........................................73
10.3. Agent in its Capacity as Lender..................................73
10.4. Independent Credit Analysis......................................73
10.5. General Immunity.................................................74
10.6. Action by Agent..................................................75
10.7. Right to Indemnity...............................................75
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10.8. Rights and Remedies to be Exercised by Agent Only..................76
10.9. Agent's Resignation................................................76
10.10. Disbursement of Proceeds of Loans and Other Advances..............76
10.11. Release of Collateral.............................................77
10.12. Agreement to Cooperate............................................77
10.13. Sharing of Collateral.............................................77
10.14. Lenders to Act as Agents..........................................78
11. ADDITIONAL PROVISIONS.........................................................78
12. GENERAL.......................................................................78
12.1. Borrower Waiver....................................................78
12.2. Power of Attorney..................................................78
12.3. Expenses; Attorneys' Fees..........................................79
12.4. BAI's Fees and Charges.............................................80
12.5. Lawful Interest....................................................80
12.6. No Waiver by Agent or any Lender; Amendments.......................81
12.7. Termination of Revolving Credit....................................81
12.8. Notices............................................................82
12.9. Assignments and Participations; Information........................82
12.10. Severability......................................................84
12.11. Successors........................................................84
12.12. Construction......................................................84
12.13. Consent to Jurisdiction...........................................85
12.14. Subsidiary Reference..............................................85
12.15. Waiver of Jury Trial..............................................85
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LOAN AND SECURITY AGREEMENT
THIS AGREEMENT ("Agreement") is made as of this 17th day of
June, 1997 by and among BANK OF AMERICA ILLINOIS (in its individual capacity,
"BAI"), an Illinois corporation having its principal office at 231 South
LaSalle Street, Chicago, Illinois 60697, as Agent and a Lender hereunder, the
other Lenders from time to time party hereto, and PIONEER AMERICAS ACQUISITION
CORP. ("Borrower"), a Delaware corporation having its principal office at 4200
NationsBank Center, 700 Louisiana Street, Houston, Texas 77002.
W I T N E S S E T H:
WHEREAS, Borrower may, from time to time, request loans or
other financial accommodations from Lenders, and the parties wish to provide
for the terms and conditions upon which such loans or other financial
accommodations shall be made;
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit (including any loan or advance or grant of credit by renewal or
extension) hereafter made to Borrower by, or on behalf of, Lenders, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. DEFINITIONS AND OTHER TERMS.
1.1. Definitions.
In addition to terms defined elsewhere in this Agreement or any Supplement,
Schedule or Exhibit hereto, when used herein, the following terms shall have
the following meanings (such meanings shall be equally applicable to the
singular and plural forms of the terms used, as the context requires):
"Account Debtor" means any Person who is or who may become obligated to
Borrower or any Designated Subsidiary under, with respect to, or on account of
an Account Receivable, Contract Right or other Collateral.
"Account Receivable" means any account of Borrower or any Designated
Subsidiary and any other right of Borrower or any Designated Subsidiary to
payment for goods sold or leased or for services rendered, whether or not
evidenced by an instrument or chattel paper and whether or not yet earned by
performance.
"Acquisition" means, collectively, (a) the purchase by PCAC of the assets
of the Tacoma, Washington chlor-alkali facility of OCC and (b) the transactions
contemplated in connection therewith, including without limitation (i) the
issuance by Parent to Occidental Chemical Corporation of 55,000 shares of its
convertible preferred stock, par value $0.01 per share and (ii) the execution
by Occidental Chemical Corporation and
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Borrower of a certain Chlorine Purchase Agreement, in each case occurring on or
before the Closing Date.
"Agent" means BAI in its capacity as agent for Lenders hereunder and under
the Related Agreements, or any successor agent pursuant to Section 10.
"Agreement" means this Loan and Security Agreement, as the same may be
amended, modified or supplemented from time to time.
"Applicable Margin" means, at any time, a percentage determined with
reference to Borrower's Total Debt to EBITDA Ratio for the twelve month period
ending on the last day of Borrower's most recent fiscal quarter, as set forth
below for the applicable interest rate or fee:
Total Debt to Applicable Margin Applicable Margin Applicable Margin
EBITDA Ratio for LIBOR Rate Loans for Floating Rate Loans for Nonuse Fee
------------ -------------------- ----------------------- --------------
Equal to or greater 2.50% 0.00% 0.375%
than 4.0:1.0
Less than 4.0:1.0 and 2.25% 0.50% 0.25%
equal to or greater
than 3.5:1.0
Less than 3.5:1.0 2.00% 0.50% 0.25% The Total Debt to EBITDA Ratio for any
fiscal quarter shall be determined pursuant to Borrower's monthly financial
statements for the last month in such quarter delivered pursuant to Section
5.1.1(b) or, with respect to the last fiscal quarter in any Fiscal Year,
Borrower's annual audited financial statements for such Fiscal Year delivered
pursuant to Section 5.1.1(a). Changes in the Applicable Margin shall become
prospectively effective 5 days after receipt by Agent of the applicable
financial statements, accompanied by a calculation of the Total Debt to EBITDA
Ratio. The Applicable Margin for the period from the Closing Date until five
(5) days after receipt by Agent of Borrower's financial statements for June,
1997, shall be set at the level that would be applicable if the Total Debt to
EBITDA Ratio were equal to or greater than 4.0:1.0.
"Application" means an application by Borrower, in a form and containing
terms and provisions acceptable to Agent and Issuing Bank, for the issuance by
Issuing Bank of a Letter of Credit.
"Assignee Deposit Account" has the meaning ascribed to such term in Section
3.2(d).
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"Assignment and Acceptance Agreement" means an agreement in the form of
Exhibit D pursuant to which a Lender assigns all or a portion of its rights,
and delegates all or such portion of its obligations, under this Agreement and
the Related Agreements, to another Person.
"Attorneys' Fees" has the meaning ascribed to such term in Section 12.3.
"BAI" has the meaning ascribed to such term in the Preamble.
"Banking Day" means any day other than a Saturday, Sunday or legal holiday
on which banks are authorized or required to be closed for the conduct of
commercial banking business in Chicago, Illinois; provided, with respect to
LIBOR Rate Loans, Banking Days shall not include a day on which dealings in
U.S. Dollars may not be carried on by BAI in the London interbank LIBOR market.
"Borrower" has the meaning ascribed to such term in the Preamble.
"Borrower Collateral" has the meaning ascribed to such term in Section 3.1.
"Borrowing Base" has the meaning ascribed to such term in Supplement A.
"Borrowing Base Certificate" means a certificate in the form of Exhibit A
attached hereto, executed and certified as accurate by an officer of Borrower
designated in writing from time to time by Borrower to Agent pursuant to
resolutions of the Board of Directors of Borrower.
"BMPC" means Black Mountain Power Company, a Subsidiary of PCAC.
"Capitalized Lease" means any lease which is or should be capitalized on
the balance sheet of the lessee in accordance with GAAP.
"Closing Date" means the first date on which Loans are made, or Letters of
Credit are issued, under this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time.
"Collateral" means, collectively, (a) Borrower Collateral and (b) the
Obligor Collateral.
"Contingent Payment Agreement" shall mean that certain Contingent Payment
Agreement dated on or about the Original Closing Date among Parent, Borrower
and Sellers.
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"Contract Right" means any right of Borrower or any Designated Subsidiary
to payment under a contract for the sale or lease of goods or the rendering of
services, which right is not yet earned by performance.
"Credit" means the facility established under this Agreement pursuant to
which Lenders will make Revolving Loans (the "Revolving Credit") to Borrower,
and/or cause Issuing Bank to issue Letters of Credit for the account of
Borrower.
"Default Rate" means, with respect to a Loan, the rate of interest which is
applicable to such Loan after the occurrence of an Event of Default, as
determined pursuant to Supplement A.
"Demand Deposit Account" has the meaning ascribed to such term in Section
2.3.
"Depository Accounts" has the meaning ascribed to such term in Section
3.2(d).
"Designated Subsidiary" means any Subsidiary of Borrower so designated by
Borrower from time to time, with Agent's written consent, which shall not be
unreasonably withheld. The Designated Subsidiaries existing on the Closing Date
are designated as such on Schedule 4.10.
"Disproportionate Advance" has the meaning ascribed to such term in Section
2.1.1(a).
"East" means Pioneer (East), Inc., a Subsidiary of PAI.
"EBITDA" for any period means net earnings (excluding interest income)
before interest expense, tax expense, depreciation and amortization, all
determined for Borrower and its Subsidiaries on a consolidated basis and in
accordance with GAAP; provided, that for purposes hereof (a) net earnings shall
not include any gains or losses on the sale or other disposition of Investments
or fixed assets or any other extraordinary items of income and (b) net earnings
for periods that include any portion of the 1997 Fiscal Year shall exclude up
to $31,000,000 related to prepayment premiums paid or incurred by Borrower in
connection with the refinancing of some or all of the First Mortgage Notes on
or about the Closing Date.
"Eligible Account Receivable" means an Account Receivable owing to Borrower
or a Designated Subsidiary which meets the following requirements:
(a) it is genuine and in all respects what it purports to be;
(b) it arises from either (i) the performance of services by Borrower or
such Designated Subsidiary, which services have been fully performed and, if
applicable,
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acknowledged and/or accepted by the Account Debtor with respect thereto or (ii)
the sale or lease of goods by Borrower or such Designated Subsidiary; and if it
arises from the sale or lease of goods, (A) such goods comply with such Account
Debtor's specifications (if any) and have been shipped to, or delivered to and
accepted by, such Account Debtor and neither Borrower nor such Designated
Subsidiary has knowledge that the Account Debtor has failed to accept delivery
of all or a portion of such goods, and (B) Borrower or such Designated
Subsidiary has possession of shipping and delivery receipts evidencing such
shipment, delivery and acceptance;
(c) it (i) is evidenced by an invoice rendered to the Account Debtor with
respect thereto which (A) is dated not earlier than the date of shipment or
performance and (B) has payment terms which are not unacceptable to Agent in
its reasonable discretion and (ii) meets the additional Eligible Account
Receivable requirements set forth in Supplement A;
(d) it is not subject to any assignment, claim or Lien, other than (i) a
Lien in favor of Agent, for the benefit of itself and Lenders, and (ii) a Lien
consented to by Agent in writing;
(e) it is a valid, legally enforceable and unconditional obligation of the
Account Debtor with respect thereto, and is not subject to setoff,
counterclaim, credit or allowance (except any credit or allowance which has
been deducted in computing the net amount of the applicable invoice as shown in
the original schedule or Borrowing Base Certificate furnished to Agent
identifying or including such Account Receivable) or adjustment by the Account
Debtor with respect thereto, or to any claim by such Account Debtor denying
liability thereunder in whole or in part, and such Account Debtor has not
refused to accept any of the goods or services which are the subject of such
Account Receivable or offered or attempted to return any of such goods;
(f) there are no proceedings or actions which to the knowledge of Borrower
are then threatened or pending against the Account Debtor with respect thereto
or to which such Account Debtor is a party which are reasonably likely to
materially impair its ability to pay any Account Receivable in full when due;
(g) it does not arise out of a contract which, by its terms, forbids,
restricts or makes void or unenforceable the assignment by Borrower or such
Designated Subsidiary to Agent, for the benefit of itself and Lenders, of the
Account Receivable arising with respect thereto;
(h) the Account Debtor with respect thereto is not Borrower, a Subsidiary,
Related Party (other than Saguaro Power Company L.P.) or Obligor, or a
director, officer, employee or agent of Borrower, a Subsidiary, Related Party
or Obligor;
(i) the Account Debtor with respect thereto is a resident or citizen of,
and is located within, the United States of America (a "Domestic Account");
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(j) it is not a Domestic Account (a "Foreign Account"), but only to the
extent that the aggregate amount of all Foreign Accounts does not exceed
$3,000,000 (the "Foreign Account Limit");
(k) it is not an Account Receivable arising from a "sale on approval,"
"sale or return" or "consignment," or subject to any other repurchase or return
agreement;
(l) it is not an Account Receivable with respect to which possession and/or
control of the goods sold giving rise thereto is held, maintained or retained
by Borrower or such Designated Subsidiary or any Subsidiary, Related Party or
other Obligor (or by any agent or custodian of Borrower or such Designated
Subsidiary, any Subsidiary, Related Party or Obligor) for the account of or
subject to further and/or future direction from the Account Debtor thereof;
(m) it is not an Account Receivable which in any way fails to meet or
violates any warranty, representation or covenant contained in this Agreement
or any Related Agreement relating directly or indirectly to Accounts
Receivable;
(n) it arises in the ordinary course of Borrower's or such Designated
Subsidiary's business;
(o) if the Account Debtor is the United States of America or any state or
local governmental entity, or any department, agency or instrumentality
thereof, Borrower or such Designated Subsidiary has assigned its rights to
payment of such Account Receivable to Agent, for the benefit of itself and
Lenders, pursuant to the Assignment of Claims Act of 1940, as amended, or
pursuant to any similar state or local law, regulation or requirement, but only
to the extent that the aggregate amount of such government Accounts exceeds
$10,000,000 or the amount of any individual government Accounts exceeds
$2,000,000;
(p) if Agent in its reasonable business judgment has established a credit
limit for an Account Debtor, the aggregate dollar amount of Accounts Receivable
due from such Account Debtor, including such Account Receivable, does not
exceed such credit limit; provided, however, that Agent may not reduce any
credit limit with respect to any Account Debtor except upon 45 days' prior
notice to Borrower;
(q) if the Account Receivable is evidenced by chattel paper or an
instrument, (i) Agent shall have specifically agreed in writing to include such
Account Receivable as an Eligible Account Receivable, (ii) only payments then
due and payable under such chattel paper or instrument shall be included as an
Eligible Account Receivable and (iii) the originals of such chattel paper or
instruments have been endorsed and/or assigned and delivered to Agent, for the
benefit of itself and Lenders, in a manner satisfactory to Agent;
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(r) it is an Account Receivable with respect to which Agent, for itself and
Lenders, has a valid, first priority and fully perfected Lien, other than
Foreign Accounts with an aggregate value less than or equal to the Foreign
Account Limit; and
(s) it is an Account Receivable that Agent in its reasonable business
judgment deems to be acceptable.
Agent further reserves the right in its reasonable business judgment, from time
to time hereafter, to designate upon ten (10) Banking Days' prior notice to
Borrower as ineligible specific Accounts Receivable that meet the
aforementioned criteria for Eligible Accounts Receivable, including without
limitation if Agent in its reasonable business judgment determines that the
prospect of payment or performance of the Account Debtor with respect to such
Account Receivable is or will be materially impaired for any reason whatsoever.
An Account Receivable which is at any time an Eligible Account Receivable, but
which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Account Receivable.
"Eligible Inventory" means Inventory of Borrower or any Designated
Subsidiary, which meets the following requirements:
(a) it is owned by Borrower or a Designated Subsidiary and is not subject
to any prior assignment, claim or Lien, other than (i) a Lien in favor of
Agent, for the benefit of itself and Lenders, and (ii) Liens consented to by
Agent in writing;
(b) if it is a hard good held for sale or lease or furnishing under
contracts of service, it is (except as Agent may otherwise consent in writing)
new and unused;
(c) except as Agent may otherwise consent, it is in the possession and
control of Borrower, a Designated Subsidiary or their respective agents;
(d) if it is in the possession or control of a bailee, warehouseman,
processor or other Person other than Borrower or a Designated Subsidiary, Agent
is in possession of such agreements, instruments and documents as Agent may
require (each in form and content acceptable to Agent and duly executed, as
appropriate, by the bailee, warehouseman, processor or other Person in
possession or control of such Inventory, as applicable), including but not
limited to warehouse receipts in Agent's name, for the benefit of itself and
Lenders, covering such Inventory;
(e) it is not Inventory which is dedicated to, identifiable with, or is
otherwise specifically to be used in the manufacture of, goods which are to be
sold or leased to the United States of America or any department, agency or
instrumentality thereof and in respect of which Inventory Borrower or a
Designated Subsidiary shall have received any progress or other advance payment
which is or may be against any Account Receivable generated upon the sale or
lease of any such goods;
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(f) it is not Inventory produced in violation of the Fair Labor Standards
Act and subject to the "hot goods" provisions contained in Title 29 U.S.C.
ss.215 or any successor statute or section;
(g) it is not (i) packaging or shipping materials, (ii) goods used in
connection with maintenance or repair of Borrower's or a Designated
Subsidiary's business, properties or assets, (iii) work-in-process or (iv)
general supplies;
(h) it is not Inventory which in any way fails to meet or violates any
warranty, representation or covenant contained in this Agreement or any Related
Agreement relating directly or indirectly to Inventory;
(i) Agent has not determined in its reasonable business judgment and after
ten (10) Banking Days' prior notice to Borrower that it is unacceptable due to
age, type, category, quality and/or quantity;
(j) it is Inventory with respect to which Agent, for itself and Lenders,
has a valid, first priority and fully perfected Lien; and
(k) it is not Inventory the use of which by Borrower or a Designated
Subsidiary or the manufacture or sale thereof by Borrower or a Designated
Subsidiary, is subject to any licensing, patent, royalty, trademark, tradename
or copyright agreement of any other Person, other than Inventory subject to the
two certain DSA Anode Lease Agreements dated January 1, 1987 between Electrode
Corporation and Stauffer Chemical Company.
Notwithstanding anything to the contrary contained herein, up to $1,000,000 of
Inventory located at leased locations of Borrower and the Designated
Subsidiaries shall at all times deemed to be Eligible Inventory hereunder,
despite the fact that the lessors of the applicable leased locations have not
executed and delivered to Agent Landlord's Waivers in form and substance
reasonably satisfactory to Agent, so long as such Inventory would be classified
as Eligible Inventory except for the failure to deliver such Landlord's
Waivers.
Agent further reserves the right in its reasonable business judgment, from time
to time hereafter, to designate upon ten (10) Banking Days' prior notice to
Borrower as ineligible specific items of Inventory that meet the aforementioned
criteria for Eligible Inventory. Inventory which is at any time Eligible
Inventory but which subsequently fails to meet any of the foregoing
requirements shall forthwith cease to be Eligible Inventory.
"Environmental Laws" means the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, any
so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act, and
any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree or other requirement regulating, relating to, or
imposing liability or standards of conduct (including but not limited to permit
requirements, and emission or effluent restrictions)
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with respect to protection or conservation of the environment concerning any
Hazardous Materials or any hazardous, toxic or dangerous waste, substance or
constituent, or any pollutant or contaminant or other substance, whether solid,
liquid or gas, as now or at any time hereafter in effect.
"Environmental Lien" means a Lien in favor of any governmental entity for
(a) any liability under any Environmental Law or (b) damages arising from or
costs incurred by such governmental entity in response to a Release of any
Hazardous Material or the spillage, disposal or release into the environment of
any other hazardous, toxic or dangerous waste, substance or constituent, or
other substance.
"Equipment" means all equipment of Borrower or any Designated Subsidiary of
every description, including without limitation fixtures, furniture, vehicles
and trade fixtures, together with any and all accessions, parts and equipment
attached thereto or used in connection therewith, and any substitutions
therefor and replacements thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor
sections.
"ERISA Affiliate" means any corporation, partnership, or other trade or
business (whether or not incorporated) that is, along with Borrower, a member
of a controlled group of corporations or a controlled group of trades or
businesses, as described in Sections 414(b) and 414(c), respectively, of the
Code or Section 4001 of ERISA, or a member of the same affiliated service group
within the meaning of Section 414(m) of the Code.
"Eurocurrency Reserve Requirement" means, with respect to any LIBOR Rate
Loan for any Interest Rate Period, a percentage equal to the daily average
during such Interest Rate Period of the percentages in effect on each day of
such Interest Rate Period, as prescribed by the Federal Reserve Board, for
determining the aggregate maximum reserve requirements (including all basic,
supplemental, marginal and other reserves) applicable to "Eurocurrency
liabilities" pursuant to Regulation D or any other then applicable regulation
of the Federal Reserve Board which prescribes reserve requirements applicable
to "Eurocurrency liabilities," as presently defined in Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Requirement
shall reflect any other reserves required to be maintained by BAI against (i)
any category of liabilities that includes deposits by reference to which the
LIBOR Rate is to be determined, or (ii) any category of extensions of credit or
other assets that includes LIBOR Rate Loans. For purposes of this Agreement,
any LIBOR Rate Loan hereunder shall be deemed to be "Eurocurrency liabilities,"
as defined in Regulation D, and, as such, shall be deemed to be subject to such
reserve requirements without the benefit of, or credit for, proration,
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exceptions or offsets which may be available to BAI from time to time under
Regulation D.
"Event of Default" has the meaning ascribed to such term in Section 6.1.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal, for each day during such period, to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day
(or, if such day is not a Banking Day, for the next preceding Banking Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Banking Day, the average of the quotations for such day on
such transactions received by Agent from three federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"First Mortgage Loans" means, collectively, all Indebtedness of Borrower
represented by the First Mortgage Notes.
"First Mortgage Note Documents" means, collectively, the agreements,
instruments and documents evidencing and governing the First Mortgage Notes,
including the First Mortgage Note Indenture, as each of the same may be
amended, modified or supplemented from time to time in compliance with Section
5.26 hereof.
"First Mortgage Note Indenture" means the Indenture dated as of April 1,
1995 among Borrower, PAI, the Designated Subsidiaries, certain other
Subsidiaries of PAI and IBJ Schroder Bank and Trust Company as Trustee.
"First Mortgage Notes" means, collectively, Borrower's 13 3/8% First
Mortgage Notes due 2005 in the aggregate principal amount due upon maturity of
not more than $__________.
"Fiscal Year" means any period of twelve (12) consecutive calendar months
ending on December 31. References to a Fiscal Year with a number corresponding
to any calendar year (e.g. "Fiscal Year 1997") refer to the Fiscal Year ending
on the thirty-first (31st) day of December occurring during such calendar year.
"Floating Rate" means, at any time, the Reference Rate minus the Applicable
Margin.
"Floating Rate Loan" means any portion of the Revolving Loan which bears
interest at a rate determined with reference to the Floating Rate.
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"GAAP" means generally accepted accounting principles as in effect from
time to time (except as otherwise provided in Section 1.4), as applied in the
preparation of the audited financial statements referred to in Section 4.6.
"General Intangibles" means all general intangibles now owned or hereafter
acquired by Borrower or any Designated Subsidiary, to the extent that any of
the foregoing arises out of or relates to Accounts or Inventory, including
without limitation all right, title and interest of Borrower or such Designated
Subsidiary in and to: (a) all tax refunds and tax refund claims; (b) registered
and unregistered patents, service marks, copyrights, applications for any of
the foregoing and (c) all trade secrets and other confidential information
relating to the business of Borrower or such Designated Subsidiary, in each
case to the extent that any of the foregoing arises out of or relates to
Accounts or Inventory.
"Hazardous Materials" means any toxic substance, hazardous substance,
hazardous material, hazardous chemical or hazardous waste defined or qualifying
as such in any Environmental Law, and shall include, but not be limited to,
petroleum, including crude oil, any radioactive material, including but not
limited to any source, special nuclear or by-product material as defined at 42
U.S.C. Section 2011 et seq., as amended or hereafter amended, polychlorinated
biphenyls and asbestos in any form or condition.
"Imperial" means Imperial West Chemical Co., an indirect Subsidiary of
Borrower.
"Indebtedness" of any Person means, without duplication, (a) the principal
portion of any obligation of such Person for borrowed money, including without
limitation (i) any obligation of such Person evidenced by bonds, debentures,
notes or other similar debt instruments and (ii) any obligation for borrowed
money which is non-recourse to the credit of such Person but which is secured
by a Lien on any asset of such Person, (b) the principal component of any
obligation of such Person on account of deposits or advances, (c) any
obligation of such Person for the deferred purchase price of any property or
services, except Trade Accounts Payable, (d) any obligation of such Person as
lessee under a Capitalized Lease, (e) any net obligation of such Person with
respect to interest rate swaps, interest rate caps, interest rate collars or
other interest hedging agreements, (f) any net obligation of such Person in
respect of foreign exchange contracts, (g) any obligation of such Person with
respect to letters of credit, acceptances, guarantees or similar obligations of
another Person issued for the account of such Person and (h) any Indebtedness
of another Person secured by a Lien on any asset of such first Person, whether
or not such Indebtedness is assumed by such first Person. For all purposes of
this Agreement, the Indebtedness of any Person shall include the Indebtedness
of any partnership or joint venture in which such Person is a general partner
or joint venturer and such Indebtedness is recourse to some or all of the
assets of such Person.
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"Interest Coverage Sale Threshold" means with respect to any sale,
transfer, conveyance, lease or other disposition of assets otherwise permitted
under Section 5.11, that the Interest Coverage Ratio after such transaction,
calculated in the manner set forth in Section 5.1 of Supplement A, but using
the financial results most recently reported by Borrower to Agent, adjusted to
reflect the pro forma effect of such transaction, is at least 1.1:1.0.
"Interest Rate Period" means with respect to any portion of the Revolving
Loans, the period commencing on the date on which the LIBOR Rate is deemed
applicable to such portion of the Revolving Loans, and ending on the
numerically corresponding day one (1), two (2), three (3) or six (6) months
thereafter, as selected by Borrower pursuant to Section 3.1.1(c) of Supplement
A; provided, however, that:
(a) any Interest Rate Period which would otherwise end on a day which is
not a Banking Day shall end on the next succeeding Banking Day unless such next
succeeding Banking Day falls in another calendar month, in which case such
Interest Rate Period shall end on the next preceding Banking Day;
(b) any Interest Rate Period which begins on the last Banking Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Rate Period) shall end on the
last Banking Day of the calendar month at the end of such Interest Rate Period;
and
(c) no Interest Rate Period shall extend beyond the Termination Date.
"Inventory" means any and all of Borrower's and each Designated
Subsidiary's goods (including without limitation goods in transit) wheresoever
located, which are held for sale, furnished under any contract of service, or
held as raw materials, work in process, or supplies or materials used or
consumed in Borrower's or such Designated Subsidiary's business, or which are
held for use in connection with the manufacture, packing, shipping,
advertising, selling or finishing of such goods, and any and all goods the sale
or other disposition of which has given rise to an Account Receivable, Contract
Right or any other property described in Section 3.1(a), which are returned to
and/or repossessed and/or stopped in transit by, or at any time hereafter are
in the possession or under the control of, Borrower, any Designated Subsidiary,
Agent or any Lender or any agent or bailee of any of them, and all documents of
title or other documents representing the same.
"Investment" of any Person means any investment, made in cash or by
delivery of any kind of property or asset, in any other Person, whether by
acquisition of shares of stock or similar interest, Indebtedness or other
obligation or security, or by loan, advance or capital contribution, or
otherwise.
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"Issuing Bank" means BAI or any other Lender selected by Agent with
Borrower's consent (which will not be unreasonably withheld) to issue Letters
of Credit under this Agreement.
"L/C Draft" means a draft drawn on Issuing Bank pursuant to a Letter of
Credit.
"Lenders" means, collectively, BAI and any other Person that becomes a
Lender under this Agreement and each of their respective successors and assigns
as provided in this Agreement; and "Lender" means any one of Lenders.
"Letter of Credit" means a standby letter of credit issued by the Issuing
Bank on the Application of Borrower.
"Letter of Credit Obligations" means at any time an amount equal to the sum
of (a) the aggregate outstanding face amount of all Letters of Credit plus (b)
the aggregate outstanding face amount of all accepted but unpaid L/C Drafts.
"Liabilities" means all of the liabilities, obligations (including
obligations of performance) and indebtedness of Borrower to Agent or any Lender
of any kind or nature, however created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing or due or to become
due, and arising under, or in connection with, this Agreement, any Note, any
Related Agreement, any Letter of Credit or any Application therefor, including
without limitation all interest, charges, expenses, Attorneys' Fees and other
sums chargeable to Borrower by Agent or any Lender hereunder or thereunder.
"Liabilities" shall also include any and all amendments, extensions, renewals,
refundings or refinancings of any of the foregoing.
"LIBOR Base Rate" means, with respect to each Interest Rate Period for a
LIBOR Rate Loan, the rate per annum (rounded upward, if necessary, to the
nearest one hundredth of one percent (1/100%)) at which U.S. Dollar deposits in
immediately available funds are offered to the LIBOR Office of BAI two (2)
Banking Days prior to the beginning of such Interest Rate Period by major banks
in the interbank eurodollar market as at or about the relevant local time of
such LIBOR Office, for delivery on the first day of such Interest Rate Period,
for the number of days comprised therein and in an amount equal to the amount
of the LIBOR Rate Loan to be outstanding during such Interest Rate Period. As
used herein, "relevant local time" as to any LIBOR Office means 11:00 a.m.,
London time, when such LIBOR Office is located in Europe or the Middle East,
and 10:00 a.m., Chicago time, when such LIBOR Office is located in North
America or the Caribbean.
"LIBOR Office" means with respect to any Lender the office or offices of
such Lender which shall be making or maintaining the LIBOR Rate Loans of such
Lender hereunder or such other office or offices through which such Lender
determines its LIBOR Base Rate. A LIBOR Office of any Lender may be, at the
option of such Lender, either a domestic or foreign office.
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"LIBOR Rate" means, with respect to each Interest Rate Period for a LIBOR
Rate Loan, a rate per annum (rounded upward, if necessary, to the nearest one
hundredth of one percent (1/100th of 1%)) determined pursuant to the following
formula:
LIBOR Rate = LIBOR Base Rate plus the Applicable Margin
----------------------------------
1-Eurocurrency Reserve Requirement
"LIBOR Rate Loan" means any portion of the Revolving Loan which bears
interest at a rate determined with reference to the LIBOR Rate.
"Lien" means any security interest, mortgage, pledge, hypothecation,
judgment lien or similar legal process, title retention lien, or other lien or
encumbrance, including without limitation the interest of a vendor under any
conditional sale or other title retention agreement and the interest of a
lessor under any Capitalized Lease.
"Loan" means (a) any Revolving Loan made pursuant to Section 2.1.1 and (b)
any other loan or advance made to Borrower by Agent or any Lender under or
pursuant to this Agreement.
"Loan Account" has the meaning ascribed to such term in Section 2.3.
"Margin Stock" has the meaning ascribed to such term in Regulation U of the
Federal Reserve Board or any regulation substituted therefor, as in effect from
time to time.
"Material Adverse Change" means (a) a material adverse change in the
condition (financial or otherwise), operations, performance, prospects,
properties or affairs, of Borrower or in the ability of Borrower to perform its
obligations under any material agreement to which Borrower is a party, (b) a
material adverse change in the condition (financial or otherwise), operations,
performance, prospects, properties or affairs of Borrower and the Designated
Subsidiaries taken as a whole or in the ability of Borrower and the Designated
Subsidiaries taken as a whole to perform their obligations under any material
agreements to which they are parties, (c) a material adverse change in the
condition (financial or otherwise), operations, performance, prospects,
properties or affairs of Borrower and the Designated Subsidiaries taken as a
whole or in the ability of Borrower and the Designated Subsidiaries taken as a
whole to perform their obligations under any material agreements to which they
are parties, or (d) an impairment of Agent's interest, for the benefit of
itself and Lenders, in any material portion of the Collateral or the material
diminution in value of the Collateral.
"Material Adverse Effect" means (a) a material adverse effect upon the
condition (financial or otherwise), operations, performance, prospects,
properties or affairs, of Borrower or upon the ability of Borrower to perform
its obligations under any material agreement to which Borrower is a party, (b)
a material adverse effect upon the condition (financial or otherwise),
operations, performance, prospects, properties or affairs of
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Borrower and the Designated Subsidiaries taken as a whole or upon the ability
of Borrower and the Designated Subsidiaries taken as a whole to perform their
obligations under any material agreements to which they are parties, (c) a
material adverse effect upon the condition (financial or otherwise),
operations, performance, prospects, properties or affairs of Borrower and the
Designated Subsidiaries taken as a whole or upon the ability of Borrower and
the Designated Subsidiaries taken as a whole to perform their obligations under
any material agreements to which they are parties, or (d) an impairment of
Agent's interest, for the benefit of itself and Lenders, in any material
portion of the Collateral or the material diminution in value of the
Collateral.
"Maximum Loan Amount" means, with respect to any Lender, the maximum amount
of Loans which such Lender has agreed, pursuant to the terms and conditions of
this Agreement, to make available to Borrower, as set forth on the signature
page hereto or in an Assignment and Acceptance Agreement executed by such
Lender.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA that is maintained for employees of Borrower or any ERISA
Affiliate.
"Note" means any promissory note of Borrower evidencing any loan or advance
made by any Lender to Borrower pursuant to this Agreement, as the same may be
amended, modified or supplemented from time to time.
"Obligor" means Borrower and each other Person (including without
limitation each Designated Subsidiary) who is or shall become primarily or
secondarily liable on any of the Liabilities, or who grants to Agent, for the
benefit of itself and Lenders, a Lien on any property of such Person as
security for any of the Liabilities.
"Obligor Collateral" means any real or personal property of any Obligor on
which a Lien has been granted to Agent, for the benefit of itself and Lenders,
in order to secure the Liabilities and/or such Obligor's guaranty of the
Liabilities.
"OCC" means OCC Tacoma, Inc., a Delaware corporation.
"Occupational Safety and Health Law" means the Occupational Safety and
Health Act of 1970 and any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning employee health and/or
safety.
"Offering Memorandum" means that certain Offering Memorandum relating to
the issuance of the Senior Secured Notes dated June 11, 1997.
"Original Closing Date" means April 12, 1995.
"Over Advance" has the meaning ascribed to such term in Section 2.8.
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"Overdraft Loan" has the meaning ascribed to such term in Section 2.7.
"PAI" means Pioneer Americas, Inc., a Subsidiary of Borrower.
"Parent" means Pioneer Companies, Inc., (formerly known as GEV
Corporation), a Delaware corporation.
"Participant" means any Person, now or at any time or times hereafter,
participating with any Lender, pursuant to the provisions of Section 12.9, in
the Loans made or Letters of Credit issued, pursuant to this Agreement or any
Related Agreement.
"Payment Liabilities" means all Liabilities other than contingent
obligations of Borrower with respect to which neither Agent nor any Lender has
asserted a claim against Borrower or against which Borrower has provided
reserves or Collateral satisfactory to Agent or such Lender; provided, that
Payment Liabilities shall include the Letter of Credit Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PCAC" means Pioneer Chlor Alkali Company, Inc., an indirect Subsidiary of
Borrower.
"Pension Plan" means a "pension plan," as such term is defined in Section
3(2) of ERISA, that is subject to the provisions of Title IV of ERISA (other
than a Multiemployer Plan) and to which Borrower or any ERISA Affiliate may
have any liability, including any liability by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
"Permitted Intercompany Indebtedness" shall mean Indebtedness of a
Designated Subsidiary to Borrower as permitted pursuant to Section 5.19.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, or government (whether national, federal, state, county,
city, municipal or otherwise, including without limitation any instrumentality,
division, agency, body or department thereof).
"Pre-Settlement Determination Date" has the meaning ascribed to such term
in Section 2.15.
"Pro Rata Share" means, with respect to any Lender, a fraction (expressed
as a percentage in nine (9) decimal places), the numerator of which shall be
the Maximum Loan Amount of such Lender and the denominator of which shall be
the aggregate amount of the Maximum Loan Amounts of all Lenders.
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"Reference Rate" means, at any time, the rate of interest then most
recently announced by BAI at Chicago, Illinois as its reference rate. Each
change in the interest rate on any Floating Rate Loan shall take effect on the
effective date of the change in the Reference Rate.
"Register" has the meaning ascribed to such term in Section 12.9(d).
"Related Agreement" means any agreement, instrument or document (including
without limitation notes, guarantees, chattel mortgages, pledges, powers of
attorney, consents, assignments, contracts, notices, security agreements,
leases, financing statements, subordination agreements, intercreditor
agreements, trust account agreements and all other written matter) heretofore,
now, or hereafter delivered to Agent or any Lender with respect to or in
connection with or pursuant to this Agreement or any of the Liabilities, and
executed by or on behalf of Borrower, any Designated Subsidiary or any other
Obligor, as each of the same may be amended, modified or supplemented from time
to time and shall specifically include any Notes. The Related Agreements shall
specifically exclude the Transaction Documents.
"Related Party" means, with respect to any Person, any other Person (a)
that directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such first Person or a
subsidiary of such first Person, (b) that beneficially owns or holds ten
percent (10%) or more of the equity interest of such first Person or a
subsidiary of such first Person or (c) ten percent (10%) or more of the equity
interest of which is beneficially owned or held by such first Person or a
subsidiary of such first Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Release" means any actual or threatened spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing of Hazardous Materials into the environment.
"Reportable Event" has the meaning given to such term in ERISA.
"Requisite Lenders" means Lenders having, in the aggregate, Pro Rata Shares
of at least fifty-one percent (51%).
"Revolving Credit" has the meaning ascribed to such term in the definition
of "Credit."
"Revolving Credit Amount" has the meaning ascribed to such term in
Supplement A.
"Revolving Loan" has the meaning ascribed to such term in Section 2.1.1.
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"Revolving Loan Availability" means the lesser of (a) the Revolving Credit
Amount minus the Letter of Credit Obligations and (b) the Borrowing Base minus
the Letter of Credit Obligations.
"Seller Notes" means, collectively, the subordinated promissory notes
issued by Borrower to the Sellers in the original aggregate principal amount of
$10,000,000, as adjusted.
"Sellers" means the "Sellers" as defined in the Stock Purchase Agreement.
"Senior Secured Loans" means, collectively, all Indebtedness of Borrower
represented by the Senior Secured Notes.
"Senior Secured Note Documents" means, collectively, the agreements,
instruments and documents evidencing and governing the Senior Secured Notes,
including the Senior Secured Note Indenture, as each of the same may be
amended, modified or supplemented from time to time in compliance with Section
5.26 hereof.
"Senior Secured Note Indenture" means the Indenture dated as of June 17,
1997 among Borrower, the Subsidiary Guarantors (as defined therein) and United
States Trust Company of New York as Trustee (the "Trustee") for the Senior
Secured Notes.
"Senior Secured Notes" means, collectively, Borrower's 9 1/4% Senior
Secured Notes due 2007 in the aggregate principal amount due upon maturity of
not more than $200,000,000.
"Settlement Date" has the meaning ascribed to such term in Section 2.15.
"Stock Purchase Agreement" means that certain Stock Purchase Agreement,
dated as of March 24, 1995, by and among Borrower and GEV Corporation
(predecessor-in-interest to Parent), as purchasers, and Richard C. Kellogg,
Jr., Frans G.J. Speets, D.A. Huckabay, and all common shareholders, warrant
holders and option holders of PAI, as sellers.
"Subordinated Debt" means, collectively, that portion of any liabilities,
obligations or Indebtedness of Borrower or any Designated Subsidiary which is
subordinated as to right and time of payment of principal and interest thereon,
to all of the Liabilities.
"Subordinated Debt Documents" means, collectively, the agreements,
instruments and documents evidencing or otherwise pertaining to any
Subordinated Debt, as each of the same may be amended, modified or supplemented
from time to time in compliance with Section 5.26.
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"Subsidiary" means any Person of which or in which Borrower and its other
Subsidiaries own directly or indirectly fifty percent (50%) or more of (a) the
combined voting power of all classes of stock having general voting power under
ordinary circumstances to elect a majority of the board of directors of such
Person, if it is a corporation, (b) the capital interest or profits interest of
such Person, if it is a partnership, joint venture or similar entity or (c) the
beneficial interest of such Person, if it is a trust, association or other
unincorporated organization.
"Supplemental Documentation" has the meaning ascribed to such term in
Section 3.4.
"Taxes" with respect to any Person means taxes, assessments or other
governmental charges or levies imposed upon such Person, its income or any of
its properties, franchises or assets.
"TC Notes" means, collectively, the subordinated promissory notes issued by
All-Pure Chemical Co. on July 31, 1996 to the sellers of the stock of T.C.
Holdings, Inc., in the original aggregate principal amount of $4,500,000.
"TCH" means T.C. Holdings, Inc., a Subsidiary of All Pure Chemical Co.
"Term Lenders" means the lenders of the Term Loans pursuant to the Term
Loan Documents.
"Term Loan Agreement" means the Term Loan Agreement dated as of June 17,
1997 among Borrower, Term Lenders, DLJ Capital Funding, Inc., as Syndication
Agent for the Term Lenders, Salomon Brothers Holding Company, Inc., as
Documentation Agent for the Term Lenders and Bank of America Illinois, as
Administrative Agent for the Term Lenders.
"Term Loan Documents" means, collectively, the agreements, instruments and
documents evidencing and governing the Term Loans, including the Term Loan
Agreement, as each of the same may be amended, modified or supplemented from
time to time in compliance with Section 5.26 hereof.
"Term Loans" means, collectively, all indebtedness of Borrower under the
Term Loan Documents, in the aggregate principal amount due upon maturity of not
more than $100,000,000.
"Termination Date" means June 17, 2002.
"Total Debt to EBITDA Ratio" for any period means the ratio of (a) all
Indebtedness for borrowed money as of the last day of such period to (b) EBITDA
for such period, all determined for Borrower and its Subsidiaries on a
consolidated basis and in accordance with GAAP.
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"Trade Accounts Payable" of any Person means trade accounts payable of such
Person with a maturity of not greater than two hundred seventy (270) days
incurred in the ordinary course of such Person's business.
"Transaction Documents" means, collectively, the agreements, instruments
and documents evidencing and governing the Transactions, as each of the same
may be amended, modified or supplemented from time to time in compliance with
Section 5.26 hereof.
"Transactions" has the meaning ascribed to such term in Section 8.1.2.
"UCC" means the Uniform Commercial Code as in effect in the State of
Illinois, and any successor statute, together with any regulations thereunder,
in each case as in effect from time to time. References to sections of the UCC
shall be construed to also refer to any successor sections.
"Unmatured Event of Default" means any event or condition which, with the
lapse of time or giving of notice to Borrower or both, would constitute an
Event of Default.
"ZENECA Indemnity" means the indemnity in favor of Borrower by ZENECA
Delaware Holdings, Inc. and ZENECA, Inc. (as successors to ICI Delaware
Holdings, Inc. and ICI Americas, Inc., respectively) in respect of certain
environmental matters, issued in connection with the purchase by PAI in
October, 1988 of PCAC.
1.2. Other Definitional Provisions.
Unless otherwise defined or the context otherwise requires, all financial
and accounting terms used herein or in any certificate or other document made
or delivered pursuant hereto shall be defined in accordance with GAAP. Unless
otherwise defined therein, all terms defined in this Agreement shall have the
defined meanings when used in any Related Agreement or Supplemental
Documentation. Terms used in this Agreement which are defined in any Supplement
or Exhibit hereto shall, unless the context otherwise indicates, have the
meanings given them in such Supplement or Exhibit. Other terms used in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.
1.3. Interpretation of Agreement.
A Section, an Exhibit or a Schedule is, unless otherwise stated, a
reference to a section hereof, an exhibit hereto or a schedule hereto, as the
case may be. Section captions used in this Agreement are for convenience only
and shall not affect the construction of this Agreement. The words "hereof,"
"herein," "hereto" and "hereunder" and words of similar import when used in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. Reference to "this Agreement" shall include the
provisions of Supplement A.
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1.4. Compliance with Financial Restrictions.
Compliance with each of the financial ratios and restrictions contained in
Section 5 or Supplement A shall, except as otherwise provided herein, be
determined in accordance with GAAP consistently followed.
2. LOANS; LETTERS OF CREDIT; OTHER MATTERS.
2.1. Loans.
2.1.1. Revolving Loans.
(a) Subject to the terms and conditions of this Agreement and the Related
Agreements, and in reliance upon the warranties and representations of Borrower
set forth herein and the warranties and representations of Borrower and each
other Obligor set forth in the Related Agreements, each Lender, severally and
not jointly, agrees to make its Pro Rata Share of such loans or advances
(individually each a "Revolving Loan" and collectively the "Revolving Loans")
from time to time before the Termination Date to Borrower as Borrower may from
time to time request; provided, that Agent may, but shall not be obligated to,
make such Revolving Loans to Borrower on behalf of Lenders as a
"Disproportionate Advance" (as defined below); provided further, that, except
as provided in Section 2.8, the aggregate outstanding principal amount of the
Revolving Loans made by or on behalf of Lenders shall not at any time exceed
the Revolving Loan Availability. Revolving Loans made by or on behalf of
Lenders may be repaid and, subject to the terms and conditions hereof,
reborrowed to but not including the Termination Date unless the Credit extended
under this Agreement is otherwise terminated as provided in this Agreement. No
Lender shall be obligated at any time to make available to Borrower its Pro
Rata Share of any requested Revolving Loan if such amount, plus its Pro Rata
Share of all Revolving Loans then outstanding, would exceed such Lender's
Maximum Loan Amount at such time. No Lender shall be obligated to make
available its Pro Rata Share of any Revolving Loans during the occurrence of
any Event of Default or Unmatured Event of Default; provided that
notwithstanding the foregoing or anything contained herein to the contrary,
regardless of whether an Event of Default or an Unmatured Event of Default
exists, each Lender shall, at the request of Agent, continue to be obligated to
make its Pro Rata Share of the Revolving Loans available to Borrower for a
period of up to five (5) Banking Days, but in any event, no Lender shall be
obligated at any time to make available to Borrower its Pro Rata Share of any
such requested Revolving Loan if such amount, plus its Pro Rata Share of all
Revolving Loans then outstanding, would exceed such Lender's Maximum Loan
Amount at such time. Neither Agent nor any Lender shall be responsible for any
failure by any other Lender to perform its obligations to make advances
hereunder, and the failure of any Lender to make its Pro Rata Share of any
advance hereunder shall not relieve any other Lender of its obligation, if any,
to make its Pro Rata Share of Loans hereunder, nor require such other Lender to
make more than its Pro Rata Share of any Loans hereunder. If Borrower makes a
request for a Revolving Loan as provided herein, or if Agent desires to make a
Revolving Loan pursuant to any other provision of this Agreement or any Related
Agreement
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that permits Agent to advance Revolving Loans to Borrower, Agent, at its option
and in its sole and absolute discretion, shall do either of the following:
(i) Advance the amount of the proposed Revolving Loan to Borrower
disproportionately (a "Disproportionate Advance") out of Agent's own funds on
behalf of Lenders, and request settlement in accordance with Section 2.15,
such that upon such settlement, each Lender's share of the outstanding
Revolving Loans (including, without limitation, the amount of any
Disproportionate Advance) equals its Pro Rata Share and such Disproportionate
Advance shall be deemed to be repaid; or
(ii) Notify each Lender and Borrower by telecopy or other similar form of
teletransmission of the proposed advance on the same day Agent is notified by
Borrower of Borrower's request for an advance hereunder or the same day Agent
desires to make a Revolving Loan for the benefit of Borrower (to the extent
permitted hereunder or under any Related Agreement). Each Lender shall remit,
to the Demand Deposit Account, on or prior to twelve o'clock noon, Chicago
time, on the business day immediately succeeding the date of such
notification, immediately available funds in an amount equal to such Lender's
Pro Rata Share of such proposed advance.
If and to the extent that a Lender does not settle with Agent as required under
clause (i), Borrower agrees to repay to Agent forthwith on demand such amount
required to be paid by such Lender to Agent, together with interest thereon,
for each day from the date such amount is made available to Borrower until the
date such amount is repaid to Agent, at the interest rate applicable at such
time for such Revolving Loans; provided, that Borrower's obligation to repay
such advance to Agent shall not relieve each Lender of its liability to Agent
or Borrower for failure to settle as provided in clause (i).
(b) In the event the aggregate outstanding principal balance of the
Revolving Loans exceeds the Revolving Loan Availability, Borrower shall, unless
Agent permits such Over Advance as provided in Section 2.8 or Requisite Lenders
shall otherwise consent, without notice or demand of any kind, immediately make
such repayments of the Revolving Loans or take such other actions as shall be
necessary to eliminate such excess.
(c) All Revolving Loans hereunder shall be paid by Borrower on the
Termination Date, unless payable sooner pursuant to the provisions of this
Agreement, but may, at Borrower's election, be repaid in whole or in part at
any time prior to such date without premium or penalty (other than as expressly
provided in Section 3.4 of Supplement A with respect to LIBOR Rate Loans repaid
prior to the end of the applicable Interest Rate Period).
2.1.2. Prepayment of all Liabilities; Reduction of Revolving Credit Amount.
Borrower may prepay all of the Liabilities in full at any time, without premium
or penalty (other than as expressly provided in Section 3.4 of Supplement A
with respect to LIBOR Rate
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Loans repaid prior to the end of the applicable
Interest Rate Period), by prepaying the outstanding principal balance of the
Revolving Loans, together with (a) all accrued and unpaid interest on the
Liabilities, (b) all other outstanding Liabilities and (c) cash in the amount
of, or adequate (in Agent's determination) cash collateral for, the Letter of
Credit Obligations. Borrower may permanently reduce the Revolving Credit Amount
by multiples of $1,000,000, so long as after giving effect to such reduction,
the Revolving Credit Amount equals or exceeds the amount of the Loans plus the
Letter of Credit Obligations then outstanding.
2.1.3. Maximum Outstanding Liabilities. Notwithstanding any other provision
of this Agreement, the aggregate outstanding principal balance of the Loans
plus Letter of Credit Obligations shall not exceed the Revolving Credit Amount;
provided, however, that the foregoing shall not limit the right of Agent to
advance Revolving Loans to Borrower pursuant to any other provision of this
Agreement or any Related Agreement that permits Agent to advance Revolving
Loans to Borrower. Any Revolving Loan advanced by Agent to Borrower under any
of the foregoing provisions shall be deemed to be a Revolving Loan made by
Agent on behalf of Lenders.
2.2. Letters of Credit.
(a) In addition to Loans made pursuant to Section 2.1, Agent will, upon
receipt of duly executed Applications and such other documents, instruments
and/or agreements as Agent may require, request, on Borrower's behalf, that
Issuing Bank issue Letters of Credit on such terms as are satisfactory to Agent
and Issuing Bank, provided, however that no Letter of Credit will be issued if,
before or after taking such Letter of Credit into account, (i) the Letter of
Credit Obligations exceed $10,000,000 or (ii) the Letter of Credit Obligations
exceeds the lesser of (A) the Revolving Credit Amount minus the outstanding
principal balance of the Revolving Loans and (B) the Borrowing Base minus the
outstanding principal balance of the Revolving Loans. If such excess shall at
any time exist, Borrower shall, unless Requisite Lenders shall otherwise
consent, promptly make such payments as are necessary to eliminate such excess
or shall promptly post cash collateral in the amount of such excess. No Letter
of Credit shall have an expiry date after the Termination Date. Prior to the
Closing Date, Issuing Bank issued letters of credit for the account of PAI
under a certain Loan and Security Agreement dated the Original Closing Date
(the "Existing Letters of Credit"). All Existing Letters of Credit still
outstanding on the date hereof are listed on Exhibit G. Agent, Issuing Bank,
Lenders and Borrower hereby agree that the Existing Letters of Credit shall be
deemed to be Letters of Credit issued under this Agreement for the account of
Borrower and the Letter of Credit Obligations in respect thereof shall be
primary obligations of Borrower.
(b) Borrower agrees to pay to Issuing Bank, on demand, Issuing Bank's
standard issuance, negotiation and administrative operating fees and charges in
effect from time to time for issuing and administering any Letters of Credit
and if not so paid, each Lender shall, without regard to any other provision of
this Agreement or any other Related Agreement, any defense that Borrower may
have to its obligation to pay Issuing Bank in connection with such fees and
charges or any defense that any Lender may have in connection with the
participation
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described in Section 2.2(e) in connection with any Letter of Credit or L/C
Draft, pay Issuing Bank for such Lender's Pro Rata Share of such fees and
charges, and any payments so made by Lenders to Issuing Bank shall be deemed to
be Revolving Loans. Each Lender (other than a Lender that is Issuing Bank)
acknowledges and agrees that it shall not be entitled to any of the fees and
charges of Issuing Bank. Borrower further agrees to pay Agent, for the benefit
of itself and Lenders, a commission equal to one and one-half percent (1.5%)
per annum (calculated on the basis of a year consisting of three hundred sixty
(360) days and paid for actual days elapsed) of the daily average of the
undrawn amount of each Letter of Credit and on each L/C Draft accepted (but not
yet paid) in connection therewith. Such Letter of Credit commissions shall be
paid in arrears on the last day of each month thereafter. Agent may provide for
the payment of any fees, charges or commissions due hereunder by advancing the
amount thereof to Borrower as a Revolving Loan. At all times that any Default
Rate is being charged under this Agreement, the Letter of Credit commission
shall be equal to the otherwise applicable commission plus two percent (2%) per
annum.
(c) Subject to the remaining sentences of this clause (c), Borrower agrees
to reimburse Issuing Bank, on demand, for each payment made by Issuing Bank
under or pursuant to any Letter of Credit or L/C Draft and if not so
reimbursed, each Lender shall, without regard to any other provision of this
Agreement or any other Related Agreement, any defense that Borrower may have to
its obligation to reimburse Issuing Bank in connection with such payment or any
defense that any Lender may have in connection with the participation described
in Section 2.2(e) in connection with any Letter of Credit or L/C Draft,
reimburse Issuing Bank for such Lender's Pro Rata Share of such payment, and
any payments so made by Lenders to Issuing Bank shall be deemed to be Revolving
Loans. Agent and Lenders agree that so long as there is sufficient Revolving
Loan Availability and provided that no Event of Default is then in existence or
would be caused thereby, Agent will provide for the payment of any
reimbursement obligations and any interest accrued thereon by advancing the
amount thereof to Borrower as a Revolving Loan as soon as reasonably
practicable. Prior to such advance, the amount of such reimbursement
obligations shall bear interest at the then applicable Floating Rate. Agent
shall have the option, pursuant to Section 2.8, to so provide for such payments
even if there is not sufficient Revolving Loan Availability or if an Event of
Default is then in existence or would be caused thereby and such amounts will
bear interest at the rate set forth in Section 2.8. In the event a Letter of
Credit or L/C Draft is not reimbursed from a Revolving Loan as provided herein,
Borrower agrees to pay Agent, for the benefit of itself and Lenders, on demand,
interest at the Default Rate on any amounts paid by Issuing Bank in respect of
a Letter of Credit or an L/C Draft until the reimbursement of Issuing Bank by
Borrower of such payment.
(d) Notwithstanding anything to the contrary herein or in any Application,
upon the occurrence of an Event of Default, an amount equal to the aggregate
amount of the outstanding Letter of Credit Obligations shall, at Agent's option
and without demand upon or further notice to Borrower, be deemed (as between
Lenders and Borrower) to have been paid or disbursed by Agent under the Letters
of Credit and accepted L/C Drafts (notwithstanding that such amounts may not in
fact have been so paid or disbursed), and a Revolving Loan to
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Borrower in the amount of such Letter of Credit Obligations to have been made
and accepted, which Loan shall be immediately due and payable. In lieu of the
foregoing, at the election of Agent at any time after an Event of Default,
Borrower shall, upon Agent's demand, deliver to Agent cash collateral equal to
the aggregate Letter of Credit Obligations. Any such cash collateral and/or any
amounts received by Agent in payment of the Loan made pursuant to this
paragraph (d) shall be held by Agent, for the benefit of itself and Lenders, in
the Assignee Deposit Account or a separate account appropriately designated as
a cash collateral account in relation to this Agreement and the Letters of
Credit and shall be retained by Agent, for the benefit of itself and Lenders,
as collateral security in respect of, first, the Liabilities under or in
connection with the Letters of Credit and L/C Drafts and then, all other
Liabilities. Such amounts shall not be used by Agent to pay any amounts drawn
or paid under or pursuant to any Letter of Credit or L/C Draft, but may be
applied to reimburse Issuing Bank for drawings or payments under or pursuant to
Letters of Credit or L/C Drafts which Issuing Bank has paid, or if no such
reimbursement is required, to payment of such other Liabilities as Agent shall
determine. Any amounts remaining in any cash collateral account established
pursuant to this paragraph (d) following payment in full of all Liabilities
shall be returned to Borrower.
(e) Immediately upon the issuance of a Letter of Credit in accordance with
this Agreement, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from Issuing Bank, without recourse or
warranty, an undivided interest and participation therein to the extent of such
Lender's Pro Rata Share (including without limitation, all obligations of
Borrower with respect thereto). Borrower hereby indemnifies each of Agent and
each Lender against any and all liability and expense it may incur in
connection with any Letter of Credit or L/C Draft and agrees to reimburse each
of Agent and each Lender for any payment made by Agent or any Lender to Issuing
Bank, except for any liability incurred or payment made as a result of Agent's
or such Lender's gross negligence or willful misconduct.
2.3. Loan Account; Demand Deposit Account.
Agent shall establish or cause to be established on its books in Borrower's
name one or more accounts (each a "Loan Account") to evidence Loans made to
Borrower. Agent or Lenders, as appropriate, will credit or cause to be credited
to a commercial account ("Demand Deposit Account") maintained by Borrower at
BAI's 231 South LaSalle Street, Chicago, Illinois office the amount of any sums
advanced as Loans hereunder, which shall be disbursed at Borrower's direction.
Any amounts advanced as Loans hereunder which are credited to Borrower's Demand
Deposit Account, together with any other amounts advanced to Borrower as a Loan
pursuant to this Agreement, will be debited to the applicable Loan Account and
result in an increase in the principal balance outstanding in such Loan Account
in the amount thereof.
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2.4. Interest and Fees.
2.4.1. Interest. The unpaid principal amount of each Revolving Loan
hereunder shall bear interest until maturity at the rate or rates applicable to
Revolving Loans indicated in Supplement A hereto. If any Revolving Loan or
portion thereof is not paid when due, whether by acceleration or otherwise, the
entire unpaid principal amount of the Revolving Loans shall bear interest
thereafter until such amount is paid in full at the Default Rate applicable to
Revolving Loans indicated in Supplement A hereto. Until maturity, interest on
the Revolving Loans shall be paid by Borrower on the date(s) indicated in
Supplement A, and at such maturity. After maturity, whether by acceleration or
otherwise, accrued interest shall be payable on demand.
2.4.2. Nonuse Fee. Borrower agrees to pay to Agent, for the benefit of
itself and Lenders, a fee equal to the Applicable Margin per annum on the daily
average amount by which the Revolving Credit Amount exceeds the outstanding
principal balance of the Revolving Loans plus the Letter of Credit Obligations.
The fee provided for in this Section 2.4.2 shall be payable monthly in arrears
on the last day of each month commencing June 30, 1997, and on the date the
Revolving Credit terminates for the period then ended.
2.4.3. Method of Calculating Interest and Fees. Interest on the unpaid
principal amount of each Loan shall accrue from and including the date such
Loan is made to, but not including, the date such Loan is paid. Interest
determined at the Floating Rate shall be calculated on the basis of a year
consisting of three hundred sixty-five (365) days and paid for actual days
elapsed; and interest determined at the LIBOR Rate and any fees payable under
this Agreement shall be calculated on the basis of a year consisting of three
hundred sixty (360) days and paid for actual days elapsed.
2.4.4. Payment of Interest and Fees. Agent may provide for the payment of
any unpaid accrued interest and any fees by charging the Demand Deposit Account
or any bank account maintained by Borrower with Agent or by advancing the
amount thereof to Borrower as a Revolving Loan.
2.5. Requests for Loans; Borrowing Base Certificates; Other Information.
(a) Loans shall be requested in writing or by telephone, except for
Overdraft Loans and Revolving Loans made pursuant to any provision of this
Agreement or any Related Agreement that permits Agent to advance Revolving
Loans to Borrower.
(b) In the event that Borrower shall at any time, or from time to time, (i)
make a request for a Loan hereunder or (ii) be deemed to have requested an
Overdraft Loan, Borrower agrees to forthwith provide Agent and Lenders with
such information, at such frequency and in such format, as is reasonably
required by Agent, such information to be current as of the time of such
request.
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(c) Borrower further agrees to provide to Agent and Lenders a current
Borrowing Base Certificate on the last day of each month for the preceding
month and at such other times as Agent may request. Such Borrowing Base
Certificate shall be in substantially the same form as that attached hereto as
Exhibit A, executed and certified as accurate by such officers or employees of
Borrower as Borrower designates from time to time in writing to Agent pursuant
to duly adopted resolutions of Borrower's Board of Directors authorizing such
action.
(d) Borrower may request, telephonically or by written authorization, the
disbursement of Revolving Loans by Agent or Lenders, as appropriate. Borrower
shall provide Agent with documentation satisfactory to Agent indicating the
names of those employees of Borrower authorized by Borrower to sign Borrowing
Base Certificates and/or to make telephonic requests for Loans and Letters of
Credit, and/or to authorize disbursement of the proceeds of Loans by wire
transfer or otherwise, and Agent and Lenders shall be entitled to rely upon
such documentation until notified in writing by Borrower of any change(s) in
the names of the employees so authorized. Agent and Lenders shall be entitled
to act on the instructions of anyone identifying himself as one of the persons
authorized to request Loans and Letters of Credit, or disbursements of Loan
proceeds by telephone and Borrower shall be bound thereby in the same manner as
if the person were actually so authorized. Borrower agrees to indemnify and
hold each of Agent and each Lender harmless from any and all claims, damages,
liabilities, losses, costs and expenses (including Attorneys' Fees) which may
arise or be created by the acceptance of instructions for making or paying
Loans in writing or by telephone. Each such request must be received by Agent
no later than 10:00 a.m. (Chicago time) on the date on which such Revolving
Loan is requested to be made.
2.6. Statements.
All Loans and payments hereunder shall be recorded on Agent's books, which
shall be rebuttably presumptive evidence of the amount of such Loans
outstanding at any time hereunder. Agent will account monthly as to all Loans
and payments hereunder and, absent demonstrable error, each monthly accounting
will be fully binding on Borrower unless, within thirty (30) days of Borrower's
receipt thereof, Borrower shall provide Agent with a specific listing of
exceptions. Notwithstanding any term or condition of this Agreement to the
contrary, however, the failure of Agent to record the date and amount of any
Loan hereunder shall not limit or otherwise affect the obligation of Borrower
to repay any such Loan.
2.7. Overdraft Loans.
Agent, in its sole and absolute discretion, and subject to the terms
hereof, may make a Revolving Loan to Borrower in an amount equal to the amount
of any overdraft which may from time to time exist with respect to the Demand
Deposit Account or any bank account which Borrower may now or hereafter have
with Agent. The existence of any such overdraft shall be deemed to be a request
by Borrower for such Loan.
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Borrower acknowledges that Agent is under no duty or obligation to make any
Loan to Borrower to cover any overdraft. Borrower further agrees that if the
making of a Loan to cover any Overdraft would result in an Over Advance, such
overdraft shall constitute a separate Loan under this Agreement (an "Overdraft
Loan"), which shall bear, from the date on which the overdraft occurred until
paid, interest in an amount equal to the greater of one hundred thirty percent
(130%) of the highest rate of interest then actually being charged for
Revolving Loans (other than Overdraft Loans) made hereunder, and $50 per day.
If Agent, in its sole and absolute discretion, decides not to make a Loan to
cover part or all of any overdraft, Agent may return any check(s) which created
such overdraft.
2.8. Over Advances.
If the aggregate outstanding Revolving Loans and Letter of Credit
Obligations exceed Revolving Loan Availability (such excess Liabilities are
herein referred to as "Over Advances"), Agent, in its sole and absolute
discretion, may, for a period of five (5) Banking Days, to the extent such Over
Advance arises as a result of a reduction in the Borrowing Base, permit such
Over Advance to exist without the consent of any Lender (but subject to Section
2.1.1(a)) and continue to make Revolving Loans on behalf of Lenders, and after
the expiration of such five (5) Banking Day period, no such event or occurrence
shall cause or constitute a waiver by any Lender of its right to refuse to make
any further Revolving Loans at any time that an Over Advance exists or would
result therefrom; provided, that Agent may not (i) make Revolving Loans on
behalf of Lenders under this Section 2.8 to the extent such Revolving Loans
would cause a Lender's Pro Rata Share of the Revolving Loans to exceed such
Lender's Maximum Loan Amount or (ii) make Revolving Loans on behalf of Lenders
under this Section 2.8 to the extent such Revolving Loans would cause the then
outstanding Revolving Loans and Letter of Credit Obligations to exceed the sum
of $1,000,000 and the amount of the outstanding Revolving Loans and Letter of
Credit Obligations as of the date Agent became aware of the Over Advance.
During any period in which an Over Advance exists, the amount of Over Advances
shall bear interest at a rate equal to one hundred thirty percent (130%) of the
highest rate of interest then actually being charged for Revolving Loans made
hereunder.
2.9. All Loans One Obligation.
The Revolving Loans and all other Loans under this Agreement shall
constitute one Loan, and all Indebtedness and other Liabilities of Borrower
under this Agreement and any of the Related Agreements shall constitute one
general obligation secured by Agent's Lien, for the benefit of itself and
Lenders, on all of the Collateral and by all other Liens heretofore, now, or at
any time or times hereafter granted by Borrower or any other Obligor to Agent,
for the benefit of itself and Lenders. Borrower agrees that all of the rights
of Agent and Lenders set forth in this Agreement shall apply to any
modification of or supplement to this Agreement, any Supplements or Exhibits
hereto, and the Related Agreements, unless otherwise agreed in writing.
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2.10. Making of Payments; Application of Collections; Charging of Accounts.
(a) All payments hereunder (including payment of Letter of Credit
Obligations and payments with respect to any Notes) shall be made without
set-off or counterclaim and shall be made to Agent in immediately available
funds (except for payments to be made to Issuing Bank as provided in Section
2.2 and except as Agent may otherwise consent) prior to 12:30 p.m., Chicago
time, on the date due at BAI's office at 231 South LaSalle Street, Chicago,
Illinois 60697, or at such other place as may be designated by Agent to
Borrower in writing. Any payments received after such time shall be deemed
received on the next Banking Day. Whenever any payment to be made hereunder or
under any Note shall be stated to be due on a date other than a Banking Day,
such payment may be made on the next succeeding Banking Day, and such extension
of time shall be included in the calculation of interest and any fees.
(b) (i) Borrower authorizes Agent, and Agent will, subject to the
provisions of this paragraph (b), apply the whole or any part of any amounts
received by Agent (whether deposited in the Assignee Deposit Account or
otherwise received by Agent) from the collection of items of payment and
proceeds of any Collateral (including without limitation proceeds of
insurance), against the principal and/or interest of any Loans made hereunder
and/or any other Liabilities, whether or not then due, in such order of
application as Agent may determine; provided, however, that prior to the
occurrence of an Event of Default, any such amounts received by Agent shall, at
Borrower's option, (y) be transferred to Borrower's Demand Deposit Account or
other operating account in accordance with written instructions provided by
Borrower, or (z) be applied in the manner, if any, specifically set forth in
this Agreement with respect to such payment and if no such manner is
specifically set out, then as follows: first, to payment of amounts then due
with respect to fees (including Attorneys' Fees), charges and expenses for
which Borrower is liable pursuant to this Agreement and the Related Agreements;
second, to payment of amounts then due with respect to interest on the Loans;
third, to payment of the principal of the Loans.
(ii) Notwithstanding anything to the contrary herein, (i) all cash,
checks, instruments and other items of payment, solely for purposes of
determining the occurrence of an Event of Default, shall be deemed received
upon actual receipt by Agent, unless the same is subsequently dishonored for
any reason whatsoever, (ii) for purposes of determining whether, under Sections
2.1 and 2.2, there is availability for Loans or Letters of Credit, all cash,
checks, instruments and other items of payment shall be applied against the
Liabilities when received by Agent and (iii) solely for purposes of interest
calculation hereunder, all cash, checks, instruments and other items of payment
shall be deemed to have been applied against the Liabilities on the first
Banking Day after receipt by Agent of collected funds with respect thereto;
further provided, that any amounts earned on such funds during the period after
receipt thereof by Agent and prior to application thereof against the
Liabilities as provided herein, shall be retained by Agent for Agent's own
account. Notwithstanding the foregoing, no checks, drafts or other instruments
received by Agent shall constitute final
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payment with respect to any Liabilities unless and until such item of payment
has actually been collected.
(c) Borrower hereby authorizes Agent, and Agent may, in its sole and
absolute discretion, charge to Borrower at any time when due all or any portion
of any of the Liabilities consisting of principal or interest and, after three
Banking Days' prior notice, any other Liabilities including but not limited to
any Attorneys' Fees and other costs and expenses of Agent and Lenders for which
Borrower is liable pursuant to the terms of this Agreement or any Related
Agreement, or for which any other Obligor is liable pursuant to the terms of
any Related Agreement, by charging Borrower's Demand Deposit Account or any
bank account of Borrower with Agent or by advancing the amount thereof to
Borrower as a Revolving Loan; provided, however that the provisions of this
Section 2.10(c) shall not affect Borrower's obligation to pay when due all
amounts payable by Borrower under this Agreement, any Note or any Related
Agreement, whether or not there are sufficient funds therefor in the Demand
Deposit Account or any such other bank account of Borrower.
2.11. Agent's Election Not to Enforce.
Notwithstanding any term or condition of this Agreement to the contrary,
Agent, in the sole and absolute discretion of Requisite Lenders, at any time
and from time to time, may suspend or refrain from enforcing any or all of the
restrictions imposed in this Section 2, but no such suspension or failure to
enforce shall impair any right or power of Agent or any Lender under this
Agreement, including without limitation any right of each Lender to refrain
from making a Loan or Issuing Bank to refrain from issuing a Letter of Credit
if all conditions precedent to such Lender's obligation to make such Loan or
Issuing Bank's obligation to issue such Letter of Credit have not been
satisfied.
2.12. Reaffirmation.
Each Loan or Letter of Credit, or designation or continuation of a LIBOR
Rate Loan, in each case requested by Borrower pursuant to this Agreement, shall
constitute an automatic certification by Borrower to Agent and Lenders that (a)
all of the representations and warranties of Borrower in this Agreement and
each of the Related Agreements are true and correct on the date of such request
to the same extent as if made on such date, except for such changes as are
specifically permitted hereunder (or under such Related Agreement) and except
for those representations and warranties made solely as of the date hereof or
the Closing Date and (b) immediately before and after making the requested Loan
or issuing the requested Letter of Credit, no Event of Default or Unmatured
Event of Default, then exists or would result therefrom.
2.13. Setoff.
In addition to and not in limitation of all other rights and remedies
(including other rights of offset or banker's lien) that Agent and Lenders may
have under applicable law, each of Agent and each Lender shall, upon the
occurrence of any Event of Default described in Section 6.1, or any Unmatured
Event of Default
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described in Section 6.1(e), have the right to appropriate and apply to the
payment of the Liabilities (whether or not then due), in such order of
application as Agent may elect, any and all balances, credits, deposits
(general or special, time or demand, provisional or final), accounts or moneys
of Borrower then or thereafter with Agent or any Lender. Agent and each Lender
shall promptly advise Borrower of any such setoff and application but failure
to do so shall not affect the validity of such setoff and application.
2.14. Upfront Closing Fee.
Borrower agrees to pay to BAI, for its own account, in connection with the
closing of this Agreement, an upfront closing fee of $87,500, which amount
shall be deemed fully earned and shall be payable in full on the Closing Date.
With Agent's consent, the amount of the closing fee may be advanced to Borrower
as a Revolving Loan.
2.15. Settlements, Distributions and Apportionment of Payments.
On a weekly basis (or more frequently if required by Agent) (a "Settlement
Date"), Agent shall provide each Lender with a statement of the outstanding
balance of the Liabilities as of the end of the Banking Day preceding the
Settlement Date (the "Pre-Settlement Determination Date") and the current
balance of the Revolving Loans funded by each Lender (whether made directly by
such Lender to Borrower or constituting a settlement by such Lender of a
previous Disproportionate Advance made by Agent on behalf of such Lender to
Borrower). If such statement discloses that such Lender's current balance of
the Revolving Loans as of the Pre-Settlement Determination Date exceeds such
Lender's Pro Rata Share of the Revolving Loans outstanding as of the
Pre-Settlement Determination Date, then Agent shall, one (1) Banking Day after
the Settlement Date, transfer to such Lender, by wire transfer, the net amount
due to such Lender in accordance with such Lender's instructions, and if such
statement discloses that such Lender's current balance of the Revolving Loans
as of the Pre-Settlement Determination Date is less than such Lender's Pro Rata
Share of the Revolving Loans outstanding as of the Pre-Settlement Determination
Date, then such Lender shall, one (1) Banking Day after the Settlement Date,
transfer to Agent, by wire transfer the net amount due to Agent in accordance
with Agent's instructions. In addition, payments actually received by Agent
with respect to the following items shall be distributed by Agent to Lenders as
follows:
(a) Within one (1) Banking Day of receipt thereof by Agent, payments to be
applied to interest on the Loans shall be paid to each Lender in proportion to
its Pro Rata Share, subject to any adjustments for any Disproportionate
Advances so that Agent shall receive interest on the Disproportionate Advances
and each Lender shall only receive interest on the amount of funds actually
advanced by such Lender; and
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(b) Within one (1) Banking Day of receipt thereof by Agent, payments to
be applied to the unused line fee set forth in Section 2.4.2 and the Letter of
Credit commission set forth in Section 2.2(b), shall each be paid to each
Lender in proportion to its Pro Rata Share.
Notwithstanding the foregoing, if a Lender has failed to remit its Pro Rata
Share of any Loans required to be made pursuant to Section 2.1.1 or has failed
to make a settlement payment to Agent pursuant to this Section 2.15, no payment
shall be made to such Lender by Agent at any time such Lender's share of the
outstanding Loans is less than such Lender's Pro Rata Share. If Agent or any
Lender fails to pay the other any payment due under this Agreement on its due
date, the party to whom such payment is due shall be entitled to recover
interest from the party obligated to make such payment at a rate per annum
equal to the overnight Federal Funds Rate.
3. COLLATERAL.
3.1. Grant of Security Interest.
As security for the payment of all Loans now or hereafter made by, or on
behalf of, Lenders to Borrower hereunder or under any Note, and as security for
the payment or other satisfaction of all other Liabilities (including without
limitation all reimbursement obligations under any Letters of Credit), Borrower
hereby grants to Agent, for the benefit of itself and Lenders, a security
interest in and to the following property of Borrower, whether now owned or
existing, or hereafter acquired or coming into existence, wherever now or
hereafter located (all such property is hereinafter referred to collectively as
the "Borrower Collateral"):
(a) Accounts Receivable (whether or not Eligible Accounts); Contract
Rights; any and all security deposits and other security held by or granted to
Borrower to secure payments from any and all persons who are or may become
obligated to Borrower under, with respect to, or on account of any Account
Receivable or Contract Right; and all chattel paper and instruments evidencing,
arising out of or relating to any obligations to Borrower for goods sold or
leased or services rendered, or otherwise arising out of or relating to any
property described in this Section 3.1;
(b) Inventory (whether or not Eligible Inventory);
(c) General Intangibles;
(d) Any and all balances, credits, deposits (general or special, time or
demand, provisional or final), accounts or monies of or in the name of Borrower
now or hereafter with Agent, any Lender or any Participant and any and all
property of every kind or description of or in the name of Borrower now or
hereafter, for any reason or purpose whatsoever, in the possession or control
of, or in transit to, or standing to Borrower's credit on the books of, Agent,
any agent or bailee for Agent, any Lender, or any Participant;
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(e) To the extent related to the property described in clauses (a) through
(d) above, all books, correspondence, credit files, records, invoices and other
papers and documents, including without limitation, to the extent so related,
all tapes, cards, computer runs, computer programs and other papers and
documents in the possession or control of Borrower or any computer bureau from
time to time acting for Borrower, and, to the extent so related, all rights in,
to and under all policies of insurance, including claims of rights to payments
thereunder and proceeds therefrom, including business interruption insurance
and any credit insurance; and
(f) All products and proceeds (including but not limited to any Accounts
Receivable or other proceeds arising from the sale or other disposition of any
property described above, any returns of Inventory sold by Borrower, and the
proceeds of any insurance covering any of the property described above) of any
of the foregoing.
3.2. Accounts Receivable.
(a) If requested by Agent, Borrower shall notify Agent immediately of all
material disputes and claims by any Account Debtor and, if reasonably requested
by Agent after the occurrence and during the continuance of an Event of
Default, settle or adjust them, or cause them to be settled or adjusted, at no
expense to Agent or Lenders. If Agent directs after the occurrence and during
the continuance of an Event of Default, no discount or credit allowance shall
be granted thereafter by Borrower or any Designated Subsidiary to any Account
Debtor, other than discounts and trade allowances offered in the ordinary
course of Borrower's or a Designated Subsidiary's business. All Account Debtor
payments and all net amounts received by Agent in settlements, adjustment or
liquidation of any Account Receivable may be applied by Agent to the
Liabilities or credited to the Demand Deposit Account (subject to collection)
with Agent, as more fully described in Section 2.10. If requested by Agent,
Borrower will, and will cause each Designated Subsidiary to, make proper
entries in its books and records, disclosing the assignment of Accounts
Receivable to Agent, for the benefit of itself and Lenders.
(b) Borrower warrants and covenants that: (i) all of the Accounts
Receivable are and will continue to be bona fide existing obligations created
by the sale of goods, the rendering of services, or the furnishing of other
good and sufficient consideration to Account Debtors in the regular course of
business; (ii) all shipping or delivery receipts and other documents furnished
or to be furnished to Agent in connection therewith are and will be genuine;
and (iii) none of the Accounts Receivable identified or included on any
schedule, Borrowing Base Certificate or report as Eligible Accounts Receivable
fail at the time so identified or included to satisfy any of the requirements
for eligibility set forth in the definition of Eligible Accounts Receivable.
(c) Agent is authorized and empowered (which authorization and power, being
coupled with an interest, is irrevocable until the last to occur of termination
of this
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Agreement and payment and performance in full of all of the Payment Liabilities
under this Agreement) at any time in its sole and absolute discretion:
(i) To request, in the name of Agent, in Borrower's or a
Designated Subsidiary's name or the name of a third party,
confirmation from any Account Debtor or party obligated under or with
respect to any Collateral of the amount shown by the Accounts
Receivable or other Collateral to be payable, or any other matter
stated therein;
(ii) To endorse in Borrower's or a Designated Subsidiary's
name and to collect any chattel paper, checks, notes, drafts,
instruments or other items of payment tendered to or received by Agent
in payment of any Account Receivable or other obligation owing to
Borrower or such Designated Subsidiary;
(iii) After the occurrence and during the continuance of an
Event of Default, to notify, either in Agent's name or Borrower's or a
Designated Subsidiary's name, and/or to require Borrower or such
Designated Subsidiary to notify, any Account Debtor or other Person
obligated under or in respect of any Collateral, of the fact of
Agent's Lien thereon, for the benefit of itself and Lenders, and of
the collateral assignment thereof to Agent, for the benefit of itself
and Lenders;
(iv) After the occurrence and during the continuance of an
Event of Default, to direct, either in Borrower's or a Designated
Subsidiary's name or Agent's name, and/or to require Borrower or such
Designated Subsidiary to direct, any Account Debtor or other Person
obligated under or in respect of any Collateral to make payment
directly to Agent of any amounts due or to become due thereunder or
with respect thereto; and
(v) After the occurrence and during the continuance of an
Event of Default, to demand, collect, surrender, release or exchange
all or any part of any Collateral or any amounts due thereunder or
with respect thereto, or compromise or extend or renew for any period
(whether or not longer than the initial period) any and all sums which
are now or may hereafter become due or owing upon or with respect to
any of the Collateral, or enforce, by suit or otherwise, payment or
performance of any of the Collateral either in Agent's own name or in
the name of Borrower or a Designated Subsidiary.
Under no circumstances shall Agent be under any duty to act in regard to any of
the foregoing matters. The costs relating to any of the foregoing matters,
including Attorneys' Fees and out-of-pocket expenses, and the cost of any
Depository Account, Assignee Deposit Account, or other bank account or accounts
which may be required hereunder, shall be borne solely by Borrower whether the
same are incurred by Agent or Borrower,
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and Agent may after three Banking Days' prior to notice to Borrower advance
same to Borrower as a Revolving Loan.
(d) Borrower will notify its Account Debtors to make all payments in
respect of Borrower's Accounts Receivable directly to one or more lockbox
accounts evidenced by agreements in form and substance satisfactory to Agent.
All deposits to such lockbox accounts, and all of the checks, drafts, cash and
other remittances received by Borrower in payment or as proceeds of, or on
account of, any of the Accounts Receivable or other Collateral, shall be
deposited in special bank accounts (the "Depository Accounts") at such banks or
financial institutions as Agent shall consent. Said proceeds shall be deposited
in precisely the form received except for Borrower's endorsement where
necessary to permit collection of items, which endorsement Borrower agrees to
make. Pending such deposit, Borrower agrees not to commingle any such checks,
drafts, cash and other remittances received by it with any of its funds or
property, but will hold them separate and apart therefrom and upon an express
trust for Agent, for the benefit of itself and Lenders, until deposit thereof
is made in the Depository Accounts. All funds in the Depository Accounts at the
end of each Banking Day will be wire transferred or transferred by other means
acceptable to Agent to a special bank account (the "Assignee Deposit Account")
at BAI, over which Agent alone has power of withdrawal. Borrower acknowledges
that the maintenance of the Assignee Deposit Account is solely for the
convenience of Agent in facilitating its own operations, and Borrower does not
and shall not have any right, title or interest in the Assignee Deposit Account
or in the amounts at any time appearing to the credit thereof, except to the
extent that such amounts are transferred to Borrower's Demand Deposit Account
or operating account in accordance with Section 2.10(b)(i). Borrower agrees not
to maintain any depository accounts other than Depository Accounts, the Demand
Deposit Account and the Assignee Deposit Account established pursuant to this
Section 3.2(d). Upon the full and final liquidation of all Payment Liabilities,
Agent will pay over to Borrower any excess amounts received by Agent as payment
or proceeds of Collateral, whether received by Agent as a deposit in the
Assignee Deposit Account, contained in a lockbox account or any Depository
Account or received by Agent as a direct payment on any of the sums due
hereunder. Borrower will cause each of its Designated Subsidiaries to establish
accounts comparable to those set forth above for the collection of the proceeds
of their Accounts Receivable, and Borrower shall cause each Designated
Subsidiary to take all other actions to implement the collection mechanism set
forth in this Section 3.2(d).
(e) Borrower appoints Agent, or any Person whom Agent may from time to time
designate, as Borrower's attorney and agent-in-fact with power: (i) after the
occurrence and during the continuance of an Event of Default to notify the post
office authorities to change the address for delivery of Borrower's mail to an
address designated by Agent; (ii) to receive, open and dispose of all mail
addressed to Borrower, but received by Agent; (iii) to send requests for
verification of Accounts Receivable or other Collateral to Account Debtors;
(iv) to open an Assignee Deposit Account, Depository Accounts, lockbox accounts
or other accounts under Agent's sole control for the collection of Accounts
Receivable or other Collateral, if not required contemporaneously with the
execution hereof; and (v) to do all other things which Agent is permitted to do
under this Agreement or any Related Agreement or which are
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necessary to carry out this Agreement and the Related Agreements. Neither Agent
nor any of its directors, officers, employees or agents will be liable for any
acts of commission or omission nor for any error in judgment or mistake of fact
or law, unless the same shall have resulted from gross negligence or willful
misconduct. The foregoing appointment and power, being coupled with an
interest, is irrevocable until all Payment Liabilities under this Agreement are
paid and performed in full and this Agreement is terminated. Borrower expressly
waives presentment, demand, notice of dishonor and protest of all instruments
and any other notice to which it might otherwise be entitled.
(f) If any Account Receivable or Contract Right, in either case in excess
of $2,000,000, and designated by Borrower as an Eligible Account, arises out of
a contract with the United States or any state or local governmental entity, or
any department, agency, or instrumentality of any thereof, Borrower will, and
will cause each Designated Subsidiary to, immediately notify Agent in writing
and execute any instruments and take any steps reasonably required by Agent in
order that all monies due and to become due under such contract shall be
assigned to Agent, for the benefit of itself and Lenders, and notice thereof
given to the applicable government under the Federal Assignment of Claims Act
of 1940, as amended, or other applicable laws or regulations. The failure of
Borrower or a Designated Subsidiary to comply with this clause (f) shall not by
itself constitute an Event of Default; rather, such failure will cause the
applicable Account Receivable or Contract Right to be deemed not to be an
Eligible Account under this Agreement.
(g) If any Account Receivable or Contract Right is evidenced by chattel
paper or promissory notes, trade acceptances, or other instruments for the
payment of money, Borrower will, unless Agent shall otherwise agree, deliver
the originals of same to Agent, appropriately endorsed to Agent's order and,
regardless of the form of such endorsement, Borrower hereby expressly waives
presentment, demand, notice of dishonor, protest and notice of protest and all
other notices with respect thereto.
3.3. Inventory.
(a) Borrower warrants and covenants that: (i) all of the Inventory is, and
at all times shall be, owned by Borrower or a Designated Subsidiary free of all
claims and Liens (except as set forth in Section 5.15); and (ii) neither
Borrower nor any Designated Subsidiary will make any further assignment of any
thereof or create or permit to exist any further Lien thereon, unless approved
in writing by Requisite Lenders, nor permit any of Agent's rights therein to be
affected by any attachment, levy, garnishment or other judicial process.
(b) Neither Agent nor any Lender shall be liable or responsible in any way
for the safekeeping of any Inventory delivered to it, to any bailee appointed
by or for it, to any warehouseman, or under any other circumstances, other than
for losses caused by its gross negligence or willful misconduct. Neither Agent
nor any Lender shall be responsible for collection of any proceeds or for
losses in collected proceeds held by Borrower or any
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Designated Subsidiary in trust for Agent. Any and all risk of loss for any or
all of the foregoing shall be upon Borrower and the Designated Subsidiaries.
(c) Any material change in the value, or condition of any Inventory, and
any errors discovered in any monthly inventory certificate under Section 5.1.3
or any other inventory schedule delivered to Agent and Lenders, shall be
reported to Agent promptly. Borrower represents and warrants that, as to each
schedule of Inventory delivered to Agent or any Lender:
(i) The descriptions, origins, sizes, qualities, quantities, weights, and
markings of all goods stated thereon, or on any attachment thereto, are
true and correct in all respects;
(ii) None of the goods are defective, of second quality, used, or goods
returned after shipment, except where described as such; and
(iii) All Inventory not included on such schedule has been previously
scheduled.
3.4. Supplemental Documentation.
At Agent's request, Borrower shall execute and deliver, or cause to be
executed and delivered, to Agent, at any time or times hereafter, such
agreements, documents, financing statements, warehouse receipts, bills of
lading, notices of assignment of Accounts Receivable, schedules of Accounts
Receivable assigned, and other written matter necessary or reasonably requested
by Agent to perfect and maintain perfected Agent's Lien on the Collateral, for
the benefit of itself and Lenders (all the above hereinafter referred to as
"Supplemental Documentation"), in form and substance acceptable to Agent, and
pay all taxes, fees and other costs and expenses associated with any recording
or filing of the Supplemental Documentation. Borrower hereby irrevocably makes,
constitutes and appoints Agent (and all Persons designated by Agent for that
purpose) as Borrower's true and lawful attorney (and agent-in-fact) (which
appointment and power, being coupled with an interest, is irrevocable until the
last to occur of termination of this Agreement and payment and performance in
full of all of the Payment Liabilities under this Agreement) to sign the name
of Borrower on any of the Supplemental Documentation and to deliver any of the
Supplemental Documentation to such Persons as Agent in its sole and absolute
discretion, may elect. Borrower agrees that a carbon, photographic,
photostatic, or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement.
3.5. Collateral for the Benefit of Agent and Lenders.
All Liens granted to Agent hereunder and under the Related Agreements and
all Collateral delivered to Agent hereunder and under the Related Agreements
shall be
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deemed to have been granted and delivered to Agent, for the benefit of itself
and Lenders, to secure the Liabilities.
3.6. Certain Intellectual Property.
Borrower hereby grants Agent, for the benefit of Lenders, a world-wide
irrevocable license or other right to use, without charge, Borrower's labels,
rights of use of any name, tradenames, trademarks and advertising matter, or
any assets and property of a similar nature (collectively, the "Intangible
Rights"), as they pertain to the Collateral, in advertising for sale and
selling any Collateral and Borrower's rights under all applicable licenses and
license agreements related to the foregoing shall inure to Agent's benefit.
Such license shall remain in full force and effect until all of the Liabilities
have been repaid in full. Any transfer of or Lien on the Intangible Rights
granted by Borrower to any other Person shall be subject in all respects to
Agent's rights granted hereunder.
3.7. Landlord's Agreements.
In the event that Borrower shall at any time, or from time to time (a)
make a request for a Loan hereunder or (ii) be deemed to have requested an
Overdraft Loan, Borrower shall, at Agent's request, promptly deliver to Agent
such Landlord's Agreements with respect to leased locations of Borrower and the
Designated Subsidiaries as Agent shall request; provided, that until such time
as such Landlord's Agreements are delivered, Agent shall have the right, in its
reasonable business judgment, to establish reserves against the Borrowing Base
in the amount of three (3) month's rent for each leased location for which
Agent has requested but not received such a Landlord's Agreement.
4. REPRESENTATIONS AND WARRANTIES.
To induce Agent and Lenders to make Loans to, and issue Letters of Credit
for the account of, Borrower under this Agreement, Borrower makes the following
representations and warranties to Agent and Lenders, all of which shall be true
and correct as of the date the initial Loan is made or the initial Letter of
Credit is issued and shall survive the execution of this Agreement and the
making of the initial Loan and the issuance of the initial Letter of Credit:
4.1. Organization.
Borrower and each Designated Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
respective incorporation. Borrower and each Designated Subsidiary is in good
standing and is duly qualified to do business in each jurisdiction where,
because of the nature of its activities or properties, such qualification is
required, except for those states in which its failure to qualify to do
business would not be reasonably likely to have a Material Adverse Effect.
Except as set forth on Schedule 4.1 (with respect to Borrower) or Schedule 4.10
(with respect to each Designated Subsidiary), on the date hereof, Borrower and
each Designated
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Subsidiary conducts business in its own name exclusively. Schedule 4.1 sets
forth a complete and accurate list, as of the date of this Agreement, of (a)
the state of formation of Borrower, (b) each state in which Borrower is
qualified to do business and (c) all of Borrower's tradenames, trade styles or
doing business forms.
4.2. Authorization.
Borrower is duly authorized to execute and deliver this Agreement, any
Notes, and any Related Agreements or Supplemental Documentation contemplated by
this Agreement, and is and will continue to be duly authorized to borrow monies
hereunder and to perform its obligations under this Agreement, any Notes and
any such Related Agreements and Supplemental Documentation. Each Designated
Subsidiary is duly authorized to execute and deliver any Related Agreements or
Supplemental Documentation contemplated to be delivered by such Designated
Subsidiary, and is and will continue to be duly authorized to perform its
obligations thereunder. The execution, delivery and performance by (a) Borrower
of this Agreement, any Notes, and any Related Agreements or Supplemental
Documentation contemplated by this Agreement, and the borrowings hereunder and
(b) each Designated Subsidiary of any Related Agreements or Supplemental
Documentation to which it is a party, do not and will not require any consent
or approval of any governmental agency or authority.
4.3. No Conflicts.
The execution, delivery and performance by (a) Borrower of this
Agreement, any Notes, and any Related Agreements or Supplemental Documentation
contemplated by this Agreement and (b) each Designated Subsidiary of any
Related Agreements or Supplemental Documentation to which it is a party, do not
and will not conflict with (i) any provision of law, (ii) the Certificate or
Articles of Incorporation, as applicable, or by-laws, of Borrower or such
Designated Subsidiary, (iii) any agreement binding upon Borrower or such
Designated Subsidiary which conflict is reasonably likely to have a Material
Adverse Effect or (iv) any court or administrative order or decree applicable
to Borrower or such Designated Subsidiary which conflict is reasonably likely
to have a Material Adverse Effect, and do not and will not require, or result
in, the creation or imposition of any Lien on any asset of Borrower or any
Designated Subsidiary, except as provided herein.
4.4. Validity and Binding Effect.
This Agreement, any Notes, and any Related Agreements or Supplemental
Documentation contemplated by this Agreement, when duly executed and delivered,
will be legal, valid and binding obligations of Borrower and each Designated
Subsidiary party thereto, as applicable, enforceable against Borrower and each
such Designated Subsidiary in accordance with their respective terms.
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4.5. No Default.
Neither Borrower nor any Designated Subsidiary is in default under any
agreement or instrument to which Borrower or such Designated Subsidiary is a
party or by which any of their respective properties or assets is bound or
affected, which default is reasonably likely to have a Material Adverse Effect.
No Event of Default or Unmatured Event of Default has occurred and is
continuing.
4.6. Financial Statements.
Borrower's consolidated audited financial statements as of December 31,
1996 and Borrower's consolidated and consolidating unaudited financial
statements as of March 31, 1997, copies of which have been furnished to Agent,
have been prepared in conformity with GAAP applied on a basis consistent with
that of the preceding Fiscal Year and period and present fairly the financial
condition of Borrower and the Subsidiaries as of such dates and the results of
their operations for the periods then ended, subject (in the case of the
interim financial statement) to year-end audit adjustments. Since December 31,
1996, there has been no Material Adverse Change with respect to Borrower and
the Designated Subsidiaries. OCC's audited financial statements as of December
31, 1996 and OCC's unaudited financial statements as of March 31, 1997, copies
of which have been furnished to Agent, have been prepared in conformity with
GAAP and present fairly the financial condition of OCC as of such dates and the
results of its operations for the periods then ended, subject (in the case of
the interim financial statements) to year-end audit adjustments. Since December
31, 1996, there has been no material adverse change in the condition (financial
or otherwise), operations, performance, prospects, properties or affairs of OCC
or in the ability of OCC to perform its obligations under any material
agreement to which OCC is a party. Borrower's consolidated and consolidating
unaudited pro forma balance sheets as of the Closing Date reflect pro forma
changes in Borrower's financial condition since March 31, 1997, including the
pro forma effects of the Transactions and the application of proceeds in
respect thereof, and have been prepared in conformity with GAAP and present
fairly the financial condition of Borrower and the Subsidiaries as of such
date.
4.7. Insurance.
Schedule 4.7 hereto is a complete and accurate summary of the property
and casualty insurance program carried by Borrower and the Designated
Subsidiaries on the date hereof. Schedule 4.7 includes the insurer's(s')
name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s)
of coverage, the annual premium(s), deductibles and self-insured retention and
describes any retrospective rating plan, fronting arrangement or any other
self-insurance or risk assumption agreed to by Borrower or any Designated
Subsidiary or imposed upon Borrower or any Designated Subsidiary by any such
insurer. This summary also includes any self-insurance program that is in
effect.
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4.8. Litigation; Contingent Liabilities.
(a) As of the date hereof, except for those referred to in Schedule 4.8,
there are no claims, litigation, arbitration proceedings or governmental
proceedings pending or threatened against or affecting Borrower, any Designated
Subsidiary or any Related Party, the results of which are reasonably likely to
have a Material Adverse Effect.
(b) As of the date hereof, other than any liability incident to the
claims, litigation or proceedings disclosed in Schedule 4.8 or Schedule 4.19,
or provided for or disclosed in the financial statements referred to in Section
4.6 neither Borrower nor any of the Designated Subsidiaries has any contingent
liabilities which are reasonably likely to have a Material Adverse Effect.
4.9. Liens.
None of the Collateral or other property, revenues or assets of Borrower
or any Designated Subsidiary is subject to any Lien (including but not limited
to Liens pursuant to Capitalized Leases under which Borrower or any Designated
Subsidiary is a lessee) except: (a) Liens in favor of Agent, for the benefit of
itself and Lenders; (b) Liens for current Taxes not delinquent or Taxes being
contested in good faith and by appropriate proceedings and as to which such
reserves or other appropriate provisions as may be required by GAAP are being
maintained; (c) carriers', warehousemen's, mechanics', materialmen's and other
like statutory Liens arising in the ordinary course of business securing
obligations which are not overdue or which are being contested in good faith
and by appropriate proceedings and as to which such reserves or other
appropriate provisions as may be required by GAAP are being maintained; (d)
Liens listed on Schedule 4.9 and Liens permitted by Section 5.15; and (e) Liens
consented to in writing by Requisite Lenders.
4.10. Subsidiaries.
As of the date hereof, all of Borrower's Subsidiaries are listed on
Schedule 4.10. Schedule 4.10 sets forth, for each such Subsidiary, a complete
and accurate statement of (a) Borrower's percentage ownership of each of the
Subsidiaries, (b) the state or other jurisdiction of formation or incorporation
of each Subsidiary, (c) each state in which each Subsidiary is qualified to do
business and (d) all of each Subsidiary's trade names, trade styles or doing
business forms. Except as otherwise noted on Schedule 4.10, all of the
Subsidiaries listed on Schedule 4.10 are Restricted Subsidiaries and are
Designated Subsidiaries.
4.11. Partnerships; Joint Ventures.
As of the date hereof, neither Borrower nor any of the Designated
Subsidiaries is a partner or joint venturer in any partnership or joint venture
other than the partnerships and joint ventures listed on Schedule 4.11.
Schedule 4.11 sets forth, for each
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such partnership or joint venture, a complete and accurate statement of (a)
Borrower's and each Designated Subsidiary's percentage ownership of each such
partnership or joint venture, (b) the state or other jurisdiction of formation
or incorporation, as appropriate, of each such partnership or joint venture,
(c) each state in which each such partnership or joint venture is qualified to
do business and (d) all of each such partnership's or joint venture's trade
names, trade styles or doing business forms on the date of this Agreement.
4.12. Business and Collateral Locations.
(a) On the date hereof, the office where Borrower and keeps its books and
records concerning its Accounts Receivable and other Collateral, and Borrower's
chief place of business and chief executive office, is located at the address
of Borrower set forth on the signature pages of this Agreement. Schedule 4.12
accurately identifies the office where each Designated Subsidiary keeps its
books and records concerning its Accounts Receivable and other Collateral.
Schedule 4.12 contains a complete and accurate list, as of the date of this
Agreement, of all of Borrower's and each Designated Subsidiary's places of
business other than that referred to in the first two sentences of this
paragraph (a).
(b) Schedule 4.12 contains a complete and accurate list, as of the date
of this Agreement, of the locations of all Inventory and other tangible
Collateral and if any Inventory or other Collateral is not in the possession or
control of Borrower, a Designated Subsidiary or the owner of such Collateral,
the name and mailing address of each bailee, processor, warehouseman or other
Person in possession or control thereof.
4.13. Senior Secured Notes.
The Senior Secured Notes have been issued on or prior to the Closing Date
in accordance with and pursuant to the terms of the Offering Memorandum and in
compliance with all laws, including without limitation Rule 144A of the
Securities Act of 1933, as amended and all other applicable federal and state
securities laws. The issuance of the Senior Secured Notes and the execution of
the Senior Secured Note Documents has been duly authorized by all necessary
corporate action on the part of Borrower and each Designated Subsidiary party
thereto and will not require any consent or approval of any governmental agency
or authority that has not been obtained prior to the date hereof. The issuance
of the Senior Secured Notes and the execution of the Senior Secured Note
Documents does not conflict with (i) any provision of law, (ii) the Certificate
or Articles of Incorporation or by-laws of Borrower or any Designated
Subsidiary party thereto, (iii) any agreement binding upon Borrower or any
Designated Subsidiary party thereto which conflict is reasonably likely to have
a Material Adverse Effect, or (iv) any court or administrative order or decree
applicable to Borrower or any Designated Subsidiary party thereto which
conflict is reasonably likely to have a Material Adverse Effect. The Senior
Secured Note Documents are legal, valid and binding obligations of Borrower and
each Designated Subsidiary party thereto, enforceable against Borrower and each
Designated Subsidiary party thereto in accordance with their respective terms.
All representations and
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warranties of Borrower or any Designated Subsidiary contained in the Senior
Secured Note Documents are true and correct in all material respects as of the
date hereof.
4.14. Term Loans.
The Term Loans have been consummated on or prior to the Closing Date in
accordance with and pursuant to the terms of the Term Loan Documents and in
compliance with all laws and in connection therewith, the Term Lenders have
advanced term loans to Borrower in the aggregate amount of $100,000,000. The
execution of the Term Loan Documents have been duly authorized by all necessary
corporate action on the part of Borrower and each Designated Subsidiary party
thereto and will not require any consent or approval of any governmental agency
or authority that has not been waived by the Term Lenders or obtained prior to
the date hereof. The execution of the Term Loan Documents does not conflict
with (i) any provision of law, (ii) the Certificate or Articles of
Incorporation or by-laws of Borrower or any Designated Subsidiary party
thereto, (iii) any agreement binding upon Borrower or any Designated Subsidiary
party thereto which conflict is reasonably likely to have a Material Adverse
Effect or (iv) any court or administrative order or decree applicable to
Borrower or any Designated Subsidiary party thereto which conflict is
reasonably likely to have a Material Adverse Effect. The Term Loan Documents
are legal, valid and binding obligations of Borrower and each Designated
Subsidiary party thereto, enforceable against Borrower and each Designated
Subsidiary party thereto in accordance with their respective terms. All
representations and warranties of Borrower or any Designated Subsidiary
contained in the Term Loan Documents are true and correct in all material
respects as of the date hereof.
4.15. Eligibility of Collateral.
Each Account Receivable or item of Inventory which Borrower shall,
expressly or by implication (by inclusion on a Borrowing Base Certificate or
otherwise), request Agent to classify as an Eligible Account Receivable or as
Eligible Inventory, respectively, will, as of the time when such request is
made, conform in all respects to the requirements of such classification set
forth in the respective definitions of "Eligible Account Receivable" and
"Eligible Inventory" set forth herein.
4.16. Patents, Trademarks, etc.
Borrower and each of the Designated Subsidiaries possesses adequate
licenses, patents, patent applications, copyrights, trademarks, trademark
applications, trade styles, and tradenames to continue to conduct its
respective business as heretofore conducted by it, and all such licenses,
patents, patent applications, copyrights, trademarks, trademark applications,
trade styles, and tradenames existing on the date hereof of Borrower or any
Designated Subsidiary are listed on Schedule 4.16.
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4.17. Solvency.
Each of (i) Borrower and each Designated Subsidiary and (ii) Borrower and
the Designated Subsidiaries, taken as a whole, now have capital sufficient to
carry on their businesses and transactions and all businesses and transactions
in which any of them is about to engage, and are able to pay their debts as
they mature. Each of (i) Borrower and each Designated Subsidiary, and (ii)
Borrower and the Designated Subsidiaries, taken as a whole, are now solvent and
now own property having a value, both at fair valuation and at present fair
salable value, greater than the amount required to pay its debts.
4.18. Contracts; Labor Matters.
Except as disclosed on Schedule 4.18: (a) neither Borrower nor any
Designated Subsidiary is a party to any contract or agreement, or is subject to
any charge, corporate restriction, judgment, decree or order, which is
reasonably likely to have a Material Adverse Effect; (b) as of the date hereof,
no labor contract to which Borrower or any Designated Subsidiary is a party or
is otherwise subject is scheduled to expire prior to the Termination Date; (c)
neither Borrower nor any Designated Subsidiary has, within the two (2)-year
period preceding the date of this Agreement, taken any action which would have
constituted or resulted in a "plant closing" or "mass layoff" within the
meaning of the Federal Worker Adjustment and Retraining Notification Act of
1988 or any similar applicable federal, state or local law, and Borrower has no
reasonable expectation that any such action is or will be required at any time
prior to the initial Termination Date and (d) on the date of this Agreement (i)
neither Borrower nor any Designated Subsidiary is a party to any labor dispute
and (ii) there are no strikes or walkouts relating to any labor contracts to
which Borrower or any Designated Subsidiary is a party or is otherwise subject.
4.19. Pension and Welfare Plans.
Each Pension Plan complies, and has been administered in compliance, in
all material respects, with all applicable statutes and governmental rules and
regulations; no Reportable Event has occurred and is continuing with respect to
any Pension Plan; neither Borrower nor any ERISA Affiliate has withdrawn from
any Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" as
defined in Section 4203 or 4205 of ERISA, respectively, with respect to which
Borrower or any ERISA Affiliate has any unsatisfied liability; no steps have
been instituted to terminate any Pension Plan; no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under Section 302(f) of ERISA; no condition exists or event or transaction has
occurred in connection with any Pension Plan or Multiemployer Plan that is
reasonably likely to have a Material Adverse Effect; and neither Borrower nor
any ERISA Affiliate is a "contributing sponsor" as defined in Section
4001(a)(13) of ERISA of a "single-employer plan" as defined in Section
4001(a)(15) of ERISA that has two or more contributing sponsors at least two of
whom are not under common control. Except as listed in Schedule
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4.19, neither Borrower nor any ERISA Affiliate, to the extent there is joint
and several liability with Borrower to pay such benefits, has any liability to
pay any welfare benefits under any employee welfare benefit plan within the
meaning of Section 3(l) of ERISA to former employees thereof or to current
employees with respect to claims incurred after the termination of their
employment other than as required by Section 4980B of the Code or Part 6 of
Subtitle B of Title 1 of ERISA.
4.20. Regulations G, U and X.
Neither Borrower nor any Designated Subsidiary is engaged in the business
of purchasing or selling Margin Stock or extending credit to others for the
purpose of purchasing or carrying Margin Stock, and no part of the proceeds of
the Senior Secured Loans, the Term Loans or any borrowing hereunder will be
used to purchase or carry any Margin Stock or for any other purpose which would
violate any of the margin regulations of the Federal Reserve Board.
4.21. Compliance.
Except as described on Schedule 4.21 or Schedule 4.25, each of Borrower
and each Designated Subsidiary is in compliance with all statutes and
governmental rules and regulations applicable to it, the noncompliance with
which is reasonably likely to have a Material Adverse Effect.
4.22. Taxes.
Each of Borrower and each Designated Subsidiary has filed all material
tax returns which are required to have been filed and has paid, or made
adequate provisions for the payment of, all of its Taxes which are due and
payable, except such Taxes, if any, as are being contested in good faith and by
appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP have been maintained. The federal income
tax liability of Borrower and each Designated Subsidiary has been audited by
the Internal Revenue Service and has been finally determined and satisfied (or
the time for audit has expired) for all tax years up to and including the tax
year ended December 31, 1995. Except as described on Schedule 4.22, as updated
from time to time, Borrower is not aware of any proposed assessment against
Borrower or any of the Designated Subsidiaries for additional Taxes (or any
basis for any such assessment).
4.23. Investment Company Act Representation.
Neither Borrower nor any Designated Subsidiary is an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
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4.24. Public Utility Holding Company Act Representation.
Neither Borrower nor any Designated Subsidiary is a "holding company" or
a "subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
4.25. Environmental and Safety and Health Matters.
Except as disclosed on Schedule 4.25, Borrower and each of the Designated
Subsidiaries and/or each property, operations and facility that Borrower or any
Designated Subsidiary owns, operates or controls (a) complies in all respects
with (i) all applicable Environmental Laws, except for those laws the failure
with which to comply is not reasonably likely to have a Material Adverse Effect
and (ii) all applicable Occupational Safety and Health Laws, except for those
laws the failure with which to comply is not reasonably likely to have a
Material Adverse Effect; (b) is not subject to any judicial or administrative
proceeding alleging the violation of any Environmental Law or Occupational
Safety and Health Law which is reasonably likely to have a Material Adverse
Effect; (c) has not received any notice (i) that it may be in violation of any
Environmental Law or Occupational Safety and Health Law which is reasonably
likely to have a Material Adverse Effect, (ii) threatening the commencement of
any proceeding under Environmental Law or Occupational Safety and Health Law,
which is reasonably likely to have a Material Adverse Effect, or (iii) alleging
that it is or may be responsible for any response, cleanup, or corrective
action, including but not limited to any remedial investigation/feasibility
studies, under any Environmental Law or Occupational Safety and Health Law,
which, is reasonably likely to have a Material Adverse Effect; (d) to the
knowledge of Borrower is not the subject of federal or state investigation
evaluating whether any investigation, remedial action or other response is
needed to respond to (i) a Release or threatened Release into the environment
of any Hazardous Material or the spillage, disposal or release or threatened
release into the environment of any other hazardous, toxic or dangerous waste,
substance or constituent, or other substance regulated under Environmental Law
which is reasonably likely to have a Material Adverse Effect or (ii) any
allegedly unsafe or unhealthful condition regulated under Environmental Law
which is reasonably likely to have a Material Adverse Effect; (e) has not filed
any notice under or relating to any Environmental Law or Occupational Safety
and Health Law indicating or reporting (i) any past or present Release into the
environment of, or treatment, storage or disposal of, any Hazardous Material or
spillage, disposal or release into the environment of any other hazardous,
toxic or dangerous waste, substance or constituent, or other substance
regulated under Environmental Law or (ii) any unsafe or unhealthful condition,
in either case, which is reasonably likely to have a Material Adverse Effect,
and to Borrower's knowledge, there exists no basis for such notice irrespective
of whether such notice was actually filed; and (f) has no contingent liability
in connection with any actual Release into the environment of, or otherwise
with respect to, any Hazardous Material or spillage, disposal or release into
the environment of any other hazardous, toxic or dangerous waste, substance or
constituent, or other substance, whether
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on any premises owned or occupied by Borrower or any Designated Subsidiary or
on any other premises, which is reasonably likely to have a Material Adverse
Effect. Except as disclosed on Schedule 4.25, there are no Hazardous Materials
on, in or under any property or facilities owned, operated or controlled by
Borrower or any Designated Subsidiary the presence of which is reasonably
likely to have a Material Adverse Effect, including but not limited to such
Hazardous Materials that may be contained in underground storage tanks, but
excepting such Hazardous Materials used in accordance with all applicable laws
and such Hazardous Materials used in the same manner as an ordinary consumer
(e.g., gasoline in tanks of motor vehicles, small amounts of cosmetic cleaners,
etc.). Except with respect to the termination of its term on April 12, 1999, to
the best of Borrower's knowledge, the ZENECA Indemnity shall remain in full
force and effect in accordance with its terms following consummation of the
Transactions.
4.26. Related Agreements and Transaction Documents.
As of the date hereof, all representations and warranties of Borrower and
each Designated Subsidiary contained in any Related Agreements and all
representations and warranties of Parent, Borrower and each Designated
Subsidiary contained in any Transaction Document (whether such representations
and warranties were made to Agent or any Lender or to another Person), are true
and correct as if made on the date hereof (except for those representations and
warranties which are expressly made as of another specified date) and Borrower
hereby adopts and affirms all such representations and warranties which
Borrower agrees shall be incorporated by reference herein and made a part
hereof.
4.27. Capitalized Lease Obligations.
As of the date hereof, the Indebtedness of Borrower and each Designated
Subsidiary under Capitalized Leases is as set forth on Schedule 4.27.
4.28. Other Transactions.
(a) The Final Offer to Purchase and Solicitation of Consents (the
"Offer") with respect to the First Mortgage Note has become effective and
pursuant thereto (a) holders of an aggregate of ___% in principal amount of the
First Mortgage Notes have consented to the amendments and modifications of the
First Mortgage Note Indenture described in the Offer and evidenced by the
certain Third Supplemental Indenture and the Third Supplemental Indenture has
become effective and (b) holders of an aggregate of ___% in principal amount of
the First Mortgage Notes have tendered their First Mortgage Note pursuant to
the Offer. After payment by Borrower of the tender price pursuant to the Offer,
no more than $__________ in aggregate principal amount of the First Mortgage
Note will be outstanding.
(b) Each of the Transactions other than the issuance of the Senior
Secured Notes, the consummation of the Term Loans and the tender and consent
solicitation for the First Mortgage Notes, has been consummated in accordance
with and pursuant to the terms of
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the applicable Transaction Documents, and in compliance with all applicable
laws except where noncompliance therewith is not reasonably likely to have a
Material Adverse Effect. The execution of all such Transaction Documents has
been duly authorized by all necessary corporate action on the part of Borrower,
the Designated Subsidiaries and Parent, as applicable, and will not require any
consent or approval of any governmental agency or authority that has not been
duly waived or obtained prior to the date hereof. The execution of all such
Transaction Documents does not conflict with (i) any provision of law, (ii) the
Certificate or Articles of Incorporation or by-laws of Borrower, any Designated
Subsidiary party thereto or Parent, (iii) any agreement binding upon Borrower,
any Designated Subsidiary party thereto or Parent which conflict is reasonably
likely to have a Material Adverse Effect or (iv) any court or administrative
order or decree applicable to Borrower, any Designated Subsidiary or Parent
party thereto which conflict is reasonably likely to have a Material Adverse
Effect.
(c) After consummation of the Transactions, the capitalization of
Borrower and each Designated Subsidiary shall be as set forth on Schedule 4.28.
4.29. Holding Companies.
As of the Closing Date, each of Parent, Borrower, PAI, BMPC, East, TCH
and Imperial is a holding company without material assets, operations or
business, other than the ownership by (a) Parent of the common stock of
Borrower and Pioneer Water Technologies, Inc., (b) Borrower of the common stock
of PAI, (c) PAI of the common stock of its Subsidiaries, (d) TCH of the common
stock of T.C. Products, Inc. and (e) Imperial of 50% of the common stock of
Kemwater North America Company. Upon consummation of the Transactions, as of
the Closing Date, none of Parent, Borrower, PAI, BMPC, East, TCH or Imperial
has any Indebtedness or other obligations other than Indebtedness of each of
them in respect of the First Mortgage Loans, the Senior Secured Loans, the Term
Loans and under this Agreement.
5. BORROWER COVENANTS.
From the date of this Agreement and thereafter until the Credit is
terminated and all Payment Liabilities of Borrower hereunder are paid in full,
Borrower agrees that unless Agent, at the written direction of Requisite
Lenders, shall otherwise consent in writing, it will:
5.1. Financial Statements and Other Reports.
Furnish to Agent and each Lender, in form satisfactory to Agent:
5.1.1. Financial Reports:
(a) Annual Audited Financial Statements. Within ninety (90) days after
each Fiscal Year, a copy of the annual audited financial statements of Borrower
and the Subsidiaries prepared on a consolidated and consolidating basis and in
conformity with GAAP and certified
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by an independent certified public accountant who shall be satisfactory to
Agent, together with (i) a certificate from such accountant, (x) containing a
computation of, and showing compliance with, each of the financial ratios and
restrictions contained in this Section 5 or in Supplement A, and (y) to the
effect that, in making the examination necessary for the signing of such annual
audit report, such accountant has not become aware of any Event of Default or
Unmatured Event of Default that has occurred and is continuing and that relates
to financial or other accounting matters or the financial ratios and
restrictions contained in this Section 5 or in Supplement A, or, if such
accountant has become aware of any such event, describing it and (ii) if
prepared in connection with the annual audit report, the annual operating
statements of Borrower and the Subsidiaries prepared on a consolidating basis
and in conformity with GAAP applied in a manner consistent with the audit
report referred to in preceding clauses (a)(i), signed by Borrower's chief
financial officer or assistant treasurer.
(b) Monthly Financial Statement. Within thirty (30) days after the end of
each month of each Fiscal Year of Borrower except (i) forty-five (45) days
after the end of each month closing a fiscal quarter and (ii) ninety (90) days
after the end of each month closing a Fiscal Year, a copy of the unaudited
financial statement of Borrower and the Subsidiaries prepared on a consolidated
and consolidating basis and in conformity with GAAP applied in a manner
consistent with the audit report referred to in preceding clause (a)(i), and
consisting of at least a balance sheet as at the close of such month and an
income statement and cash flow statement for such month and for the period from
the beginning of such Fiscal Year to the close of such month, compared, in the
case of the consolidated statements only, to the actual results for the same
period during the prior Fiscal Year and to Borrower's budget (delivered
pursuant to Section 5.1.1(c), for the current Fiscal Year). Each such financial
statement delivered with respect to a month which is not closing a fiscal
quarter or Fiscal Year of Borrower shall be signed by the chief financial
officer or assistant treasurer.
(c) Annual Budgets. Within thirty (30) days after the end of each Fiscal
Year of Borrower, a copy of an annual budget of Borrower for the current Fiscal
Year, prepared on a consolidated and consolidating basis and in conformity with
GAAP applied in a manner consistent with the prior Fiscal Year's budget, signed
by Borrower's chief financial officer or assistant treasurer and consisting of
at least a balance sheet, an income statement and a cash flow statement, each
calculated on a quarter by quarter basis.
(d) Officer's Certificate. Together with the financial statements
furnished by Borrower under the preceding clauses (a), and (b), a certificate
of Borrower's chief financial officer or assistant treasurer in the form of
Exhibit C, dated the date of such annual audit report or such monthly financial
statement, as the case may be, containing a statement that no Event of Default
or Unmatured Event of Default has occurred and is continuing, or, if there is
any such event, describing it and the steps, if any, being taken to cure it,
and containing a computation of, and showing compliance with, each of the
financial ratios and restrictions contained in this Section 5 or in Supplement
A.
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5.1.2. Agings. If so requested by Agent, and, even if no such request has
been received, within thirty (30) days after the end of each month after
Borrower has requested the initial disbursement of Revolving Loans hereunder,
an aging of all Accounts Receivable of Borrower and the Designated Subsidiaries
as of the end of such month, in form substantially as attached hereto as
Exhibit E.
5.1.3. Inventory Certification. If so requested by Agent, and, even if no
such request has been received, within thirty (30) days after the end of each
month after Borrower has requested the initial disbursement of Revolving Loans
hereunder, an Inventory certification report as of the end of the month for all
Inventory locations of Borrower and the Designated Subsidiaries as of the end
of such month, in form substantially as attached hereto as Exhibit B.
5.1.4. Other Reports and Information:
(a) SEC and Other Reports. Copies of each filing and report made by
Parent, Borrower or any Designated Subsidiary with or to any securities
exchange or the Securities and Exchange Commission, promptly upon the filing or
making thereof;
(b) Intercompany Loans. Upon request therefor by Agent and, even if no
such request has been received, within thirty (30) days after the end of each
month after Borrower has requested the initial disbursement of Revolving Loans
hereunder, a list of all outstanding balances of the Permitted Intercompany
Indebtedness of each Designated Subsidiary owing to Borrower as of the end of
such month, together with a list of all debits and credits with respect
thereto, in form and content acceptable to Agent; and
(c) Other Reports. Any information required to be provided pursuant to
other provisions of this Agreement, and such other reports or information from
time to time reasonably requested by Agent on behalf of itself or any Lender.
5.2. Notices.
Notify Agent in writing of any of the following promptly upon learning of
the occurrence thereof (or, in the case of clauses (e) and (f) (other than
clause (e)(iii)) of this Section 5.2, at least thirty (30) days prior to the
occurrence thereof to the extent applicable to Borrower, any Designated
Subsidiary or any other Obligor), describing the same and, if applicable, the
steps being taken by the Person(s) affected with respect thereto:
(a) Default. The occurrence of (i) an Event of Default or Unmatured Event
of Default and (ii) to the extent not included in clause (i) of this Section
5.2(a), the default by Parent, Borrower, any other Obligor or any Designated
Subsidiary under any material note, indenture, loan agreement, mortgage, lease,
deed or other material similar agreement to which Parent, Borrower, any other
Obligor or any Designated Subsidiary, as appropriate, is a party or by which it
is bound (including without limitation any First Mortgage Note Documents,
Senior
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Secured Note Documents, Term Loan Documents, the Seller Notes, the TC Notes or
any Subordinated Debt Document);
(b) Intentionally Omitted.
(c) Judgment. The entry of any judgment or decree against Borrower, any
other Obligor or any Designated Subsidiary, if the amount of such judgment
exceeds $500,000;
(d) Pension Plans and Welfare Plans. The occurrence of a Reportable Event
with respect to any Pension Plan; the filing of a notice of intent to terminate
a Pension Plan by Borrower, any ERISA Affiliate, or any other Obligor; the
institution of proceedings to terminate a Pension Plan by the PBGC or any other
Person; the withdrawal in a "complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 and 4205, respectively, of ERISA by Borrower, any
ERISA Affiliate or any other Obligor from any Multiemployer Plan, which
complete or partial withdrawal results in a liability to such Multiemployer
Plan in excess of $1,000,000; the failure of Borrower, any other Obligor or any
ERISA Affiliate to make a required contribution to any Pension Plan, including
but not limited to any failure to pay an amount sufficient to give rise to a
Lien under Section 302(f) of ERISA; the taking of any action with respect to a
Pension Plan which could result in the requirement that Borrower, any other
Obligor or any ERISA Affiliate furnish a bond or other security to the PBGC or
such Pension Plan; the occurrence of any other event with respect to any
Pension Plan which could result in the incurrence by Borrower, any other
Obligor or any ERISA Affiliate of any material liability, fine or penalty; or
the establishment of a new plan subject to ERISA or an amendment to any
existing plan which will result in a material increase in contributions or
benefits under such plan or the incurrence of any material increase in the
liability of Borrower, any other Obligor (or an ERISA Affiliate to the extent
there is joint and several liability with Borrower or any other Obligor) or any
Designated Subsidiary, with respect to any "employee welfare benefit plan" as
defined in Section 3(l) of ERISA which covers former employees thereof or
current employees and their beneficiaries with respect to claims incurred after
the termination of their employment;
(e) Business and Collateral Information. Any change or proposed change in
any of the information set forth on Schedule 4.12, including but not limited to
(i) any change in the location of any Inventory, (ii) the identity of any new
bailee, processor, warehouseman or other Person in possession or control of any
Inventory or other Collateral, (iii) any change in the name or address of the
lessor or owner of any real property leased to Borrower, any Designated
Subsidiary or any other Obligor, (iv) any proposed change in the location of
Borrower's or any Designated Subsidiary's chief executive office or chief place
of business, (v) any proposed opening, closing or other change in the list of
offices and other places of business of Borrower or any Designated Subsidiary
and (vi) any opening, closing or other change in the offices and other places
of business of each other Obligor;
(f) Change of Name or Status. Any change in the name or address of
Borrower, any Designated Subsidiary, or any other Obligor;
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(g) Insurance Information. Any material change in the information set
forth in Schedule 4.7;
(h) Environmental and Safety and Health Matters. The occurrence of any
event, or the acquisition of any information which, if it had occurred or was
true on or before the Closing Date, would have been required to have been
disclosed and included on Schedule 4.25, including but not limited to existence
of any Environmental Lien and receipt of any notice from any federal, state or
local government or agency alleging violation of any Environmental Law or any
Occupational Safety and Health Law which violation is reasonably likely to have
a Material Adverse Effect;
(i) Material Adverse Change or Effect. The occurrence of a Material
Adverse Change or the occurrence of any event that is reasonably likely to have
a Material Adverse Effect;
(j) Default by Others. Any material default by any Account Debtor or
other Person obligated to Borrower, any other Obligor, or any Designated
Subsidiary, under any contract, chattel paper, note or other evidence of
amounts payable or due or to become due to Borrower, such Obligor or Designated
Subsidiary if the amount payable under such contract, chattel paper, note or
other evidence of amounts payable or due or to become due is reasonably likely
to have a Material Adverse Effect;
(k) Change in Management or Line(s) of Business. Any substantial change
in the senior management of Borrower or any Designated Subsidiary, or any
change in Borrower's or any Designated Subsidiary's line(s) of business;
(l) Transaction Documents. The existence or assertion of any claim or
possible claim in excess of $100,000 or that is reasonably likely to have a
Material Adverse Effect by or against Borrower, any Designated Subsidiary or
any Obligor under any Transaction Document.
(m) Other Indebtedness Notices. Copies of any material amendments,
waivers or consents, notices of breach or default, notices relating to the
exercise or nonexercise of any remedy available to any Person, notices of
indemnity or other claims, written materials relating to any dispute, written
materials relating to the exercise of any rights derived from or arising in
connection with any Indebtedness and other written communications of a material
nature, including any communications by Parent, Borrower or any Designated
Subsidiary in connection with the First Mortgage Loans, the Senior Secured
Loans, the Term Loans, the Seller Notes or the TC Notes, other than any such
notice or other written materials already sent to Agent pursuant to any other
Section of this Agreement; and
(n) Patents, Etc. Any change to the list of patents, trademarks,
copyrights and other information set forth in Schedule 4.16;
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(o) Litigation. An update of any changes to Schedule 4.8, disclosing all
newly instituted claims, litigation, arbitration proceedings or governmental
proceedings against or affecting Borrower or any Designated Subsidiary or any
Collateral which involves an amount in controversy in excess of $500,000 or
which requests injunctive or other equitable relief, and which discloses any
significant events or occurrences in any of the matters set forth on Schedule
4.8 or any updates previously provided thereto;
(p) Certain Changes. Any change in the information set forth in Schedule
4.1, Schedule 4.10 or Schedule 4.11 concerning Borrower, any Designated
Subsidiary or any partnership or joint venture of any of the foregoing; and
(q) Other Notices. Notice of the occurrence of such other event as Agent
may reasonably from time to time specify, and any notices required to be
provided pursuant to any Related Agreement or the other provisions of this
Agreement.
5.3. Existence.
Except as permitted under Section 5.11, maintain and preserve, and cause
each Designated Subsidiary to maintain and preserve, its respective existence
as a corporation or other form of business organization, as the case may be,
and all rights, privileges, licenses, patents, patent rights, copyrights,
trademarks, trade names, trade styles, franchises and other authority to the
extent material and necessary for the conduct of its respective business in the
ordinary course as conducted from time to time.
5.4. Nature of Business.
Engage in, and cause each Designated Subsidiary to engage in,
substantially the same fields of business as it is engaged in on the date
hereof or reasonably incidental thereto.
5.5. Books, Records and Access.
Maintain, and cause each Designated Subsidiary to maintain, complete and
accurate books and records (including but not limited to records relating to
Accounts Receivable, Inventory, and other Collateral and property), in which
full and correct entries in conformity with GAAP shall be made of all dealings
and transactions in relation to its respective business and activities. Cause
the books and records of Borrower and each Designated Subsidiary as at the end
of any calendar month to be posted and closed not more than thirty (30) days
after the last business day of such month except (i) forty-five (45) days after
the end of each month closing a fiscal quarter and (ii) ninety (90) days after
the end of each month closing a fiscal year. Permit, and cause each Designated
Subsidiary to permit, access by Agent and its agents and employees to the books
and records of Borrower and such Designated Subsidiary at Borrower's or such
Designated Subsidiary's place or places of business at intervals to be
determined by Agent upon reasonable prior notice and during normal business
hours and without hindrance or delay, and permit and
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cause each Designated Subsidiary to permit Agent and its agents and employees
to inspect the books and records and location of such Designated Subsidiary, as
applicable, and to inspect, audit, check and make copies and/or extracts from
the books, records, computer data and records, computer programs, journals,
orders, receipts, correspondence and other data relating to Inventory, Accounts
Receivable, and, any other Collateral and property, or relating to any other
transactions between the parties hereto; provided, that Borrower shall permit
each Lender and its respective agents and employees to accompany Agent on each
such visit; and provided further, that after the occurrence of an Event of
Default, Agent and Lenders may have access to such premises at such times as
they desire, without having given prior notice. Any and all such inspections,
appraisals and/or audits by Agent and its agents and employees relating to
Borrower's or any Designated Subsidiary's books and records and locations shall
be at Borrower's expense, no matter when the same shall occur. Agent may
advance such costs for which Borrower is responsible to Borrower as a Revolving
Loan.
5.6. Insurance.
Maintain, and cause each Designated Subsidiary to maintain, insurance to
such extent and against such hazards and liabilities as is commonly maintained
by companies similarly situated. Keep the Collateral properly housed and
insured for its full insurable value (subject to customary deductibles) against
loss or damage by fire, theft, explosion, sprinklers and such other risks as
are customarily insured against by persons engaged in business similar to that
of Borrower or such Designated Subsidiary, as applicable, with such companies,
in such amounts and under policies in such form as shall be reasonably
satisfactory to Agent. Certificates of such policies of insurance in form and
substance satisfactory to Agent have been delivered to Agent prior to the date
hereof together with evidence of payment of all premiums therefor then due.
Borrower hereby directs all insurers under Borrower's policies of insurance to
pay all proceeds payable thereunder after the occurrence and during the
continuance of an Event of Default in respect of the Collateral directly to
Agent, as its interest may appear. Borrower appoints Agent and any Person whom
Agent may from time to time designate (and all officers, employees or agents
designated by Agent or such Person) after the occurrence and during the
continuance of an Event of Default as Borrower's true and lawful attorney and
agent in fact with power to make, settle and adjust claims under such policies
of insurance, endorse the name of Borrower on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance which are
payable to Agent or any Lender hereunder and make all determinations and
decisions with respect to such policies of insurance. The foregoing appointment
and power, being coupled with an interest, is irrevocable until all Payment
Liabilities under this Agreement are paid and performed in full and this
Agreement is terminated. In the event Borrower or any Designated Subsidiary at
any time or times hereafter shall fail to obtain or maintain any of the
policies of insurance required herein or to pay any premium in whole or in part
relating thereto when due, then Agent, without waiving or releasing any
obligation of or default by Borrower hereunder, may at any time or times
thereafter (but shall be under no obligation to do so) obtain and maintain
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such policies of insurance and pay such premiums and take any other action with
respect thereto which Agent deems advisable. All sums so disbursed by Agent,
including reasonable Attorneys' Fees, court costs, expenses and other charges
relating thereto, shall be payable on demand by Borrower to Agent, and Agent
may, in its sole and absolute discretion, after three (3) Banking Days' prior
notice to Borrower advance such sums to Borrower as a Revolving Loan. Borrower
shall cause each Designated Subsidiary to grant to Agent rights identical to
those granted by Borrower to Agent in respect of its insurance.
5.7. Repair.
Maintain, preserve and keep, and cause each Designated Subsidiary to
maintain, preserve and keep, its Equipment and other properties in good
operating condition and repair, ordinary wear and tear excepted, and from time
to time make, and cause each Designated Subsidiary to make, all necessary and
proper repairs, renewals, replacements, additions, betterments and improvements
thereto so that at all times the efficiency thereof shall be fully preserved
and maintained.
5.8. Taxes.
Pay, and cause each Designated Subsidiary to pay, when due, all of its
Taxes, unless and only to the extent that Borrower or such Designated
Subsidiary is contesting such Taxes in good faith and by appropriate
proceedings and Borrower or such Designated Subsidiary has set aside on its
books such reserves or other appropriate provisions therefor as may be required
by GAAP; not file a consolidated tax return together with any other Person,
unless consented to in writing by Agent, except that Borrower and the
Designated Subsidiaries may file consolidated returns with Parent pursuant to
that certain Tax Sharing Agreement dated on or about the Original Closing Date;
and not change its Fiscal Year or tax year without Agent's prior written
consent.
5.9. Compliance.
Comply, and cause each Designated Subsidiary to comply, with all statutes
and governmental rules and regulations applicable to it, except where the
failure to so comply would not be reasonably likely to have a Material Adverse
Effect.
5.10. Pension Plans.
Not permit, and not permit any Designated Subsidiary to permit, any
condition to exist in connection with any Pension Plan that would constitute
grounds for the PBGC to institute proceedings to have such Pension Plan
terminated or a trustee appointed to administer such Pension Plan; not fail,
and not permit any Designated Subsidiary to fail, to make a required
contribution to any Pension Plan if such failure is sufficient to give rise to
a Lien under Section 302(f) of ERISA; and not engage in, or permit to exist or
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occur, or permit any of the Designated Subsidiaries to engage in, or permit to
exist or occur, any other condition, event or transaction with respect to any
Pension Plan that is reasonably likely to result in a Material Adverse Effect.
5.11. Merger, Purchase and Sale.
Not, and not permit any Designated Subsidiary to: (a) be a party to any
merger, liquidation or consolidation, except, in the case of Borrower and the
Designated Subsidiaries, with or into Borrower or another Designated
Subsidiary; (b) except for sales of Inventory in the normal course of its
business and as permitted otherwise in this Agreement, sell, transfer, convey,
lease or otherwise dispose of its assets, including without limitation any
Accounts Receivable, Contract Rights, notes receivable or chattel paper;
provided, however, that (i) if no Event of Default has occurred and is
continuing or would be caused thereby, (ii) to the extent permitted by the
terms of the Senior Secured Note Indenture as it exists on the Closing Date
and, if any First Mortgage Notes remain outstanding, the terms of the First
Mortgage Note Indenture as it existed on the Original Closing Date, and (iii)
after such transaction, the Interest Coverage Sale Threshold has been met, any
or all of the assets of or capital stock in any Designated Subsidiary may be
sold, transferred, conveyed, leased or otherwise disposed of, on such terms as
Borrower or such Designated Subsidiary determines to be commercially
reasonable, in each case as long as the cash proceeds (net of taxes, expenses
of sale and repayment of any Indebtedness secured thereby) of any of the
foregoing transactions are applied to (A) repay the Liabilities, (B) repay
Indebtedness in respect of the First Mortgage Notes, the Senior Secured Notes
and the Term Loans, on a pro rata basis, or (C) purchase replacement assets,
all as provided in the Senior Secured Note Indenture as it exists on the
Closing Date, and, if the assets sold, transferred, conveyed, leased or
otherwise disposed of include Eligible Accounts or Eligible Inventory,
Liabilities in an amount equal to the Borrowing Base generated by such assets
are immediately repaid in full out of the proceeds of such transaction; (c)
purchase or otherwise acquire all or substantially all of the assets of any
Person, except, if no Event of Default has occurred and is continuing or would
be caused thereby, (i) the purchase of the assets of or capital stock in any
Designated Subsidiary by Borrower or another Designated Subsidiary and (ii) any
such purchase or acquisition by Borrower or any Designated Subsidiary, so long
as (A) such purchase or acquisition does not create Indebtedness or Liens not
otherwise permitted by this Agreement, (B) such purchase or acquisition is
permitted by the terms of the Senior Secured Note Indenture as it exists on the
Closing Date and, if any First Mortgage Notes remain outstanding, the terms of
the First Mortgage Note Indenture as it existed on the Original Closing Date,
and (C) total consideration (including cash purchase price, liabilities assumed
by Borrower or any Designated Subsidiary and deferred purchase price and
related payments, including current and future payments in respect of covenants
not to compete, consulting agreements and the like) (I) for any such purchase
or acquisition does not exceed $15,000,000 and (II) for all such purchases and
acquisitions prior to the Termination Date does not exceed $20,000,000; or (d)
become a party to or participate in any joint venture, partnership or similar
business organization not in existence on the Closing Date.
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5.12. Restricted Payments.
Not, and not permit any Designated Subsidiary to, (a) purchase or redeem
any shares of its stock or any options or warrants therefor, other than the
purchase of capital stock held by employees of Borrower or any Designated
Subsidiary pursuant to any employee stock ownership plan thereof upon the
termination, retirement or death of any employee in accordance with the
provisions of any such plan in an amount not greater than $500,000 in any
calendar year, plus the portion of any such amounts that remain unused at the
end of the two prior calendar years, but in no event shall the total thereof in
any calendar year exceed $1,500,000; (b) except as provided below in this
Section 5.12, declare or pay any dividends on any of its stock (other than
dividends payable in non-redeemable capital stock) or make any distribution to
stockholders as such or set aside any funds for any such purpose (collectively,
"Upstream Payments"); (c) make any prepayment, purchase, defeasance or
redemption of any First Mortgage Loans, Senior Secured Loans or Term Loans
(including without limitation any mandatory prepayment required by the terms of
the applicable First Mortgage Note Documents, Senior Secured Note Documents or
Term Loan Documents upon a change of control or an asset sale, or any optional
prepayment, redemption or defeasance allowed by the terms of the First Mortgage
Note Documents, Senior Secured Note Documents or Term Loan Documents) at any
time that an Event of Default is in existence or to the extent an Event of
Default would be caused thereby; or (d) except as permitted in any applicable
subordination or intercreditor agreements, or any subordination terms contained
within the applicable Subordinated Debt Documents, pay any Subordinated Debt.
Notwithstanding the foregoing, (x) (i) each Designated Subsidiary may make
direct or indirect Upstream Payments to Borrower at any time, and (ii) Borrower
may make Upstream Payments to Parent to the extent permitted under the terms of
the Senior Secured Note Indenture, as its exists on the Closing Date; and (y)
payments by Borrower or any Designated Subsidiary may be made at any time
pursuant to the Contingent Payment Agreement as it existed on the Original
Closing Date, to the extent permitted in the Senior Secured Note Indenture as
it exists on the Closing Date.
5.13. Stock.
Except as permitted under Section 5.11, not permit any Designated
Subsidiary to purchase or otherwise acquire any shares of the stock of
Borrower, and not take any action, or permit any Designated Subsidiary to take
any action, which will result in a decrease in Borrower's ownership interest in
any Designated Subsidiary.
5.14. Indebtedness.
Not, and not permit any Designated Subsidiary to, incur or permit to
exist any Indebtedness (including but not limited to Indebtedness as lessee
under Capitalized Leases), except: (a) Indebtedness under the terms of this
Agreement; (b) Indebtedness of Borrower and the Designated Subsidiaries in
respect of the Senior Secured Notes in an aggregate principal amount of not
more than $200,000,000; (c) Indebtedness of Borrower
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and the Designated Subsidiaries in respect of the Term Loans in an aggregate
principal amount of not more than $100,000,000; (d) Indebtedness of Borrower
and the Designated Subsidiaries in respect of the First Mortgage Notes in an
aggregate principal amount of not more than $0; (e) other Indebtedness
outstanding on the date hereof and listed on Schedule 5.14; (f) Indebtedness as
lessee under Capitalized Leases plus Indebtedness secured by Liens securing the
payment of all or part of the purchase price of assets acquired after the
Closing Date, which Indebtedness does not exceed $10,000,000 in the aggregate
for Borrower and the Designated Subsidiaries on a consolidated basis at any
time, and any refinancing of any of the foregoing; (g) Permitted Intercompany
Indebtedness and Indebtedness of Borrower to the Designated Subsidiaries; (h)
Indebtedness under Hedging Obligations (as defined in the Senior Secured Note
Indenture as it exists on the Closing Date), to the extent permitted in the
Senior Secured Note Indenture as it exists on the Closing Date; (i)
Indebtedness in respect of performance, completion, guarantee, surety and
similar bonds, banker's acceptances or letters of credit provided by Borrower
or any Designated Subsidiary in the ordinary course of business; (j)
Indebtedness permitted pursuant to the first paragraph of Section 1008 of the
Senior Secured Note Indenture as it exists on the Closing Date; (k) in addition
to any other Indebtedness permitted hereunder, up to $10,000,000 aggregate
principal amount of Indebtedness at any one time outstanding; and (l) other
Indebtedness approved in writing by Requisite Lenders.
5.15. Liens.
Not, and not permit any Designated Subsidiary to, create or permit to
exist any Lien with respect to any property, revenue or assets now owned or
hereafter acquired, except: (a) Liens in favor of Agent, for the benefit of
itself and Lenders; (b) Liens securing Permitted Intercompany Indebtedness; (c)
without duplication, Liens referred to in Section 4.9; (d) Liens permitted
under clause (b) of the definition of "Permitted Liens" in the Senior Secured
Note Indenture as it exists on the Closing Date, and, if any First Mortgage
Notes remain outstanding, clause (b) of the definition of "Permitted Liens" in
the First Mortgage Note Indenture as its existed on the Original Closing Date,
in an aggregate amount of up to $5,000,000 at any one time outstanding; (e)
other than in connection with Indebtedness, Liens arising in the ordinary
course of business (i) to secure payments of workers' compensation,
unemployment insurance, pension or other social security or retirement
benefits, or to secure the performance of bids, tenders, leases, progress
payments, contracts (other than for the payment of money) or to secure public
or statutory obligations of Borrower or any Designated Subsidiary, or to secure
surety or appeal bonds to which Borrower or any Designated Subsidiary is a
party and (ii) for rights of financial institutions to setoff and chargeback
arising by operation of law; (f) Liens permitted under clauses (d) and (e) of
the definition of "Permitted Liens" in the Senior Secured Note Indenture as it
exists on the Closing Date, and, if any First Mortgage Notes remain
outstanding, clauses (d) and (e) of the definition of "Permitted Liens" in the
First Mortgage Note Indenture as it existed on the Original Closing Date; (g)
Liens permitted under clause (f) of the definition of "Permitted Liens" or
clauses (c), (d) and (e) of Section 1012 of the
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Senior Secured Note Indenture as it exists on the Closing Date, and, if any
First Mortgage Notes remain outstanding, clause (f) of the definition of
"Permitted Liens" or clauses (c), (d) and (e) of Section 1012 of the First
Mortgage Note Indenture as it existed on the Original Closing Date; provided,
however, that with respect to Borrower and the Designated Subsidiaries, such
Lien shall be permitted only to the extent it secures Indebtedness permitted
under Section 5.14(f); (h) Liens permitted under clauses (f), (g), (j) and (k)
of Section 1012 of the Senior Secured Note Indenture as it exists on the
Closing Date, and, if any First Mortgage Notes remain outstanding, Liens
permitted under clauses (f), (g), (j) and (k)of Section 1012 of the First
Mortgage Note Indenture as its existed on the Original Closing Date; (i) Liens
on certain equipment, real property and stock securing the obligations of the
First Mortgage Loans, the Term Loans and the Senior Secured Loans; and (j)
Liens consented to in writing by Requisite Lenders.
5.16. Guaranties.
Not, and not permit any Designated Subsidiary to, become or be a
guarantor or surety of, or otherwise become or be responsible in any manner
(whether by agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or services, or
otherwise) with respect to, any undertaking of any other Person, except for (a)
the endorsement, in the ordinary course of collection, of instruments payable
to it or its order; (b) any guaranty of the Liabilities in favor of Agent, for
the benefit of itself and Lenders; (c) any guaranty of the First Mortgage
Notes, the Senior Secured Notes or the Term Loans and (d) any guaranty of any
Indebtedness permitted under this Agreement.
5.17. Investments.
Except as provided in Section 5.19 or Section 5.11, not, and not permit
any Designated Subsidiary to, make or permit to exist any Investment in any
Person, except for: (a) advances to employees of Borrower or any of the
Designated Subsidiaries for travel or other ordinary business expenses provided
that the aggregate amount outstanding at any one time shall not exceed $500,000
in the aggregate for all employees; (b) Eligible Investments (as defined in the
Senior Secured Note Indenture as it exists on the Closing Date); (c)
Investments consisting of Indebtedness permitted under Section 5.14 (g); (d)
Investments (other than loans) by Borrower in any Designated Subsidiary or by
any Designated Subsidiary in another Designated Subsidiary; (e) extensions of
credit in the nature of Accounts Receivable or notes receivable arising from
the sale of goods and services in the ordinary course of business; (f) shares
of stock, obligations or other securities received in settlement of claims
arising in the ordinary course of business; (g) other Investments outstanding
on the date hereof and listed on Schedule 5.17 and any reclassification or
conversion thereof into an alternate form of Investment in the same or a
successor entity; (h) Investments consisting of bank accounts permitted under
this Agreement; (i) other Investments that are permitted pursuant to clause
(vi) of the definition of the term "Permitted Investment" contained in Section
101 of the Senior Secured Note
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Indenture as it exists on the Closing Date; and (j) other Investments consented
to by Requisite Lenders in writing.
5.18. Designated Subsidiaries.
Except as permitted in Section 5.11 or Section 5.17, not, and not permit
any Designated Subsidiary to, acquire any stock or similar interest in any
Person and not create, establish or acquire any Subsidiaries; not change the
status of a Subsidiary to or from a Designated Subsidiary.
5.19. Loans to Designated Subsidiaries.
Not make or extend any loan or advance to any Designated Subsidiary (a)
not designated as such on the Closing Date, without prior written notice of
such loan or advance to Agent and (b) until such time as Agent has received
resolutions of such Designated Subsidiary's board of directors authorizing or
ratifying the execution, delivery and performance of all Related Agreements
executed by such Designated Subsidiary, in form and substance satisfactory to
Agent; and not permit any Designated Subsidiary to make or extend any loan or
advance to another Designated Subsidiary. Upon Agent's request, prior to any
such loan or advance from Borrower to a Designated Subsidiary not designated as
such on the Closing Date, such Designated Subsidiary shall execute and deliver
agreements in the same form as those delivered to Agent on the Closing Date by
the currently existing Designated Subsidiaries in order to evidence such loans
and advances and to grant Borrower a first priority perfected Lien on such
Designated Subsidiary's property of the types described in Section 3.1 as
collateral therefor. Borrower shall assign the proceeds of such loans, all of
the foregoing agreements, documents and instruments and its Lien related
thereto to Agent, in each case in a manner, and pursuant to agreements,
satisfactory to Agent.
5.20. Change in Accounts Receivable.
After the occurrence and during the continuance of an Event of Default,
not permit or agree to, or permit any Designated Subsidiary to permit or agree
to, any extension, compromise or settlement or make any change or modification
of any kind or nature with respect to any Account Receivable, including any of
the terms relating thereto.
5.21. Environmental Issues.
Provide such information that is or becomes available (unless subject to
confidentiality restrictions in existence on the Closing Date) to Borrower or
any Designated Subsidiary which Agent may reasonably request from time to time
pertaining to the environmental aspects of Borrower and the Designated
Subsidiaries and any property owned, operated or controlled by Borrower or any
Designated Subsidiary. Nothing in this Section 5.21, and no actions taken by
Agent or any Lender pursuant thereto, shall give, or be construed as
controlling, or giving to Agent or any Lender the right or obligation to
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direct or control, the conduct or action or inaction of Borrower or any
Designated Subsidiary with respect to any environmental matters, including but
not limited to those pertaining to compliance with any Environmental Laws.
Borrower shall also maintain, and cause each Designated Subsidiary to maintain,
in full force and effect all third-party indemnities in favor of Borrower or
any Designated Subsidiary with respect to any of the foregoing.
5.22. Related Agreements.
After the date hereof, not enter into, or permit any Designated
Subsidiary to enter into, any agreement containing any provision which would be
violated or breached by the performance by Borrower or such Designated
Subsidiary of its obligations hereunder or under any Related Agreement or any
instrument or document delivered or to be delivered by Borrower or such
Designated Subsidiary in connection herewith.
5.23. Unconditional Purchase Options.
Except in the ordinary course of business, not enter into or be a party
to, or permit any Designated Subsidiary to enter into or be a party to any
contract for the purchase of materials, supplies or other property or services,
if such contract requires that payment be made by it regardless of whether or
not delivery is ever made of such materials, supplies or other property or
services.
5.24. Use of Proceeds.
Not use or permit, and not permit any Designated Subsidiary to use or
permit, any proceeds of the Senior Secured Loans, the Term Loans, the Loans or
Letters of Credit to be used, either directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of "purchasing or carrying" any
Margin Stock, and furnish to Agent upon request, a statement in conformity with
the requirements of Federal Reserve Form U-l referred to in Regulation U of the
Board of Governors of the Federal Reserve System.
5.25. Transactions with Related Parties.
Except as set forth on Schedule 5.25, not, and not permit any Designated
Subsidiary to, (a) pay any management, consulting or similar fees to any
Related Party, whether for services rendered to Borrower or any Designated
Subsidiary, or otherwise, or (b) enter into or be a party to any other
transaction or arrangement, including without limitation the purchase, sale,
lease or exchange of property or the rendering of any service, with any Related
Party, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Designated Subsidiary's business and upon
fair and reasonable terms no less favorable to Borrower or such Designated
Subsidiary than would obtain in a comparable arm's-length transaction with a
Person not a Related Party and unless such transaction or arrangement is
permitted by the terms of the Senior Secured Note Indenture, as it exists on
the Closing Date.
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5.26. Amendment of Documents.
Not, and not permit Parent or any Designated Subsidiary to, amend, modify
or alter, or permit to be amended, modified or altered, (a) any First Mortgage
Note Document, any Senior Secured Note Document or any Term Loan Document, (b)
any other Transaction Document, or (c) any agreement, instrument or document
evidencing any of the Indebtedness listed on Schedule 5.14 if the effect of
such amendment or modification is to (i) increase the interest rate payable
thereunder more than 200 basis points in excess of the highest interest rate
applicable under the First Mortgage Note Documents, the Senior Secured Note
Documents or the Term Loan Documents, as applicable (including application of
any "default rate" thereunder), in each case as they exist on the date hereof,
(ii) with respect to the First Mortgage Note Documents and the Senior Secured
Note Documents, alter the timing or amount of any payment terms thereunder, if
applicable, or with respect to the Term Loan Documents only, alter the timing
or amount of any payment terms during the first seven (7) years after the date
hereof, (iii) increase the aggregate amount of Indebtedness thereunder, if
applicable, or (iv) materially adversely affect the interest of Agent or
Lenders. Agent and Lenders hereby agree that their consent to any of the
foregoing will not be unreasonably withheld or delayed.
5.27. Designated Subsidiary.
Cause each Designated Subsidiary to execute and deliver to Agent, in form
and substance satisfactory to Agent in its sole discretion, the following (a) a
guaranty in favor of Agent, for the benefit of itself and Lenders, pursuant to
which such Designated Subsidiary has unconditionally guarantied the
Liabilities; (b) a security agreement with Agent, for the benefit of itself and
Lenders, pursuant to which such Subsidiary has granted to Agent, for the
benefit of itself and Lenders, a Lien on its assets of the types described in
Section 3.1, as collateral for the guaranty described in clause (i) above, (c)
such UCC financing statements as Agent shall reasonably require in order to
perfect such Lien and (d) appropriate evidence of such Designated Subsidiary's
corporate authority for the foregoing. No otherwise Eligible Inventory or
Eligible Accounts Receivable of any Designated Subsidiary shall be included in
the Borrowing Base unless (i) such Designated Subsidiary has complied in all
respects with this Section 5.27, to Agent's reasonable satisfaction, (ii) Agent
has satisfied itself that Agent's Liens on the Collateral of such Designated
Subsidiary are fully perfected senior Liens thereon, (iii) Borrower has
demonstrated to Agent that such Collateral is insured in compliance with
Section 5.6 and (iv) Agent has received such landlord's and bailee's agreements
with respect to such Collateral as Agent shall reasonably request.
5.28. Limitation on Applicability of Covenants.
Notwithstanding the covenants contained in this Agreement, Borrower and
any Designated Subsidiary may engage in any transactions contemplated by and
effected in accordance with the terms of the Contingent Payment Agreement as it
existed on the
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Original Closing Date. The consummation of any such transaction shall not
constitute a breach of the otherwise applicable covenants, contained in this
Agreement.
5.29. Merger.
Complete the merger of Borrower and PAI, pursuant to agreements
reasonably acceptable to Agent, on or before July 17, 1997.
5.30. Holding Companies.
Not, and not permit any of PAI, East, TCH, BMPC or Imperial to, conduct
any material business or have any material operations, assets or liabilities,
other than as set forth in Section 4.29.
5.31. Banking Relationships.
Maintain, and cause each of the Designated Subsidiaries to maintain,
their principal bank accounts and banking relationships with BAI.
6. DEFAULT.
6.1. Event of Default.
Each of the following shall constitute an Event of Default under this
Agreement:
(a) Non-Payment. Default in the payment of the principal of the
Liabilities when due or declared due or the payment of any of the other
Liabilities other than principal within five (5) Banking Days' of the date due
or declared due.
(b) Non-Payment of Other Indebtedness. Default in the payment when due,
whether by acceleration or otherwise (subject to any applicable grace period),
of any Indebtedness of, or guaranteed by, Borrower, any other Obligor or any
Designated Subsidiary with a principal balance in excess of $5,000,000 (other
than any Indebtedness under this Agreement and any Notes), including without
limitation the First Mortgage Loans, the Senior Secured Loans and the Term
Loans.
(c) Acceleration of Other Indebtedness. Any event or condition shall
occur which results in the acceleration of the maturity of any Indebtedness of,
or guaranteed by, Borrower, any other Obligor or any Designated Subsidiary with
a principal balance in excess of $5,000,000 (other than the Indebtedness under
this Agreement and any Notes), including without limitation the First Mortgage
Loans, the Senior Secured Loans and the Term Loans, or enables the holder or
holders of such other Indebtedness or any trustee or agent for such holders to
accelerate the maturity of such other Indebtedness.
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(d) Other Obligations. Default in the performance or observance (subject
to any applicable grace period or waiver of such default) of (i) any obligation
or agreement of Borrower, any other Obligor or any Designated Subsidiary to or
with Agent or any Lender (other than any obligation or agreement of Borrower
hereunder and under any Notes) or (ii) any obligation or agreement of Borrower,
any other Obligor or any Designated Subsidiary to or with any other Person
(other than (x) any such obligation or agreement constituting or related to
Indebtedness, or (y) Trade Accounts Payable), in any case if the existence of
any such default is not being contested by Borrower, such other Obligor or such
Designated Subsidiary, as the case may be, in good faith and by appropriate
proceedings and Borrower, such other Obligor or such Designated Subsidiary, as
applicable, shall have set aside on its books such reserves or other
appropriate provisions therefor as may be required by GAAP and such obligation
is for an amount in excess of $5,000,000.
(e) Bankruptcy. Borrower, any other Obligor or any Designated Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for Borrower, such other Obligor or such Designated
Subsidiary, or for a substantial part of the property of Borrower, such other
Obligor or such Designated Subsidiary, or makes a general assignment for the
benefit of creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for Borrower,
any other Obligor or any Designated Subsidiary, or for a substantial part of
the property of Borrower, any other Obligor or any Designated Subsidiary and is
not discharged or dismissed within sixty (60) days; or any bankruptcy,
reorganization, debt arrangement or other proceeding under any bankruptcy or
insolvency law, or any dissolution or liquidation proceeding, is instituted by
or against Borrower, any other Obligor or any Designated Subsidiary; or any
warrant of attachment or similar legal process is issued against any
substantial part of the property of Borrower, any other Obligor or any
Designated Subsidiary.
(f) Insolvency. Borrower, any other Obligor or any Designated Subsidiary
becomes insolvent, or generally fails to pay, or admits in writing its
inability to pay, its debts as they mature.
(g) ERISA Liabilities. Any of the following events shall have occurred,
if such event is reasonably likely to have a Material Adverse Effect: (i) the
existence of a Reportable Event, (ii) the withdrawal of Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, (iii) the occurrence of an
obligation to provide affected parties with a written notice of intent to
terminate a Pension Plan in a distress termination under Section 4041 of ERISA,
(iv) the institution by PBGC of proceedings to terminate any Pension Plan, (v)
any event or condition that would require the appointment of a trustee to
administer a Pension Plan, (vi) the withdrawal of Borrower or any ERISA
Affiliate from a Multiemployer Plan, and (vii) any event that would give rise
to a Lien under Section 302(f) of ERISA.
(h) Non-Compliance With This Agreement. Default in the performance of any
of Borrower's agreements set forth in Section 3.2, 3.3, 5.5, 5.6, 5.11 through
5.31 or in
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Section 5 of Supplement A hereto (and not constituting an Event of Default
under any of the other subsections of this Section 6.1); or default in the
performance of any of Borrower's agreements set forth in Section 5.1.1, 5.1.2,
5.1.3, 5.1.4 or 5.2 (and not constituting an Event of Default under any of the
other subsections of this Section 6.1), and continuance of such default for
five (5) days after the occurrence thereof; or default in the performance of
any of Borrower's other agreements herein set forth (and not constituting an
Event of Default under any of the other subsections of this Section 6.1), and
continuance of such default for thirty (30) days after the occurrence thereof.
(i) Non-Compliance With Related Agreements. Default in the performance by
Borrower, any other Obligor or any Designated Subsidiary of any of its
agreements set forth in any Related Agreement (and not constituting an Event of
Default under any of the other subsections of this Section 6.1), and
continuance of such default after notice from Agent and the expiration of the
grace or cure period (if any) set forth therein.
(j) Representations and Warranties. Any representation or warranty made
by Borrower or any other Obligor herein (including without limitation any
representation or warranty contained in Section 3.2 or 3.3) or in any Related
Agreement is untrue or misleading in any material respect when made or deemed
made; or any schedule, statement, report, notice, certificate or other writing
furnished by Borrower, any Designated Subsidiary or any other Obligor to Agent
or any Lender is untrue or misleading in any material respect on the date as of
which the facts set forth therein are stated or certified; or any certification
made or deemed made by Borrower, any Designated Subsidiary or any other Obligor
to Agent or any Lender is untrue or misleading in any material respect on or as
of the date made or deemed made.
(k) Litigation. There shall be entered against any one of Borrower, any
other Obligor or any Designated Subsidiary one or more judgments or decrees in
excess of $5,000,000 in the aggregate at any one time outstanding, excluding
those judgments or decrees (i) that shall have been outstanding less than
thirty (30) calendar days from the entry thereof, (ii) for and to the extent
which Borrower, such Obligor or such Designated Subsidiary, as applicable, is
insured and with respect to which the insurer has assumed responsibility in
writing or for and to the extent which Borrower, such Obligor or such
Designated Subsidiary, as applicable, is otherwise indemnified if the terms of
such indemnification are satisfactory to Agent or (iii) which have been stayed
pending appeal and with respect to which Borrower, such Obligor or such
Designated Subsidiary has posted any required bond or letter of credit.
(l) Termination of Obligations. If any Obligor shall terminate any of its
obligations to Agent or any Lender in respect of the Liabilities.
(m) Validity. If the validity or enforceability of this Agreement or any
Related Agreement shall be challenged by Borrower, any Designated Subsidiary or
any other Obligor, or if this Agreement or any Related Agreement shall fail to
remain in full force and effect.
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(n) Change of Control. If (i) any Person and its Related Parties (other
than William R. Berkley and his Related Parties and Interlaken Capital, Inc.
and its Related Parties (collectively, the "Investor Parties")) among them have
record and beneficial ownership of more than 25% of the outstanding voting
power of Borrower or Parent on a fully diluted basis, in any case at any time
that the Investor Parties among them have record and beneficial ownership of
less than 30% of the outstanding voting power of Borrower or Parent on a fully
diluted basis; or (ii) if any Change of Control (as defined in the Senior
Secured Note Indenture as it exists on the Closing Date) occurs or (iii) if
Borrower ceases to retain record and beneficial ownership of 100% of the issued
and outstanding stock of PAI.
6.2. Effect of Event of Default; Remedies.
(a) In the event that one or more Events of Default described in Section
6.1(e) shall occur, then each Lender's commitment and the Credit extended under
this Agreement shall terminate and all Liabilities hereunder and under any
Notes shall be immediately due and payable without demand, notice or
declaration of any kind whatsoever.
(b) In the event an Event of Default other than one described in Section
6.1(e) shall occur, at the option of Agent or Requisite Lenders, each Lender's
commitment shall terminate and all Liabilities hereunder and under any Notes
shall immediately be due and payable without demand or notice of any kind
whatsoever, whereupon the Credit extended under this Agreement shall terminate.
Agent shall promptly advise Borrower of any such declaration, but failure to do
so shall not impair the effect of such declaration.
(c) In the event of the occurrence of any Event of Default, Agent may
exercise any one or more or all of the following remedies, all of which are
cumulative and non-exclusive:
(i) Any remedy contained in this Agreement or in any of the Related
Agreements or any Supplemental Documentation;
(ii) Any rights and remedies available to Agent or any Lender under the
UCC, and any other applicable law;
(iii) To the extent permitted by applicable law, Agent may, without
notice, demand or legal process of any kind, take possession of any or all
of the Collateral (in addition to Collateral which it may already have in
its possession), wherever it may be found, and for that purpose may pursue
the same wherever it may be found, and may enter into any premises where
any of the Collateral may be or is supposed to be, and search for, take
possession of, remove, keep and store any of the Collateral until the same
shall be sold or otherwise disposed of, and Agent shall have the right to
store the same in any of Borrower's premises without cost to Agent;
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(iv) At Agent's request, Borrower will, at Borrower's expense, assemble
the Collateral and make it available to Agent at a place or places to be
designated by Agent which is reasonably convenient to Agent and Borrower;
and
(v) Agent at its option, and pursuant to notification given to Borrower
as provided for below, may sell any Collateral actually or constructively
in its possession at public or private sale and apply the proceeds thereof
as provided below.
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND AGENT'S RIGHTS.
7.1. Notice of Disposition of Collateral.
Any notification of intended disposition of any of the Collateral
required by law shall be deemed reasonably and properly given if given at least
ten (10) calendar days before such disposition.
7.2. Application of Proceeds of Collateral.
Any proceeds of any disposition by Agent of any of the Collateral may be
applied by Agent to the payment of expenses in connection with the taking
possession of, storing, preparing for sale, and disposition of Collateral,
including Attorneys' Fees and legal expenses, and any balance of such proceeds
may be applied by Agent toward the payment of such of the Liabilities, and in
such order of application, as Agent may from time to time elect.
7.3. Care of Collateral.
Agent shall be deemed to have exercised reasonable care in the custody
and preservation of any Collateral in its possession if it takes such action
for that purpose as Borrower requests in writing, but failure of Agent to
comply with such request shall not, of itself, be deemed a failure to exercise
reasonable care, and no failure of Agent to preserve or protect any rights with
respect to such Collateral against prior parties, or to do any act with respect
to the preservation of such Collateral not so requested by Borrower, shall be
deemed a failure to exercise reasonable care in the custody or preservation of
such Collateral.
7.4. Performance of Borrower's Obligations.
Agent shall have the right, but shall not be obligated, to discharge any
claims or Liens against, and any Taxes at any time levied or placed upon any or
all Collateral, including without limitation those arising under statute or in
favor of landlords, taxing authorities, government, public and/or private
warehousemen, common and/or private
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carriers, processors, finishers, draymen, coopers, dryers, mechanics, artisans,
laborers, attorneys, courts, or others. Agent may also pay for maintenance and
preservation of Collateral. Agent may, but is not obligated to, perform or
fulfill any of Borrower's responsibilities under this Agreement which Borrower
has failed to perform or fulfill. Agent may after three (3) Banking Days'
notice to Borrower advance to Borrower as a Revolving Loan any payment made or
expense incurred under this Section 7.4.
7.5. Agent's Rights.
None of the following shall affect the obligations of Borrower or any
Designated Subsidiary to Agent or any Lender under this Agreement or Agent's
right with respect to the remaining Collateral (any or all of which actions may
be taken by Agent at any time, whether before or after an Event of Default, at
its sole and absolute discretion and without notice to Borrower):
(a) acceptance or retention by Agent or any Lender of other property or
interests in property as security for the Liabilities, or acceptance or
retention of any Obligor(s), in addition to Borrower, with respect to any of
the Liabilities;
(b) release of its Lien on, or surrender or release of, or the
substitution or exchange of or for, all or any part of the Collateral or any
other property securing any of the Liabilities (including but not limited to
any property of any Obligor other than Borrower), or any extension or renewal
for one or more periods (whether or not longer than the original period), or
release, compromise, alteration or exchange, of any obligations of any
guarantor or other Obligor with respect to any Collateral or any such property;
(c) extension or renewal for one or more periods (whether or not longer
than the original period), or release, compromise, alteration or exchange of
any of the Liabilities, or release or compromise of any obligation of any
Obligor with respect to any of the liabilities; or
(d) failure by Agent or any Lender to resort to other security or pursue
any Person liable for any of the Liabilities before resorting to the
Collateral.
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER
MATTERS.
8.1. Conditions Precedent to Initial Loans and Letters of Credit.
The obligation of each Lender that is a party to this Agreement on the
date hereof to make the initial Loans and for Issuing Bank to issue the initial
Letters of Credit is subject to satisfaction of the following conditions
precedent (in addition to those provided in Section 8.2):
8.1.1. Liens. The Liens on the Collateral granted under this Agreement
and the Related Agreements and all other Liens granted to Agent, for the
benefit of itself and Lenders,
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to secure the Liabilities, shall be senior, perfected Liens, except as
otherwise agreed by Agent and Lenders, and all financing statements and other
documents relating to Collateral shall have been filed or recorded, as
appropriate. Agent shall have received such consents and waivers with respect
to the Collateral as Agent shall request, in form and substance satisfactory to
Agent.
8.1.2. Transactions. (i) Borrower shall have issued the Senior Secured
Notes, the gross proceeds of such Senior Secured Notes, in an amount not less
than $200,000,000, shall have been received by Borrower and the proceeds
thereof shall have been used by Borrower in substantially the manner described
in "The Acquisition and Use of Proceeds" section of the Offering Memorandum,
(ii) the Acquisition shall have been consummated in accordance with all
applicable laws, (iii) Borrower shall have consummated the Term Loans, the
gross proceeds thereof, in an amount not less than $100,000,000, should have
been received by Borrower and the proceeds thereof shall have been used by
Borrower substantially in the manner described in "The Acquisition and Use of
Proceeds" section of the Offering Memorandum and (iv) the Third Supplemental
Indenture relating to the First Mortgage Notes shall have become effective and
the holders of at least ___% of the aggregate principal amount of the First
Mortgage Note shall have tendered their First Mortgage Notes pursuant to the
Offer (the transactions referred to herein are hereinafter referred to as the
"Transactions").
8.1.3. Solvency. Each Lender shall be satisfied that, after giving effect
to the Transactions, and the initial Loans and Letters of Credit, Borrower,
each Designated Subsidiary and each other Obligor shall have assets (excluding
goodwill and other intangible assets not capable of valuation) having a value,
both at fair salable value and at fair valuation, greater than the amount of
such Person's liabilities (including trade debt and Indebtedness to Agent and
Lenders). Each Lender shall be satisfied that all of the assets supporting the
Loans and Letters of Credit under this Agreement shall be sufficient in value
to provide Borrower and each Designated Subsidiary with sufficient cash flow
and working capital to enable it to thereafter profitably operate its business
and to meet its obligations as they become due. Each Lender shall be satisfied
that Borrower and each Designated Subsidiary has adequate capital for the
business in which it is about to engage. In connection with the foregoing, each
Lender shall have received such written appraisals, balance sheets, solvency
certificates or other materials as Agent shall reasonably request.
8.1.4. Effect of Law. No law or regulation affecting Agent's or any
Lender's entering into the secured financing transaction contemplated by this
Agreement shall impose upon Agent or such Lender any material obligation, fee,
liability, loss, penalty, cost, expense or damage.
8.1.5. Exhibits; Schedules. All Exhibits and Schedules to this Agreement
shall have been completed and submitted to each Lender, shall be in form and
substance satisfactory to such Lender and shall contain no facts or information
which such Lender, in its sole judgment, determines to be unacceptable.
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8.1.6. Licenses, Permits and Consents. All licenses, permits, consents,
judicial and regulatory approvals and corporate action necessary to consummate
the Transactions and the making of the initial Loans and the issuance of the
initial Letters of Credit shall have been obtained on terms acceptable to each
Lender.
8.1.7. Fees. If not funded with the proceeds of the initial Loans, Agent
shall have received the upfront closing fee referred to in Section 2.14 and any
other fees due and payable by Borrower or any other Person on the funding of
the initial Loans and the issuance of the initial Letters of Credit.
8.1.8. Title to Assets. Borrower and the Designated Subsidiaries shall
have good, indefeasible and merchantable title to the Collateral, free and
clear of all Liens, except as otherwise permitted in Section 5.15 hereof.
8.1.9. Material Adverse Change; Litigation. No Material Adverse Change,
as determined by each Lender, shall have occurred from December 31, 1996
through the Closing Date and the issuance of the initial Letters of Credit and
no Material Adverse Change, as determined by such Lender, shall have occurred
in the facts and information disclosed to such Lender or otherwise relied upon
by such Lender in making its decision to enter into this Agreement, and no
Lender shall have become newly aware of any material adverse facts or
information, as reasonably determined by such Lender, with respect to Parent,
Borrower or any Designated Subsidiary or the business, operations or prospects
thereof. In addition, there shall not have been instituted or threatened any
litigation or proceedings in any court or administrative forum affecting or
threatening to affect the consummation of the Transactions or which would have
a Material Adverse Effect, in each case as determined by each Lender.
8.1.10. Documents. In addition to this Agreement, each Lender shall have
received the agreements, documents and instruments listed in Section VIII of
the Closing Checklist attached hereto as Exhibit F, each duly executed where
appropriate and dated as of the Closing Date (or such other date as shall be
satisfactory to Agent), in form, and containing terms and provisions,
acceptable to such Lender.
8.1.11. Default. No Event of Default or Unmatured Event of Default shall
have occurred and be continuing or would be caused thereby.
8.1.12. Resolutions. Agent shall have received resolutions of Borrower's
board of directors authorizing or ratifying the execution, delivery and
performance of this Agreement and all Related Agreements executed by Borrower,
in form and substance satisfactory to Agent.
8.2. Continuing Conditions Precedent to all Loans; Certification.
The obligation of each Lender to make the initial Loans and each
subsequent Loan and to establish any LIBOR Rate Loans, and for Issuing Bank to
issue the initial Letters of Credit and each subsequent Letter of Credit, is
subject to satisfaction of the following conditions precedent in addition to
those provided in Section 8.1:
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(a) No Change in Condition. No change in the condition or operations,
financial or otherwise, of Borrower, any Designated Subsidiary or any other
Obligor, shall have occurred which change, in the reasonable credit judgment of
Requisite Lenders, is reasonably likely to have a Material Adverse Effect;
(b) Default. Before and after giving effect to such Loan and/or Letter of
Credit, no Event of Default or Unmatured Event of Default shall have occurred
and be continuing; and
(c) Representations and Warranties. Before and after giving effect to
such Loan and/or Letter of Credit, the representations and warranties in
Section 4 shall be true and correct in all material respects as though made on
the date of such Loan and/or Letter of Credit, except for those representations
and warranties which are expressly made as of the date hereof.
Each request for a Loan or a Letter of Credit hereunder made or deemed to have
been made by Borrower shall be deemed to be a certificate of Borrower as to the
matters set out in the foregoing provisions of this Section 8.2.
9. INDEMNITY.
9.1. Environmental and Safety and Health Indemnity.
Borrower hereby indemnifies Agent and each Lender and agrees to hold
Agent and each Lender harmless from and against any and all losses,
liabilities, damages, injuries, costs, expenses and claims of any and every
kind whatsoever (including without limitation court costs and Attorneys' Fees)
which at any time or from time to time may be paid, incurred or suffered by, or
asserted against, Agent or any Lender for, with respect to, or as a direct or
indirect result of the violation by Borrower or any of the Designated
Subsidiaries of any Environmental Law or Occupational Safety and Health Law, or
with respect to, or as a direct or indirect result of (a) the presence on or
under, or the Release from, properties utilized by Borrower and/or any
Designated Subsidiary in the conduct of its business into or upon any land, the
atmosphere, or any watercourse, body of water or wetland, of any Hazardous
Material or the escape, seepage, leakage, spillage, disposal, discharge,
emission or release of any other hazardous or toxic waste, substance or
constituent, or other substance (including without limitation any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising
under any Environmental Law) or (b) the existence of any unsafe or unhealthful
condition on or at any premises utilized by Borrower and/or any Designated
Subsidiary in the conduct of its business except, with respect to any of the
foregoing, to the extent arising out of the gross negligence or willful
misconduct of Agent or any Lender. The provisions of and undertakings and
indemnification set out in this Section 9.1 shall survive satisfaction and
payment of the Liabilities and termination of this Agreement.
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9.2. General Indemnity.
In addition to the payment of expenses pursuant to Section 12.3, whether
or not the transactions contemplated hereby shall be consummated, Borrower
agrees to indemnify, pay and hold Agent and each Lender, and the officers,
directors, employees, agents, and affiliates of each of Agent and each Lender
(collectively, the "Indemnitees") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the reasonable fees and disbursements
of counsel for any of such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
any of such Indemnitees shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against any Indemnitee, in any manner
relating to or arising out of this Agreement or any Related Agreement, the
statements contained in any commitment letter delivered by Agent or any Lender,
Agent's or any Lender's agreement to make the Loans or to issue Letters of
Credit hereunder, the use or intended use of any Letters of Credit, or the use
or intended use of the proceeds of any of the Loans hereunder (the "indemnified
liabilities"); provided that Borrower shall have no obligation to an Indemnitee
hereunder with respect to indemnified liabilities arising from the gross
negligence or willful misconduct of such Indemnitee. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it violates any law or public policy,
Borrower shall contribute the maximum portion that it is permitted to pay under
applicable law to the payment and satisfaction of all indemnified liabilities
incurred by the Indemnitees or any of them. The provisions of the undertakings
and indemnification set out in this Section 9.2 shall survive satisfaction and
payment of the Liabilities and termination of this Agreement.
9.3. Capital Adequacy.
If Agent or any Lender shall reasonably determine that the application or
adoption of any law, rule, regulation, directive, interpretation, treaty or
guideline regarding capital adequacy, or any change therein or in the
interpretation or administration thereof, whether or not having the force or
law (including without limitation application of changes to Regulation H and
Regulation Y of the Federal Reserve Board issued by the Federal Reserve Board
on January 19, 1989 and regulations of the Comptroller of the Currency,
Department of the Treasury, 12 CFR Part 3, Appendix A, issued by the
Comptroller of the Currency on January 27, 1989) increases the amount of
capital required or expected to be maintained by Agent or such Lender or any
Person controlling Agent or such Lender in excess of any such increases
affecting Agent or such Lender as of the date hereof, and such increase is
based upon the existence of Agent's or such Lender's obligations hereunder and
other commitments of this type, then from time to time, within ten (10) days
after demand from Agent or such Lender, Borrower shall pay to Agent or such
Lender, as applicable, such amount or amounts as will compensate Agent or such
Lender or such controlling Person, as the case may be, for such increased
capital requirement. The determination of
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any amount to be paid by Borrower under this Section 9.3 shall take into
consideration the policies of Agent or such Lender or any Person controlling
Agent or such Lender with respect to capital adequacy and shall be based upon
any reasonable averaging, attribution and allocation methods. A certificate of
Agent or such Lender, as applicable, setting forth the amount or amounts as
shall be necessary to compensate Agent or such Lender as specified in this
Section 9.3 shall be delivered to Borrower and shall be conclusive in the
absence of manifest error. Any demand to be given by a Lender under this
Section 9.3 shall be effective only if given within 120 days after such Lender
became aware or should have become aware of the events giving rise to such
notice.
10. AGENT.
10.1. Appointment of Agent.
Each Lender hereby irrevocably appoints and authorizes BAI to act as its
Agent under this Agreement and the Related Agreements. Each Lender hereby
irrevocably appoints and authorizes Agent to take such action on such Lender's
behalf under the provisions of this Agreement and the Related Agreements and to
exercise such powers and perform such duties under this Agreement and the
Related Agreements as are specifically delegated to Agent by the terms hereof
and thereof, together with such other powers as are reasonably incidental
hereto and thereto. Agent may perform any of its duties hereunder or under the
Related Agreements by or through its agents or employees. The provisions of
this Section 10 are solely for the benefit of Agent and Lenders, and neither
Borrower nor any Obligor shall have any rights as a third party beneficiary of
any of the provisions hereof other than Section 10.9. In performing its
functions and duties under this Agreement and the Related Agreements, Agent
shall act solely as agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for Borrower or any Obligor.
10.2. Nature of Duties of Agent.
Agent shall have no duties, obligations or responsibilities except those
expressly set forth in this Agreement and the Related Agreements. Neither Agent
nor any of its officers, directors, employees or agents shall be liable for any
action taken or omitted by it as such hereunder or under the Related Agreements
or in connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of Agent shall be mechanical and
administrative in nature; Agent shall not have by reason of this Agreement or
the Related Agreements a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or the Related Agreements, expressed or implied, is
intended to or shall be so construed as to impose upon Agent any obligations in
respect of this Agreement or the Related Agreements except as expressly set
forth herein or therein. No duty to act, or refrain from acting, and no other
obligation whatsoever, shall be implied on the basis of or imputed in respect
of any right, power or authority granted to Agent or
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shall become effective in the event of any temporary or partial exercise of
such rights, power or authority.
10.3. Agent in its Capacity as Lender.
With respect to its obligation to lend under this Agreement and the
Related Agreements, the Loans made by it and its participation in Letters of
Credit, Agent shall have the same rights and powers under this Agreement and
the Related Agreements as any Lender and may exercise the same as though it
were not Agent, and the terms "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Agent in its capacity as a Lender hereunder.
Agent, any Lender and their respective affiliates may accept deposits from,
lend money to, and generally engage in any kind of banking or trust business
with Borrower, or Related Parties of Borrower, as if it were not Agent or as if
it or they were not a Lender hereunder and without any duty to account therefor
to the other parties to this Agreement; provided, that the obligations of
Borrower under such transactions shall not be deemed to be Liabilities or
secured by any Collateral without the prior written agreement of the Requisite
Lenders; provided, further that Lenders acknowledge and agree that the
obligations of Borrower to BAI or any other Lender as Issuing Bank and with
respect to any lockbox or bank account maintained by or for the benefit of
Borrower, including the Demand Deposit Account, the Depository Accounts, and
the Assignee Deposit Account, shall be deemed to be Liabilities secured by the
Collateral.
10.4. Independent Credit Analysis.
Each Lender agrees that it has, independently and without reliance upon
Agent, any other Lender, or the directors, officers, agents, attorneys or
employees of Agent or of any other Lender, and instead in reliance upon
information supplied to it by or on behalf of Parent, Borrower and/or each
Designated Subsidiary, made its own independent credit analysis and decision to
enter into this Agreement and the Related Agreements to which it is a party,
and that it shall independently and without reliance upon Agent, any other
Lender, or the directors, officers, agents, attorneys or employees of Agent or
of any other Lender, continue to make its own independent credit analysis and
decisions in acting or not acting under this Agreement and the Related
Agreements. Except as otherwise expressly provided herein, Agent shall not have
any duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information concerning the affairs,
financial condition, litigation, liabilities, or business of Parent, Borrower,
any Designated Subsidiary or any other Obligor which may at any time come into
the possession of Agent (or any of its affiliates). In the event such
information is furnished to any Lender by Agent, Agent shall have no duty to
confirm or verify its accuracy or completeness and shall have no liability
whatsoever with respect thereto.
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10.5. General Immunity.
Neither Agent nor any of its directors, officers, agents, attorneys or
employees shall be liable to any Lender for any action taken or omitted to be
taken by it or them under this Agreement or the Related Agreements or in
connection herewith or therewith except for its or their own willful misconduct
or gross negligence. Without limiting the generality of the foregoing, Agent:
(i) shall not be responsible to Lenders for any recitals, statements,
warranties or representations under this Agreement or the Related Agreements or
any agreement or document relative hereto or thereto or for the financial or
other condition of any Obligor, (ii) shall not be responsible for the
authenticity, accuracy, completeness, value, validity, effectiveness, due
execution, legality, genuineness, enforceability, collectibility or sufficiency
of this Agreement or the Related Agreements or any other agreements or any
assignments, certificates, requests, financial statements, projections,
notices, schedules or opinions of counsel executed and delivered pursuant
hereto or thereto, (iii) shall not be bound to ascertain or inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the Related Agreements on the part of Obligors or of any of the
terms of any such agreement by any party hereto or thereto and shall have no
duty to inspect the property (including the books and records) of any Obligor,
(iv) shall have no obligation whatsoever to Lenders or to any other Person to
assure that the Collateral exists or is owned by Borrower or another Obligor or
is cared for, protected or insured or that the Liens granted to Agent herein or
in Related Agreements or pursuant hereto or thereto have been properly or
sufficiently or lawfully created, perfected, protected, enforced, realized upon
or are entitled to any particular priority, and (v) shall incur no liability
under or in respect of this Agreement or the Related Agreements or any other
document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, cable, telex, telecopier or similar form of
facsimile transmission) believed by Agent to be genuine and signed or sent by
the proper party. Agent may consult with legal counsel (including counsel for
Borrower), independent public accountants and other experts selected by Agent
and shall not be liable for any action taken or omitted to be taken in good
faith in accordance with the advice of such counsel, accountants or experts.
10.6. Action by Agent.
(a) Actual Knowledge. Agent may assume that no Event of Default has
occurred and is continuing, unless Agent has actual knowledge of the Event of
Default, has received notice from Borrower or Borrower's independent certified
public accountants stating the nature of the Event of Default, or has received
notice from a Lender stating the nature of the Event of Default and that such
Lender considers the Event of Default to have occurred and to be continuing.
(b) Discretion to Act. Agent shall have the right to request instructions
from Requisite Lenders by notice to each Lender. If Agent shall request
instructions from Requisite Lenders with respect to any act or action
(including the failure to act) in connection with this
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Agreement or any Related Agreement, Agent shall be entitled to refrain from
such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, and Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any Related Agreement in
accordance with the instructions of Requisite Lenders. Agent may give any
notice required under Section 6 hereof without the consent of any of Lenders
unless otherwise directed by Requisite Lenders in writing and will, at the
direction of Requisite Lenders, give any such notice required under Section 6.
Except for any obligation expressly set forth in this Agreement or the Related
Agreements, Agent may, but shall not be required to, exercise its discretion to
act or not act, except that Agent shall be required to act or not act upon the
instructions of Requisite Lenders (unless all of Lenders are required to
provide such instructions as provided in Section 12.6) and those instructions
shall be binding upon Agent and all Lenders; provided that Agent shall not be
required to act or not act if to do so would expose Agent to liability or would
be contrary to this Agreement or any Related Agreements or to applicable law.
10.7. Right to Indemnity.
Agent shall be fully justified in failing or refusing to take any action
under this Agreement or the Related Agreements or in relation hereto or thereto
unless it shall first be indemnified (upon requesting such indemnification) to
its satisfaction by Lenders against any and all liability and expense which it
may incur by reason of taking or continuing to take any such action. Lenders
further agree to indemnify Agent ratably in accordance with their Pro Rata
Shares for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against
Agent in any way relating to or arising out of this Agreement or the other
Related Agreements or the transactions contemplated hereby or thereby, or the
enforcement of any of the terms hereof or thereof or of any other documents;
provided no such liability, obligation, loss, damage, penalty, action,
judgment, suit, cost, expense or disbursement results from Agent's gross
negligence or willful misconduct. Each Lender agrees to reimburse Agent in the
amount of its Pro Rata Share of any out-of-pocket expenses for which Agent is
entitled to receive, but has not received, reimbursement pursuant to this
Agreement. The agreements in this Section 10.7 shall survive the payment and
fulfillment of the Liabilities and termination of this Agreement.
10.8. Rights and Remedies to be Exercised by Agent Only.
In the event any remedy may be exercised with respect to this Agreement
or the Related Agreements or the Collateral, Agent shall pursue remedies
designated by Requisite Lenders subject to the proviso set forth in Section
10.6(b). Each Lender agrees that no Lender shall have any right individually
(a) to realize upon the security created by this Agreement or the Related
Agreements, (b) enforce any provision of this Agreement or
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the Related Agreements, or (c) make demand under this Agreement or the Related
Agreements; provided, that any Lender that is an Issuing Bank may make demand
upon Borrower as the Issuing Bank pursuant to Sections 2.2(b) and 2.2(c) and
BAI may make demand upon Borrower pursuant to Section 12.4.
10.9. Agent's Resignation.
Agent may resign at any time after giving at least thirty (30) days'
prior written notice of its intention to do so to each Lender and to Borrower.
Upon satisfaction of the foregoing condition, Requisite Lenders shall have the
right to appoint a successor Agent (such appointment to be subject to the
consent of Borrower (which consent of Borrower shall not be unreasonably
withheld or delayed); provided, that Borrower's consent shall not be required
if a Lender is appointed Agent). If no successor Agent shall have been so
appointed and shall have accepted such appointment within twenty (20) days
after Agent's giving of such notice of resignation, then the resigning Agent
may appoint a successor Agent. After any resigning Agent's resignation
hereunder as Agent, it shall be discharged from its duties and obligations
under this Agreement but the provisions of this Section 10 shall continue to
bind Agent and inure to Agent's benefit as to any actions taken or omitted to
be taken by it while it was Agent hereunder. Upon appointment of a successor
Agent, the term "Agent" shall for all purposes of this Agreement thereafter
mean such successor.
10.10. Disbursement of Proceeds of Loans and Other Advances.
Agent may (and is hereby irrevocably authorized by Lenders), but shall
have no duty to make such other disbursements and advances as Revolving Loans
on behalf of Lenders, including without limitation the making of advances for
the expenditures described in Section 7.4 of this Agreement, which Agent, in
its sole discretion, deems necessary or desirable to preserve or protect the
Collateral, or any portion thereof. Agent's use of its own checks upon its
funds or Agent's transfer of its own funds, by wire or otherwise, to an account
of Borrower or any other Obligor shall be deemed to be disbursements made by
each Lender under this Agreement and pursuant to the Related Agreements.
10.11. Release of Collateral.
Each Lender hereby irrevocably authorizes Agent, at its option and in its
discretion, to release any and all guaranties of the Liabilities and any Lien
granted to or held by Agent upon any Collateral (i) upon termination of
Lenders' obligations to make Loans and payment and satisfaction of all Loans,
Letter of Credit reimbursement obligations and all other Payment Liabilities
and which Agent has been notified in writing are then due and payable; (ii)
constituting Collateral being sold or disposed of if Borrower certifies to
Agent that the sale or disposition is made in compliance with the terms of this
Agreement (and, absent any actual knowledge of Agent to the contrary, Agent may
rely
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conclusively on any such certificate, without further inquiry); (iii)
constituting property in which Borrower or any other Obligor owned no interest
at the time the Lien was granted and at all times thereafter; or (iv) if
approved, authorized or ratified in writing by Agent at the direction of all
Lenders. Upon request by Agent at any time, each Lender will confirm in writing
Agent's authority to release particular types or items of Collateral pursuant
to this Section 10.11.
10.12. Agreement to Cooperate.
Each Lender agrees to cooperate to the end that the terms and provisions
of this Agreement may be promptly and fully carried out. Lenders also agree,
from time to time, at the request of Agent, to execute and deliver any and all
other agreements, documents or instruments and to take such other actions, all
as may be reasonably necessary or desirable to effectuate the terms, provisions
and intent of this Agreement and the Related Agreements.
10.13. Sharing of Collateral.
If any Lender shall obtain any payment (whether voluntary, involuntary,
through exercise of any right of set off, or otherwise) on account of the
Liabilities in excess of the amount to which it is entitled pursuant to this
Agreement, such Lender shall forthwith purchase from the other Lenders such
participations in such other Lenders' claims against Borrower as shall be
necessary to cause such purchasing Lender to share the excess payment with the
other Lenders in accordance with the provisions of this Agreement; provided,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from such other Lender shall be rescinded
and such other Lenders shall repay to the purchasing Lender the purchase price
to the extent of their portion of such recovery together with an amount equal
to the share (according to the proportion of (i) the amount of such other
Lenders' required repayment, to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by
purchasing Lender in respect of the total amount recovered.
10.14. Lenders to Act as Agents.
If any Collateral or proceeds thereof at any time comes into the
possession or under the control of any Lender, such Lender shall hold such
Collateral or proceeds thereof as agent for the joint benefit of Lenders, and
will, upon receipt therefor, deliver such Collateral or proceeds thereof to
Agent.
11. ADDITIONAL PROVISIONS.
Additional provisions are set forth in Supplement A.
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12. GENERAL.
12.1. Borrower Waiver.
Except as otherwise provided for in this Agreement, Borrower waives (a)
presentment, demand and protest and notice of presentment, protest, default,
non-payment, maturity, release, compromise, settlement, one or more extensions
or renewals of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
or any Lender on which Borrower may in any way be liable and hereby ratifies
and confirms whatever Agent or any Lender may do in this regard; (b) all rights
to notice and a hearing prior to Agent's or any Lender's taking possession or
control of, or Agent's or any Lender's replevy, attachment or levy on or of,
the Collateral or any bond or security which might be required by any court
prior to allowing Agent or any Lender to exercise any of Agent's or any
Lender's remedies; and (c) the benefit of all valuation, appraisement and
exemption laws. Borrower acknowledges that it has been advised by counsel of
its choice with respect to this Agreement and the transactions evidenced by
this Agreement.
12.2. Power of Attorney.
Borrower appoints Agent, or any Person whom Agent may from time to time
designate, as Borrower's attorney and agent-in-fact with power (which
appointment and power, being coupled with an interest, is irrevocable until all
Payment Liabilities under this Agreement are paid and performed in full and
this Agreement is terminated), without notice to Borrower, to:
(a) At such time or times hereafter as Agent or said agent, in its sole
and absolute discretion, may determine in Borrower's or Agent's name (i)
endorse Borrower's name on any checks, notes, drafts or any other items of
payment relating to and/or proceeds of the Collateral which come into the
possession of Agent or under Agent's control and apply such payment or proceeds
to the Liabilities; (ii) endorse Borrower's name on any chattel paper,
document, instrument, invoice, freight bill, bill of lading or similar document
or agreement in Agent's possession relating to Accounts Receivable, Inventory
or any other Collateral; (iii) use the information recorded on or contained in
any data processing equipment and computer hardware and software to which
Borrower has access relating to Accounts Receivable, Inventory and/or other
Collateral; (iv) use Borrower's stationery and sign the name of Borrower to
verification of Accounts Receivable and notices thereof to Account Debtors; and
(v) if not done by Borrower, do all acts and things determined by Agent to be
necessary, to fulfill Borrower's obligations under this Agreement; and
(b) At such time or times after the occurrence and during the continuance
of an Event of Default, as Agent or said agent, in its sole and absolute
discretion, may determine, in Borrower's or Agent's name: (i) demand payment of
the Accounts Receivable; (ii) enforce payment of the Accounts Receivable, by
legal proceedings or otherwise; (iii) exercise all of
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Borrower's rights and remedies with respect to the collection of the Accounts
Receivable and other Collateral; (iv) settle, adjust, compromise, extend or
renew the Accounts Receivable; (v) settle, adjust or compromise any legal
proceedings brought to collect the Accounts Receivable; (vi) if permitted by
applicable law, sell or assign the Accounts Receivable and/or other Collateral
upon such terms for such amounts and at such time or times as Agent may deem
advisable; (vii) discharge and release the Accounts Receivable and/or other
Collateral; (viii) prepare, file and sign Borrower's name on any proof of claim
in bankruptcy or similar document against any Account Debtor; (ix) prepare,
file and sign Borrower's name on any notice of lien, assignment or satisfaction
of lien or similar document in connection with the Accounts Receivable and/or
other Collateral; and (x) do all acts and things necessary, in Agent's sole and
absolute discretion, to obtain repayment of the Liabilities and to fulfill
Borrower's other obligations under this Agreement.
12.3. Expenses; Attorneys' Fees.
Borrower agrees, whether or not any Loan is made or Letter of Credit is
issued hereunder, to pay upon demand all Attorneys' Fees and all other
reasonable expenses incurred by Agent at any time, including fees, costs and
expenses incurred in connection with Collateral field audits or other due
diligence investigations by Agent (subject to the limits contained in Section
5.5). For purposes of this Agreement, "Attorneys' Fees" means the reasonable
value of the services (and costs, charges and expenses related thereto) of the
attorneys (and all paralegals and any outside consultants employed by such
attorneys) employed by Agent or, to the extent specifically referred to below,
any Lender (including but not limited to attorneys and paralegals who are
employees of Agent or any Lender) from time to time (a) in connection with the
negotiation, preparation, execution, delivery, administration and, in the case
of Agent or any Lender, enforcement of this Agreement, any Related Agreement,
any Supplemental Documentation and all other documents or instruments provided
for herein or in any thereof or delivered or to be delivered hereunder or under
any thereof or in connection herewith or with any thereof, (b) to prepare
documentation related to the Loans made and other Liabilities incurred
hereunder, (c) to prepare any amendment to or waiver under this Agreement or
any Related Agreement and any documents or instruments related thereto, (d) to
represent Agent or any Lender in any litigation, contest, dispute, suit or
proceeding or to commence, defend or intervene in any litigation, contest,
dispute, suit or proceeding or to file a petition, complaint, answer, motion or
other pleading, or to take any other action in or with respect to, any
litigation, contest, dispute, suit or proceeding (whether instituted by Agent
or any Lender, Borrower or any other Person and whether in bankruptcy or
otherwise) in any way or respect relating to the Collateral, this Agreement or
any Related Agreement (other than any litigation, contest, dispute, suit or
proceedings involving a dispute between Agent and any Lender or between any
Lender and any other Lender), or Borrower's or any other Obligor's or any
Designated Subsidiary's affairs, (e) to protect, collect, lease, sell, take
possession of, or liquidate any of the Collateral, (f) to perfect or attempt to
enforce any security interest in any of the Collateral or to give any advice
with respect to such enforcement and (g) to enforce any of Agent's or any
Lender's
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rights to collect any of the Liabilities. Agent may after three (3) Banking
Days' notice to Borrower advance all such amounts to Borrower as a Revolving
Loan. Borrower also agrees (y) to indemnify and hold Agent and each Lender
harmless from any loss or expense which may arise or be created by the
acceptance of telephonic or other instructions for making Loans or issuing
Letters of Credit and (z) to pay, and save Agent and each Lender harmless from
all liability for, any stamp or other taxes which may be payable with respect
to the execution or delivery of this Agreement, or any Related Agreement or
Supplemental Documentation, or the issuance of any Note or of any other
instruments or documents provided for herein or to be delivered hereunder or in
connection herewith. In addition to the foregoing, "Attorneys' Fees" shall
include Agent's fees and expenses of the types described in the preceding
sentence incurred in connection with the syndication, participation and
assignment of this Agreement, any Related Agreement and any Supplemental
Documentation. Borrower's foregoing obligations shall survive any termination
of this Agreement.
12.4. BAI's Fees and Charges.
To the extent not already covered by Section 12.3, Borrower agrees to pay
BAI on demand by BAI the customary fees and charges of BAI for maintenance of
accounts with BAI or for providing other services to Borrower and if not so
paid, each Lender shall, without regard to any other provision of this
Agreement or any other Related Agreement or any defense that Borrower may have
to its obligation to pay BAI in connection with such fees and charges, pay BAI
for such Lender's Pro Rata Share of such fees and charges, and any payments so
made by Lenders to BAI shall be deemed to be Revolving Loans. Each Lender
(other than BAI) acknowledges and agrees that it shall not be entitled to any
of the fees and charges of BAI as provided in the immediately preceding
sentence. Agent may, in its sole and absolute discretion, provide for such
payment by advancing the amount thereof to Borrower as a Revolving Loan after
three (3) Banking Days' notice to Borrower.
12.5. Lawful Interest.
In no contingency or event whatsoever shall the interest rate charged
pursuant to the terms of this Agreement exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a court
determines that any Lender has received interest hereunder in excess of the
highest applicable rate, such Lender shall promptly refund its Pro Rata Share
of such excess interest to Borrower.
12.6. No Waiver by Agent or any Lender; Amendments.
No failure or delay on the part of Agent or any Lender in the exercise of
any power or right, and no course of dealing between Borrower and Agent or any
Lender shall operate as a waiver of such power or right, nor shall any single
or partial exercise of any
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power or right preclude other or further exercise thereof or the exercise of
any other power or right. The remedies provided for herein are cumulative and
not exclusive of any remedies which may be available to Agent or any Lender at
law or in equity. No notice to or demand on Borrower not required hereunder
shall in any event entitle Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the right of Agent or
any Lender to any other or further action in any circumstances without notice
or demand. No amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement or any Related Agreement shall in any event be
effective unless the same shall be in writing and signed and delivered by
Requisite Lenders. Notwithstanding the foregoing, any amendment, modification,
termination, waiver or consent with respect to any of the following provisions
of this Agreement shall be effective only by a written agreement, signed by
each Lender affected thereby: (a) increase in the amount of the Maximum Loan
Amount of such Lender, (b) reduction of the principal of, rate or amount of
interest on the Revolving Loans or any fees or charges (including, without
limitation, any Letter of Credit fees or charges) payable to such Lender (other
than by the payment or prepayment thereof), (c) postponement of the date fixed
for any payment of principal of, or interest on, the Loans or any fees or
charges) (including, without limitation, any Letter of Credit fees or charges)
or other amounts payable to such Lender, (d) change in the aggregate Pro Rata
Share of Lenders which shall be required for Lenders or any of them to take
action hereunder or amend the definition of "Requisite Lenders," or (e)
amendment of this Section 12.6. Agent may, but shall have no obligation to,
with the written concurrence of any Lender, execute amendments, modifications,
waivers or consents on behalf of that Lender. Any waiver of any provision of
this Agreement, and any consent to any departure by Borrower from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which given.
12.7. Termination of Revolving Credit.
Borrower may terminate the Revolving Credit at any time upon notice to
Agent and payment in full of the outstanding principal balance of the Loans and
all other Payment Liabilities under this Agreement and the Related Agreements,
as provided in Section 2.1.2. All of Agent's and each Lender's rights and
remedies, the Liens of Agent on the Collateral, for the benefit of itself and
Lenders, and all of Borrower's duties and obligations under this Agreement
shall survive termination of the Credit extended to Borrower hereunder until
all of the Payment Liabilities hereunder have been finally paid and performed
in full. The termination or cancellation of the Credit shall not affect or
impair the liabilities and obligations of Borrower or any one or more of the
Obligors to Agent and Lenders or Agent's and each Lender's rights with respect
to any Loans and advances made and other Liabilities incurred prior to such
termination or with respect to the Collateral.
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12.8. Notices.
Except as otherwise expressly provided herein, any notice hereunder to
Borrower, Agent or any Lender shall be in writing (including facsimile
communication) and shall be given to Borrower, Agent or such Lender at its
address or facsimile number set forth on the signature pages hereof or at such
other address or facsimile number as Borrower, Agent or such Lender may, by
written notice, designate as its address or facsimile number for purposes of
notices hereunder. All such notices shall be deemed to be given when
transmitted by facsimile, delivered by courier, personally delivered or, in the
case of notice by mail, three (3) Banking Days following deposit in the United
States mails, properly addressed as herein provided, with proper postage
prepaid; provided, however, that notice to Agent of Borrower's intent to
terminate the Credit shall not be effective until actually received by Agent.
12.9. Assignments and Participations; Information.
(a) This Agreement may not be assigned by Borrower without the prior
written consent of Agent and Lenders. Whenever in this Agreement reference is
made to any of the parties hereto, such reference shall be deemed to include,
wherever applicable, a reference to the successors and permitted assigns of
Borrower and the successors and assigns of Agent and each Lender.
(b) Borrower and each Lender hereby agree that on or after the date
hereof, BAI may, in its discretion, without Borrower's or any other Lender's
consent, sell one or more assignments of portions of its interest in the
Credit. Each sale described in the preceding sentence shall be to a
creditworthy financial institution satisfactory to BAI, in its discretion, and
on such terms and conditions as BAI may determine. No other Lender may sell any
portion of its interest in the Credit without the consent of Borrower and
Agent, which consent will not be unreasonably withheld.
(c) Each assignment of an interest hereunder shall be subject to the
following conditions: (i) each assignment shall be of a constant, and not a
varying, ratable percentage of all of the assigning Lender's rights and
obligations under this Agreement, and the Maximum Loan Amount assigned shall be
in a minimum amount of $5,000,000 and after giving effect to such assignment no
Lender's Maximum Loan Amount shall be less than $5,000,000 (unless such Lender
sells all of its interest in the Credit), and (ii) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording
in the Register, an Assignment and Acceptance Agreement, with a copy to
Borrower. Upon such execution, delivery, acceptance and recording in the
Register, from and after the effective date specified in each Assignment and
Acceptance Agreement and agreed to by Agent, (x) the assignee thereunder shall,
in addition to any rights and obligations hereunder held by it immediately
prior to such effective date, if any, have the rights and obligations hereunder
that have been assigned to it pursuant to such Assignment and Acceptance
Agreement and shall, to the fullest extent permitted by law, have the same
rights and benefits hereunder as if it were an original
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Lender hereunder and (y) the assigning Lender shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance Agreement, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance Agreement covering all or the remaining portion of such assigning
Lender's rights and obligations under this Agreement, the assigning Lender
shall cease to be a party hereto).
(d) Agent shall maintain a copy of each Assignment and Acceptance
Agreement delivered to and accepted by it and a register (the "Register") for
the recordation of the names and addresses of Lenders and the Maximum Loan
Amount and principal amount of the Loans owing to each Lender from time to
time. The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Agent and Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance Agreement executed
by the assigning Lender and the assignee and a processing and recordation fee
of $2,500 (payable by the assigning Lender or the assignee, as shall be agreed
between them), Agent shall, if such Assignment and Acceptance Agreement has
been completed and is in compliance with this Agreement and in substantially
the form of Exhibit D and Agent has consented to the assignment evidenced
thereby, (i) accept such Assignment and Acceptance Agreement, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to Borrower.
(f) Each Lender may sell participations to one or more other financial
institutions in or to all or a portion of its rights and obligations under and
in respect of any and all facilities under this Agreement; provided, however,
that (i) such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) Borrower, Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
(iv) such participant's rights to agree or to restrict such Lender's ability to
agree to the modification, waiver or release of any of the terms of this
Agreement or the Related Agreements or to the release of any Collateral covered
by this Agreement or the Related Agreements, to consent to any action or
failure to act by any party to this Agreement or any of the Related Agreements,
or to exercise or refrain from exercising any powers or rights which any Lender
may have under or in respect of this Agreement or the Related Agreements or any
Collateral, shall be limited to the right to consent to (A) an increase in the
Maximum Loan Amount of the Lender from whom such participant purchased a
participation, (B) reduction of the principal of, or rate or amount of interest
on the Loans subject to such participation (other than by the payment or
prepayment thereof) or (C) postponement of any date fixed for any payment of
principal of, or interest on, the Loans subject to such participation.
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(g) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 12.9, disclose to
the assignee or participant or proposed assignee or participant, any
information relating to Parent, Borrower or its Subsidiaries furnished to such
Lender by or on behalf of Borrower; provided that, prior to any such
disclosure, such assignee or participant, or proposed assignee or participant,
shall agree to preserve the confidentiality of any confidential information
described therein and such Lender shall notify Borrower of the assignee or
participant, or proposed assignee or participant.
(h) Anything in this Agreement to the contrary notwithstanding, in the
case of any participation, all amounts payable by Borrower under this Agreement
or the Related Agreements shall be calculated and made in the manner and to the
parties required hereby as if no such participation had been sold.
(i) Agent agrees to promptly notify Borrower of each sale of a
participation or permitted assignment hereunder. Borrower agrees to use its
best efforts to assist Lenders in their efforts to sell assignments and
participations hereunder. In addition, Borrower agrees to execute new Notes in
favor of each of the selling and purchasing Lender, upon each sale of an
assignment hereunder, provided that the existing Notes in favor of the selling
Lender are simultaneously therewith returned to Borrower.
12.10. Severability.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
12.11. Successors.
This Agreement shall be binding upon each of Borrower, Agent and each
Lender and their respective successors and permitted assigns, and shall inure
to the benefit of each of Borrower, Agent and each Lender and their respective
successors and permitted assigns.
12.12. Construction.
BORROWER ACKNOWLEDGES THAT THIS AGREEMENT SHALL NOT BE BINDING UPON AGENT
OR ANY LENDER OR BECOME EFFECTIVE UNTIL FULLY EXECUTED COUNTERPARTS HAVE BEEN
EXECUTED AND DELIVERED TO AGENT AND BORROWER. ONCE EFFECTIVE, THIS AGREEMENT
AND THE RELATED AGREEMENTS AND SUPPLEMENTAL DOCUMENTS SHALL, UNLESS OTHERWISE
EXPRESSLY PROVIDED THEREIN, BE DEEMED TO HAVE BEEN NEGOTIATED AND ENTERED INTO
IN, AND SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF, THE STATE OF ILLINOIS
AS TO INTERPRETATION, ENFORCEMENT, VALIDITY,
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CONSTRUCTION, EFFECT, CHOICE OF LAW, AND IN ALL OTHER RESPECTS, INCLUDING BUT
NOT LIMITED TO THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, BUT
EXCLUDING PERFECTION OF SECURITY INTERESTS AND LIENS WHICH SHALL BE GOVERNED
AND CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION.
12.13. Consent to Jurisdiction.
To induce Agent and each Lender to accept this Agreement, Borrower
irrevocably agrees that, subject to Agent's sole and absolute election, ALL
ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR
RELATED TO THIS AGREEMENT, THE RELATED AGREEMENTS, OR THE SUPPLEMENTAL
DOCUMENTATION OR THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING SITUS
WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN
SAID CITY AND STATE AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED
MAIL DIRECTED TO BORROWER AT THE ADDRESS STATED ON THE SIGNATURE PAGE HEREOF
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT
THEREOF.
12.14. Subsidiary Reference.
Any reference herein to a Subsidiary or Subsidiaries of Borrower, and any
financial definition, ratio, restriction or other provision of this Agreement
which is stated to be applicable to "Borrower and the Subsidiaries" or which is
to be determined on a "consolidated" or "consolidating" basis, shall apply only
to the extent Borrower has any Subsidiaries and, where applicable, to the
extent any such Subsidiaries are consolidated with Borrower for financial
reporting purposes.
12.15. Waiver of Jury Trial.
BORROWER, AGENT AND EACH LENDER EACH WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS
AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR (B) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first written above.
PIONEER AMERICAS ACQUISITION CORP.
By /s/ PHILIP J. ABLOVE
-----------------------------------
Title Vice President and Chief
--------------------------------
Financial Officer
--------------------------------
Address: 4200 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Telecopier Number: (713) 225-4426
Attention: Chief Financial Officer and
Corporate Secretary
BANK OF AMERICA ILLINOIS, as a Lender
By /s/ RICHARD A. BEUTEL
-----------------------------------
Title Senior Vice President
--------------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopier Number: (312) 974-0761
Attention: Richard Beutel
Maximum Loan Amount: $35,000,000
BANK OF AMERICA ILLINOIS, as Agent
By /s/ DAVID A. JOHANSON
-----------------------------------
Title Vice President
--------------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopier Number: (312) 974-9102
Attention: Agency Management Services
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LIST OF EXHIBITS AND SCHEDULES
Exhibits:
Exhibit A - Form of Borrowing Base Certificate
Exhibit B - Form of Inventory Report
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Assignment and Acceptance Agreement
Exhibit E - Form of Accounts Receivable Report
Exhibit F - Closing Checklist
Exhibit G - Existing Letters of Credit
Schedules:
Schedule 4.1 Schedule of Tradenames and State of Incorporation and States
of Qualification
Schedule 4.7 Insurance Summary
Schedule 4.8 Schedule of Litigation and Contingent Liabilities
Schedule 4.9 Schedule of Liens
Schedule 4.10 Schedule of Subsidiaries
Schedule 4.11 Schedule of Partnerships and Joint Ventures
Schedule 4.12 Schedule of Business and Collateral Locations
Schedule 4.16 Schedule of Patents, Trademarks and Copyrights
Schedule 4.18 Schedule of Labor Matters
Schedule 4.19 Schedule of Contingent Employee Benefit Plan Liabilities
Schedule 4.21 Schedule of Noncompliance
Schedule 4.22 Schedule of Proposed Tax Assessments
Schedule 4.25 Schedule of Environmental Matters
Schedule 4.27 Schedule of Capitalized Lease Obligations
Schedule 4.28 Schedule of Capitalization
Schedule 5.14 Schedule of Indebtedness
Schedule 5.17 Schedule of Investments
Schedule 5.25 Schedule of Affiliate Transactions
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SUPPLEMENT A
to
LOAN AND SECURITY AGREEMENT
Dated as of June 17, 1997 among
Pioneer Americas Acquisition Corp.,
Bank of America Illinois, as Agent and as Lender,
and the other Lenders Party Thereto
1. Loan Agreement Reference.
This Supplement A, as it may be amended or modified from time
to time, is a part of the Loan and Security Agreement dated as of June 17, 1997
among Borrower, Agent and Lenders (together with all amendments, modifications
and supplements thereto, the "Loan Agreement"). Terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Loan
Agreement.
2. Revolving Credit Amount; Borrowing Base.
2.1. Revolving Credit Amount. The maximum amount of
Revolving Loans which Lenders will make available to Borrower (such amount is
herein called the "Revolving Credit Amount") is $35,000,000.
2.2. Borrowing Base. The term "Borrowing Base," as used
herein, shall mean:
(i) an amount equal to up to 85% of the net
amount (after deduction of such reserves and allowances as
Agent deems proper and necessary in its reasonable business
judgment) of Eligible Accounts Receivable; plus
(ii) an amount equal to the least of (a)
$10,000,000, subject to Section 5.1 hereof, (b) up to 50%
(after deduction of such reserves and allowances as Agent
deems proper and necessary in its reasonable judgment) of
Eligible Inventory and (c) an amount equal to 35% of the
amount in Section 2.2(i) hereof.
2.3. Agent's and Lenders' Rights. Borrower agrees that
nothing contained in Supplement A (i) shall be construed as Agent's or any
Lender's agreement to resort or look to a particular type or item of Collateral
as security for any specific Loan or portion of the Liabilities or advance or
in any way limit Agent's or any Lender's right to resort to any or all of the
Collateral as security for any of the Liabilities, (ii) shall be deemed to
limit or reduce any Lien upon any portion of the Collateral or other security
for the Liabilities or (iii) shall supersede Section 2.9 of the Loan Agreement.
95
3. Interest.
3.1. Loans.
3.1.1. Revolving Loans.
(a) Interest to Maturity. The unpaid principal balance
of the Revolving Loans (other than Overdraft Loans and Over Advances)
shall bear interest to maturity at a per annum rate equal to the
Floating Rate; provided, that pursuant to the provisions of Section
3.1.1(c), below, from time to time Borrower may elect to have all or
any portion of the Revolving Loans bear interest at the LIBOR Rate.
(b) LIBOR Rate Option. Borrower shall have the right,
from time to time, to designate all or any portion of the Revolving
Loans as bearing interest at the then applicable LIBOR Rate, by means
of a written notice to Agent specifying (i) the amount of such
Revolving Loans that will bear interest at a LIBOR Rate (provided,
that such LIBOR Rate Loans shall be in a minimum amount of Five
Hundred Thousand Dollars ($500,000)); (ii) the date on which the
applicable Interest Rate Period shall begin; and (iii) the Interest
Rate Period applicable thereto. All designations of Revolving Loans
as LIBOR Rate Loans must be received by Agent not later than 10:00
a.m., Chicago time, three (3) Banking Days prior to the date the
applicable Interest Rate Period is to begin (or is to be continued).
Notwithstanding the foregoing, (x) all undesignated portions of the
Revolving Loans shall bear interest at the Floating Rate, (y) no
Interest Rate Period may commence or be continued at any time that an
Event of Default is in existence under Section 6.1(a), 6.1 (e) or
Section 6.1(h) (solely because of a breach of Section 5 of this
Supplement A) of the Loan Agreement and in each case, Agent has
determined in good faith that such a commencement or continuation is
not appropriate, in any case notwithstanding a contrary designation by
Borrower, and (z) in no event may more than four (4) LIBOR Rate Loans
having different Interest Rate Periods be outstanding at any one time.
Each designation by Borrower of a LIBOR Rate Loan shall be
irrevocable.
(c) Default Rate. If any principal amount of the Loans
is not paid when due, at the option of Requisite Lenders, the entire
unpaid principal balance of the Revolving Loans shall bear interest
until paid at a rate per annum equal to the greater of (i) the
applicable interest rate from time to time in effect plus 2.00% and
(ii) 2.00% above the applicable interest rate in effect at the time of
such Event of Default.
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3.1.2. Overdraft Loans; Over Advances. Overdraft
Loans and Over Advances shall bear interest at the rate(s) determined
pursuant to Section 2.7 or Section 2.8 of the Loan Agreement, as
applicable.
3.2. Computation. Interest shall be calculated on the
basis of a year consisting of 360 days and paid for actual days elapsed;
provided, that the computation of interest on LIBOR Rate Loans shall include
the date on which the applicable Interest Rate Period began, but shall exclude
the last day of the applicable Interest Rate Period. LIBOR Rate Loans not
repaid on the last day of the Interest Rate Period applicable thereto shall be
continued or converted into Revolving Loans bearing interest at the Floating
Rate, as applicable, and bear interest as provided herein, from and including
the last day of such Interest Rate Period. Changes in any interest rate
provided for herein which are due to changes in the Reference Rate shall take
effect on the date of the change in the Reference Rate.
3.3. Payment. Until maturity, interest on the Loans shall
be payable on the last day of each month, commencing on June 30, 1997, and at
maturity; provided, that interest on LIBOR Rate Loans shall be payable in
arrears on the last day of the Interest Rate Period applicable thereto and at
maturity. After maturity, whether by acceleration or otherwise, accrued
interest shall be payable on demand.
3.4. Funding Indemnification. If any payment of a LIBOR
Rate Loan occurs on a date which is not the last day of the applicable Interest
Rate Period, whether because of acceleration, prepayment or otherwise, Borrower
will indemnify each Lender and Agent for any loss or cost incurred by it
resulting therefrom, including without limitation any loss or cost in
liquidating or employing deposits acquired to fund or maintain such Loan.
Agent shall deliver a written statement as to the amount due, if any, under
this Section, after consultation with each Lender so affected. Such written
statement shall set forth in reasonable detail the calculations upon which
Agent and each Lender determined such amount and shall be final, conclusive and
binding on Borrower in the absence of manifest error. Determination of amounts
payable under this Section shall be calculated as though each Lender funded its
LIBOR Rate Loans through the purchase of a deposit of the type and maturity
corresponding to the LIBOR Rate Loan and applicable Interest Rate Period
bearing interest at the LIBOR Rate less the Applicable Margin at such time,
whether or not the Lender actually funded the Loan in that manner. The amount
specified in the written statement shall be payable on demand after receipt by
Borrower of the written statement.
3.5. Availability of Interest Rate Options. If any Lender
determines that maintenance of any of its LIBOR Rate Loans would violate any
applicable law, rule, regulation or directive, whether or not having the force
of law, the Lender shall immediately notify Agent thereof and Agent shall
suspend the availability of such LIBOR Rate Loans and require any LIBOR Rate
Loans outstanding and so affected to be repaid; or if any Lender determines
that (i) deposits of a type or maturity appropriate to match fund LIBOR Rate
Loans are not available, (ii) the LIBOR Rate does not accurately reflect the
cost of making
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such Loans, or (iii) the Lender's ability to make or maintain LIBOR Rate Loans
has been materially adversely affected by the occurrence of any event after the
date hereof, then Lender shall immediately notify Agent thereof and Agent shall
suspend the availability of the LIBOR Rate Loans, as applicable, after the date
of any such determination.
3.6. Lenders' Obligation to Mitigate. Agent and each
Lender agrees that if it becomes aware of either (i) the occurrence of an event
or the existence of a condition described in Section 9.3 of the Loan Agreement
or Section 3.5 hereof that would cause Agent or such Lender to make a
determination of the nature described therein, or (ii) the imposition,
assessment or collection of any taxes on or in respect of any Loan or Letter of
Credit, Agent or such Lender will, to the extent consistent with its internal
policies, use reasonable efforts to issue, make, fund or maintain the affected
Letters of Credit or Loans through another lending office of such Agent or
Lender, if any, if, as a result thereof, the additional amounts that would
otherwise be required to be paid to Agent or such Lender in respect thereof,
would be reduced, or LIBOR Rate Loans could be maintained, as the case may be,
and if, as determined by Agent or such Lender in its reasonable discretion, the
issuing, making, funding or maintaining of such Letters of Credit or Loans
through such other lending office would not adversely affect Agent or such
Lender or such Letters of Credit or Loans. Borrower hereby agrees to pay all
reasonable expenses incurred by Agent or any Lender in using another lending
office pursuant to this Section 3.6.
4. Additional Eligible Account Receivable Requirements.
Each Account Receivable identified by Borrower as an Eligible
Account Receivable must not be unpaid on the date that is 60 days after the
applicable invoice dates. If invoices representing 15% or more of the unpaid
net amount of all Accounts Receivable from any one Account Debtor are unpaid
more than 60 days after the applicable invoice dates, then all Accounts
Receivable relating to such Account Debtor shall cease to be Eligible Accounts
Receivable.
5. Additional Covenants.
From the Closing Date and thereafter until all of Borrower's
Liabilities under the Loan Agreement are paid in full, Borrower agrees that,
unless Requisite Lenders otherwise consent in writing:
5.1. Interest Coverage Ratio. Borrower will not permit
the ratio ("Interest Coverage Ratio") of (a) EBITDA for any period set forth
below, to (b) interest expense (net of interest income not otherwise included
in the calculation of earnings) for such period, each determined for Borrower
and its Subsidiaries on a consolidated basis, and in accordance with GAAP, to
be less than 1.1:1.0 at the end of each month for the preceding twelve month
period.
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For purposes of Section 5.1, interest expense shall include,
without limitation, implicit interest expense on Capitalized Leases.
PIONEER AMERICAS ACQUISITION CORP.
By /s/ PHILIP J. ABLOVE
-------------------------------------------
Title Vice President and Chief
----------------------------------------
Financial Officer
----------------------------------------
Address: 4200 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Telecopier Number: (713) 225-4426
Attention: Chief Financial Officer and
Corporate Secretary
BANK OF AMERICA ILLINOIS, as a Lender
By /s/ RICHARD A. BEUTEL
-------------------------------------------
Title Senior Vice President
----------------------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopier Number: (312) 974-0761
Attention: Richard Beutel
BANK OF AMERICA ILLINOIS, as Agent
By /s/ DAVID A. JOHANSON
-------------------------------------------
Title Vice President
----------------------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopier Number: (312) 974-9102
Attention: Agency Management Services
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