SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarter ended September 29, 1995
OR
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission file number 1-9037
International Technology Corporation
(Exact name of registrant as specified in its charter)
Delaware 33-0001212
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23456 Hawthorne Boulevard, Torrance, California 90505
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 378-9933
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ..X....
No ........
At October 31, 1995 the registrant had issued and outstanding an
aggregate of 36,068,363 shares of its common stock.
1
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 29, 1995
PART I. FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets
as of September 29, 1995 (unaudited) and
March 31, 1995. 3
Condensed Consolidated Statements of Operations
for the Fiscal Quarter and Two Fiscal Quarters
ended September 29, 1995 and September 30, 1994
(unaudited). 4
Condensed Consolidated Statements of Cash Flows
for the Two Fiscal Quarters ended September 29,
1995 and September 30, 1994 (unaudited). 5
Notes to Condensed Consolidated Financial
Statements (unaudited). 6-8
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition. 9-17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. 18
Item 6. Exhibits and Reports on Form 8-K. 19
Signature. 20
2
<PAGE>
PART I
Item 1. Financial Statements.
INTERNATIONAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 29, March 31,
1995 1995
------------ --------
(Unaudited)
(In thousands)
ASSETS
------
Current assets:
Cash and cash equivalents $ 15,437 $ 6,547
Receivables, net 139,198 137,896
Prepaid expenses and other current assets 4,888 5,630
Deferred income taxes 14,600 14,600
------- -------
Total current assets 174,123 164,673
------- -------
Property, plant and equipment, at cost:
Land and land improvements 1,766 1,766
Buildings and leasehold improvements 10,934 9,561
Machinery and equipment 142,204 140,800
------- -------
154,904 152,127
Less accumulated depreciation and
amortization 95,043 82,324
------- -------
Net property, plant and equipment 59,861 69,803
------- -------
Construction-in-progress 959 2,381
Investment in Quanterra 34,495 36,316
Other assets 14,275 47,274
Long-term assets of discontinued operations 41,705 41,705
------- -------
Total assets $325,418 $362,152
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 32,121 $ 28,823
Accrued liabilities 37,700 42,660
Billings in excess of revenues 3,312 3,977
Short-term debt, including current portion
of long-term debt 216 1,154
Net current liabilities of discontinued
operations 14,488 14,221
------- -------
Total current liabilities 87,837 90,835
------- -------
Long-term debt 50,107 80,189
Long-term accrued liabilities of
discontinued operations 33,359 39,480
Other long-term accrued liabilities 5,496 5,727
Commitments and contingencies
Stockholders' equity:
Preferred stock, $100 par value; 180,000
shares authorized; 24,000 shares
issued and outstanding 2,400 2,400
Common stock, $1 par value; 100,000,000
shares authorized; 36,097,001 shares
issued at September 29, 1995, and
35,737,313 shares issued and outstanding
at March 31, 1995 36,097 35,737
Additional paid-in capital 171,890 172,137
Treasury stock, at cost (4,768 shares at
September 29, 1995 (15) -
Deficit (61,753) (64,353)
------- -------
Total stockholders' equity 148,619 145,921
------- -------
Total liabilities and stockholders' equity $325,418 $362,152
======= =======
See accompanying notes.
3
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INTERNATIONAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal quarter ended Two fiscal quarters ended
--------------------------- ---------------------------
September 29, September 30, September 29, September 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues $106,259 $102,509 $206,551 $211,077
Cost and expenses:
Cost of revenues 91,085 86,081 174,433 178,731
Selling, general and
administrative expenses 10,016 10,401 20,039 21,872
------- ------- ------- -------
Operating income 5,158 6,027 12,079 10,474
Equity in net income
(loss) of Quanterra,
including integration
charge in 1994 (866) 507 (1,821) (8,757)
Other income 1,090 - 1,090 -
Interest, net (1,652) (1,634) (3,643) (3,103)
------- ------- ------- -------
Income (loss) before
income taxes 3,730 4,900 7,705 (1,386)
Provision for income taxes (1,375) (2,009) (3,005) (2,009)
------- ------- ------- -------
Net income (loss) 2,355 2,891 4,700 (3,395)
Less preferred stock
dividends (1,050) (1,050) (2,100) (2,100)
------- ------- ------- -------
Net income (loss)
applicable to common
stock $ 1,305 $ 1,841 $ 2,600 $ (5,495)
======= ======= ======= =======
Net income (loss)
per share $ .04 $ .05 $ .07 $ (.16)
======= ======= ======= =======
</TABLE>
See accompanying notes.
4
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INTERNATIONAL TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Two fiscal quarters ended
----------------------------
September 29, September 30,
1995 1994
------------ -----------
(Unaudited)
Cash flows from operating activities:
Net income (loss) $ 4,700 $(3,395)
Adjustments to reconcile net income (loss)
to net cash provided by (used for)
operating activities:
Equity in net loss (income) of Quanterra 1,821 (507)
Integration charge related to the
formation of Quanterra - 9,264
Gain from Motco settlement (9,090) -
Writedown of equipment 8,000 -
Depreciation and amortization 6,814 9,413
Deferred income taxes 2,145 1,702
Changes in assets and liabilities, net of
effects from acquisitions and dispositions
of businesses:
Increase in receivables, net (1,302) (29,558)
Decrease (increase) in prepaid expenses
and other current assets 742 (483)
Increase in accounts payable 3,298 6,872
(Decrease) increase in accrued liabilities (4,870) 3,926
(Decrease) increase in billings in excess
of revenues (665) 909
(Decrease) increase in other long-term
accrued liabilities (231) 312
_______ _______
Net cash provided by (used for) operating
activities 11,362 (1,545)
_______ _______
Cash flows from investing activities:
Proceeds from Motco settlement 41,100 -
Capital expenditures (3,073) (6,272)
Investment in Quanterra - (1,208)
Other, net (1,623) 610
Investment activities of transportation,
treatment and disposal
discontinued operations (5,854) (5,559)
_______ _______
Net cash provided by (used for) investing
activities 30,550 (12,429)
_______ _______
Cash flows from financing activities:
Repayments of long-term borrowings (60,520) (15,479)
Long-term borrowings 29,500 28,000
Dividends paid on preferred stock (2,100) (2,100)
Purchase of treasury shares (740) -
Issuances of common stock 838 -
_______ _______
Net cash (used for) provided by financing
activities (33,022) 10,421
_______ _______
Net increase (decrease) in cash and
cash equivalents 8,890 (3,553)
Cash and cash equivalents at beginning
of period 6,547 10,646
_______ _______
Cash and cash equivalents at end of period $ 15,437 $ 7,093
======= =======
See accompanying notes.
5
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INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The condensed consolidated financial statements included herein
have been prepared by International Technology Corporation (Company or
IT), without audit, and include all adjustments of a normal, recurring
nature which are, in the opinion of management, necessary for a fair
presentation of the results of operations for the fiscal quarter and two
fiscal quarters ended September 29, 1995, pursuant to the rules of the
Securities and Exchange Commission. The Company has changed its fiscal
year to include four thirteen-week fiscal quarters with the fourth
quarter ending on the last Friday in March. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations although the
Company believes that the disclosures in such financial statements are
adequate to make the information presented not misleading. Certain
reclassifications have been made to prior period amounts to conform to
the current period's presentation.
These condensed consolidated financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1995. The results of operations for the fiscal
periods ended September 29, 1995 are not necessarily indicative of the
results for the full fiscal year.
2. On August 7, 1995, the Company received $41,100,000 of cash from
Monsanto Company in settlement of the Motco Trust litigation. Such
settlement proceeds were used principally to pay down all outstanding
borrowings against the Company's bank line of credit. In the second
quarter of fiscal year 1996, the Company reported in other income a
pre-tax gain of $1,090,000, which represented the settlement proceeds,
net of the previously recorded $31,200,000 claim amount, $8,000,000 of
costs related to certain equipment specially constructed for the Motco
project which has been idle since ceasing work on the project, and legal
and other expenses.
3. On October 25, 1995, the Company completed the refinancing of its
$50,000,000 of 9 3/8% senior notes due July 1, 1996 and its bank
revolving line of credit with a combined $125,000,000 financing which
includes $65,000,000 of 8.67% senior secured notes with a group of major
insurance companies and a $60,000,000 syndicated bank revolving credit
facility. The financing package, which is subject to a borrowing base,
is secured by the accounts receivable and certain fixed assets of the
Company. The senior secured notes have an eight-year final maturity
with no principal payments until the sixth year, and the new bank line
has a term of five years.
As a result of the consummation of this refinancing arrangement, the
Company's $50,000,000 of 9 3/8% senior notes due July 1, 1996, are classified
as long-term debt in the Company's condensed consolidated balance sheet at
September 29, 1995. The holders of the 9 3/8% senior notes have been notified
that redemption of all outstanding amounts will occur on November 24, 1995.
4. For the two fiscal quarters ended September 29, 1995, the Company
had an effective tax rate of 39%, which exceeds the 34% federal
statutory rate primarily due to state income taxes and nondeductible
expenses, net of a release of a portion of the valuation allowance
related to the Company's deferred tax asset. In the corresponding
six-month period of the prior fiscal year, in which the Company reported
a loss before income taxes of $1,386,000, the Company recorded a
$2,009,000 income tax provision principally due to the partial
nondeductibility of the integration charge recorded by the Company in
the first quarter of fiscal year 1995.
5. Net income (loss) per common share is computed by dividing net
income (loss) applicable to common stock by the weighted average number
of outstanding common shares and common share equivalents during each
period as follows:
6
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INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Average common and common
Fiscal quarter ended equivalent shares outstanding
____________________ _____________________________
September 29, 1995 35,993,068
September 30, 1994 35,640,338
Average common and common
Two fiscal quarters ended equivalent shares outstanding
_________________________ _____________________________
September 29, 1995 35,875,657
September 30, 1994 35,448,445
Common stock equivalents relate to dilutive stock options using the
treasury stock method. For all periods presented, the computation of
net income (loss) per share, assuming conversion into common shares of
the Company's Preferred Stock, is antidilutive.
6. In December 1987, the Company's Board of Directors adopted a
strategic restructuring program which included a formal plan to divest
the transportation, treatment and disposal operations through sale of
some facilities and closure of certain other facilities. As of
September 29, 1995, two of the Company's inactive disposal sites have
been formally closed and the other two are in the process of closure.
In connection with the plan of divestiture, at December 31, 1987,
the Company recorded a provision for loss on disposition of
transportation, treatment and disposal discontinued operations in the
amount of $110,069,000, net of income tax benefit of $24,202,000, which
included the estimated net loss on sale or closure and the results of
operations of the active disposal sites and the transportation business
through the then estimated sale date. At March 31, 1992, the Company
increased the provision for loss on disposition by the amount of
$32,720,000, net of income tax benefit of $2,280,000, principally due to
the write off of the $30,400,000 contingent purchase price from the
earlier sale of certain assets. At March 31, 1993, the Company
increased the provision for loss on disposition by $6,800,000, with no
offsetting income tax benefit, related to estimated additional costs
resulting from delays in the regulatory approval process and associated
closure plan revisions. At March 31, 1995, the Company recorded an
increase in the provision for loss on disposition of $10,603,000, net of
income tax benefit of $6,397,000, primarily for estimated increased
costs resulting from additional delays in the regulatory approval
process at the Company's inactive disposal sites in Northern California
and an additional accrual for estimated costs related to certain waste
disposal sites where IT has been named as a potentially responsible
party (PRP). At September 29, 1995, the Company's condensed
consolidated balance sheet included accrued liabilities of $47,847,000
to complete the closure and related post-closure of its inactive
disposal sites and related matters.
The provision for loss on disposition of transportation, treatment and
disposal discontinued operations is based on various assumptions and
estimates. Management believes the provision, as adjusted, is
reasonable; however, the ultimate effect of the divestiture on the
consolidated financial condition of the Company is dependent upon future
events, the outcome of which cannot be determined at this time.
Outcomes significantly different from those used to estimate the
provision for loss could result in a material adverse effect on the
consolidated financial condition of the Company.
7. Litigation to which IT is a party is discussed in Item 3, Legal
Proceedings, in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1995. Current developments are discussed in Part
II of this filing.
8. Unbilled receivables of $21,194,000 at September 29, 1995
($20,869,000 at March 31, 1995) are included in accounts receivable.
Unbilled receivables typically represent amounts earned under the
Company's contracts but not yet billable according to the contract
terms, which usually consider the passage of time, achievement of
certain milestones, negotiation of change orders or completion of the
project.
7
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Included in unbilled receivables at September 29, and March 31, 1995 are
approximately $8,000,000 of claims related to the Helen Kramer project,
which is subject to a governmental investigation.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition.
INTERNATIONAL TECHNOLOGY CORPORATION
FOR QUARTER ENDED SEPTEMBER 29, 1995
RESULTS OF OPERATIONS
- --------------------
Overview
- --------
The Company operates in one industry segment and provides a broad range
of environmental management services to clients principally in the
United States. The Company's principal strategy is to market its
services on a full-service basis. There are operating and economic
synergies between its service areas, as they are complementary and often
used in combination.
Prior to the June 1994 formation of Quanterra (see Equity in Net Loss of
Quanterra), the Company was organized into three business areas,
Environmental Services, Construction and Remediation, and Analytical
Services. Subsequent to June 1994, the Company operated in the first
two of these business areas. Effective April 1, 1995, the Company
implemented organizational structure changes in an effort to deliver
more cost-effective services to clients. The Company's operations are
now principally managed under a structure consisting of three regions
with full-service capabilities. Each region has its own technical,
project management, sales and administrative support functions. The
Construction and Remediation group's project management capabilities and
related infrastructure have been integrated throughout the Company to
strengthen project execution skills and enhance client service on a
company-wide basis. Accordingly, IT offers all of its services in each
region in which it operates.
Revenues
- --------
Effective with the inception of operations for Quanterra in the second
quarter of fiscal year 1995, the Company no longer records any revenue
in the Analytical Services area. However, since approximately 30
percent of Analytical Services area revenue historically was derived
from the Company's other operations, additional revenue now is being
recorded in those operations related to analytical services subcontracts
performed by Quanterra for IT, similar to other third party
subcontracts. After excluding prior year Analytical Services revenues
other than those provided to the Company's other operations, revenues
for the first two quarters of fiscal year 1996 were approximately 1.9%
higher than the amount reported for the corresponding period of the
prior fiscal year. Revenues for the current second fiscal quarter were
3.9% above the related level from the prior year. These increases are
principally due to an increased level of subcontract costs on project
work.
Due to its technical expertise, project management experience and
full-service capabilities, the Company has successfully bid on and
executed contracts with federal and other governmental agencies for the
performance of various Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) and Resource Conservation and
Recovery Act (RCRA) projects. The Company's governmental contracts are
often multi-year but can generally be canceled, delayed or modified at
the sole option of the client. Additionally, government contracts are
typically subject to annual funding limitations and public sector
budgeting constraints. The major contracts with federal government
agencies typically involve a competitive bidding process pursuant to
federal procurement policies involving several bidders and result in a
period of contract negotiation after a successful bidder is selected.
Although the Company generally serves as the prime contractor on its
contracts or as a part of a joint venture which is a prime contractor,
the Company serves as a subcontractor to other prime contractors on some
federal government programs. As has recently become typical in the
industry, the Company has entered into joint venture or teaming
arrangements with competitors when bidding on certain of the largest,
most complex contracts with federal governmental agencies, in order to
provide the increased work force capacity and breadth of technical
expertise required for the project.
The following table shows, for the second fiscal quarters and the two
fiscal quarters ended September 29, 1995 and 1994, the Company's
revenues attributable to federal, state and local governmental contracts
as a percentage of the Company's consolidated revenues, including
Analytical Services through June 1994:
9
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INTERNATIONAL TECHNOLOGY CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Fiscal quarter ended Two fiscal quarters ended
--------------------------- ---------------------------
September 29, September 30, September 29, September 30,
Source 1995 1994 1995 1994
- ------ ------------- ------------ ------------ ------------
<S> <S> <S> <S> <S>
Federal government:
U.S. Department of Defense
(DOD) . . . . . . . . . . 53% 46% 52% 44%
U.S. Department of Energy
(DOE) . . . . . . . . . . 10 11 10 12
Other federal agencies. . . 3 4 4 3
--- --- --- ---
66 61 66 59
State and local governments . 3 12 4 13
--- --- --- ---
Total . . . . . . . . . . . . 70% 73% 70% 72%
=== === === ===
</TABLE>
Revenues from the DOD increased primarily due to work performed on tasks
issued under the Company's major indefinite delivery order programs,
several of which were awarded in the prior year. The Company expects to
continue to derive a substantial portion of its revenues from these
contracts, which are primarily related to remedial action type of work.
Revenues from state and local government contracts declined primarily
due to the wind-up late in fiscal year 1995 of the Sikes Disposal Pits
contract, performed for the Texas Natural Resources Conservation
Commission.
Commercial work has increased over the past two quarters due to the
start-up of a major thermal treatment project which was awarded in 1992
but which had been subject to permitting delays. Excluding this
contract, commercial work has declined due to reductions in awards by
commercial clients, who, the Company believes, to some degree are
delaying such awards until final Congressional action is taken on the
reauthorization of CERCLA. Funding authority under CERCLA will lapse on
December 31, 1995 and it is uncertain whether reauthorization will occur
prior to that date or what the details of the legislation, including
retroactive liability, cleanup standards, and remedy selection (such as
proposed changes that would change CERCLA's preference for permanent
treatment remedies such as incineration in favor of confinement and
containment) may include. Uncertainty regarding possible Congressional
rollbacks of environmental regulation and enforcement have led
commercial clients to delay projects, as well.
The Company cannot predict the impact of continuing delays in the
reauthorization of CERCLA, or of the many legislative and regulatory
changes proposed since the November 1994 elections. Delays in the
reauthorization of CERCLA may continue to adversely impact the
environmental industry. Failure of Congress to reauthorize CERCLA,
and/or substantial changes in or repeal of other environmental laws may
significantly affect the Company and the environmental industry. The
Company believes that it generally has benefitted from increased
environmental regulations affecting business, and from more stringent
enforcement of those regulations. The currently contemplated changes in
regulations could decrease the demand for certain of the Company's
services, as customers anticipate and adjust to the new regulations.
However, the proposed legislation could also result in increased demand
for certain of the Company's services if regulatory changes decrease
the cost of remediation projects or result in more funds being spent for
actual remediation. The ultimate impact of the proposed changes will
depend upon a number of factors, including the overall strength of the
economy and customers' views on the cost effectiveness of remedies
available under the changed regulations.
A significant portion of IT's revenues continue to be derived from
large, complex thermal remediation contracts utilizing the Company's
Hybrid Thermal Treatment System (HTTS ) incineration technology.
Incineration as an allowable remedy under CERCLA continues to come under
legislative and regulatory pressures. The U.S. Environmental Protection
Agency (USEPA) has adopted a strategy of favoring waste minimization
over combustion/incineration and of increasing regulatory burdens upon
combustion and incineration facilities, whether fixed-base or on-site.
If policies were implemented or regulations were changed such that the
Company was unable to permit and use incinerators on remediation
projects due to either regulatory or market factors, the Company would
have to find alternative uses for its HTTS equipment. If alternative
10
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
uses, such as foreign installations, were not found or were
uneconomical, there could be a negative effect to the Company due to
impairment of HTTS assets as well as lost project opportunities. At
September 29, 1995, IT's HTTS equipment had a net book value of
approximately $18,500,000. In the quarter ended September 29, 1995, the
Company reduced the net book value by $8,000,000 of costs related to
equipment specially constructed for the Motco project which has been
idle since ceasing work on the project (see Note 2 to Condensed
Consolidated Financial Statements).
The Company's total contract backlog at September 29, 1995 was
approximately $1,134,000,000 including approximately $676,000,000 of
future project work the Company estimates it will receive (based on
historical experience) under existing governmental indefinite delivery
programs which provide for a general undefined scope of work. Revenues
from backlog and indefinite delivery order contracts are expected to be
earned over the next one to five years. Backlog declined by
approximately $40,000,000 during the quarter due to a significant amount
of work being performed on existing contracts. Continued funding of
existing backlog could be negatively impacted in the future due to
reductions in current and future federal government environmental
restoration budgets.
Gross Margin
- ------------
Gross margin percentage for the second quarter of fiscal year 1996
declined to 14.3% of revenues from 16.0% of revenues for the
corresponding period of the prior fiscal year. In the current quarter,
gross margin was adversely impacted by the combination of lower pricing
due to competitive industry conditions, a shift in revenue mix toward
lower margin subcontracted work and severance costs related to headcount
reductions, partially offset by lower overhead costs.
For the first two quarters of fiscal year 1996, gross margin of 15.5% of
revenues declined from 16.1% of revenues (excluding Analytical Services)
in the corresponding period of the prior fiscal year, generally for the
same reasons noted above related to the second quarter. Reported gross
margin including Analytical Services for the first two quarters of
fiscal year 1995 was 15.3% due to a gross margin of just 3.1% in the
Analytical Services business prior to the June 28, 1994 formation of
Quanterra.
Selling, General and Administrative Expenses
- --------------------------------------------
For the three months and six months ended September 29, 1995, selling,
general and administrative expenses represented 9.4% of revenues and
9.7% of revenues, respectively. This level compares favorably to the
related 10.1% and 10.4% of revenues reported for the corresponding
periods of the prior fiscal year as a result of continued management
attention to expenses. Beginning with the second quarter of the prior
fiscal year, the Company experienced a decline in selling, general and
administrative expenses as approximately $5,000,000 of annual expenses
were eliminated or transferred from the Company upon the formation of
Quanterra.
Equity in Net Loss of Quanterra
- -------------------------------
In June 1994, the Company and an affiliate of Corning Incorporated
(Corning) combined the two companies' environmental analytical services
businesses into a newly formed 50/50 jointly-owned company (Quanterra).
IT's 50 percent investment in Quanterra is accounted for under the
equity method. An integration plan was implemented in the early stages
of Quanterra's operations. The plan included consolidation and closure
of redundant lab facilities and equipment, a reduction in force to
eliminate duplicative overhead and excess capacity and a consolidation
of laboratory management and accounting systems. IT reported a pre-tax
charge of $9,264,000 related to the integration in its operating results
for the quarter ended June 30, 1994. Although the implementation of the
integration plan has resulted in operational efficiencies and cost
reductions, the environmental laboratory business continues to be faced
with excess capacity and intense price competition. Consequently, in
the quarter and two fiscal quarters ended September 29, 1995, the
Company reported equity in net loss of Quanterra of $866,000 and
$1,821,000, respectively, continuing a trend of losses which have
11
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
occurred for the past several quarters. Although this current trend is
expected to continue for the next several quarters, there are operating
and strategic activities underway in an effort to improve these
operating trends.
In the quarter ended June 30, 1994, prior to the formation of Quanterra,
the Company's Analytical Services business experienced an operating loss
of approximately $850,000.
Interest, Net
- -------------
For the second quarter and first two quarters of fiscal year 1996, net
interest expense represented 1.6% of revenues and 1.8% of revenues,
respectively, compared to the 1.6% and 1.5% of revenues reported in the
second quarter and first two quarters of fiscal year 1995. The increase
in interest expense for the six-month period was due to the cessation of
capitalized interest on the Company's major financial and project
management software project which was substantially completed at
September 30, 1994 and to increased borrowing over the past year. The
flat second quarter level compared to a year ago is due to the factors
noted above being offset by a reduction in interest expense due to the
paydown of bank borrowings which occurred in August 1995 utilizing the
proceeds from the Motco settlement (see Note 2 to Condensed Consolidated
Financial Statements). Interest expense should decline slightly further
in the third fiscal quarter since the second quarter did not benefit
from such paydown for the full quarter. The impact of the recently
completed refinancing will not significantly affect net interest
expense.
Income Taxes
- ------------
For the two fiscal quarters ended September 29, 1995, the Company had an
effective income tax rate of 39%, which exceeds the 34% federal
statutory rate primarily due to state income taxes and nondeductible
expenses, net of a release of a portion of the valuation allowance
related to the Company's deferred tax asset. In the corresponding
six-month period of the prior fiscal year, in which the Company reported
a loss before income taxes of $1,386,000, the Company recorded a
$2,009,000 income tax provision principally due to the partial
nondeductibility of the integration charge recorded by the Company in
the first quarter of fiscal year 1995.
12
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
FINANCIAL CONDITION
- -------------------
Working capital of $86,286,000 at September 29, 1995 increased by
$12,448,000 or 16.9% from $73,838,000 at March 31, 1995. The current
ratio at September 29, 1995 increased to 1.98:1 from 1.81:1 at March 31,
1995.
On August 7, 1995, the Company received $41,100,000 of cash from Monsanto
Company in settlement of the Motco Trust litigation. Such settlement
proceeds were used principally to pay down all outstanding borrowings
against the Company's bank line of credit.
Cash provided by operating activities for the first two quarters of
fiscal year 1996 totaled $11,362,000, compared to $1,545,000 cash used
for operating activities in the corresponding six-month period of the
prior fiscal year. During the current period, the increase in cash
provided by operating activities is principally due to the lack of
receivables growth compared to the prior year because of a greatly
reduced level of revenue growth. Capital expenditures of $3,073,000 for
the current two fiscal quarters were $3,199,000 lower than the
$6,272,000 amount reported for the corresponding period of the prior
fiscal year principally due to the cessation of spending in the
Analytical Services area due to the formation of Quanterra and to the
completion of a major company-wide systems project which was in process
in the prior fiscal year.
With regard to the Company's transportation, treatment and disposal
discontinued operations, the Company has closed two of the inactive
disposal sites and is pursuing formal permanent closure of its Panoche
and Vine Hill disposal sites, for which there will be significant
closure and post-closure costs over the next several years. During the
first two quarters of the current fiscal year, the Company spent
$5,854,000 relating to closure plans and construction costs for the
sites compared to $5,559,000 in the corresponding period of the prior
fiscal year. At September 29, 1995, the Company's condensed
consolidated balance sheet included accrued liabilities of $47,847,000
to complete the closure and post-closure of its inactive Northern
California disposal sites and related matters.
Closure and post-closure plans for the Panoche facility were revised to
incorporate regulatory agency comments in March 1991. In December 1991,
the California Supreme Court issued a decision upholding the County of
Solano's (County) authority to issue an order (the County Order)
requiring the Company to submit for agency consideration a closure plan
providing for the excavation and relocation on-site of wastes and soils
from peripheral waste areas at the facility (the Buffer Zone Areas).
During fiscal year 1993, the Company was required to submit, and did
submit, additional information and closure designs for the Buffer Zone
Areas, including a design for excavation and relocation on-site of
significant quantities of wastes and soils. An Environmental Impact
Report (EIR), required by California law to be completed prior to plan
approval, currently is being prepared by the California Environmental
Protection Agency, Department of Toxic Substances Control (DTSC). DTSC
recently completed an Administrative Draft EIR on the plan. As
reflected in the Administrative Draft EIR, the EIR will address the 1991
closure plan and the plan submitted in 1993 to address the County Order,
as well as other alternative plans, including alternative plans that
would require varying amounts of excavation and relocation on-site of
wastes and soil in the Buffer Zone Areas. The additional study of the
plan submitted to address the County Order and of the other alternatives
has resulted in delays to closure plan approval. While difficult to
predict and therefore subject to change, the Company presently expects
final determination on the closure and post-closure plans in early
fiscal year 1997. The Company is targeting completion of the closure
for fiscal year 1999, but completion will depend on the closure plan
approved and therefore the date for completion is uncertain at this
time. The delays in the closure plan review and approval process have
resulted in additional costs for monitoring and maintaining the
facility, conducting engineering and permitting activities, and charges
for the EIR contractor. A determination to excavate and relocate a
substantial amount of materials in the Buffer Zone Areas would increase
closure costs substantially, which would have a material adverse affect
on the consolidated financial condition of the Company.
Progress on the Vine Hill Complex facility closure plan continues, with
a revised closure plan submitted to the DTSC in August 1991. In April
1992, the Company received and subsequently responded to comments on the
plan from DTSC. In June 1995, the DTSC published the draft EIR and
draft closure plan approval for public review and comment. The public
comment period closed on July 31, 1995. The Company expects the plan to
be approved in fiscal year 1996; however, significant work which will
13
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
FINANCIAL CONDITION (CONTINUED)
ultimately be required for closure will have been completed by that
time. The Company is targeting completion of the closure for fiscal
year 1998.
Closure construction was completed for the Montezuma Hills site and the
Benson Ridge facility in December 1991 and December 1992, respectively.
Upon completion of closure construction, the Company is required to
perform post-closure monitoring and maintenance of its disposal sites
for at least 30 years. Operation of the sites in the closure and
post-closure periods is subject to numerous federal, state and local
regulations. The Company may be required to perform unexpected
remediation work at the sites in the future or to pay penalties for
alleged noncompliance with regulatory permit conditions.
Regulations of the DTSC and the USEPA require that owners and operators
of hazardous waste treatment, storage and disposal facilities provide
financial assurance for closure and post-closure costs of those
facilities. The Company has provided financial assurance equal to its
estimate for closure costs at March 31, 1995, which could be subject to
increase at a later time as a result of regulatory requirements, in the
form of a corporate guarantee of approximately $10,600,000, letters of
credit totaling approximately $10,200,000 and a trust fund containing
approximately $10,600,000, and has purchased annuities which will
ultimately mature over the next 30 years to pay for its estimates of
post-closure costs as part of a consent order with the DTSC entered on
June 27, 1989. Among other provisions, the consent order requires IT to
revise its financial assurance estimates on March 1 of each year to
reflect inflation adjustments and any changes in the cost estimates
resulting from completion of interim closure procedures and from
revisions in the closure and post-closure plans. Thereafter, the
Company has 60 days to adjust its financial assurance mechanisms to
reflect the changed costs. IT completed cost revisions required at
March 1, 1995 and the DTSC has approved the revised amounts. The
Company has provided financial assurance on the amounts required by the
cost revisions.
IT's inactive disposal sites are subject to the RCRA and other federal
laws including the Toxic Substances Control Act, the Clean Water Act,
the Clean Air Act and the regulations of the Occupational Safety and
Health Act. The provisions of CERCLA and its amendments generally do not
presently affect the Company's four inactive disposal sites, but do
apply in some cases to former business operations where the Company is
an alleged generator or transporter of waste or former operator of a
disposal site owned by others. California has been one of the leading
states in regulating the transportation, treatment and disposal of
hazardous waste substances. Under the Hazardous Waste Control Act, the
DTSC administers a comprehensive regulatory program. California
operations are also subject to regulation by the State Water Resources
Control Board, the California Air Resources Board, Regional Water
Quality Control Boards (RWQCBs), Air Quality Management Districts and
various other state authorities. At the local level, treatment and
disposal sites are also subject to zoning and land use restrictions, and
other ordinances.
The California Toxic Pits Cleanup Act of 1984 (TPCA) required operators
of certain surface impoundments to cease discharging liquid hazardous
wastes into these units by a statutory deadline, unless the units were
retrofitted to meet minimum technology requirements. The Company has
taken reasonable measures and has made substantial progress toward
compliance at the Vine Hill Complex, but cannot fully meet statutory
requirements until final closure plans have been approved. The Company
has discussed its TPCA compliance activities with the applicable RWQCB.
Although substantial civil penalties are available for noncompliance
with TPCA, the Company does not expect that penalties, if imposed, would
be material to the Company's financial condition, given the
circumstances and the Company's good faith efforts to achieve compliance
and conclude closure.
Closure and post-closure costs are incurred over a significant number of
years and are subject to a number of variables including, among others,
completion of negotiations regarding specific site closure and
post-closure plans with applicable regulatory agencies. Such closure
costs are comprised principally of engineering, design and construction
costs and of caretaker and monitoring costs during closure. The Company
has estimated the impact of closure and post-closure costs in the
provision for loss on disposition of transportation, treatment and
disposal discontinued operations; however, closure and post-closure
costs could be higher than estimated if regulatory agencies were to
require closure and/or post-closure procedures significantly different
than those in the plans developed by the Company or if there are
14
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
FINANCIAL CONDITION (CONTINUED)
additional delays in the closure plan approval process. Certain
revisions to the closure procedures could also result in impairment of
the residual land values attributed to certain of the sites.
The carrying value of the long-term assets of transportation, treatment
and disposal discontinued operations of $41,705,000 at September 29,
1995 is principally comprised of residual land at the inactive disposal
sites and assumes that sales will occur at current market prices
estimated by the Company based on certain assumptions (entitlements,
development agreements, etc.), taking into account market value
information provided by independent real estate appraisers. During
fiscal year 1992, the Company entered into an agreement with a real
estate developer to develop some of this property as part of a larger
development in the local area involving a group of developers. The
entitlement process has been delayed due to uncertainties over the
Company's closure plans for its adjacent disposal site and local
community review of growth strategy. If the developers' plans change or
the developers are unable to obtain entitlements as planned, the
carrying value of this property could be significantly impaired. With
regard to this property or any of the other residual land, there is no
assurance as to the timing of sales or the Company's ability to
ultimately liquidate the land for the sale prices assumed. If the
assumptions used to determine such prices are not realized, the value of
the land could be materially different from the current carrying value.
In June 1986, USEPA notified a number of entities, including the
Company, that they were PRPs under CERCLA with respect to the Operating
Industries, Inc. (OII) Superfund site in Monterey Park, California and,
as such, faced joint and several liability for the costs to investigate
and cleanup this site. USEPA requested these entities to work as a
single group to settle with USEPA and DTSC their alleged liability for
certain past response costs and to perform future remedial work. A
number of these PRPs subsequently formed the OII Steering Committee
(Steering Committee) and negotiated a series of settlements (in the form
of partial consent decrees) addressing cost reimbursement demands and
performing certain interim remedial measures (IRMs). The Company did
not join the Steering Committee or enter these settlements. In October
1994, USEPA advised the Company in writing that it continued to regard
the Company and its subsidiaries as liable for response costs. In that
notice, USEPA provided the Company and other non-Steering Committee PRPs
the opportunity to make a limited challenge as to USEPA's volume
determinations. Subject to its review of that challenge, USEPA further
stated it intended to offer the Company and other non-settling PRPs
another opportunity to resolve their liability for response costs
incurred in the prior settlements or risk enforcement actions by the
USEPA.
In October 1995, the Company and the USEPA agreed to a settlement of the
Company's liability for response costs incurred by the USEPA pursuant to
the first three partial consent decrees entered into in connection with
OII site. The settlement with USEPA will be entered in the form of a
consent decree (the Fifth Partial Consent Decree) filed in the U.S.
District Court. The settlement is subject to a public notice and
comment period, as well as subsequent federal court approval. If the
settlement is approved, the Company will pay to the USEPA approximately
$5,350,000 in installments within one year, which amounts had been
previously reserved by the Company. While resolving the Company's
liability for response costs incurred by the USEPA pursuant to the first
three partial consent decrees, the settlement does not include any costs
for future or final OII remedies. Since USEPA is not expected to
announce a final remedy for the site for at least a year, future
response costs are undetermined, although they are expected to be
substantial.
The Steering Committee continues to contend the Company is liable to it
for a share of the response costs its members have paid. On October 11,
1994, the Company was served with a summons and complaint in a cost
recovery action brought by members of the Steering Committee (National
Railroad Passenger Corporation, et al. v. Harshaw Filtrol, U.S.D.C.,
Central District, California, No. CV 94-2861 WMB (GHKx)). The action
seeks (1) recovery from the Company of a portion, allegedly attributable
to the Company, of certain of plaintiffs' costs incurred at OII pursuant
to the first two settlements (the Steering Committee had previously
quantified its claim against the Company for these response costs at
$2,700,000) and (2) a declaration from the court as to the Company's
share of future costs associated with the IRMs addressed in these prior
settlements. On May 16, 1995, a second lawsuit was filed against the
Company (National Railroad Passenger Corporation v. ACF United,
U.S.D.C., Central District, California, Case No. CV 95-2050 LGB (RMBx))
by the Steering Committee, which seeks from the Company unspecified
amounts for cost recovery, contribution and declaratory relief for
15
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
FINANCIAL CONDITION (CONTINUED)
response costs incurred by Steering Committee members pursuant to the
third settlement. These two lawsuits have been consolidated with three
other cost recovery and contribution actions and are now scheduled for
trial on July 25, 1996. The Company is defending itself vigorously in
the consolidated action.
The Steering Committee has also indicated to the Company that it opposes
USEPA's settlement with the Company and will take all action it can to
prevent the Fifth Partial Consent Decree from being entered. As a part
of the settlement and if the settlement is approved, the Company will
receive from the USEPA contribution protection and a covenant not to sue
as to the matters addressed in the Fifth Partial Consent Decree. The
settlement does not itself result in dismissal of the pending lawsuits
against the Company by the Steering Committee (i.e., the consolidated
actions referenced above), but the Company believes that, if the
settlement is approved, the contribution protection included in the
settlement should protect it from such lawsuits and should result in
their ultimate dismissal. In addition, the Company is pursuing certain
other PRPs for cost recovery and contribution to attempt to recover a
portion of the sums which it will pay pursuant to the Fifth Partial
Consent Decree. The Company also has advised its liability insurance
carriers as to the pendency of the USEPA's and the Steering Committee's
claims and requested indemnification and legal representation. The
carriers dispute their obligations to the Company.
Disapproval of the settlement and the inability of the Company to
otherwise effect a satisfactory resolution with the USEPA and/or the
Steering Committee of the claims addressed in the Fifth Partial Consent
Decree, or the inability of the Company to effect a satisfactory
resolution with the USEPA and/or the Steering Committee of claims with
respect to future costs for site remediation and long-term monitoring
and maintenance, could have a material adverse effect on the
consolidated financial condition of the Company.
The Company, as a major provider of hazardous waste transportation,
treatment and disposal operations in California prior to the December
1987 strategic restructuring program, has been named a PRP at other
sites. The Company has either denied responsibility and/or is
participating with others named by the USEPA, the DTSC or other state
governmental agencies in conducting investigations as to the nature and
extent of contamination at such sites. Additionally, the Company may,
from time to time, be so named at additional sites and may also face
damage claims by third parties for alleged releases or discharges of
contaminants or pollutants arising out of its transportation, treatment
and disposal operations.
The provision for loss on disposition of transportation, treatment and
disposal discontinued operations is based on various assumptions and
estimates, including those discussed above. Management believes that
the provision, as adjusted, is reasonable; however, the ultimate effect
of the divestiture on the consolidated financial condition of the
Company is dependent upon future events, the outcome of which cannot be
determined at this time. Outcomes significantly different from those
used to estimate the provision for loss could result in a material
adverse effect on the consolidated financial condition of the Company.
At September 29, 1995, a deferred tax asset in the amount of $17,030,000
(net of a valuation allowance of $11,243,000) is included in the
Company's condensed consolidated balance sheet. The asset represents
the tax benefit of future tax deductions and net operating loss (NOL),
alternative minimum and investment tax carryforwards. The asset will be
realized principally as closure expenditures related to the Company's
inactive Northern California disposal sites are made over the next
several years, as such expenditures are deductible in the year made, but
only to the extent the Company has sufficient levels of taxable income.
During the second fiscal quarter ended September 29, 1995, the
settlement of the Motco Trust lawsuit (see Note 2 to Condensed
Consolidated Financial Statements) generated substantial amounts of
current taxable income resulting in the utilization of NOL
carryforwards. As a result, a valuation allowance reduction of
$3,238,000 has been included in the computation of the estimated annual
effective tax rate of 39% for the fiscal year ending March 29, 1996.
The Company evaluates the adequacy of the valuation allowance and the
realizability of the deferred tax asset on an ongoing basis.
16
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
FINANCIAL CONDITION (CONTINUED)
The Company's agreements with Corning relating to Quanterra contain
general provisions which could affect liquidity including restrictions
on dividends to the partners, buy-sell provisions obligating the Company
to sell its interests in Quanterra in certain circumstances and to
contribute up to an additional $5,000,000 to Quanterra under certain
circumstances, and requirements that the Company indemnify Quanterra and
Corning from certain liabilities arising prior to the closing of the
transaction. Although there are operating and strategic activities
underway in an effort to improve Quanterra's current weak operating
trends, IT was required by these agreements to contribute $2,500,000 to
Quanterra in October 1995 and anticipates that it will be required to
contribute the remaining $2,500,000 commitment later in fiscal year
1996. Due to the operating losses which Quanterra has been incurring
and the requirements to contribute additional capital to Quanterra, the
Company is evaluating and will continue to evaluate the ultimate
recoverability of its investment in Quanterra. If the Company
determines that its investment in Quanterra is not fully recoverable, a
writedown of that investment could occur which could have a material
adverse impact on the Company's consolidated financial condition.
In aggregate, at September 29, 1995, letters of credit totaling
approximately $37,100,000 related to the Company's insurance program,
financial assurance requirements and bonding requirements were
outstanding against the Company's $95,000,000 bank line of credit. The
Company had no outstanding cash advances under the line at September 29,
1995.
On October 25, 1995, the Company completed the refinancing of its
$50,000,000 of 9 3/8% senior notes due July 1, 1996 and its bank
revolving line of credit with a combined $125,000,000 financing which
includes $65,000,000 of 8.67% senior secured notes with a group of major
insurance companies and a $60,000,000 syndicated bank revolving credit
facility. The financing package, which is subject to a borrowing base,
is secured by the accounts receivable and certain fixed assets of the
Company. The senior secured notes have an eight-year final maturity
with no principal payments until the sixth year, and the new bank line
has a term of five years.
As a result of the consummation of this refinancing arrangement, the
Company's $50,000,000 of 9 3/8% senior notes due July 1, 1996, are
classified as long-term debt in the Company's condensed consolidated
balance sheet at September 29, 1995. The holders of the 9 3/8% senior
notes have been notified that redemption of all outstanding amounts will
occur on November 24, 1995.
Interest on borrowings under the Company's new revolving line of credit
is at the bank's prime rate plus 0.5%, or in the case of Eurodollar
borrowings, at the interbank offered rate plus 1.5%. The Company is
subject to a 0.5% per annum charge on the unused portion of the
commitment. The Company's new credit facilities contain several
financial ratio and net worth covenants. In addition, the facilities
contain certain other restrictive covenants, including prohibitions on
the payment of cash dividends on common stock (and, if the Company is in
default under the facilities, on the preferred stock), and on the
repurchase of stock other than to fund IT's compensation plans,
limitations on capital expenditures, the incurrence of other debt and
the purchase or sale of assets and a negative pledge on substantially
all of the Company's assets not pledged to the facilities.
Additionally, the credit agreements for Quanterra prohibit the Company
from pledging its interest in Quanterra to other lenders, including the
Company's new lenders.
As the result of the refinancing, the Company increased cash equivalents
by approximately $11,000,000 which would have increased cash and cash
equivalents at September 29, 1995 on a pro forma basis to approximately
$26,000,000. In addition, the Company would have had availability
within its borrowing base under its new bank line of approximately
$10,000,000.
The Company continues to have significant cash requirements, including
working capital, capital expenditures, expenditures for the closure of
its inactive disposal sites, dividend obligations on the depositary
shares and contingent liabilities. The Company's cash and availability
under its bank line are presently sufficient to meet the foreseeable
requirements.
17
<PAGE>
PART II
INTERNATIONAL TECHNOLOGY CORPORATION
Item 1. Legal Proceedings.
The following matters and other litigation to which the Company is a
party are more fully discussed in Item 3, Legal Proceedings, in the
Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1995. See Note 2 to Condensed Consolidated Financial Statements for a
discussion of current developments related to the Motco litigation. See
also Management's Discussion and Analysis of Results of Operations and
Financial Condition - Financial Condition for current developments
related to the Operating Industries, Inc. Superfund site matter.
Class Action Lawsuit
- --------------------
The trial in this action, which was scheduled for November 28, 1995, has
been continued until February 27, 1996. The Company has filed a motion
for summary judgment, which the plaintiffs have opposed. The matter is
pending before the trial judge. Nonbinding mediation has not, to date,
resulted in a settlement.
Central Garden
- --------------
The nonbinding mediation previously scheduled in this matter for
mid-October 1995 has been postponed until mid-December 1995. Trial is
currently set for May 1996.
18
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. These exhibits are numbered in accordance with
the Exhibit Table of Item 601 of Regulation S-K.
Exhibit No. Description
----------- -----------------------------------
10(ii) 1. Credit Agreement among IT
Corporation, the Several Lenders from
Time to Time Parties Hereto and
Chemical Bank, as Administrative
Agent, dated as of October 24, 1995.
2. Note Purchase Agreement dated as of
October 24, 1995 for IT Corporation
8.67% Guaranteed Senior Secured Notes
due October 30, 2003.
3. Master Collateral and Intercreditor
Agreement dated as of October 24,
1995 among Certain Participating
Creditors of IT Corporation and
Chemical Bank, as Collateral Agent.
27 1. Financial Data Schedule for the
quarter ended September 29, 1995.
(b) Reports on Form 8-K.
None.
19
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL TECHNOLOGY CORPORATION
(Registrant)
ANTHONY J. DELUCA November 13, 1995
__________________________________ _________________
Anthony J. DeLuca
Senior Vice President,
Chief Financial Officer
and Duly Authorized Officer
20
<PAGE>
EXHIBIT 10(ii) 1.
CONFORMED COPY
============================================================
CREDIT AGREEMENT
among
IT CORPORATION,
The Several Lenders
from Time to Time Parties Hereto
and
CHEMICAL BANK,
as Administrative Agent
Dated as of October 24, 1995
================================================================
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions. . . . . . . . 8
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS. . . . . . 8
2.1 Revolving Credit Commitments . . . . . . . . 8
2.2 Procedure for Borrowing. . . . . . . . . . . 9
2.3 Commitment Fee . . . . . . . . . . . . . . . 9
2.4 Termination or Reduction of Commitments. . . 10
2.5 Repayment of Loans; Evidence of Debt . . . . 10
2.6 Optional and Mandatory Prepayments . . . . . 11
2.7 Conversion and Continuation Options. . . . . 12
2.8 Minimum Amounts and Maximum Number
of Tranches. . . . . . . . . . . . . . . . . 13
2.9 Interest Rates and Payment Dates . . . . . . 13
2.10 Computation of Interest and Fees. . . . . . 14
2.11 Inability to Determine Interest Rate. . . . 14
2.12 Pro Rata Treatment and Payments . . . . . . 15
2.13 Illegality. . . . . . . . . . . . . . . . . 15
2.14 Requirements of Law . . . . . . . . . . . . 16
2.15 Taxes . . . . . . . . . . . . . . . . . . . 17
2.16 Indemnity . . . . . . . . . . . . . . . . . 18
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . 19
3.1 L/C Commitment.. . . . . . . . . . . . . . . 19
3.2 Procedure for Issuance of Letters
of Credit. . . . . . . . . . . . . . . . . . 19
3.3 Fees, Commissions and Other Charges. . . . . 20
3.4 L/C Participations.. . . . . . . . . . . . . 20
3.5 Reimbursement Obligation of the Borrower.. . 21
3.6 Obligations Absolute.. . . . . . . . . . . . 22
3.7. Letter of Credit Payments.. . . . . . . . . 22
3.8. Application.. . . . . . . . . . . . . . . . 23
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . 23
4.1 Corporate Power; Authorization;
Enforceable Obligations. . . . . . . . . . . 23
4.2 No Legal Bar . . . . . . . . . . . . . . . . 23
4.3 Purpose of Loans . . . . . . . . . . . . . . 23
4.4 Representations and Warranties
in Schedule II . . . . . . . . . . . . . . . 24
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . 24
5.1 Conditions to Initial Extension of Credit. . 24
5.2 Conditions to Each Extension of Credit . . . 28
SECTION 6. COVENANTS. . . . . . . . . . . . . . . . . 29
SECTION 7. EVENTS OF DEFAULT. . . . . . . . . . . . . 29
SECTION 8. THE ADMINISTRATIVE AGENT . . . . . . . . . 30
8.1 Appointment. . . . . . . . . . . . . . . . . 30
8.2 Delegation of Duties . . . . . . . . . . . . 30
8.3 Exculpatory Provisions . . . . . . . . . . . 30
8.4 Reliance by Administrative Agent . . . . . . 31
8.5 Notice of Default. . . . . . . . . . . . . . 31
8.6 Non-Reliance on Administrative Agent
and Other Lenders. . . . . . . . . . . . . . 32
8.7 Indemnification. . . . . . . . . . . . . . . 32
8.8 Administrative Agent in Its
Individual Capacity. . . . . . . . . . . . . 33
8.9 Successor Administrative Agent . . . . . . . 33
SECTION 9. MISCELLANEOUS. . . . . . . . . . . . . . . 33
9.1 Amendments and Waivers . . . . . . . . . . . 33
9.2 Notices. . . . . . . . . . . . . . . . . . . 34
9.3 No Waiver; Cumulative Remedies . . . . . . . 35
9.4 Survival of Representations and Warranties . 35
9.5 Payment of Expenses and Taxes. . . . . . . . 35
9.6 Successors and Assigns; Participations
and Assignments. . . . . . . . . . . . . . . 36
9.7 Adjustments; Set-off . . . . . . . . . . . . 38
9.8 Examination Reports. . . . . . . . . . . . . 39
9.9 Counterparts . . . . . . . . . . . . . . . . 39
9.10 Severability. . . . . . . . . . . . . . . . 39
9.11 Integration . . . . . . . . . . . . . . . . 39
9.12 GOVERNING LAW . . . . . . . . . . . . . . . 40
9.13 Submission To Jurisdiction; Waivers . . . . 40
9.14 Confidentiality . . . . . . . . . . . . . . 40
9.15 Acknowledgements. . . . . . . . . . . . . . 41
9.16 WAIVERS OF JURY TRIAL . . . . . . . . . . . 41
SCHEDULES
Schedule IA Commitments
Schedule IB Description of Property
Schedule I Uniform Definitions
Schedule II Uniform Representations and Warranties
Schedule III Uniform Covenants
Schedule IV Uniform Defaults
Schedule 5.1(q) Terminated Existing Debt
EXHIBITS
Exhibit A Form of Revolving Loan Note
Exhibit B-1 Form of Opinion of Counsel to Loan Parties
Exhibit B-2 Form of Opinion of General Counsel
Exhibit C Form of Assignment and Acceptance
Exhibit E Form of Borrowing Base Certificate
Exhibit F Form of Intercreditor Agreement
CREDIT AGREEMENT, dated as of October 24, 1995, among IT
Corporation, a California corporation (the "Borrower"), the several
banks and other financial institutions from time to time parties to this
Agreement (the "Lenders") and Chemical Bank, a New York banking
corporation, as administrative agent for the Lenders hereunder.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the
rate of interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal office
in New York City (the Prime Rate not being intended to be the lowest
rate of interest charged by Chemical Bank in connection with extensions
of credit to debtors); "Base CD Rate" shall mean the sum of (a) the
product of (i) the Three-Month Secondary CD Rate and (ii) a fraction,
the numerator of which is one and the denominator of which is one minus
the C/D Reserve Percentage and (b) the C/D Assessment Rate; "Three-Month
Secondary CD Rate" shall mean, for any day, the secondary market rate
for three-month certificates of deposit reported as being in effect on
such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors of the Federal Reserve
System (the "Board") through the public information telephone line of
the Federal Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate
shall not be so reported on such day or such next preceding Business
Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City
negotiable certificate of deposit dealers of recognized standing
selected by it; and "Federal Funds Effective Rate" shall mean, for any
day, 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 on the next succeeding Business Day
by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized
standing selected by it. Any change in the ABR due to a change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the
effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which
is based upon the ABR.
"Administrative Agent": Chemical Bank, together with its
affiliates, as the arranger of the Commitments and as the administrative
agent for the Lenders under this Agreement and the other Loan Documents.
"Aggregate Outstanding Extensions of Credit": as to any
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Loans made by such Lender then outstanding, (b)
such Lender's Commitment Percentage of the L/C Obligations then
outstanding and (c) such Lender's Commitment Percentage of all interest,
charges and fees incurred hereunder and accrued and unpaid as of such
time.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Applicable Margin": (a) for each day on which the total
Aggregate Outstanding Extensions of Credit for all Lenders is equal to
or less than $45,000,000, for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Alternate Base Eurodollar
Rate Loans Loans
--------------- ----------
0.50% 1.50%;
and (b) for each day on which the total Aggregate Outstanding Extensions
of Credit for all Lenders exceeds $45,000,000, for each Type of Loan,
the rate per annum set forth under the relevant column heading below:
Alternate Base Eurodollar
Rate Loans Loans
-------------- ----------
0.75% 1.75%;
provided, that during each fiscal quarter of the Borrower beginning
later than twelve months following the Closing Date and immediately
following any fiscal quarter during which the Aggregate Outstanding
Extensions of Credit did not at any time exceed the amount of the
portion of the Borrowing Base then in effect calculated pursuant to
clauses (i) and (ii) of the definition thereof, the Applicable Margins
to be in effect pursuant to this definition shall be 0.25% lower (i.e. a
rate that is 25 basis points lower) for each day during such following
fiscal quarter than such Applicable Margin otherwise would have been
(including giving effect to the provisions of the following proviso, if
applicable for such fiscal quarter); and provided, further, that during
each fiscal quarter of the Borrower immediately following any fiscal
quarter of the Borrower for which the ratio of Total Debt of the
Borrower on the last day thereof to EBITDA for the period of four
consecutive fiscal quarters ending on such day is less than 3:1 as
reflected in the financial statements for such fiscal quarter delivered
pursuant to Section 21 of Schedule III, the Applicable Margins to be in
effect pursuant to this definition shall be 0.25% lower for each day
during such following fiscal quarter than such Applicable Margin
otherwise would have been (including giving effect to the provisions of
the foregoing proviso, if applicable for such fiscal quarter).
"Application": an application, in such form as the Issuing
Bank may specify from time to time, requesting the Issuing Bank to open
a Letter of Credit.
"Assignee": as defined in subsection 9.6(c).
"Available Commitment": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the lesser of (x) the amount
of such Lender's Commitment and (y) such Lender's Commitment Percentage
of the Borrowing Base then in effect over (b) sum of (i) such Lender's
Aggregate Outstanding Extensions of Credit then outstanding, and (ii)
such Lender's Commitment Percentage of the aggregate principal amount of
the Senior Notes then outstanding.
"Bank Notes": as defined in subsection 2.5(e).
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Business Day": any Business Day, as defined in Schedule I,
provided that in connection with any making or conversion of any
Eurodollar Loan, "Business Day" shall exclude any day on which dealings
in foreign currencies and exchange between banks may not be carried on
in London, England.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in a
Person (other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"C/D Assessment Rate": for any day as applied to any ABR
Loan, the annual assessment rate in effect on such day which is payable
by a member of the Bank Insurance Fund maintained by the Federal Deposit
Insurance Corporation (the "FDIC") classified as well-capitalized and
within supervisory subgroup "B" (or a comparable successor assessment
risk classification) within the meaning of 12 C.F.R. 327.3(d) (or any
successor provision) to the FDIC (or any successor) for the FDIC's (or
such successor's) insuring time deposits at offices of such institution
in the United States.
"C/D Reserve Percentage": for any day as applied to any ABR
Loan, that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) (the "Board"), for determining the maximum
reserve requirement for a Depositary Institution (as defined in
Regulation D of the Board) in respect of new non-personal time deposits
in Dollars having a maturity of 30 days or more.
"Chemical": Chemical Bank.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commercial Letter of Credit": as defined in subsection
3.1(b)(i)(2).
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date or such earlier date on
which the Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes
the Borrower and which is treated as a single employer under Section 414
of the Code.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by
a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which Chemical is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery on
the first day of such Interest Period for the number of days comprised
therein and in an amount comparable to the amount of its Eurodollar Loan
to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Guarantor": any Person delivering a Guarantee pursuant to
this Agreement.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245
of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercreditor Agreement" the Master Collateral and
Intercreditor Agreement, substantially in the form of Exhibit F hereto.
"Interest Payment Date": (a) as to any ABR Loan, the first
Business Day following the last day of each calendar month and (b) as to
any Eurodollar Loan having an Interest Period of three months or less,
the last day of such Interest Period, and (c) as to any Eurodollar Loan
having an Interest Period longer than three months, each day which is
three months, or a whole multiple thereof, after the first day of such
Interest Period and the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three or six months (or, with the
consent of the Administrative Agent and the Lenders, 9 or 12 months)
thereafter, as selected by the Borrower in its notice of borrowing or
notice of conversion, as the case may be, given with respect thereto;
and
(ii) thereafter, each period commencing on
the last day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six months thereafter, as
selected by the Borrower by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the last day of the
then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar
Loan would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend
beyond the Termination Date shall end on the Termination Date;
(3) any Interest Period pertaining to a Eurodollar Loan
that begins on the last Business 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 Period) shall end on the last Business
Day of a calendar month; and
(4) the Borrower shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Issuing Bank": Chemical, in its capacity as issuer of any
Letter of Credit.
"L/C Fee Payment Date": the first Business Day of each April,
July, October and January, in each case for payments with respect to the
most recently ended calendar quarter.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings
under Letters of Credit which have not then been reimbursed pursuant to
subsection 3.5(a).
"L/C Participants": the collective reference to all the
Lenders other than the Issuing Bank.
"Letters of Credit": as defined in subsection 3.1(a).
"Loan": any loan made by any Lender pursuant to this
Agreement.
"Loan Documents": this Agreement, the Applications, any Bank
Notes, the Guarantees and the Security Documents.
"Loan Parties": the Borrower, the Parent and each Subsidiary
of the Borrower which is a party to a Loan Document.
"Non-Excluded Taxes": as defined in subsection 2.15.
"Participant": as defined in subsection 9.6(b).
"Purchase Agreement": the collective reference to the several
Note Purchase Agreements dated as of October 24, 1995 among the Borrower
and the other parties thereto under which the Senior Notes are issued.
"Register": as defined in subsection 9.6(d).
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Bank pursuant to subsection 3.5(a) for amounts
drawn under Letters of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20
of PBGC Reg. 2615.
"Required Lenders": at any time, Lenders the Commitment
Percentages of which aggregate more than 50%.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Standby Letter of Credit": as defined in subsection
3.1(b)(i)(1).
"Termination Date": October 24, 2000.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day).
"Transferee": as defined in subsection 9.6(f).
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified herein, all terms defined in Schedule I shall have the defined
meanings assigned therein when used herein or in any certificate or
other document made or delivered pursuant hereto.
(b) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in any Bank
Notes or any certificate or other document
made or delivered pursuant hereto.
(c) As used herein and in any Bank Notes, and any certificate
or other document made or delivered pursuant hereto, accounting terms
relating to the Borrower and its Subsidiaries not defined in subsection
1.1 and accounting terms partly defined in subsection 1.1 or Schedule I,
to the extent not defined, shall have the respective meanings given to
them under GAAP.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
Section, subsection, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(e) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms
and conditions hereof, each Lender severally agrees to make revolving
credit loans to the Borrower from time to time during the Commitment
Period in an aggregate principal amount at any one time outstanding not
to exceed the amount of such Lender's Commitment, provided that no loans
shall be made hereunder if, after giving effect thereto, the sum of (i)
the Aggregate Outstanding Extensions of Credit and (ii) the aggregate
principal amount of the Senior Notes outstanding would exceed the
Borrowing Base then in effect. During the Commitment Period the
Borrower may use the Commitments by borrowing, prepaying the Revolving
Credit Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof.
(b) The Loans may from time to time be (i) Eurodollar Loans,
(ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with
subsections 2.2 and 2.7, provided that no Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Termination
Date.
(c) The Borrower shall deliver a Borrowing Base Certificate
to the Administrative Agent sufficiently in advance of the Closing Date
to permit the Administrative Agent to determine the Borrowing Base to be
in effect on the Closing Date and, thereafter, shall deliver Borrowing
Base Certificates to the Administrative Agent on a monthly basis, no
later than 20 days after the end of each month; each such Certificate
shall be dated as of the last day of the applicable reporting period.
Promptly following its receipt of each such Borrowing Base Certificate,
the Administrative Agent shall determine or, as the case may be,
redetermine the Borrowing Base in its sole discretion using the
information contained in such Certificate, and shall notify the Borrower
and each Lender of the Borrowing Base so determined or redetermined.
Each Borrowing Base so determined or redetermined by the Administrative
Agent shall remain in effect until notice of a redetermined Borrowing
Base shall have been given by the Administrative Agent in accordance
with the provisions of this paragraph.
2.2 Procedure for Borrowing. The Borrower may borrow under
the Commitments during the Commitment Period on any Business Day,
provided that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative
Agent prior to 2:00 P.M., New York City time, (a) three Business Days
prior to the requested Borrowing Date, if all or any part of the
requested Revolving Credit Loans are to be initially Eurodollar Loans,
or (b) one Business Day prior to the requested Borrowing Date,
otherwise), specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of Eurodollar
Loans, ABR Loans or a combination thereof and (iv) if the borrowing is
to be entirely or partly of Eurodollar Loans, the respective amounts of
each such Type of Loan and the respective lengths of the initial
Interest Periods therefor. Each borrowing under the Commitments shall
be in an amount equal to (x) in the case of ABR Loans, $1,000,000 or a
whole multiple thereof (or, if the then Available Commitments are less
than $1,000,000 such lesser amount) and (y) in the case of Eurodollar
Loans, $3,000,000 or a whole multiple of $100,000 in excess thereof.
Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each Lender thereof. Each Lender will make
the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the office of
the Administrative Agent specified in subsection 9.2 prior to 11:00
A.M., New York City time, on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent.
Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books
of such office with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
2.3 Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee for
the period from and including the first day of the Commitment Period to
but excluding the Termination Date, computed at the rate of 1/2 of 1%
per annum on the average daily amount, during the period for which
payment is made, of the excess, if any, of such Lender's Commitment then
in effect over the sum of the aggregate principal amount of all Loans
made by such Lender then outstanding and such Lender's Commitment
Percentage of the L/C Obligations then outstanding, payable quarterly in
arrears on the first Business Day following each calendar quarter ended
on the last day of each March, June, September and December and on the
Termination Date or such earlier date as the Commitments shall terminate
as provided herein, commencing on the first of such dates to occur after
the date hereof.
2.4 Termination or Reduction of Commitments. (a) The
Borrower shall have the right, upon not less than five Business Days'
notice to the Administrative Agent and subject to the payment of fees
set forth in subsection 2.4(b), to terminate the Commitments or, from
time to time, to reduce the amount of the Commitments, provided that no
such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments of the Loans made on the effective date
thereof, the aggregate principal amount of the Loans then outstanding,
when added to the then outstanding L/C Obligations, would exceed the
Commitments then in effect. Any such reduction shall be in an amount
equal to $1,000,000 or a whole multiple thereof and shall reduce
permanently the Commitments then in effect.
(b) Each reduction or termination of the Commitments under
this subsection 2.4 on or prior to the second anniversary of the Closing
Date shall be accompanied by and conditioned upon the payment by the
Borrower of a fee in respect thereof equal to the amount of such
reduction (or the amount of the total Commitments, in the event of the
termination thereof, immediately prior to giving effect thereto)
multiplied by (i) on or prior to the first anniversary of the Closing
Date, 2% and (ii) on or prior to the second anniversary of the Closing
Date, but after the first anniversary of the Closing Date, 1%, in each
case payable on the date of such reduction or termination, as the case
may be.
2.5 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Loan
of such Lender on the Termination Date (or such earlier date on which
the Revolving Credit Loans become due and payable pursuant to Section
7). The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the
date hereof until payment in full thereof at the rates per annum, and on
the dates, set forth in subsection 2.9.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower
to such Lender resulting from each Loan of such Lender from time to
time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register
pursuant to subsection 9.6(d), and a subaccount therein for each Lender,
in which shall be recorded (i) the amount of each Loan made hereunder,
the Type thereof and each Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder and (iii) both the
amount of any sum received by the Administrative Agent hereunder from
the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 2.5(b) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence
and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Administrative
Agent to maintain the Register or any such account, or any error
therein, shall not in any manner affect the obligation of the Borrower
to repay (with applicable interest) the Loans made to such Borrower by
such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and
deliver to such Lender a promissory note of the Borrower evidencing the
Loans of such Lender, substantially in the form of Exhibit A with
appropriate insertions as to date and principal amount (a "Bank Note").
2.6 Optional and Mandatory Prepayments. (a) The Borrower
may, at any time and from time to time, prepay the Loans, in whole or in
part, without premium or penalty, subject to subsection 2.16 in the case
of a prepayment of Eurodollar Loans other than on the last day of an
Interest Period applicable thereto, upon at least three Business Day's
irrevocable notice to the Administrative Agent, in the case of
Eurodollar Loans, and one Business Day's notice, in the case of ABR
Loans, specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, ABR Loans or a combination thereof,
and, if of a combination thereof, the amount allocable to each. Upon
receipt of any such notice the Administrative Agent shall promptly
notify each Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein, together with any amounts payable pursuant to subsection 2.16.
Partial prepayments shall be in a minimum aggregate principal amount of
$1,000,000 or in multiples of $100,000 in excess thereof.
(b) If on any date the Aggregate Outstanding Extensions of
Credit for all Lenders exceeds the lesser of (i) the excess of the
Borrowing Base then in effect over the aggregate then outstanding
principal amount of the Senior Notes, or (ii) the aggregate Commitments,
then, without notice or demand, the Borrower shall immediately prepay
the Loans in an amount equal to such excess together with interest
accrued to the date of such prepayment and any amounts payable under
subsection 2.16 and, if the amount of such excess is greater than the
principal amount of the Loans then outstanding, cash collateralize the
Outstanding Obligations in the amount of the remainder of such excess by
delivery of such amount to the Collateral Agent to be held in a cash
collateral account for the benefit of the Participating Creditors (as
defined in the Intercreditor Agreement) in accordance with the terms
thereof.
(c) On or prior to the 60th day after the Closing Date, the
Borrower shall have established, subject to the control of the
Collateral Agent, for the benefit of the Administrative Agent, the other
Lenders, the Collateral Agent and the Participating Creditors under (and
as defined in) the Intercreditor Agreement, a system of lockboxes and
related deposit accounts into which the proceeds of all Accounts shall
be deposited and forwarded to the Collateral Agent, such system to be
evidenced by one or more lockbox and cash collateral agreements
satisfactory to the Collateral Agent and consistent with the provisions
hereof and of the Intercreditor Agreement and the Security Agreements
(collectively, the "Cash Collateral Agreements"). The Borrower shall
instruct all account debtors to make all payments in respect of Accounts
through one or more of such lockboxes. Subject to the foregoing, until
the Administrative Agent or the Collateral Agent shall have advised the
Borrower to the contrary or, if earlier, the acceleration of the Loans
pursuant to Section 7 hereof or Section 9 of the Senior Notes, the
Borrower may and will, subject to and in a manner consistent with its
customary collection practices and procedures, enforce and collect all
amounts owing on the Accounts, on behalf of the Administrative Agent and
the Collateral Agent, at the expense of the Borrower. Any checks, cash,
notes or other instruments or property that, notwithstanding the
establishment of such lockbox system, are received by the Borrower with
respect to any Accounts shall be immediately turned over to the lockbox
banks with which such lockbox accounts are maintained (with proper
assignments or endorsements).
(d) So long as no Event of Default has occurred or is
continuing, all amounts received in the lockboxes and related deposit
accounts pursuant to subsection 2.6(c) shall be transferred to the
account of the Borrower maintained with Chemical, such transfers to be
made on each Business Day in accordance with the Cash Collateral
Agreements. Upon the occurrence and during the continuance of an Event
of Default, all amounts received by the Collateral Agent pursuant to
subsection 2.6(c) shall, at the request of the Administrative Agent or
the Required Lenders be credited as a prepayment of the then outstanding
Loans, and shall, in accordance with subsection 2.6(e), be applied first
to the Loans that are ABR Loans and second to the Loans that are
Eurodollar Loans, provided, however, that upon and after the earlier of
the Liquidity Account Trigger Event (as defined in the Intercreditor
Agreement) or receipt by the Collateral Agent of notice that any or all
of the Outstanding Obligations (as defined in the Intercreditor
Agreement) have been declared due and payable pursuant to the
acceleration provisions of Section 7 hereof or Section 9 of the Senior
Notes, all amounts received in the lockboxes and related deposit
accounts pursuant to subsection 2.6(c) shall be deposited in the
Collateral Accounts under and in accordance with the Intercreditor
Agreement. In the event that a Liquidity Triggering Event has occurred
and thereafter there shall no longer exist any Payment Default or
Financial Covenant Default which gave rise to such Liquidity Triggering
Event, but any other Event of Default shall be continuing, all amounts
received by the Collateral Agent pursuant to subsection 2.6(c) shall, at
the request of the Administrative Agent or the Required Lenders be
credited as a prepayment of the then
outstanding Loans.
(e) No checks, drafts or other instruments received in the
lockboxes and related deposit accounts and applied pursuant to
subsection 2.6(d) shall constitute final payment to the Lenders under
subsection 2.6(d) unless and until such instruments have actually been
collected. The Borrower recognizes that the amounts evidenced by
checks, notes, drafts or any other items of payment relating to and/or
proceeds of Collateral may not be collectible on the date received. The
Administrative Agent is not required to credit a repayment of the Loans
hereunder for the amount of any item of payment which is unsatisfactory
to the Agent. The Administrative Agent shall remit to each Lender its
share, as set forth in subsection 2.12, of payments credited to
repayment of the Loans under subsection 2.6(d) as soon as practicable
after actual collection thereof.
2.7 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to ABR Loans by
giving the Administrative Agent at least two Business Days' prior
irrevocable notice of such election, provided that any such conversion
of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto. The Borrower may elect from time to time
to convert ABR Loans to Eurodollar Loans by giving the Administrative
Agent at least three Business Days' prior irrevocable notice of such
election. Any such notice of conversion to Eurodollar Loans shall
specify the length of the initial Interest Period or Interest Periods
therefor. Upon receipt of any such notice the Administrative Agent
shall promptly notify each Lender thereof. All or any part of
outstanding Eurodollar Loans, and ABR Loans may be converted as provided
herein, provided that (i) no Loan may be converted into a Eurodollar
Loan when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined that
such a conversion is not appropriate and (ii) no Loan may be converted
into a Eurodollar Loan after the date that is one month prior to the
Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by
the Borrower giving notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth
in subsection 1.1, of the length of the next Interest Period to be
applicable to such Loans, provided that no Eurodollar Loan may be
continued as such (i) when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined that such a continuation is not appropriate or (ii) after the
date that is one month prior to the Termination Date and provided,
further, that if the Borrower shall fail to give such notice or if such
continuation is not permitted such Loans shall be automatically
converted to ABR Loans on the last day of such then expiring Interest
Period.
2.8 Minimum Amounts and Maximum Number of Tranches. All
borrowings, conversions and continuations of Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts and be
made pursuant to such elections so that, after giving effect thereto,
the aggregate principal amount of the Loans comprising each Eurodollar
Tranche shall be equal to $3,000,000 or a whole multiple of $100,000 in
excess thereof. In no event shall there be more than five Eurodollar
Tranches outstanding at any time.
2.9 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with
respect thereto, from and including the first day of such Interest
Period to but excluding the last day thereof, at a rate per annum equal
to the Eurodollar Rate determined for such day plus the Applicable
Margin.
(b) Each ABR Loan shall bear interest at a rate per annum
equal to the ABR plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan,
(ii) any interest payable thereon, (iii) any commitment fee or (iv) any
other amount payable hereunder shall not be paid when due (whether at
the stated maturity, by acceleration or otherwise), the principal of the
Loans and any such overdue interest, commitment fee or other amount
shall bear interest at a rate per annum which is (x) in the case of
principal, the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this subsection plus 2% or (y) in the
case of any such overdue interest, commitment fee or other amount, the
rate described in paragraph (b) of this subsection plus 2%, in each case
from the date of such non-payment until such overdue principal,
interest, commitment fee or other amount is paid in full (as well after
as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date for the Interest Period then ended, in the case of
Eurodollar Loans, and for the full calendar month first preceding such
Interest Payment Date, in the case of ABR Loans, provided that interest
accruing pursuant to paragraph (c) of this subsection shall be payable
from time to time on demand.
2.10 Computation of Interest and Fees. (a) Commitment fees
and interest shall be calculated on the basis of a 360-day year for the
actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of
a Eurodollar Rate. Any change in the interest rate on a Loan resulting
from a change in the ABR, the Eurocurrency Reserve Requirements, the C/D
Assessment Rate or the C/D Reserve Percentage shall become effective as
of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify
the Borrower and the Lenders of the effective date and the amount of
each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall
be conclusive and binding on the Borrower and the Lenders in the absence
of manifest error. The Administrative Agent shall, at the request of
the Borrower, deliver to the Borrower a statement showing the quotations
used by the Administrative Agent in determining any interest rate
pursuant to subsection 2.9(a) or (c).
2.11 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such
Interest Period,
the Administrative Agent shall give telecopy or telephonic notice
thereof to the Borrower and the Lenders as soon as practicable
thereafter. If such notice is given (x) any Eurodollar Loans requested
to be made on the first day of such Interest Period shall be made as ABR
Loans, (y) any Loans that were to have been converted on the first day
of such Interest Period to Eurodollar Loans shall be converted to or
continued as ABR Loans and (z) any outstanding Eurodollar Loans shall be
converted, on the first day of such Interest Period, to ABR Loans. Until
such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the
Borrower have the right to convert Loans to Eurodollar Loans.
2.12 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any commitment fee or amendment fee hereunder and any
reduction of the Commitments of the Lenders shall be made pro rata
according to the respective Commitment Percentages of the Lenders. Each
payment (including each prepayment) by the Borrower on account of
principal of and of interest on the Loans shall be made pro rata
according to the respective outstanding principal amounts of the Loans
then held by the Lenders. All payments (including prepayments) to be
made by the Borrower hereunder, whether on account of principal,
interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 noon, New York City time,
on the due date thereof to the Administrative Agent, for the account of
the Lenders, at the Administrative Agent's office specified in
subsection 9.2, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders
promptly upon receipt in like funds as received. If any payment
hereunder becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable
at the then applicable rate during such extension.
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender at least one Business Day prior to a borrowing
that such Lender will not make the amount that would constitute its
Commitment Percentage of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making
such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is not
made available to the Administrative Agent by the required time on the
Borrowing Date therefor, such Lender shall pay to the Administrative
Agent, on demand, such amount with interest thereon at a rate equal to
the daily average Federal Funds Effective Rate (or, if such Lender has
not notified the Administrative Agent of such failure to make such
amount available at least one Business Day prior to such borrowing, at
the rate per annum applicable to ABR Loans hereunder) for the period
until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error. If
such Lender's Commitment Percentage of such borrowing is not made
available to the Administrative Agent by such Lender within three
Business Days of such Borrowing Date, the Administrative Agent shall
also be entitled to recover such amount with interest thereon at the
rate per annum applicable to ABR Loans hereunder, on demand, from the
Borrower.
2.13 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in, in either case after the date
hereof, any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment
of such Lender hereunder to make Eurodollar Loans, continue Eurodollar
Loans as such and convert ABR Loans to Eurodollar Loans shall forthwith
be cancelled and (b) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to ABR Loans on the
respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Loan occurs on a day which is not the
last day of the then current Interest Period with respect thereto, the
Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to subsection 2.16.
2.14 Requirements of Law. (a) If the adoption of or any
change in, in either case after the date hereof, any Requirement of Law
or in the interpretation or application thereof or compliance by any
Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any
kind whatsoever with respect to this Agreement, any Bank Note, any
Letter of Credit, any Application, or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect
thereof (except for Non-Excluded Taxes covered by subsection 2.15 and
changes in the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other
condition; and the result of any of the foregoing is to increase the
cost to such Lender, by an amount which such Lender deems to be
material, of making, converting into, continuing or maintaining
Eurodollar Loans or issuing or participating in Letters of Credit or to
reduce any amount receivable hereunder in respect thereof, then, in any
such case, the Borrower shall promptly pay such Lender such additional
amount or amounts as will compensate such Lender for such increased cost
or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in
the interpretation or application thereof occurring after the date
hereof or compliance by such Lender or any corporation controlling such
Lender with any request or directive regarding capital adequacy (whether
or not having the force of law) from any Governmental Authority made
subsequent to the date hereof shall have the effect of reducing the rate
of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Letter of Credit
to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect
to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, the Borrower shall promptly pay to such Lender
such additional amount or amounts as will compensate such Lender for
such reduction.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to this subsection submitted by such
Lender to the Borrower (with a copy to the Administrative Agent), which
specifies in reasonable detail the basis for such claim and the
calculation of such additional amount shall be conclusive in the absence
of manifest error. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
2.15 Taxes. (a) All payments made by the Borrower under
this Agreement and any Bank Notes shall be made free and clear of, and
without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges,
fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on the Administrative Agent or any Lender as a result of
a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from the Administrative
Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or
any Bank Note). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("Non-Excluded Taxes")
are required to be withheld from any amounts payable to the
Administrative Agent or any Lender hereunder or under any Bank Note, the
amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement, provided, however, that the Borrower shall
not be required to increase any such amounts payable to any Lender that
is not organized under the laws of the United States of America or a
state thereof if such Lender fails to comply with the requirements of
paragraph (b) of this subsection. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower
shall send to the dministrative Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due
to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Administrative Agent and the
Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any
such failure. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of
the United States of America or a state thereof shall:
(i) deliver to the Borrower and the
Administrative Agent (A) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable
form, as the case may be, and (B) an Internal Revenue Service Form W-8
or W-9, or successor applicable form, as the case may be;
(ii) deliver to the Borrower and the
Administrative Agent two further copies of any such form or
certification on or before the date that any such form or certification
expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it to
the Borrower; and
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be requested by
the Borrower or the Administrative Agent;
unless in any such case an event occurring after the Closing Date
(including, without limitation, any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would
otherwise be required (but after, in the case of any Assignee (as
defined in subsection 9.6) that became a Lender after the Closing Date,
the date on which such Assignee became a Lender) which renders all such
forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and such
Lender so advises the Borrower and the Administrative Agent. Such
Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the
case of a Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax. Each Person that shall become a
Lender or a Participant pursuant to subsection 9.6 shall, upon the
effectiveness of the related transfer, be required to provide all of the
forms and statements required pursuant to this subsection, provided that
in the case of a Participant such Participant shall furnish all such
required forms and statements to the Lender from which the related
participation shall have been purchased.
2.16 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such
Lender may sustain or incur as a consequence of (a) default by the
Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (b) default by
the Borrower in making any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or
(c) the making of a prepayment of Eurodollar Loans on a day which is not
the last day of an Interest Period with respect thereto, including,
without limitation, pursuant to the provisions of subsection 2.6(d).
Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from
the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a
failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the
applicable rate of interest for such Loans provided for herein
(excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Bank on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, the Issuing Bank, in reliance on the agreements of the other
Lenders set forth in subsection 3.4(a), agrees to issue letters of
credit ("Letters of Credit") for the account of the Borrower on any
Business Day during the period from and including the Closing Date to
and including the date which is five Business Days prior to the
Termination Date in such form as may be approved from time to time by
the Issuing Bank; provided that the Issuing Bank shall have no
obligation to issue any Letter of Credit if, after giving effect to such
issuance, either (a) the sum of (i) the Aggregate Outstanding Extensions
of Credit, (ii) the aggregate principal amount of the Senior Notes
outstanding would exceed the Borrowing Base then in effect or (b) the
Aggregate Outstanding Extensions of Credit would exceed the Commitments
then in effect.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars and shall be either (1) a
standby letter of credit issued to support obligations of the Borrower,
contingent or otherwise, in the ordinary course of business (a "Standby
Letter of Credit"), or (2) a commercial letter of credit issued in
respect of the purchase of goods or services by the Borrower and its
Subsidiaries in the ordinary course of business (a "Commercial Letter of
Credit"); and
(ii) expire no later than the earlier of the Termination Date
and the date which is the first anniversary of the date of issuance
thereof.
(c) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of
New York.
(d) The Issuing Bank shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Bank or any L/C Participant to exceed any limits
imposed by, any applicable Requirement of Law.
3.2 Procedure for Issuance of Letters of Credit.
The Borrower may from time to time request that the Issuing Bank
issue a Letter of Credit by delivering to the Issuing Bank at its
address for notices specified herein an Application therefor, completed
to the satisfaction of the Issuing Bank, and such other certificates,
documents and other papers and information as the Issuing Bank may
reasonably request. Upon receipt of any Application, the Issuing Bank
will process such Application and the certificates, documents and other
papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the
Letter of Credit requested thereby (but in no event shall the Issuing
Bank be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such
other certificates, documents and other papers and information relating
thereto) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed by the Issuing Bank
and the Borrower. The Issuing Bank shall furnish a copy of such Letter
of Credit to the Borrower promptly following the issuance thereof.
3.3 Fees, Commissions and Other Charges.
(a) The Borrower shall pay to the Administrative Agent, for the
account of the L/C Participants and the Issuing Bank, quarterly in
arrears, on each L/C Payment Date, a letter of credit commission with
respect to each Letter of Credit calculated at the rate per annum equal
to the Applicable Margin for Eurodollar Loans then in effect applied to
the face amount of such Letter of Credit or, if less, the average daily
undrawn portion thereof during the quarter for which such commission is
payable. Such fee shall be payable to the L/C Participants and the
Issuing Bank to be shared ratably among them in accordance with their
respective Commitment Percentages. Such letter of credit fee shall be
nonrefundable when paid.
(b) The Borrower shall pay to the Administrative Agent, for the
account of the Issuing Bank, quarterly in arrears on each L/C Payment
Date, a letter of credit fronting fee with respect to each Letter of
Credit, calculated at the rate per annum equal to 1/4 of 1% applied to
the face amount of such Letter of Credit or, if less, the average daily
undrawn portion thereof during the quarter for which such commission is
payable. Such fronting fee shall be nonrefundable when paid.
(c) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the Issuing Bank for such normal and
customary costs and expenses as are incurred or charged by the Issuing
Bank in issuing, effecting payment under, amending or otherwise
administering any Letter of Credit.
(d) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Bank and the L/C Participants all
fees and commissions received by the Administrative Agent for their
respective accounts pursuant to this subsection.
3.4 L/C Participations.
(a) The Issuing Bank irrevocably agrees to grant and hereby grants
to each L/C Participant, and, to induce the Issuing Bank to issue
Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing
Bank, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such
L/C Participant's Commitment Percentage in the Issuing Bank's
obligations and rights under each Letter of Credit issued hereunder and
the amount of each draft paid by the Issuing Bank thereunder. Each L/C
Participant unconditionally and irrevocably agrees with the Issuing Bank
that, if a draft is paid under any Letter of Credit for which the
Issuing Bank is not reimbursed in full by the Borrower in accordance
with the terms of this Agreement, such L/C Participant shall pay to the
Issuing Bank upon demand at the Issuing Bank's address for notices
specified herein an amount equal to such L/C Participant's Commitment
Percentage of the amount of such draft, or any part thereof, which is
not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to
the Issuing Bank pursuant to subsection 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Bank under any
Letter of Credit is paid to the Issuing Bank within three Business Days
after the date such payment is due, such L/C Participant shall pay to
the Issuing Bank on demand an amount equal to the product of (i) such
amount, times (ii) the daily average Federal funds rate, as quoted by
the Issuing Bank, during the period from and including the date such
payment is required to the date on which such payment is immediately
available to the Issuing Bank, times (iii) a fraction the numerator of
which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by
any L/C Participant pursuant to subsection 3.4(a) is not in fact made
available to the Issuing Bank by such L/C Participant within three
Business Days after the date such payment is due, the Issuing Bank shall
be entitled to recover from such L/C Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per
annum applicable to ABR Loans hereunder. A certificate of the Issuing
Bank submitted to any L/C Participant with respect to any amounts owing
under this subsection shall be conclusive in the absence of manifest
error.
(c) Whenever, at any time after the Issuing Bank has made payment
under any Letter of Credit and has received from any L/C Participant its
pro rata share of such payment in accordance with subsection 3.4(a), the
Issuing Bank receives any payment related to such Letter of Credit
(whether directly from the Borrower or otherwise, including proceeds of
collateral applied thereto by the Issuing Bank), or any payment of
interest on account thereof, the Issuing Bank will distribute to such
L/C Participant its pro rata share thereof; provided, however, that in
the event that any such payment received by the Issuing Bank shall be
required to be returned by the Issuing Bank, such L/C Participant shall
return to the Issuing Bank the portion thereof previously distributed by
the Issuing Bank to it.
3.5 Reimbursement Obligation of the Borrower.
(a) The Borrower agrees to reimburse the Issuing Bank on each date
on which the Issuing Bank notifies the Borrower of the date and amount
of a draft presented under any Letter of Credit and paid by the Issuing
Bank for the amount of (i) such draft so paid and (ii) any taxes, fees,
charges or other costs or expenses incurred by the Issuing Bank in
connection with such payment. Each such payment shall be made to the
Issuing Bank at its address for notices specified herein in lawful money
of the United States of America and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining
unpaid by the Borrower under this subsection from the date such amounts
become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on
any outstanding ABR Loans which were then overdue.
(c) Each drawing under any Letter of Credit shall constitute a
request by the Borrower to the Administrative Agent for a borrowing
pursuant to subsection 2.2 of ABR Loans in the amount of such drawing
(without regard to the requirement of one Business Day prior notice of
such borrowing). The Borrowing Date with respect to such borrowing shall
be the date of such drawing.
3.6 Obligations Absolute.
(a) The Borrower's obligations under this Section 3 shall be
absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which
the Borrower may have or have had against the Issuing Bank or any
beneficiary of a Letter of Credit.
(b) The Borrower also agrees with the Issuing Bank that the
Issuing Bank shall not be responsible for, and the Borrower's
Reimbursement Obligations under subsection 3.5(a) shall not be affected
by, among other things, (i) the validity or genuineness of documents or
of any endorsements thereon, even though such documents shall in fact
prove to be invalid, fraudulent or forged, or (ii) any dispute between
or among the Borrower and any beneficiary of any Letter of Credit or any
other party to which such Letter of Credit may be transferred or (iii)
any claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee.
(c) The Issuing Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by the Issuing Bank's
gross negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by the
Issuing Bank under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence
or willful misconduct and in accordance with the standards of care
specified in the Uniform Commercial Code of the State of New York, shall
be binding on the Borrower and shall not result in any liability of the
Issuing Bank to the Borrower.
3.7. Letter of Credit Payments.
If any draft shall be presented for payment under any Letter of
Credit, the Issuing Bank shall promptly notify the Borrower of the date
and amount thereof. The responsibility of the Issuing Bank to the
Borrower in connection with any draft presented for payment under any
Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of
Credit in connection with such presentment are in conformity with such
Letter of Credit.
3.8. Application.
To the extent that any provision of any Application related to any
Letter of Credit is inconsistent with the provisions of this Section 3,
the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Loans and issue or participate in
the Letters of Credit, the Borrower hereby represents and warrants to
the Administrative Agent and each Lender that:
4.1 Corporate Power; Authorization; Enforceable
Obligations. The Borrower has the corporate power and authority, and
the legal right, to make, deliver and perform the Loan Documents to
which it is a party and to borrow hereunder and has taken all necessary
corporate action to authorize the borrowings on the terms and conditions
of this Agreement and any Bank Notes and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party.
No consent or authorization of, filing with, notice to or other act by
or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of the Loan
Documents to which the Borrower is a party, other than such
authorizations, filings or consents that have been obtained prior to the
Closing Date and are in full force and effect. This Agreement has been,
and each other Loan Document to which it is a party will be, duly
executed and delivered on behalf of the Borrower. This Agreement
constitutes, and each other Loan Document to which it is a party when
executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing.
4.2 No Legal Bar. The execution, delivery and performance of
the Loan Documents to which the Borrower is a party, the borrowings
hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or Contractual Obligation of the Borrower or of any
of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective properties or
revenues pursuant to any such Requirement of Law or Contractual
Obligation.
4.3 Purpose of Loans. The proceeds of the Loans shall be
used by the Borrower (i) for refinancing its existing working capital
credit facilities and other existing Debt, (ii) to finance its ongoing
working capital requirements in the ordinary course of business, (iii)
for general corporate purposes in the ordinary course of business and
(iv) to provide letters of credit in the ordinary course of business.
4.4 Representations and Warranties in Schedule II. Each of
the representations and warranties set forth in Schedule II is true and
correct.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement
of each Lender to make the initial extension of credit requested to be
made by it is subject to the satisfaction, immediately prior to or
concurrently with the making of such extension of credit on the Closing
Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received, or, with respect to items (ii) through (vii), the Collateral
Agent shall have received, (i) this Agreement, executed and delivered by
a duly authorized officer of the Borrower, with a counterpart for each
Lender, (ii) each of the Pledge Agreements, each executed and delivered
by a duly authorized officer of the party thereto, with a counterpart or
a conformed copy for each Lender, (iii) each of the Guarantees, each
executed and delivered by a duly authorized officer of the party
thereto, with a counterpart or a conformed copy for each Lender, (iv)
each of the Security Agreements, each executed and delivered by a duly
authorized officer of the party thereto, with a counterpart or a
conformed copy for each Lender and (v) each of the Mortgages, each
executed and delivered by a duly authorized officer of the party
thereto, with a counterpart or a conformed copy for each Lender.
(b) Corporate Proceedings of the Borrower. The
Administrative Agent shall have received, with a counterpart for each
Lender, a copy of the resolutions, in form and substance satisfactory to
the Administrative Agent, of the Board of Directors of the Borrower
authorizing (i) the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party, (ii) the
borrowings contemplated hereunder and (iii) the granting by it of the
Liens created pursuant to the Borrower Security Documents, certified by
the Secretary or an Assistant Secretary of the Borrower as of the
Closing Date, which certificate shall be in form and substance
satisfactory to the Administrative Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(c) Borrower Incumbency Certificate. The Administrative
Agent shall have received, with a counterpart for each Lender, a
Certificate of the Borrower, dated the Closing Date, as to the
incumbency and signature of the officers of the Borrower executing any
Loan Document satisfactory in form and substance to the Administrative
Agent, executed by the President or any Vice President and the Secretary
or any Assistant Secretary of the Borrower.
(d) Corporate Proceedings of the Parent. The Administrative
Agent shall have received, with a counterpart for each Lender, a copy of
the resolutions, in form and substance satisfactory to the
Administrative Agent, of the Board of Directors of the Parent
authorizing (i) the execution, delivery and performance of the Loan
Documents to which the Parent is a party and (ii) the granting by it of
the Liens created pursuant to the Parent Security Documents, certified
by the Secretary or an Assistant Secretary of the Parent as of the
Closing Date, which certificate shall be in form and substance
satisfactory to the Administrative Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(e) Parent Incumbency Certificate. The Administrative Agent
shall have received, with a counterpart for each Lender, a certificate
of the Parent, dated the Closing Date, as to the incumbency and
signature of the officers of the Parent executing any Loan Document
satisfactory in form and substance to the Administrative Agent, executed
by the President or any Vice President and the Secretary or any
Assistant Secretary of the Parent.
(f) Corporate Proceedings of Subsidiaries. The
Administrative Agent shall have received, with a counterpart for each
Lender, a copy of the resolutions, in form and substance satisfactory to
the Administrative Agent, of the Board of Directors of each Subsidiary
of the Borrower which is a party to a Loan Document authorizing (i) the
execution, delivery and performance of the Loan Documents to which it is
a party and (ii) the granting by it of the Liens created pursuant to the
Subsidiaries Security Documents to which it is a party, certified by the
Secretary or an Assistant Secretary of each such Subsidiary as of the
Closing Date, which certificate shall be in form and substance
satisfactory to the Administrative Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(g) Subsidiary Incumbency Certificates. The Administrative
Agent shall have received, with a counterpart for each Lender, a
certificate of each Subsidiary of the Borrower which is a Loan Party,
dated the Closing Date, as to the incumbency and signature of the
officers of such Subsidiaries executing any Loan Document, satisfactory
in form and substance to the Administrative Agent, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of each such Subsidiary.
(h) Corporate Documents. The Administrative Agent shall have
received, with a counterpart for each Lender, true and complete copies
of the certificate of incorporation and by-laws of each Loan Party,
certified as of the Closing Date as complete and correct copies thereof
by the Secretary or an Assistant Secretary of the such Loan Party.
(i) Borrowing Base Certificate. The Administrative Agent
shall have received, with a counterpart for each Lender, a Borrowing
Base Certificate of the Borrower, dated the Closing Date, executed by a
Responsible Officer of the Borrower, which Borrowing Base Certificate
shall demonstrate a Borrowing Base on the Closing Date equal to at least
the sum of (i) the Aggregate Outstanding Extensions of Credit on the
Closing Date after giving effect to the initial extensions of credit to
be made on the Closing Date, (ii) the aggregate principal amount of the
Senior Notes to be outstanding on the Closing Date upon the issuance
thereof and (iii) $15,000,000. In addition, the Borrowing Base
certificate delivered on the Closing Date shall be accompanied by a
schedule showing the net book value of the Collateral included in
determining the Eligible Additional Asset Amount as of September 29,
1995.
(j) Fees. The Administrative Agent and each Lender shall
have received the fees to be received by it on the Closing Date referred
as agreed in writing with the Borrower.
(k) Legal Opinions. The Administrative Agent shall have
received, with a counterpart for each Lender, the following executed
legal opinions:
(i the executed legal opinion of Gibson,
Dunn & Crutcher counsel to the Borrower and the other Loan Parties,
substantially in the form of Exhibit C-1; and
(ii the executed legal opinion of Eric
Schwartz, general counsel of the Borrower, substantially in the form of
Exhibit C-2;
(l) Pledged Stock; Stock Powers. The Administrative Agent
shall have received the certificates representing the shares pledged
pursuant to each of the Pledge Agreements, together with an undated
stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof.
(m) Actions to Perfect Liens. The Administrative Agent shall
have received evidence in form and substance satisfactory to it that all
filings, recordings, registrations and other actions, including, without
limitation, the delivery on the Closing Date of duly executed financing
statements on form UCC-1, necessary or, in the opinion of the
Administrative Agent, desirable to perfect first priority security
interests in respect of the Liens granted under the Security Documents
shall have been completed, and such termination statements and pay-out
letters as shall be satisfactory to the Administrative Agent.
(n) Title Insurance Policy. The Administrative Agent shall
have received in respect of each parcel covered by each Mortgage a
mortgagee's title policy (or policies) or marked up unconditional binder
for such insurance dated the Closing Date. Each such policy shall (i)
be in an amount satisfactory to the Administrative Agent; (ii) be issued
at ordinary rates; (iii) insure that the Mortgage insured thereby
creates a valid first Lien on such parcel free and clear of all defects
and encumbrances, except such as may be approved by the Administrative
Agent; (iv) name the Administrative Agent for the benefit of the Lenders
as the insured thereunder; (v) be in the form of ALTA Loan Policy - 1970
(Amended 10/17/70); (vi) contain such endorsements and affirmative
coverage as the Administrative Agent may reasonably request and (vii) be
issued by title companies satisfactory to the Administrative Agent
(including any such title companies acting as co-insurers or reinsurers,
at the option of the Administrative Agent). The Administrative Agent
shall have received evidence satisfactory to it that all premiums in
respect of each such policy, and all charges for mortgage recording tax,
if any, have been paid.
(o) Copies of Documents. The Administrative Agent shall have
received a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy or policies referred to in
subsection 5.1(n) and a copy, certified by such parties as the
Administrative Agent may deem appropriate, of all other documents
affecting the property covered by each Mortgage.
(p) Lien Searches. The Administrative Agent shall have
received the results of a recent search by a Person satisfactory to the
Administrative Agent, of the Uniform Commercial Code, judgement and tax
lien filings which may have been filed with respect to personal property
of the Borrower, and the results of such search shall be satisfactory to
the Administrative Agent.
(q) Existing Debt. The Administrative Agent shall have
received evidence satisfactory to it that all indebtedness under the
facilities listed on Schedule 5.1(q) shall have be repaid in full, such
facilities shall have been terminated and all liens in connection
therewith shall have been released.
(r) Senior Notes. The Administrative Agent shall have
received evidence satisfactory to it that at least $65,000,000 in
aggregate principal amount of Senior Notes shall have been issued on
terms satisfactory to the Administrative Agent and the proceeds thereof
received by the Borrower.
(s) Intercreditor Agreement. The Administrative Agent shall
have received the Intercreditor Agreement, duly executed by the parties
thereto, and all documents and instruments required to be deliver, and
all actions required to be taken, on the Closing Date in connection
therewith shall have been so delivered or taken.
(t) Examination. The Administrative Agent or its
representatives shall have conducted an examination of the Borrower's
assets, liabilities and books and records in form and scope satisfactory
to it and shall be satisfied with the results thereof.
(u) Appraisal. The Administrative Agent and each Lender
shall have received an appraisal conducted by Murray Devine & Co. of
assets selected by the Administrative Agent, in form and scope
satisfactory to the Administrative Agent and each Lender, and shall be
satisfied with the results thereof.
(v) Environmental Report. The Administrative Agent and each
Lender shall have received an environment study of the properties of the
Borrower and its Subsidiaries, in form and scope satisfactory to the
Administrative Agent and the Lenders and prepared by a Person acceptable
to them, and shall be satisfied with the results thereof.
(w) Financial Information. The Administrative Agent shall
have received (i) consolidated balance sheets of the Parent as at the
end of each of the three most recently ended fiscal years of the Parent
and the related statements of income and retained earnings and cash
flows for such years, such consolidated financial statements to be
certified by an independent certified public accounting firm acceptable
to the Administrative Agent, (ii) quarterly income statements, balance
sheets and cash flow projections for fiscal year 1996 of the Borrower,
and annual such projections for each successive fiscal year through
2001, and (iii) such other reports, management letters and other
materials requested by the Administrative Agent, and in each case shall
be satisfied therewith.
(aa) Cash Balance. The Administrative Agent shall have
received evidence satisfactory to it that the aggregate amount of cash
and Cash Equivalents of the Borrower and its Subsidiaries, determined as
of the last day of the fiscal quarter ended September 29, 1995, on a pro
forma basis after giving effect to the initial extensions of credit
hereunder, shall not be less than $20,000,000.
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it
on any date (including, without limitation, its initial extension of
credit ) is subject to the satisfaction of the following conditions
precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower and in or pursuant
to the Loan Documents shall be true and correct in all material respects
on and as of such date as if made on and as of such date, unless such
representations and warranties expressly speak only as of another
specified date, in which case such representations and warranties shall
be true and correct in all material respects as of such specified date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extension of credit requested to be made on such date.
(c) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement and the other Loan
Documents shall be satisfactory in form and substance to the
Administrative Agent, and the Administrative Agent shall have received
such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it
shall reasonably request.
Each borrowing by and Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower
as of the date thereof that the conditions contained in this subsection
have been satisfied.
SECTION 6. COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any amount
is owing to any Lender or the Administrative Agent hereunder or under
any other Loan Document, the Borrower (a) shall, and (except in the case
of delivery of financial information, reports and notices) shall cause
each of its Subsidiaries to, observe and perform each and every one of
the covenants set forth in Schedule III, which covenants are hereby
incorporated by reference herein.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or any Reimbursement Obligation when due in accordance with the terms
thereof or hereof; or the Borrower shall fail to pay any interest on any
Loan, or any other amount payable hereunder, within five Business Days
after any such interest or other amount becomes due in accordance with
the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by
the Borrower in subsection 4.1, 4.2 or 4.3 shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) the Borrower shall default in the observance or
performance of any other agreement contained in this Agreement (other
than the covenants contained in Section 6 and other than as provided in
paragraphs (a) and (b) of this Section), and such default shall continue
unremedied for a period of 30 days; or
(d) there shall occur any "Event of Default" (as such term is
defined in Schedule IV); or
(e) there shall occur a "Change of Control" (as such term is
defined in Schedule I);
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (g) or (h) of Schedule IV
with respect to the Borrower, automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) shall immediately become
due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the
consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and
(ii) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative
Agent shall, by notice to the Borrower, declare the Loans hereunder
(with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding paragraph, the Borrower shall at
such time deposit in the Cash Collateral Accounts under the
Intercreditor Agreement in an amount equal to the aggregate then undrawn
and unexpired amount of such Letters of Credit, to be applied as set
forth in the Intercreditor Agreement.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly
waived.
SECTION 8. THE ADMINISTRATIVE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates
and appoints the Administrative Agent as the agent of such Lender under
this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to
take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative Agent by
the terms of this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or
any other Loan Document or otherwise exist against the Administrative
Agent.
8.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by
it with reasonable care.
8.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except for its or such
Person's own gross negligence or willful misconduct) or (ii) responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection
with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document or for any failure of the
Borrower to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of
the Borrower.
8.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Bank Note, writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Bank Note as
the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with
the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate or
it shall first be indemnified to its satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders, and such request and
any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Loans.
8.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Administrative Agent has received
notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice
is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice
thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable in the best interests of
the Lenders.
8.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that
no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower and any report delivered pursuant
to subsection 9.8, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Lender. Each Lender
represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and
based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness
of the Borrower and made its own decision to make its Loans hereunder
and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative Agent
or any other Lender, and without reliance on any report delivered
pursuant to subsection 9.8, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness
of the Borrower. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative
Agent hereunder, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Borrower
which may come into the possession of the Administrative Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not
reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective Commitment
Percentages in effect on the date on which indemnification is sought
(or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in
full, ratably in accordance with their Commitment Percentages
immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or
arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action
taken or omitted by the Administrative Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Administrative Agent's gross
negligence or willful misconduct. The agreements in this subsection
shall survive the payment of the Loans and all other amounts payable
hereunder.
8.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the
Borrower as though the Administrative Agent were not the Administrative
Agent hereunder and under the other Loan Documents. With respect to the
Loans made by it, the Administrative Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include
the Administrative Agent in its individual capacity.
8.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Lenders.
In addition, at any time that the Administrative Agent no longer has any
Commitments hereunder, no Letters of Credit issued by it are outstanding
hereunder and no amount payable to it is outstanding hereunder, the
Required Lenders may elect to replace such Administrative Agent. If the
Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, or if the Required Lenders elect
to replace the Administrative Agent under the circumstances described
above, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be subject
to approval by the Borrower (not to be unreasonably withheld), whereupon
such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean
such successor agent effective upon such appointment and approval, and
the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or further
act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any
retiring Administrative Agent's resignation as Administrative Agent, the
provisions of this Section 8 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement and the other Loan Documents.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of
this subsection. The Required Lenders may, or, with the written consent
of the Required Lenders, the Administrative Agent may, from time to
time, (a) enter into with the Borrower written amendments, supplements
or modifications hereto and to the other Loan Documents for the purpose
of adding any provisions to this Agreement or the other Loan Documents
or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (b) waive, on such terms and conditions as
the Required Lenders or the Administrative Agent, as the case may be,
may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default
and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) reduce the amount or
extend the scheduled date of maturity of any Loan or of any installment
thereof, or reduce the stated rate of any interest or fee payable
hereunder or extend the scheduled date of any payment thereof or
increase the amount or extend the expiration date of any Lender's
Commitment, in each case without the consent of each Lender affected
thereby, or (ii) amend, modify or waive any provision of this subsection
or reduce the percentage specified in the definition of Required
Lenders, or consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement and the other Loan
Documents, or release any material item or portion of Collateral (other
than pursuant to the terms of the Intercreditor Agreement or the
applicable Security Document) or increase any of the percentage amounts
representing advance rates set forth in clauses (i) through (v) of the
definition of Borrowing Base, in each case without the written consent
of all the Lenders, or (iii) amend, modify or waive any provision of
Section 8 without the written consent of the then Administrative Agent,
or (iv) amend, modify or waive any provision of Section 3 without the
written consent of the then Issuing Bank; and provided, further, that
(i) any amendment or waiver at any time of any provision contained in
Schedules I, II, III or IV shall require the consent of the Majority
Creditors and (ii) the amendments and modifications to the Credit
Agreement set forth in subsection 7.4 of the Intercreditor Agreement are
subject to prior written consent of Purchasers holding Voting Purchase
Agreement Obligations representing a majority of the Voting Purchase
Agreement Obligations as set forth therein. Any such waiver and any
such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon the Borrower, the Lenders, the
Administrative Agent and all future holders of the Loans. In the case
of any waiver, the Borrower, the Lenders and the Administrative Agent
shall be restored to their former positions and rights hereunder and
under the other Loan Documents, and any Default or Event of Default
waived shall be deemed to be cured and not continuing; no such waiver
shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
9.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing
(including by facsimile transmission) and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made (a) in
the case of delivery by hand, when delivered, (b) in the case of
delivery by mail, three days after being deposited in the mails, postage
prepaid, or (c) in the case of delivery by facsimile transmission, when
sent and receipt has been confirmed, addressed as follows in the case of
the Borrower and the Administrative Agent, and as set forth in Schedule
I in the case of the other parties hereto, or to such other address as
may be hereafter notified by the respective parties hereto:
The Borrower: IT Corporation
23456 Hawthorne Boulevard
Torrance, CA 90505
Attention: Anthony J DeLuca
Fax: 310-791-4770
The Administrative Agent: Chemical Bank
633 Third Avenue, 7th Floor
New York, New York 10017
Attention: Credit Deputy
Fax: 212-622-5271
provided that any notice, request or demand to or upon the
Administrative Agent or the Lenders pursuant to subsection 2.2, 2.4,
2.6, 2.7 or 2.12 shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or
any Lender, any right, remedy, power or privilege hereunder or under the
other Loan Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan
Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the making of the Loans hereunder.
9.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Administrative Agent for all its out-of-pocket
costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent and all
out-of-pocket costs and expenses incurred in connection with the
preparation of its field examinations of the Borrower (including in its
capacity as Collateral Agent), (b) to pay or reimburse each Lender and
the Administrative Agent for all its out-of-pocket costs and expenses
incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of
counsel (including the allocated fees and expenses of in-house counsel)
to each Lender and of counsel to the Administrative Agent (it being
understood that such costs and expenses include, without limitation,
costs and expenses incurred by the Lenders and the Administrative Agent
in connection herewith during the continuance of an Event of Default),
(c) to pay, indemnify, and hold each Lender and the Administrative Agent
harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery
of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and
hold each Lender and the Administrative Agent harmless from and against
any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other
Loan Documents and any such other documents, including, without
limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable
to the operations of the Borrower, any of its Subsidiaries or any of the
Properties (all the foregoing in this clause (d), collectively, the
"indemnified liabilities"), provided, that the Borrower shall have no
obligation hereunder to the Administrative Agent or any Lender with
respect to indemnified liabilities arising from (i) the gross negligence
or willful misconduct of the Administrative Agent or any such Lender or
(ii) legal proceedings commenced against the Administrative Agent or any
such Lender by any security holder or creditor thereof arising out of
and based upon rights afforded any such security holder or creditor
solely in its capacity as such. The agreements in this subsection shall
survive repayment of the Loans and all other amounts payable hereunder.
9.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Administrative Agent and their respective
successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without
the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell
to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the
other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under
this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents,
and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Loan
Documents. The Borrower agrees that if amounts outstanding under this
Agreement are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement to the same extent as if
the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed
to share with the Lenders the proceeds thereof as provided in subsection
9.7(a) as fully as if it were a Lender hereunder. The Borrower also
agrees that each Participant shall be entitled to the benefits of
subsections 2.14, 2.15, 2.16 with respect to its participation in the
Commitments and the Loans outstanding from time to time as if it was a
Lender; provided that (i) in the case of subsection 2.15, such
Participant shall have complied with the requirements of said
subsection, (ii) no Participant shall be entitled to receive any greater
amount pursuant to any such subsection than the transferor Lender would
have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant
had no such transfer occurred and (iii) no Participant shall have any
voting or consent rights hereunder or under the applicable participation
agreement with respect thereto, except with respect to amendments or
modifications described in clause (i) of the proviso to subsection 9.1
which directly affect such Participant, such limitations to be
incorporated in each participation agreement evidencing a sale to a
Participant hereunder. Each Lender agrees to notify the Borrower and
the Administrative Agent of each sale of a Participation to an entity
not organized in the United States or any subsidiary of such an entity,
and the Borrower shall have the right to consent to such participation,
such consent not to be unreasonably withheld.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time and
from time to time assign to any Lender or any affiliate thereof or, with
the consent of the Borrower and the Administrative Agent (which in each
case shall not be unreasonably withheld), to an additional bank or
financial institution ("an Assignee") all or any part of its rights and
obligations under this Agreement and the other Loan Documents pursuant
to an Assignment and Acceptance, substantially in the form of Exhibit E,
executed by such Assignee, such assigning Lender (and, in the case of an
Assignee that is not then a Lender or an affiliate thereof, by the
Borrower and the Administrative Agent) and delivered to the
Administrative Agent for its acceptance and recording in the Register,
provided, that (i) in the case of any such assignment to an additional
bank or financial institution, the sum of the aggregate principal amount
of the Loans, the aggregate amount of the L/C Obligations and the
aggregate amount of the Available Commitments being assigned and, if
such assignment is of less than all of the rights and obligations of the
assigning Lender, the sum of the aggregate principal amount of the
Loans, the aggregate amount of the L/C Obligations and the aggregate
amount of the Available Commitments remaining with the assigning Lender
are each not less than $5,000,000 (or such lesser amount as may be
agreed to by the Borrower and the Administrative Agent) and (ii) after
giving effect to an assignment by the Lender that is the Administrative
Agent, other than an assignment of all of the rights and obligations of
such Lender, the sum of the aggregate principal amount of the Loans, the
aggregate amount of the L/C Obligations and the aggregate amount of the
Available Commitments remaining with such Lender is at least equal to
the next highest such sum remaining with any other Lender. Upon such
execution, delivery, acceptance and recording, from and after the
effective date determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with a Commitment as set forth
therein, and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning
Lender shall cease to be a party hereto). Notwithstanding any provision
of this paragraph (c) and paragraph (e) of this subsection, the consent
of the Borrower shall not be required, and, unless requested by the
Assignee and/or the assigning Lender, new Bank Notes shall not be
required to be executed and delivered by the Borrower, for any
assignment which occurs at any time when any of the events described in
paragraph (g) or (h) of Schedule IV shall have occurred and be
continuing.
(d) The Administrative Agent, on behalf of the Borrower,
shall maintain at the address of the Administrative Agent referred to in
subsection 10.2 a copy of each Assignment and Acceptance delivered to it
and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of
the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders may (and, in the case
of any Loan or other obligation hereunder not evidenced by a Bank Note,
shall) treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder as the owner thereof for
all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan
or other obligation hereunder not evidenced by a Bank Note shall be
effective only upon appropriate entries with respect thereto being made
in the Register. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice, and the Administrative Agent will notify each
Lender of each Assignment pursuant to subsection 9.6(c) that results in
a change in the Commitment Percentage of any Lender. The Administrative
Agent will from time to time provide a loan summary statement to the
Lenders in accordance with its usual practices.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee
that is not then a Lender or an affiliate thereof, by the Borrower and
the Administrative Agent) together with payment by the assigning Lender
and/or the Transferee to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall (i) promptly
accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in
the Register and give notice of such acceptance and recordation to the
Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning the Borrower and its Affiliates which has been delivered to
such Lender by or on behalf of the Borrower pursuant to this Agreement
or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the
Borrower and its Affiliates prior to becoming a party to this Agreement,
provided that such Transferee or prospective Transferee agrees to be
bound by the provisions of subsection 9.15 prior to or concurrently with
such disclosure.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning
assignments of Loans and Bank Notes relate only to absolute assignments
and that such provisions do not prohibit assignments creating security
interests, including, without limitation, any pledge or assignment by a
Lender of any Loan or Bank Note to any Federal Reserve Bank in
accordance with applicable law.
9.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its
Loans, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events
or proceedings of the nature referred to in paragraphs (g) or (h) of
Schedule IV, or otherwise), in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans, or interest thereon, such
benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loan,
or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided,
however, that (i) if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such
purchase shall be rescinded, and (ii) the purchase price and benefits
returned, to the extent of such recovery, but without interest and
provided, further, that the foregoing is subject to certain sharing
arrangements under the Intercreditor Agreement as set forth therein.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice
to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, upon any amount becoming due
and payable by the Borrower hereunder (whether at the stated maturity,
by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held
or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to
notify the Borrower and the Administrative Agent after any such set-off
and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and
application.
9.8 Examination Reports. The Administrative Agent agrees to
distribute once during each calendar year to each Lender, as soon as
practicable after the completion thereof, a summary report of an
examination of the Borrower conducted by the Administrative Agent in
form and scope determined by the Administrative Agent to be appropriate,
provided that each Lender acknowledges that each such report shall be
subject to the provisions of subsection 8.6 and that, as set forth
therein, such Lender is not relying on such report.
9.9 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate
counterparts (including by facsimile transmission), and all of said
counterparts taken together shall be deemed to constitute one and the
same instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Borrower and the Administrative
Agent.
9.10 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,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
9.11 Integration. This Agreement, the other Loan Documents
and the fee letter entered into among the Borrower and the
Administrative Agent represent the agreement of the Borrower, the
Administrative Agent and the Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or
warranties by the Administrative Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
9.12 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
9.13 Submission To Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from
any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in subsection 10.2 or
at such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
9.14 Confidentiality. Each Lender agrees to keep
confidential any written or oral information (a) provided to it by the
Borrower pursuant to or in connection with this Agreement or any other
Loan Document or (b) obtained by such Lender based on a review of the
books and records of the Borrower pursuant to this Agreement; provided
that nothing herein shall prevent any Lender from disclosing any such
information (i) to the Administrative Agent or any other Lender or such
Lender's affiliates, (ii) to any Transferee or prospective Transferee
(so long as delivery of such information is made in accordance with
subsection 9.6(f)), (iii) to its employees involved in the
administration of this Agreement or any other Loan Document and to its
directors, agents, attorneys, accountants and other professional
advisors, (iv) upon the request or demand of any Governmental Authority
having jurisdiction over such Lender, (v) in response to any order of
any court or other Governmental Authority or as may otherwise be
required, or deemed advisable by counsel to such Lender, pursuant to any
Requirement of Law, (vi) which has been publicly disclosed or obtained
from a source other than the Borrower or pursuant to this Agreement or
(vii) in connection with the exercise of any remedy hereunder.
9.15 Acknowledgements. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and
the relationship between Administrative Agent and Lenders, on one hand,
and the Borrower, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower and the Lenders.
9.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
IT CORPORATION
By:
Title:
CHEMICAL BANK,
as Administrative Agent and as a
Lender
By:
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:
Title:
SOCIETE GENERALE
By:
Title:
SCHEDULE 5.1(q)
SCHEDULE 5.1(q)
TERMINATED EXISTING DEBT
1. Debt outstanding pursuant to $150,000,000 Credit Agreement among
the Parent, the Company, Bank of America NT&SA, as agent and Bank of
America NT&SA, dated as of August 27, 1991, as amended through the Sixth
Amendment, dated May 17, 1995 thereto, and the "Loan Documents," (as
defined therein).
2. 9-3/8% Senior Notes Due 1996, as referenced in Indenture dated as
of July 1, 1986 by and between Continental Illinois National Bank and
Trust Company of Chicago, Trustee ($50,000,000 of notes remaining
outstanding).
EXHIBIT 10(ii) 2.
=====================================================================
IT CORPORATION
8.67% Guaranteed Senior Secured Notes
due October 30, 2003
NOTE PURCHASE AGREEMENT
Dated as of October 24, 1995
======================================================================
TABLE OF CONTENTS
Page
SECTION 1. AUTHORIZATION OF SENIOR NOTES. . . . . . .1
SECTION 2. SALE AND PURCHASE OF SENIOR NOTES. . . . .1
SECTION 3. CLOSING. . . . . . . . . . . . . . . . . .2
SECTION 4. CONDITIONS TO CLOSING. . . . . . . . . . .2
4.1. Representations and Warranties . . . . . .2
4.2. Performance; No Default. . . . . . . . . .3
4.3. Compliance Certificates. . . . . . . . . .3
4.4. Opinions of Counsel. . . . . . . . . . . .3
4.5. Recordation; Taxes, etc. . . . . . . . . .4
4.6. Operative Agreements . . . . . . . . . . .4
4.7. Proceedings and Documents. . . . . . . . .4
4.8. Payment of Closing Fees. . . . . . . . . .4
4.9. Private Placement Number . . . . . . . . .4
4.10. Legal Investment. . . . . . . . . . .5
4.11. Sale of Other Senior Notes. . . . . .5
4.12. Title Policy. . . . . . . . . . . . .5
4.13. Lien Searches . . . . . . . . . . . .5
4.14. Borrowing Base Certificate. . . . . .5
4.15. Insurance . . . . . . . . . . . . . .6
4.16. Environmental Report. . . . . . . . .6
4.17. Pledged Stock; Stock Powers . . . . .6
4.18. Actions to Perfect Liens. . . . . . .6
4.19. Existing Debt . . . . . . . . . . . .6
4.20. Landlord Waivers. . . . . . . . . . .6
4.21. Rating. . . . . . . . . . . . . . . .7
4.22. Closing Conditions Under Credit
Agreement. . . . . . . . . . . . . . 7
4.23. Appraisals. . . . . . . . . . . . . .7
4.24. Financial Information.. . . . . . . .7
4.25. Cash Balance. . . . . . . . . . . . .7
4.26. Officer's Certificate . . . . . . . .7
4.27. Collateral Trust Agreement. . . . . .7
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY. . . . . . . . . . . . . . . . .8
5.1. Uniform Representations and Warranties . .8
5.2. Offer of Senior Notes. . . . . . . . . . .8
SECTION 6. PURCHASE FOR INVESTMENT; SOURCE OF FUNDS .8
6.1. Purchase for Investment. . . . . . . . . .8
6.2. Source of Funds. . . . . . . . . . . . . .8
SECTION 7. PREPAYMENT OF SENIOR NOTES . . . . . . . 10
7.1. Required Prepayments. . . . . . . . . . 10
7.2. Optional Prepayments of Senior Notes
with Make-Whole Amount . . . . . . . . 10
7.3. Notice of Prepayments; Officer's
Certificate. . . . . . . . . . . . . . . 10
7.4. Optional Prepayment of Senior Notes on
Sale of Assets or Change of Control;
Officer's Certificates. . . . . . . . . 11
7.5. Allocation of Partial Prepayments. . . . 13
7.6. Maturity; Surrender, etc.. . . . . . . . 13
7.7. Acquisition of Senior Notes. . . . . . . 13
SECTION 8. COVENANTS OF THE COMPANY . . . . . . . . 13
SECTION 9. DEFAULT . . . . . . . . . . . . . . . . 13
9.1. Events of Default. . . . . . . . . . . . 13
SECTION 10. REMEDIES ON DEFAULT, ETC.. . . . . . . . . . 15
SECTION 11. REGISTRATION, TRANSFER AND SUBSTITUTION OF
SENIOR NOTES. . . . . . . . . . . . . . . . 16
11.1. Senior Note Register. . . . . . . . 16
11.2. Ownership of Senior Notes in
Registered Form. . . . . . . . . . .16
11.3. Transfer and Exchange of Senior
Notes. . . . . . . . . . . . . . . .16
11.4. Replacement of Senior Notes . . . . 17
11.5. Senior Notes held by Company, etc.,
Deemed Not Outstanding. . . . . . . 17
SECTION 12. PAYMENTS ON SENIOR NOTES. . . . . . . . . . . 17
12.1. Place of Payment . . . . . . . . . 17
12.2. Home Office Payment . . . . . . . . 17
SECTION 13. EXPENSES, INDEMNITY, ETC.. . . . . . . . . . 18
SECTION 14. RELEASE OF COLLATERAL . . . . . . . . . . . 20
SECTION 15. MISCELLANEOUS . . . . . . . . . . . . . . . . 21
15.1. Amendments, Etc.. . . . . . . . . . 21
15.2. Further Assurances. . . . . . . . . 22
15.3. Survival of Agreements,
Representations and Warranties. . . 22
15.4. Successors and Assigns. . . . . . . 23
15.5. Submission to Jurisdiction. . . . 23
15.6. Entire Agreement. . . . . . . . . . 23
15.7. Reproduction of Documents . . . . . 23
15.8. Notices, Etc. . . . . . . . . . . . 24
15.9. Severability. . . . . . . . . . . . 24
15.10. Counterparts. . . . . . . . . . . . 24
15.11. Table of Contents; Headings . . . . 24
15.12. Directly or Indirectly. . . . . . . 24
15.13. Independence of Covenants . . . . . 25
15.14. Solicitation of Noteholders . . . . 25
15.15. Waiver of Jury Trial. . . . . . . . 25
15.16. Governing Law . . . . . . . . . . . 25
SCHEDULE OF PURCHASERS
SCHEDULE 4.19 Bank of America Letters of Credit
SCHEDULE I Uniform Definitions
EXHIBIT I Form of Collateral Trust Agreement
SCHEDULE I-A Description of Property
SCHEDULE II Uniform Representations and Warranties
SCHEDULE II-2 Restricted Subsidiaries
SCHEDULE II-6 Income Tax Determinations
SCHEDULE II-7 Debt
SCHEDULE II-8 Liens
SCHEDULE II-10(c) Contract Defaults
SCHEDULE II-12 Intellectual Property Claims
SCHEDULE II-18(d) ERISA
SCHEDULE II-22(a) Non-Compliance with Environmental Laws
SCHEDULE II-22(b) Environmental Litigation
SCHEDULE II-22(c) Environmental Obligations
SCHEDULE II-22(d) Notices of Potential Liability
SCHEDULE II-22(e) Hazardous Materials Disposition
SCHEDULE II-22(f) Assumption of Environmental Liability
SCHEDULE II-23 Asset Sales
SCHEDULE III Uniform Business and Financial
Covenants of the Company
SCHEDULE III-1(a) Debt
SCHEDULE III-12(h) Liens
SCHEDULE III-17 Contracts Containing Certain Restrictions
SCHEDULE IV Uniform Events of Default
EXHIBIT A Form of 8.67 % Guaranteed Senior Secured Note
due October 30, 2003
EXHIBIT B-1 Form of Opinion of Gibson, Dunn & Crutcher
EXHIBIT B-2 Form of Opinion of Eric Schwartz, Esq.
EXHIBIT B-3 Form of Opinion of Local Counsel
EXHIBIT B-4 Form of Opinion of Debevoise & Plimpton
EXHIBIT B-5 Form of Opinion of Intellectual Property Counsel
EXHIBIT I-B Form of Borrowing Base Certificate
<PAGE>
IT CORPORATION
23456 Hawthorne Boulevard
Torrance, California 90505
8.67% Guaranteed Senior Secured Notes
due October 30, 2003
Dated as of October 24, 1995
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE OF PURCHASERS
Dear Sirs:
IT CORPORATION, a California corporation (the "Company"),
agrees with you as follows:
SECTION 1. AUTHORIZATION OF SENIOR NOTES.
The Company will authorize the issue and sale of $65,000,000
aggregate principal amount of its 8.67% Guaranteed Senior Secured Notes
due October 30, 2003 (the "Senior Notes", such term to include any such
notes issued in substitution therefor pursuant to Section 11), to be
substantially in the form of the Senior Note set out in Exhibit A, with
such changes therefrom, if any, as may be approved by you and the
Company. Certain capitalized terms used in this Agreement are defined
in Schedule I; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.
The Senior Notes will be guaranteed by the Parent and the
Subsidiary Guarantors pursuant to the Guarantees and will be secured as
provided in the Security Documents.
SECTION 2. SALE AND PURCHASE OF SENIOR NOTES.
The Company will issue and sell to you and, subject to the
terms and conditions of this Agreement, you will purchase from the
Company, at the Closing provided for in Section 3, Senior Notes in the
principal amount specified opposite your name in the Schedule of
Purchasers attached hereto (the "Schedule of Purchasers") at the
purchase price of 100% of the principal amount thereof.
Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "Other Agreements")
identical with this Agreement with each of the other purchasers (the
"Other Purchasers") named in the Schedule of Purchasers providing for
the sale to each of the Other Purchasers, at such Closing, of Senior
Notes in the principal amount specified opposite its name in the
Schedule of Purchasers. The Senior Notes to be purchased by you will be
dated the Closing Date, will mature on October 30, 2003 and will bear
interest on the unpaid balance thereof from the Closing Date until the
principal thereof shall become due and payable at the rate per annum of
8.67%. Any overdue principal of, premium, if any, and overdue interest
on, any Senior Note shall bear interest for each day from and including
the date payment thereof is due to but excluding the date of actual
payment, at a rate per annum equal to 10.67%. Whenever any payment of
principal of, premium, if any, or interest on, a Senior Note shall be
due on a day which is not a Business Day, the date for payment thereof
shall be extended to the next succeeding Business Day.
SECTION 3. CLOSING.
The sales of the Senior Notes to be purchased by you and the
Other Purchasers shall take place at the offices of Debevoise &
Plimpton, 875 Third Avenue, New York, New York 10022, at 10:00 a.m., New
York City time, at a closing (the "Closing") on October 25, 1995 or on
such other Business Day thereafter on or prior to October 31, 1995 as
may be agreed upon by the Company and you and the Other Purchasers (the
"Closing Date"). At the Closing, the Company will deliver to you the
Senior Notes to be purchased by you in the form of a single Senior Note
(or such greater number of Senior Notes), in the denomination of at
least $100,000 as you may request, dated the Closing Date and registered
in your name (or in the name of your nominee), against delivery by you
to the Company or its order of immediately available funds in the amount
of the purchase price therefor. If at the Closing the Company shall
fail to tender such Senior Notes to you as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not
have been fulfilled to your satisfaction, you shall, at your election,
be relieved of all further obligations under this Agreement, without
thereby waiving any other rights you may have by reason of such failure
or such nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Senior Note(s)
to be sold to you at the Closing is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following conditions:
4.1. Representations and Warranties. The representations and
warranties of each of the Company, the Parent, the Subsidiary Guarantors
and the Subsidiaries party to any Operative Agreement contained herein
or in any other Operative Agreement and otherwise made in writing by or
on behalf of the Company, the Guarantor, any Subsidiary Guarantor or any
Subsidiary party to any Operative Agreement in connection with the
transactions contemplated hereby and by the other Operative Agreements
shall be true and correct when made and at the time of such Closing.
4.2. Performance; No Default. Each of the Company, the
Parent, each of the Subsidiary Guarantors and any Subsidiary party to
any Operative Agreement shall have performed and complied with all
agreements and conditions contained herein or in any other Operative
Agreement required to be performed or complied with by it prior to or at
the Closing. At the time of the Closing and after giving effect to the
transactions contemplated hereby and by the other Operative Agreements,
no Default or Event of Default shall have occurred and be continuing.
4.3. Compliance Certificates. Each of the Company, the
Parent, each of the Subsidiary Guarantors and each of the Subsidiaries
party to any Operative Agreement shall have delivered to you an
Officer's Certificate, dated the date of the Closing and satisfactory in
form and substance to you, certifying (a) that the conditions specified
in Sections 4.1 and 4.2 (insofar as they relate to it) have been
fulfilled, and (b) that, after giving effect to the transactions
contemplated by the Operative Agreements, it will be in compliance with
the most stringent limitations on the incurrence or maintenance by it of
Debt contained in any instrument or agreement applicable to or binding
on it or any of its Subsidiaries, or certifying that a complete and
correct copy of a waiver or waivers of compliance with such limitations
is attached to such Officer's Certificates, and that no Default or Event
of Default (insofar as they relate to it) shall have occurred and be
continuing.
4.4. Opinions of Counsel. You shall have received from (a)
Gibson, Dunn & Crutcher, special counsel to the Company, the Parent, the
Subsidiary Guarantors and the Subsidiaries party to any Operative
Agreement, (b) Eric Schwartz, Esq., General Counsel to the Company, the
Parent, the Subsidiary Guarantors and the Subsidiaries party to any
Operative Agreement, (c) opinions of local counsel in the states of
Connecticut, Oklahoma, Tennessee, Vermont and Washington, and (d)
Debevoise & Plimpton, your special counsel in connection with the
transactions contemplated by the Operative Agreements, favorable
opinions substantially in the forms set forth in Exhibits B-1, B-2, B-3,
and B-4, respectively, and covering such matters incident to such
transactions as you may reasonably request, each addressed to you, dated
the Closing Date and otherwise satisfactory in substance and form to
you. The Collateral Agent and you shall have received from special
intellectual property counsel to you and the Collateral Agent, favorable
opinions with respect to intellectual property matters, substantially in
the form of Exhibit B-5.
4.5. Recordation; Taxes, etc. To the extent deemed reasonably
necessary by your special counsel, (a) each of the Operative Agreements
and any other agreements, documents or instruments referred to herein
(or proper notices, statements or other instruments in respect thereof)
shall have been duly recorded, published, registered and filed and all
other actions shall have been duly performed or taken, as is required by
law to establish, perfect, preserve and protect the rights and security
interests of the Purchasers (or the Collateral Agent on their behalf)
and of the parties thereto and their respective successors or assigns,
and (b) all taxes, fees and other charges in connection with (i) the
execution, delivery, recording, publishing, registration and filing of
such documents or instruments, (ii) the issue and sale of the Senior
Notes and (iii) the execution and delivery of the Credit Agreement and
the transactions contemplated thereby and hereby, shall have, in each
case, been paid in full or provision satisfactory to your special
counsel shall have been made.
4.6. Operative Agreements. Each of the Operative Agreements
(including, without limitation, the Senior Notes) shall have been duly
authorized, executed and delivered by the respective parties thereto,
shall be in full force and effect, shall constitute the legal, valid and
binding obligations of the respective parties thereto, and all actions
required to be performed or taken thereunder on or prior to the Closing
Date shall have been duly taken and no default or accrued right of
termination on the part of any of the parties thereto shall exist
thereunder as of the Closing Date.
4.7. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this
Agreement and the other Operative Agreements and all documents and
instruments incident to such transactions shall be reasonably
satisfactory to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or certified
originals or certified or other copies of such documents as you or your
special counsel may request in writing.
4.8. Payment of Closing Fees. The Company shall have paid the
reasonable fees, expenses and disbursements of your special counsel
which are reflected in statements of such counsel rendered prior to or
on the Closing Date; and thereafter the Company will pay, promptly upon
receipt of any supplemental statements therefor, additional reasonable
fees, if any, and disbursements of your special counsel in connection
with the Closing (including unposted disbursements as of the Closing
Date) and attention to post-Closing matters.
4.9. Private Placement Number. The Company shall have
obtained for the Senior Notes a Private Placement Number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners).
4.10. Legal Investment. On the date of the Closing the
purchase of Senior Notes shall be permitted by the laws and regulations
of each jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without
restriction as to the character of the particular investment. If
requested by you, you shall have received, at or prior to the Closing,
Officer's Certificates of the Company, the Parent, the Subsidiary
Guarantors and the Subsidiaries party to any Operative Agreement
certifying as to such matters of fact as you may specify to enable you
to determine whether such purchase is so permitted.
4.11. Sale of Other Senior Notes. Contemporaneously with
the Closing, the Company shall sell to the Other Purchasers the Senior
Notes to be purchased by them at the Closing as specified in the
Schedule of Purchasers.
4.12. Title Policy. You shall have received in respect of
each parcel of real property covered by a Mortgage a mortgagee's title
policy (or policies) or a marked up unconditional binder for such
insurance dated the Closing Date. Each title policy shall (i) be in an
amount reasonably satisfactory to you; (ii) assure that the Mortgage
insured thereby creates a valid first Lien on such parcel free and clear
of all defects and encumbrances, except such as may be approved by you;
(iii) name the Collateral Agent as the insured thereunder; (iv) be in a
form of an ALTA Loan Policy-1970 (Amended 10/17/70); (v) contain such
endorsements and affirmative coverage as you may request; and (vi) be
issued by title companies satisfactory to (including such title
companies acting as co-insurers or re-insurers, at your option). You
shall have received evidence satisfactory to you that all premiums in
respect of each such policy, and all charges for mortgage recording
taxes, if any, have been paid. You shall have also received a copy of
all recorded documents referred to, or listed as exceptions to title in,
such title policy or policies.
4.13. Lien Searches. You shall have received the results
of recent searches satisfactory to you of the Uniform Commercial Code,
and judgment and tax lien filings which may have been filed with respect
to personal property of the Parent, the Company, the Subsidiary
Guarantors and the Subsidiaries party to any Operative Agreement in such
jurisdictions as your special counsel may request, and the results of
such searches shall be reasonably satisfactory to your special counsel.
4.14. Borrowing Base Certificate. You shall have received
a copy of the Borrowing Base Certificate of the Company, dated the
Closing Date, which Borrowing Base Certificate shall demonstrate a
Borrowing Base on the Closing Date equal to, at least, the sum of (a)
the Aggregate Outstanding Extensions of Credit after giving effect to
the initial extensions of credit to be made on the Closing Date, (b) the
aggregate principal amount of the Senior Notes to be outstanding on the
Closing Date, and (c) $15,000,000. In addition, the Borrowing Base
Certificate delivered on the Closing Date shall be accompanied by a
schedule showing the net book value of the Collateral included in
determining the Eligible Additional Amount as of the Closing Date.
4.15. Insurance. You shall have received evidence, in
form and substance satisfactory to you, that all of the requirements of
Section 5 of each Mortgage shall have been satisfied.
4.16. Environmental Report. You shall have received
reports of environmental review, with respect to the Company's
properties, each of which shall be in form and substance satisfactory to
you.
4.17. Pledged Stock; Stock Powers. The Collateral Agent
shall have received the certificates representing the shares pledged
pursuant to each of the Pledge Agreements, together with an undated
stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof.
4.18. Actions to Perfect Liens. You shall have received
evidence in form and substance satisfactory to you that all filings,
records, registrations and other actions, including, without limitation,
the filing of duly executed financing statements on form UCC-1,
necessary or, in the opinion of your special counsel, desirable to
perfect first priority security interests in respect of the Liens
granted under the Security Documents shall have been completed (or
simultaneously with the Closing are being completed) including such
termination statements and pay-out letters as shall be satisfactory to
you.
4.19. Existing Debt. You shall have received evidence
satisfactory to you that the indebtedness under the facilities listed as
"Sr. Debt Due July 1996" on Schedule II-7 and any amounts outstanding
under the Bank of America NT & SA credit facility existing on the
Closing Date shall have been repaid in full, such facilities shall have
been terminated and all liens in connection therewith shall have been
released except for the Bank of America letters of credit listed on
Schedule 4.19.
4.20. Landlord Waivers. You shall have received such
landlord waivers and consents as you shall require in connection with
the Collateral in form and substance satisfactory to you.
4.21. Rating. Fitch Investors Service shall have
confirmed in writing its rating of BBB or higher with respect to the
Senior Notes and you shall have received written evidence thereof
satisfactory to you.
4.22. Closing Conditions Under Credit Agreement. The
initial funding under the Credit Agreement on terms and amounts
satisfactory to you shall occur simultaneously with the purchase and
sale of the Senior Notes.
4.23. Appraisals. You shall have received an appraisal
conducted by Murray Devine & Co. of assets selected by you, in form and
scope satisfactory to you, and shall be satisfied with the results
thereof.
4.24. Financial Information. You shall have received (i)
consolidated balance sheets of the Parent as at the end of each of the
three most recently ended fiscal years of the Parent and the related
statements of income and retained earnings and cash flows for such
years, such consolidated financial statements to be certified by an
independent certified public accounting firm acceptable to you, (ii)
quarterly income statements and annual balance sheets and cash flow
projections for fiscal year 1996 of the Company, and annual cash flow
projections for each successive fiscal year through 2001, and (iii) such
other reports, management letters and other materials requested by you,
and in each case you shall be satisfied therewith.
4.25. Cash Balance. You shall have received evidence
satisfactory to you that the aggregate amount of cash and Cash
Equivalents of the Company and its Subsidiaries, determined as of the
last day of the fiscal quarter ended September 29, 1995, on a pro forma
basis after giving effect to the initial extensions of credit under the
Credit Agreement and the sale of the Senior Notes, shall not be less
than $20,000,000.
4.26. Officer's Certificate. An Officer's Certificate
from a Responsible Officer of the Company certifying as to certain
matters related to the Company's existing Debt as you may request.
4.27. Collateral Trust Agreement. You shall have received
the Collateral Trust Agreement, duly executed by the parties thereto,
and all documents and instruments required to be delivered, and all
actions required to be taken, on the Closing Date in connection
therewith shall have been so delivered or taken.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
5.1. Uniform Representations and Warranties. The Company
makes each of the "Uniform Representations and Warranties" set forth in
Schedule II, which Schedule II is incorporated and repeated herein as if
set forth herein in full.
5.2. Offer of Senior Notes. The Company represents and
warrants that neither the Company nor any of its Affiliates nor anyone
acting on its or their behalf has directly or indirectly offered the
Senior Notes or any part thereof or any similar securities for sale to,
or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, anyone other than you,
the Other Purchasers and not more than 35 other institutional investors.
Neither the Company nor any of its Affiliates nor anyone acting on its
or their behalf has taken or will take any action which would subject
the issuance and sale of the Senior Notes to the registration and
prospectus delivery provisions of the Securities Act of 1933, as
amended, or violate the provisions of any Blue Sky laws of any
applicable jurisdiction.
SECTION 6. PURCHASE FOR INVESTMENT; SOURCE OF FUNDS.
6.1. Purchase for Investment. You represent that you are
purchasing the Senior Notes for your own account or for one or more
separate accounts maintained by you or for the account of one or more
affiliated institutional investors on whose behalf you have authority to
make this representation or for the account of one or more pension or
trust funds, in each case for investment and not with a view to the
distribution thereof or with any present intention of distributing or
selling any of the Senior Notes, provided that the disposition of your
or their property shall at all times be within your or their control.
If you are purchasing for the account of one or more pension or trust
funds, you represent that (except to the extent you have otherwise
advised the Company in writing) you have sole investment discretion with
respect to the acquisition of the Senior Notes to be issued to you
pursuant to this Agreement.
6.2. Source of Funds. You represent that at least one of the
following statements is an accurate representation as to the source of
funds (a "Source") to be used by you to pay the purchase price of the
Senior Notes purchased by you hereunder:
(a) if you are an insurance company, the Source does not
include assets allocated to any separate account maintained by you in
which any employee benefit plan (or its related trust) has any interest,
other than a separate account that is maintained solely in connection
with your fixed contractual obligations under which the amounts payable,
or credited, to such plan and to any participant or beneficiary of such
plan (including any annuitant) are not affected in any manner by the
investment performance of the separate account; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (ii) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
to the Company in writing pursuant to this paragraph (b), no employee
benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment fund;
or
(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment fund
have been disclosed to the Company in writing pursuant to this paragraph
(c); or
(d) the Source is an insurance company general account of
which the assets are such that if any of them are, or are deemed to be,
assets of any Plan, the acquisition of the Senior Notes by you pursuant
hereto is eligible for and satisfies the requirements of Prohibited
Transaction Exemption ("PTE") 95-60 (issued July 12, 1995);
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit
plans, each of which has been identified to the Company in writing
pursuant to this paragraph (f); or
(g) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall
have the respective meanings assigned to such terms in Section 3 of
ERISA, and the term "QPAM Exemption" means Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.
SECTION 7. PREPAYMENT OF SENIOR NOTES.
7.1. Required Prepayments. On October 30, 2001, and on each
October 30 thereafter until maturity, the Company will prepay a
principal amount of the Senior Notes equal to $21,666,666.67 (or will
prepay such lesser principal amount of the Senior Notes as shall at the
time be outstanding), at the principal amount of the Senior Notes so
prepaid, without premium, provided that, upon any prepayment pursuant to
Section 7.4 of the Senior Notes held by some but not all holders, the
principal amount of each required prepayment of the Senior Notes
becoming due under this Section 7.1 on and after the date of such
prepayment pursuant to Section 7.4 shall be reduced in the same
proportion as the aggregate unpaid principal amount of the Senior Notes
is reduced as a result of such prepayment pursuant to Section 7.4. Any
partial optional prepayment of the Senior Notes pursuant to Section 7.2
shall be applied to reduce each prepayment thereafter required to be
made pro rata, and no partial prepayment of the Senior Notes pursuant to
Section 7.2 and no acquisition of any Senior Notes by the Company,
otherwise shall relieve the Company from its obligation to make the
required prepayments provided for in this Section 7.1.
On the maturity date, the Company will pay the then
outstanding principal amount of the Senior Notes.
7.2. Optional Prepayments of Senior Notes with Make-Whole
Amount. The Company may, at its option, upon notice as provided in
Section 7.3, prepay at any time all, or from time to time any part (in
an aggregate principal amount of at least $1,000,000 and an integral
multiple of $100,000 in excess thereof) of, the Senior Notes, at 100% of
the principal amount of the Senior Notes so prepaid, together with
accrued but unpaid interest thereon to the date of prepayment plus the
Make-Whole Amount (based on such principal amount).
7.3. Notice of Prepayments; Officer's Certificate. The
Company will give each holder of any Senior Notes irrevocable written
notice of each prepayment of the Senior Notes under Section 7.2 not less
than 30 calendar days and not more than 60 calendar days prior to the
date fixed for such prepayment. Each such notice and each such
prepayment shall be accompanied by an Officer's Certificate (a) stating
the total principal amount to be prepaid, the amount to be paid to each
Noteholder (as such Noteholder appears in the Senior Note Register) and
the serial number of each Senior Note to be prepaid, (b) stating the
proposed date of prepayment, (c) stating the accrued but unpaid interest
to such date on the principal amount being prepaid and (d) stating the
Make-Whole Amount payable in connection with such proposed prepayment
(calculated as of the date of such notice or prepayment, as the case may
be, and, in the case of any notice of a Make-Whole Amount, proffered
solely as an estimate of the Make-Whole Amount due upon prepayment) and
setting forth the calculations used in computing such Make-Whole Amount,
accompanied by a copy of the sources of market data used in determining
the Treasury Yield, provided that the Company will give each Noteholder
a calculation of the Make-Whole Amount 2 days prior to the date of
prepayment. If any Noteholder disagrees with the market data or the
calculation (or the method thereof) used in determining the Make-Whole
Amount (as evidenced by the information contained in the Officer's
Certificate accompanying the notice), it shall so advise the Company,
and the Company and such Noteholder shall attempt in good faith to
resolve such disagreement prior to such prepayment date.
7.4. Optional Prepayment of Senior Notes on Sale of Assets or
Change of Control; Officer's Certificates.
(a) In the event of a sale, lease, transfer or disposition of
the consolidated assets of the Parent or any of its Restricted
Subsidiaries (including, without limitation, the Company) in excess of
the amounts permitted by Section 10 (b) of Schedule III, the Company
may, as contemplated by such Section 10(b) of Schedule III, use the
proceeds of such sale, lease, transfer or other disposition that are in
excess of such permitted amounts (the "Excess Proceeds") to repay
amounts due under the Credit Agreement or offer to redeem the Senior
Notes. In such event, the Company may, at its option, give written
notice of such sale, lease, transfer or other disposition to each
Noteholder, by facsimile (and shall confirm such notice by nationally
recognized express delivery service), which notice shall contain a
written irrevocable offer by the Company to prepay, together with
accrued but unpaid interest thereon, but without premium, the portion of
the Senior Notes specified therein which are held by such Noteholder
(which shall be pro rata as among the Noteholders) on a date (the "Sale
Prepayment Date") specified in such notice (which date shall be not more
than 30 calendar days after the date of such sale, lease, transfer or
other disposition). Such notice shall be accompanied by the Officer's
Certificate described in paragraph (c). Such offered prepayment shall
be made on the Sale Prepayment Date to the Noteholder or Noteholders
accepting such offer in an amount equal to the principal amount of the
Senior Notes being so prepaid, together with interest thereon to the
date of prepayment, but without premium, provided that the acceptance of
such offer by such Noteholder or Noteholders is received by the Company
at least 10 days prior to the Sale Prepayment Date. To the extent that
such offer is not timely accepted by all of the Noteholders, the Company
may (but shall not be obligated to) offer to further prepay (with the
portion of the Excess Proceeds not so accepted) an additional amount of
Senior Notes held by Noteholders that had accepted the original offer
(such further offer shall be made on a pro rata basis to the Noteholders
accepting the original offer, and shall otherwise be made as provided
herein).
(b) In the event of a proposed Change of Control, the Company
will, no less than 15 days prior to such proposed Change of Control,
give written notice of such proposed Change of Control to each
noteholder, by facsimile (and shall confirm such notice by nationally
recognized express delivery service), which notice shall contain a
written irrevocable offer by the Company to prepay, together with
accrued and unpaid interest thereon and Make-Whole Amount, in whole but
not in part, the Senior Notes held by such holder on a date (the "Change
of Control Prepayment Date") specified in such notice, which date shall
be not more than 5 days after such Change of Control. In the event such
prepayment is not made on the date of the Change of Control, the Company
will, on such date of the Change of Control, place in escrow (in a
manner satisfactory to the Noteholders being so prepaid) an amount equal
to the full amount of principal, interest and Make-Whole Amount required
for such prepayment. Such notice shall be accompanied by the Officer's
Certificate described in paragraph (c). Such offered prepayment shall
be made on the Change of Control Prepayment Date at the principal amount
of the Senior Notes so prepaid together with the Make-Whole Amount and
accrued and unpaid interest thereon, upon acceptance of such offer by
such holder received by the Company at least 5 days prior to the Change
of Control Prepayment Date, provided that, if any Noteholder does not
accept or reject such offer of prepayment at least 5 days prior to the
Change of Control Prepayment Date, such Noteholder shall be deemed to
have accepted such offer of prepayment, provided further, that such
offered prepayment may be rescinded by the Company, and any Noteholder
acceptance of such offer shall thereupon be null and void, by notice to
such accepting Noteholder on or prior to the Change of Control
Prepayment Date if the proposed Change of Control shall not be
consummated or shall be abandoned.
(c) Any offer by the Company to prepay Senior Notes, or a
portion thereof, and any subsequent prepayment thereof pursuant to this
Section 7.4 shall be accompanied by an Officer's Certificate (i)
certifying that the conditions of this Section 7.4 have been fulfilled,
(ii) specifying the nature of the sale, lease, transfer or other
disposition of assets or Change of Control that has occurred, and (iii)
otherwise containing the information specified for the Officer's
Certificate required under Section 7.3.
7.5. Allocation of Partial Prepayments. In the case of each
partial prepayment of Senior Notes pursuant to Section 7.1 or 7.2, the
principal amount of the Senior Notes to be prepaid shall be allocated
among all of the Senior Notes at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts
thereof (which for purposes of this allocation shall not include any
principal which has been called for prepayment but has not yet been
prepaid), with adjustments, to the extent practicable, to compensate for
any prior prepayments pursuant to Section 7.1 or 7.2 not made exactly in
such proportion.
7.6. Maturity; Surrender, etc. In the case of each prepayment
of the Senior Notes, the principal amount of each Senior Note or portion
thereof to be prepaid shall mature and become due and payable on the
date fixed for such prepayment, together with accrued but unpaid
interest on such principal amount to such date and the Make-Whole
Amount, if any. From and after such date, unless the Company shall fail
to pay such principal amount when so due and payable, together with the
interest and the Make-Whole Amount, if any, as aforesaid, interest on
such principal amount shall cease to accrue. Any Senior Note that is
paid or prepaid in full shall be surrendered to the Company and
cancelled and shall not be reissued, and no Senior Note shall be issued
in lieu of any prepaid principal amount of any Senior Note.
7.7. Acquisition of Senior Notes. The Company will not, and
will not permit any Subsidiary or Affiliate to, purchase, redeem or
otherwise acquire any Senior Note except upon the payment or prepayment
thereof in accordance with the terms of this Section 7. Notwithstanding
the foregoing, any Senior Note acquired by the Company or any Subsidiary
or Affiliate thereof shall be cancelled and shall not be reissued, and
no new Senior Note shall be issued in lieu thereof or in replacement
thereof.
SECTION 8. COVENANTS OF THE COMPANY.
The Company covenants that from the date of this Agreement
through the Closing and thereafter so long as any of the Senior Notes
are outstanding, it will observe and comply with the "Uniform Covenants"
set forth in Schedule III, which Schedule III is incorporated herein as
if set forth herein in full.
SECTION 9. DEFAULT.
9.1. Events of Default. If one or more of the following
events or conditions shall have occurred and be continuing:
(a) the Company shall default in the payment of any principal
of or Make-Whole Amount, if any, on any Senior Note when the same
becomes due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration, declaration or otherwise; or
(b) the Company shall default in the payment of any interest
on any Senior Note or in the payment of any other amount (other than as
specified in paragraph (a) above) due and payable under any Note
Agreement, in any case, for more than 5 Business Days after the same
becomes due and payable; or
(c) the Company shall default in the performance of or
compliance with any term contained in any of the Note Agreements (other
than the Covenants contained in Section 8 hereof and other than those
referred to in paragraph (a) and (b) above) and such default shall not
have been remedied within 30 days after the earlier of (i) such failure
first became known to any Responsible Officer of the Company or (ii)
written notice thereof having been received by the Company from any
Noteholder; or
(d) any representation or warranty made (or deemed made) by
or on behalf of the Company in Section 5.2 hereof any of the Note
Agreements or in any instrument furnished in compliance with or in
connection with any of the Note Agreements or otherwise made in
connection with the transactions contemplated by the Note Agreements
shall prove to have been false or incorrect in any material respect on
the date as of which made; or
(e) there shall occur any "Event of Default" (as specified in
Schedule IV "Uniform Events of Default");
then, in any such event:
(A) except as provided in paragraph (b) below, the Required
Noteholders may at any time (unless all such Events of Default shall
theretofore have been remedied) at their option, by written notice or
notices to the Company, the other Noteholders and the Lenders, declare
all the Senior Notes to be due and payable, whereupon the same shall
forthwith mature and become due and payable, together with interest
accrued thereon, and (to the extent permitted by applicable law) the
Make-Whole Amount (based on the principal amount thereof), all without
presentment, demand, protest or further notice, which are hereby waived,
provided that during the existence of an Event of Default with respect
to any Senior Note described in paragraphs (a) or (b) above,
irrespective of whether the Required Noteholders shall have declared all
the Senior Notes to be due and payable pursuant to this Section 9, the
holder of such Senior Note may, at its option, by notice in writing to
the Company, the other Noteholders and the Lenders, declare the Senior
Notes then held by such Noteholder to be due and payable, whereupon the
Senior Notes then held by such Noteholder shall forthwith mature and
become due and payable, together with interest accrued thereon, and (to
the extent permitted by applicable law) the Make-Whole Amount (based on
the principal amount thereof), all without presentment, demand, protest
or further notice, which are hereby waived, or
(B) upon the occurrence of any Event of Default described in
paragraphs (g) or (h) of Schedule IV, the unpaid principal amount of
and accrued interest on the Senior Notes, and (to the extent permitted
by applicable law) the Make-Whole Amount (based on the principal amount
thereof), shall automatically become due and payable, without
presentment, demand, protest or notice, which are hereby waived.
At any time after the principal of, and interest accrued, and
(to the extent permitted by applicable law) Make-Whole Amount, on all
the Senior Notes are declared due and payable, the Required
Noteholders, by written notice to the Company, may rescind and annul any
such declaration and its consequences (other than in respect of any
Senior Note which has been individually accelerated pursuant to the
proviso contained in paragraph (A) of this Section 9) if (1) the Company
has paid all overdue interest on the Senior Notes and the principal of
any Senior Notes which have become due otherwise than by reason of such
declaration and all other amounts then due and payable under this
Agreement, (2) all Events of Default, other than non-payment of amounts
which have become due solely by reason of such declaration, and all
conditions and events which constitute Defaults or Events of Default
have been cured or waived, and (3) no judgment or decree has been
entered for the payment of any monies due pursuant to this Agreement or
the Senior Notes; but no such rescission and annulment shall extend to
or affect any subsequent Default or Event of Default or impair any right
consequent thereon.
SECTION 10. REMEDIES ON DEFAULT, ETC.
In case any one or more Events of Default shall occur and be
continuing, any Noteholder may proceed to protect and enforce the rights
of such Noteholder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any
agreement contained herein, or for an injunction against a violation of
any of the terms hereof, or in aid of the exercise of any power granted
hereby or by law or otherwise. In case of a default in the payment of
any principal of, or interest or Make-Whole Amount, if any, on any
Senior Note, the Company will pay to the Noteholder holding such Senior
Note such further amount as shall be sufficient to cover the costs and
expenses of collection, including, without limitation, reasonable
attorneys' fees, expenses and disbursements, and any out-of-pocket costs
and expenses of any such Noteholder incurred in connection with
evaluating, defending or enforcing any of its rights as set forth herein
or in the Senior Notes. No course of dealing and no delay on the part
of any Noteholder in exercising any right, power or remedy shall operate
as a waiver thereof or otherwise prejudice such Noteholder's rights,
powers or remedies. No right, power or remedy conferred by this
Agreement upon any Noteholder shall be exclusive of any other right,
power or remedy now or hereafter available at law, in equity, by statute
or otherwise.
SECTION 11. REGISTRATION, TRANSFER AND SUBSTITUTION OF
SENIOR NOTES.
11.1. Senior Note Register. Any Senior Notes issued in
substantially the form of Exhibit A are in "registered form". The
Company will maintain at its principal office a register of the Senior
Notes (the "Senior Note Register") in which it will provide for the
registration of Senior Notes in registered form and the registration of
transfers of Senior Notes in registered form.
11.2. Ownership of Senior Notes in Registered Form. Each
of the Company, the Parent, each Subsidiary Guarantor, the Lenders and
the Collateral Agent shall be entitled to treat and shall treat the
Person in whose name any Senior Note is registered on the Senior Note
Register as the absolute owner thereof for the purpose of receiving
payment of the principal of and the Make-Whole Amount, if any, and
interest on the Senior Notes and for all other purposes, whether or not
such Senior Note shall be overdue, and all payments to the registered
holder of a Senior Note shall satisfy the Company's, the Parent's and
any Subsidiary Guarantor's obligations in respect of such Senior Note
and none of the Company, the Parent nor any Subsidiary Guarantor shall
be affected by any notice to the contrary.
11.3. Transfer and Exchange of Senior Notes. Upon
surrender of any Senior Note for registration of transfer or for
exchange to the Company at its principal office, the Company at its
expense will execute and deliver or cause to be delivered in exchange
therefor a new Senior Note or Senior Notes in denominations of at least
$100,000 (except that one Senior Note may be issued in a lesser
principal amount if the unpaid principal amount of the surrendered
Senior Note is not evenly divisible by, or is less than, $100,000) as
requested by the holder or transferee, which aggregate amount is equal
to the unpaid principal amount of such surrendered Senior Note. Each
such new Senior Note shall also be a Senior Note in registered form.
Each such new Senior Note shall be dated so that there will be no loss
of interest on such surrendered Senior Note and otherwise of like tenor,
and shall be registered in the name or names of such Person as such
holder or transferee may request. Any Senior Note in lieu of which any
such new Senior Note has been so executed and delivered shall not be
deemed to be an outstanding Senior Note for any purpose of this
Agreement and the other Operative Agreements. The Company shall cancel
and destroy each Senior Note surrendered to it and in respect of which a
replacement has been delivered. Each holder of a Senior Note agrees
that any transfer of its Senior Note or Senior Notes shall be in
compliance with all applicable securities laws of the United States.
11.4. Replacement of Senior Notes. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Senior Note and, in the case of any
such loss, theft or destruction of any Senior Note, upon delivery of an
indemnity bond in such reasonable form and amount as the Company may
determine (or, in the case of any Senior Note held by you or another
institutional investor or your or its nominee, of an unsecured indemnity
agreement from you or such holder) or, in the case of any such
mutilation, upon the surrender of such Senior Note for cancellation to
the Company at its principal office, the Company will execute and
deliver in lieu thereof a new Senior Note in the unpaid principal amount
of such lost, stolen, destroyed or mutilated Senior Note, dated so that
there will be no loss of interest on such Senior Note and otherwise of
like tenor. Any Senior Note in lieu of which any such new Senior Note
has been so executed and delivered shall not be deemed to be an
outstanding Senior Note for any purpose of this Agreement and the other
Operative Agreements. The Company shall cancel and destroy each
mutilated Senior Note surrendered to it and in respect of which a
replacement has been delivered.
11.5. Senior Notes held by Company, etc., Deemed Not
Outstanding. For the purposes of determining whether the holders of the
Senior Notes of the requisite principal amount at the time outstanding
have taken any action authorized by this Agreement or any other
Operative Agreement with respect to the giving of consents or approvals
or with respect to acceleration upon an Event of Default or otherwise
any Senior Notes directly or indirectly owned by the Company or any of
its Subsidiaries or Affiliates shall be disregarded and deemed not to be
outstanding.
SECTION 12. PAYMENTS ON SENIOR NOTES
12.1. Place of Payment. Payments of principal,
Make-Whole Amount, if any, and interest becoming due and payable on the
Senior Notes shall be made at the principal office of Chase Manhattan
Bank, N.A. in the Borough of Manhattan, the City and State of New York,
unless the Company, by written notice to each holder of any Senior
Notes, shall designate the principal office of a bank or trust company
in such Borough as such place of payment, in which case the principal
office of such other bank or trust company shall thereafter be such
place of payment.
12.2. Home Office Payment. So long as you or your nominee
shall be the holder of any Senior Note, and notwithstanding anything
contained in section 12.1 or in such Senior Note to the contrary, the
Company will pay all sums becoming due on such Senior Note for
principal, Make-Whole Amount, if any, and interest by the method and at
the address specified for such purpose in the Schedule of Purchasers, or
by such other method or at such other address as you shall have from
time to time specified to the Company in writing for such purpose,
without the presentation or surrender of such Senior Note or the making
of any notation thereon, except that any Senior Note paid or prepaid in
full shall be surrendered to the Company at its principal office or at
the place of payment maintained by the Company pursuant to Section 12.1
for cancellation. Prior to any sale or other disposition of any Senior
Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date
to which interest has been paid thereon or surrender such Senior Note to
the Company in exchange for a new Senior Note or Senior Notes pursuant
to Section 11.3. The Company will afford the benefits of this Section
12.2 to any institutional investor which is the direct or indirect
transferee of any Senior Note purchased by you under this Agreement and
which has made the same agreement relating to such Senior Note as you
have made in this Section 12.2.
SECTION 13. EXPENSES, INDEMNITY, ETC.
(a) Whether or not the transactions contemplated hereby and
by the other Operative Agreements shall be consummated, the Company will
pay: (i) the out-of-pocket costs and expenses incurred by the
Noteholders in connection with such transactions, including, without
limitation, the preparation, negotiation and execution of this
Agreement, the other Operative Agreements and the Senior Notes; (ii)
the cost of transmitting to the principal office of each Noteholders
(insured to such Noteholders' satisfaction) the Senior Notes issued to
such Noteholders pursuant hereto; (iii) the fees, charges and
disbursements of special counsel to the Noteholders in connection with
such transactions, including the costs and expenses attributable to
producing closing documents, record sets and conformed copies; (iv) the
out-of-pocket costs and expenses incurred by any Noteholder (including
the fees and expenses of legal counsel and financial advisors ) in
connection with the evaluation, defense, enforcement or exercise of its
rights hereunder, including in any insolvency or bankruptcy of the
Parent, the Company or any of their respective Subsidiaries; (v) the
cost of any filing or recording (including the cost of any later filing
or recording) of this Agreement, the other Operative Agreements, the
Senior Notes or any amendments or waivers hereof or thereof; (vi) the
out-of-pocket costs and expenses incurred by the Purchasers (including
the fees and disbursements of legal counsel and financial advisors) in
connection with any consents, amendment or waivers hereof (including any
work-out or restructuring) whether or not the same become effective;
and (vii) the out-of-pocket costs and expenses incurred by any
Noteholder (including the fees and expenses of legal counsel or
financial advisors) in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this
Agreement, the other Operative Agreements or the Senior Notes, or by
reason of being a holder of any Senior Note, or otherwise in connection
with the transactions contemplated hereby and thereby. Whether or not
the transactions contemplated hereby are consummated, the Company will
pay, and save each Senior Noteholder harmless from and against, any and
all liability and loss with respect to or resulting from (A) the
nonpayment or delayed payment of any and all brokers, finders or
placement fees or commissions, (B) any and all taxes (including, without
limitation, all documentary, stamp, registration or similar taxes, but
not in any event including any Noteholder's franchise taxes or taxes
based upon income) payable in respect of the preparation, execution,
delivery, filing, recordation, registration, notarization or enforcement
of this Agreement, the other Operative Agreements or the Senior Notes or
the purchasing of any of the Senior Notes, or the enforcement or
admissibility into evidence of this Agreement, the other Operative
Agreements or the Senior Notes (and/or any amendments or waivers
thereto), any liability resulting from nonpayment or delay in payment of
any such taxes, and all costs and expenses (including, without
limitation, attorneys' fees) in connection with the assertion of claims
for any such stamp and other taxes. The obligations of the Company
under this Section 13 shall survive the transfer of the Senior Notes.
In furtherance of the foregoing, at or prior to the Closing the Company
will pay the fees, charges and disbursements of special counsel for the
Noteholders which are reflected in the statement of such special counsel
delivered to the Company at least one day prior to the date of the
Closing; and thereafter the Company will pay, promptly upon receipt of
supplemental statements therefor from time to time, additional fees, if
any, and disbursements of special counsel for the Noteholders in
connection with the transactions hereby contemplated (including unposted
charges and disbursements as of the date of the Closing).
(b) The Company hereby agrees to pay, assume liability for,
indemnify, keep harmless, and make whole (collectively, to "Indemnify")
each former, present or future Noteholder, their successors and assigns,
their directors, officers, employees and agents and any Affiliate of any
thereof (each an "Indemnified Party") from and against any and all
liabilities (including without limitation liability in tort, absolute or
otherwise), obligations, losses, damages, penalties, fines, claims,
actions, judgments, suits, liabilities, settlements, costs, expenses and
disbursements, including without limitation legal fees and expenses, of
whatsoever kind and nature, known or unknown, contingent or otherwise
(collectively, "Liabilities"), imposed on, incurred by or asserted
against any Indemnified Party, whether or not also indemnified against
by any other Person under any other document, whether or not the
transactions contemplated hereby are consummated and whether or not this
Agreement has terminated or expired, in any way relating to or arising
out of the Collateral, this Agreement, any other Operative Agreement or
the Senior Notes or any amendments, consents or supplements hereto or
thereto (whether or not the same become effective) or any of the
transactions contemplated hereby or thereby or any act or omission on
the part of the Parent, the Company, or any of their respective
Subsidiaries, including without limitation (i) any action or inaction by
the Parent, the Company or any of their respective Subsidiaries in
connection with this Agreement, any other Operative Agreement or the
Senior Notes, (ii) a Default or Event of Default, (iii) the purchase,
sale, acceptance, rejection, ownership, lease, possession, occupancy,
use, operation, condition, sale or other disposition of the Collateral
(or any other property of the Company) or any part thereof (including
without limitation latent and other defects, or the imposition of any
Lien or the incurrence of any liability to refund or pay over any amount
as the result of any such Lien, whether or not discoverable, and any
claim for patent, trademark, service mark or copyright infringement),
(iv) any claim arising out of or in any way related to any
non-compliance or violation (or alleged non-compliance or violation) of,
or any liability under any applicable laws (including, without
limitation, Environmental Laws) or (v) any and all claims of any Person
in any way relating to or arising out of the Collateral or any part
thereof, the ownership, or claimed ownership thereof, or any interest,
or claimed interest therein, other than, in any such case, Liabilities
resulting from the gross negligence or willful misconduct of such
Indemnified Party.
SECTION 14. RELEASE OF COLLATERAL.
(a) Each Purchaser agrees, and by its acceptance of a Senior
Note each subsequent Noteholder agrees, at any time after the fifth
anniversary of the Closing Date, upon the Company's request and upon the
satisfaction of the conditions specified in paragraph (b), to instruct
the Collateral Agent to permanently release the Collateral from the
Liens created by the Mortgages, the Pledge Agreements and the Security
Agreements.
(b) The agreement of the Purchasers specified in paragraph
(a) is subject to the following conditions:
(i) no Default or Event of Default shall have occurred and be
continuing;
(ii) the senior unsecured debt obligations of the Company
(without the benefit of any supporting letter of credit, collateral
security or Guaranty of another Person) shall be rated Baa2 by Moody's
Investors Service, Inc., or BBB by Standard and Poor's Ratings Group or
shall have a comparable rating by a nationally-recognized rating agency
approved by the Required Noteholders;
(iii) the Lenders shall have concurrently irrevocably
terminated their security interests created pursuant to the Security
Documents securing the obligations of the Company under the Credit
Agreement, as the same may be amended, modified, supplemented,
refinanced or replaced from time to time, and the Noteholders shall have
received evidence of such termination satisfactory to the Noteholders;
and
(iv) the Company shall have paid all of the amounts specified
in paragraph (c).
(c) In connection with any proposed release of the Collateral
as contemplated by paragraph (a), the Company will pay any and all costs
and expenses of the Noteholders and the Collateral Agent in connection
with such release, including, without limitation, any and all filing
and/or recording fees and charges.
(d) In the event of the release of the Liens of the
Security Documents pursuant to this Section 14, thereafter the Parent
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, create, incur, assume or permit to exist any Lien on or in
respect to any property so released except for Permitted Liens of the
types specified in paragraphs (a) through (e) or (g) of Section 12 of
Schedule III.
If, notwithstanding the prohibition contained in this Section
14, the Parent or any of its Restricted Subsidiaries shall create,
assume or permit to exist any Lien upon any of its property or assets,
or the property or assets of any of its Restricted Subsidiaries, whether
now owned or hereafter acquired, other than those permitted by the
provisions of paragraphs (a) through (e) or (g) of Section 12 of
Schedule III, and such Lien remains in existence for more than 5 days,
it will make or cause to be made effective provision whereby the
Obligations will be secured equally and ratably with any and all other
Debt thereby secured so long as such other Debt shall be so secured,
provided that such grant of an equal and ratable Lien securing the
Obligations shall not cure (nor shall it be deemed to cure) the Default
and Event of Default arising from the breach of the prohibition
contained in this Section 14.
SECTION 15. MISCELLANEOUS.
15.1. Amendments, Etc. Any term of this Agreement or of
the Senior Notes may be amended and the observance of any term of this
Agreement or of the Senior Notes may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with
the written consent of the Company and the Required Noteholders provided
that, without the prior written consent of all of the Noteholders, no
such amendment or waiver shall (a) change the maturity or the principal
amount of, or change the rate or change the time of payment of interest
on, or change the amount or the time of payment of any principal of, or
Make-Whole Amount, if any, in respect of any Senior Note, (b) change the
aforesaid percentages of the principal amount of Senior Notes the
holders of which are required to consent to any such amendment or
waiver, (c) change the percentage of the principal amount of Senior
Notes the holders of which are required to declare the Senior Notes to
be due and payable as provided in Section 9, (d) change the percentage
of the principal amount of the Senior Notes the holders of which are
required to rescind and annul any such declaration as provided in
Section 9, (e) amend this Section 15.1 or the definitions of Required
Noteholders or Majority Creditors, or (f) release any item of Collateral
from the Lien thereof in favor of the Credit Providers (other than as
provided in the Operative Agreements).
If, after the Closing Date, any rules, regulations,
pronouncements or opinions of the Financial Accounting Standards Board
or the American Institute of Certified Public Accountants affect the
method of calculating and/or presenting the financial statements of the
Company and its Restricted Subsidiaries and thus affect the financial
calculations contained in the various provision contained in Schedule
III, the Company and the Noteholders agree to negotiate in good faith to
amend the provisions in Schedule III so affected so that the criteria
for evaluating the financial condition of the Company and its Restricted
Subsidiaries shall be the same as existed prior to such changes. If the
Company and the Noteholders are unable to reach agreement regarding such
amendments, then all calculations will be made in accordance with the
terms contained in Schedule III as then in effect.
15.2. Further Assurances. The Company agrees that at any
time and from time to time, at the expense of the Company, it will
promptly execute, acknowledge, file, deliver and record all such
amendments to the Operative Agreements and all such instruments of
further assurance and all such further certificates, instruments and
documents, and take all such further action, as may be required by law,
or as may be necessary, or that the Required Noteholders may reasonably
request, in order to carry out the purposes of the Note Agreements
and/or the other Operative Agreements.
15.3. Survival of Agreements, Representations and
Warranties. All agreements, representations and warranties contained in
the Note Agreements and/or the other Operative Agreements or made in
writing by or on behalf of the Company in connection with the
transactions contemplated by the Operative Agreements shall survive the
execution and delivery of this Agreement, any investigation at any time
made by or on behalf of the Noteholders, the acquisition of any Senior
Note or any payment on or of any Senior Note or any disposition of any
Senior Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to the Note
Agreements and/or the other Operative Agreements or in connection with
any amendment, waiver or modification of this Agreement, the Senior
Notes or any of the Operative Agreements shall be deemed representations
and warranties of the Company under this Agreement.
15.4. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and permitted assigns of the parties hereto,
whether so expressed or not, and, in particular, shall inure to the
benefit of and be enforceable by any registered holder or holders at any
time of any Senior Notes or any part thereof.
15.5. Submission to Jurisdiction. For the purpose of
assuring that the Noteholders may enforce their rights under this
Agreement and the Senior Notes, the Company, for itself and its
successors and assigns, hereby, to the fullest extent permitted by
applicable law, irrevocably (a) agrees that any legal or equitable
action, suit or proceeding brought against it arising out of or relating
to this Agreement or any transaction contemplated hereby or the subject
matter of any of the foregoing or for recognition or enforcement of any
judgment rendered in any such action, suit or proceeding may be
instituted in any state or federal court sitting in the State of New
York, (b) waives any objection which it may now or hereafter have to the
laying of venue of any such action, suit or proceeding brought in any
such court, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient
forum, or any right to require the proceeding to be conducted in any
other jurisdiction by reason of its present or future domicile, (c)
irrevocably submits itself to the non-exclusive jurisdiction of any
state or federal court of competent jurisdiction sitting in the State of
New York for purposes of any such action, suit or proceeding, and (d)
irrevocably waives any immunity from jurisdiction to which it might
otherwise be entitled in any such action, suit or proceeding which may
be instituted in any state or federal court sitting in the State of New
York, and irrevocably waives any immunity from, or objection to, the
maintaining of an action against it to enforce any judgment for money
obtained in any such action, suit or proceeding and any immunity from
execution.
15.6. Entire Agreement. Except as stated in Section 15.3,
this Agreement and the Senior Notes (together with the other Operative
Agreements) embody the entire agreement and understanding among the
Company and the Purchasers and supersede all prior agreements and
understandings, written or oral, relating to the subject matter hereof.
All exhibits and schedules hereto are an integral part of and are
incorporated into this Agreement.
15.7. Reproduction of Documents. This Agreement and all
documents relating hereto, including without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by the Noteholders at any time, including, without limitation,
in connection with the Closing (except the Senior Notes themselves), and
(c) financial statements, certificates and other information previously
or hereafter furnished to the Noteholders, may be reproduced by the
Noteholders by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and the Noteholders may
destroy any of their own copies of any original document so reproduced.
The Company agrees and stipulates that, to the extent permitted by
applicable law, any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by the Noteholders in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
15.8. Notices, Etc. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement (a)
shall be in writing, (b) shall be delivered by hand, by telecopy (if the
sender shall immediately obtain telephonic verification of receipt of
such telecopy and shall on the same day send a confirming copy of such
notice by nationally recognized express delivery service, charges
prepaid), by nationally recognized express delivery service or by
first-class mail, postage prepaid, (c) shall be deemed given when so
delivered by hand or by telecopy (with telephone confirmation of receipt
thereof) or 2 days after posting by express delivery service (if posted
prior to 5:00 p.m.) or 10 days after posting by first-class mail, and
(d) shall be addressed, (i) if to any Noteholder, at the address set
forth in the Schedule of Purchasers, or at such other as such Noteholder
shall have furnished in writing to the Company, or (ii) if to the
Company, at the address set forth at the beginning of this Agreement or
at such other address as the Company shall have furnished in writing to
the Noteholders.
15.9. 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,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
15.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.
15.11. Table of Contents; Headings. The table of contents
and the section headings in this Agreement and the Schedules are for
purposes of reference only and shall not limit or define the meaning
hereof.
15.12. Directly or Indirectly. Where any provision in this
Agreement refers to any action which any Person is prohibited from
taking, the provision shall be applicable whether the action is taken
directly or indirectly by such Person.
15.13. Independence of Covenants. All terms, covenants and
agreements hereunder shall be construed (absent express provision to the
contrary) as being independent of each other term, covenant or agreement
contained herein.
15.14. Solicitation of Noteholders. The Company agrees it
will not, nor will it permit any of its Subsidiaries or Affiliates to,
solicit, request or negotiate for or with respect to any proposed waiver
or amendment of any of the provisions of this Agreement, any Senior Note
or any other Operative Agreement unless each Noteholder (irrespective of
the amount of Senior Notes then owned by it) shall substantially
concurrently be informed thereof by the Company and shall be afforded
the opportunity of considering the same and shall be supplied by the
Company with sufficient information to enable it to make an informed
decision with respect thereto, which information shall be substantially
the same as that supplied to each other Noteholder. Executed or true
and correct copies of any waiver or consent effected pursuant to the
provisions of Section 15.1 and this Section 15.14 shall be delivered by
the Company to each Noteholder forthwith following the date on which the
same shall have been executed and delivered by the requisite percentage
of Required Noteholders and/or Required Lenders. The Company will not,
nor will it permit any of its Subsidiaries or Affiliates to, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any Noteholder
as consideration for or as an inducement to the entering into by any
Noteholder of any waiver or amendment of any of the terms and provisions
of this Agreement, any Senior Note or any other Operative Agreement
unless such remuneration is concurrently paid, on the same terms,
ratably to each Noteholder whether or not such Noteholder signs such
waiver or consent.
15.15. WAIVER OF JURY TRIAL. EACH OF THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT
TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE SENIOR NOTES OR ANY TRANSACTION CONTEMPLATED HEREBY
OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE FOREGOING.
15.16. GOVERNING LAW. THIS AGREEMENT HAS BEEN
EXECUTED AND DELIVERED IN THE CITY OF NEW YORK, STATE OF
NEW YORK, UNITED STATES OF AMERICA. THIS AGREEMENT AND
(UNLESS OTHERWISE EXPRESSLY PROVIDED) ALL AMENDMENTS AND
SUPPLEMENTS TO, AND ALL CONSENTS AND WAIVERS PURSUANT TO,
THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterparts of this letter and
return one of the same to the Company, whereupon this letter shall
become a binding agreement between you and the Company.
Very truly yours,
IT CORPORATION
By:
Title:
The foregoing Agreement
is hereby agreed to
as of the date first
above written.
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By:
Title:
JOHN HANCOCK LIFE INSURANCE
COMPANY OF AMERICA
By:
Title:
ALLSTATE LIFE INSURANCE
COMPANY
By:
Name:
By:
Name:
Authorized Signatories
THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK
By:
Title:
MONY LIFE INSURANCE
COMPANY OF AMERICA
By:
Title:
SCHEDULE I
UNIFORM DEFINITIONS
The following terms shall have the following meanings for all
purposes and such meanings shall be equally applicable to the singular
and plural forms of the terms defined. Any agreement defined or
referred to below shall include each amendment, modification and
supplement thereto and waiver thereof as may become effective from time
to time, except where otherwise indicated. Any term defined below by
reference to any agreement shall have such meaning whether or not such
agreement is in effect. As used in any agreement, document or
instrument, the terms "hereof", "herein", "hereunder" and comparable
terms refer to such agreement, document or instrument in its entirety
and not to any particular article, section, paragraph or other
subdivision thereof. Except as otherwise indicated, references in any
agreement, document or instrument to any "Section" or "Article" means a
"Section" or "Article" of such agreement, document or instrument.
As used in any agreement, document or instrument, all
financial or accounting terms not specifically defined below shall be
construed in accordance with GAAP (as defined herein), consistently
applied, and all financial and accounting terms defined below shall,
except as otherwise provided therein, be construed and determined in
accordance with GAAP (as defined herein). With reference to any Person,
whenever any financial or accounting item is required to be determined,
such calculation shall be made with reference to the financial
statements of such Person.
"Accounts Receivable" shall mean all rights to payment for
goods sold or services rendered which have been earned by performance
under valid, enforceable contracts, whether or not they have been billed
to the respective customers and reflected on the Company's balance
sheet.
"Affiliate" shall mean as to any Person, any other Person (a)
directly or indirectly controlling or controlled by or under direct or
indirect common control with, such Person, or (b) beneficially owning or
holding 5% or more of any class of Voting Stock of such Person or (c)
any corporation of which such Person beneficially owns or holds, in the
aggregate, 5% or more of any class of Voting Stock, provided that no
Lender or Noteholder nor any Person directly or indirectly controlling
or controlled by or under common control with any Lender or Noteholder
shall be deemed to be an Affiliate of the Parent, the Company or any of
their Subsidiaries solely by reason of ownership of the Senior Notes or
by reason of having the benefits of any agreements or covenants of the
Parent or the Company or any of their Subsidiaries contained in any of
the Operative Agreements. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, means
the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Aggregate Outstanding Extensions of Credit" shall mean, as
to any Lender at any time, an amount equal to the sum of (a) the
aggregate principal amount of all Loans made by such Lender then
outstanding, (b) such Lender's Commitment Percentage of the L/C
Obligations then outstanding and (c) such Lender's Commitment Percentage
of all interest, charges and fees incurred under the Credit Agreement
and accrued and unpaid as of such time.
"Allowable Restricted Payment Amount" shall have the meaning
specified in Section 8 of Schedule III.
"Asset Sale" shall mean the sale or other disposition of any
asset.
"Bank Notes" shall have the meaning specified in subsection
2.5(e) of the Credit Agreement.
"Board" shall mean the Board of Directors of the Company.
"Borrower" shall mean IT Corporation, a California
corporation, and its permitted successors and assigns.
"Borrowing Base" shall mean, as of any date of determination,
an amount equal to the sum of (i) 90% of Eligible Billed Accounts as of
such date, (ii) the lesser of (A) 80% of Eligible Unbilled Accounts as
of such date and (B) 35% of the total portion of the Borrowing Base on
such date attributable to clauses (i), (ii) and (iii) (without giving
effect to clause (ii)(B)) of this definition, (iii) 80% of Additional
Freshkills Accounts as of such date, (iv) the Eligible Additional Asset
Amount as of such date and (v) 100% of the cash and Cash Equivalents
maintained at such date in accounts with the Collateral Agent and
pledged as Collateral on terms and conditions satisfactory to the
Collateral Agent, provided that the advance rate set forth in clause (i)
may, at any time that the Collateral Agent in its reasonable discretion
believes that the Dilution Percentage exceeds 3%, be decreased to
reflect such condition. For the purposes hereof:
"Eligible Billed Accounts" shall mean the gross outstanding
balance, determined in accordance with GAAP and stated on a basis
consistent with the historical practices of the Company and its
Subsidiaries as of the date hereof, of accounts receivable of the
Company or any of its Subsidiaries arising out of sales of goods or
services made by the Company or any of its Subsidiaries in the ordinary
course of business ("Accounts") that have been invoiced and that the
Collateral Agent, in its reasonable discretion, shall deem eligible and
acceptable in all respects, less all finance charges, late fees and
other fees that are unearned, and less the value of such reserves as the
Collateral Agent, in its reasonable discretion, shall deem appropriate
(including reserves determined by the Collateral Agent, in its
reasonable discretion, to reflect any deficiency in, or absence of,
landlord lien waivers and consents). Without in any way limiting the
discretion of the Collateral Agent to deem an Account eligible or
ineligible, the Collateral Agent does not currently intend to treat an
Account as an Eligible Billed Account if:
(a) any portion of such Account has remained unpaid for a
period exceeding 90 days from the due date;
(b) any portion of such Account has remained unpaid for a
period exceeding 120 days from the invoice date thereof;
(c) the sale represented by such Account is to an Account
debtor organized or located outside one of the states of the United
States, except (i) to the extent covered by letters of credit acceptable
to, and assigned to, the Collateral Agent and (ii) if the Collateral
Agent is furnished evidence reasonably acceptable (including an opinion
of Canadian or Puerto Rican counsel, as the case may be, to the Company)
that it has a valid and enforceable first priority lien thereon,
Accounts of an Account debtor located in Canada or Puerto Rico;
(d) the Company and its Subsidiaries have not complied with
all material requirements of law, including, without limitation, all
laws, rules, regulations and orders of any governmental or judicial
authority relating to truth in lending, billing practices, fair credit
reporting, equal credit opportunity, debt collection practices and
consumer debtor protection, applicable to such Account (or any related
contracts) or affecting the collectability of such Account;
(e) the Account debtor is the Company or an Affiliate,
Subsidiary, division or employee of the Company or any of its
Subsidiaries;
(f) the Account debtor is a supplier or creditor of the
Company or any of its Subsidiaries (provided that such Account would be
ineligible only to the extent of amounts payable by the Company or such
Subsidiary to such supplier or outstanding with such creditor);
(g) the sale represented by such Account is on a
bill-and-hold, undelivered sale, guaranteed sale, sale-or-return,
consignment, or sale-on-approval basis or is subject to any setoff,
right of return, chargeback, contra, net-out contract, offset,
deduction, dispute, credit, counterclaim or other defense outside the
ordinary course of negotiations involved in performance by the Company
of its obligations under service contracts giving rise to Accounts;
(h) such an Account is an account of the United States
government, or if any applicable law of any state or political
subdivision thereof restricts or imposes conditions on the assignment or
pledge of receivables, the government of any state of the United States
or any political subdivision thereof, or any agency or instrumentality
of any of the foregoing, and is, at any time after the date that is 30
days following the Closing Date, covered by the Assignment of Claims Act
or any similar state or local law, as applicable, with respect to which
documentation in compliance therewith, in form and substance
satisfactory to the Collateral Agent, shall not have been executed by
the Account debtors in respect thereof, provided that notwithstanding
the foregoing, at any time that 80% or more of such Accounts are so
covered (and documentation in respect thereof so executed), the
remaining 20% of such Accounts shall not be deemed ineligible by virtue
of this clause (h), less any such remaining Accounts (with respect to
which such documentation has not been so executed) that have been
entered into, renewed or extended from and after the Closing Date (for
purposes of this paragraph (h), such percentage of amounts shall be
determined based on the amount of projected revenue attributable to such
Accounts for the fiscal year of the Company during which any
determination is made);
(i) the Collateral Agent believes, in its reasonable
discretion, that the collection of such Account is insecure or that such
Account may not be paid, or the Collateral Agent is otherwise not
satisfied with the credit standing of the Account debtor in respect
thereof;
(j) such Account is owed by an Account debtor (other than the
United States government, the government of any state of the United
States or any political subdivision thereof, or any agency or
instrumentality of any of the foregoing) whose Accounts constitute more
than 10% of the Accounts included in determining the Borrowing Base on
such date, to the extent of such excess, except to the extent covered by
credit insurance satisfactory to the Collateral Agent and assigned to
the Collateral Agent pursuant to documentation in form and substance
satisfactory to the Collateral Agent;
(k) such Account (other than the Freshkills Accounts) is
owing by an Account debtor when 50% or more of the outstanding amount of
all invoiced Accounts from such Account debtor remain unpaid for a
period greater than 120 days from the invoice date thereof;
(1) such Account is not assignable or a first priority
security interest in such Account in favor of the Collateral Agent has
not been obtained and fully perfected by filing Uniform Commercial Code
financing statements against the Company or the relevant Subsidiary, as
the case may be;
(m) such Account is subject to any Lien whatsoever, other
than Liens in favor of the Collateral Agent;
(n) the Company or the relevant Subsidiary, as the case may
be, in order to be entitled to collect such Account, is required to
perform any additional service for, or perform or incur any additional
obligation to, the Account debtor;
(o) such Account does not constitute a legal, valid and
binding irrevocable payment obligation of the Account debtor to pay the
balance thereof in accordance with its terms or is subject to any
defense, setoff, recoupment or counterclaim;
(p) an estimated or actual loss has been recognized in
respect of such Account, as determined in accordance with the Company's
usual business practice, or such Account is required to be charged off
or written off as uncollectible in accordance with GAAP or the customary
business practices of the Company or such Subsidiary;
(q) the Account debtor has filed a petition for relief under
the United States Bankruptcy Code (or similar action under any successor
law or under any comparable law), made a general assignment for the
benefit of creditors, had filed against it any petition or other
application for relief under the United States Bankruptcy Code (or
similar action under any successor law or under any comparable law),
failed, suspended business operations, become insolvent, called a
meeting of its creditors for the purpose of obtaining any financial
concession or accommodation, or had or suffered a receiver or a trustee
to be appointed for all or a significant portion of its assets or
affairs;
(r) such Account is not denominated in Dollars (unless a
currency swap or similar hedge has been entered into with respect to
such Account, the effect of which is to cause payments in respect of
such Account to be denominated in Dollars) or is payable outside the
United States or Canada;
(s) the Company or the relevant Subsidiary, as the case may
be, or any other party to such Account, is in default in the performance
or observance of any of the terms thereof in any material respect;
(t) the Company or the relevant Subsidiary, as the case may
be, does not have good and marketable title to such Account as sole
owner of such Account; or
(u) any amounts payable under or in connection with such
Account are evidenced by chattel paper, promissory notes or other
instruments, unless such chattel paper, promissory notes or instruments
have been endorsed and delivered to the Collateral Agent.
"Additional Freshkills Accounts" shall mean all Freshkills
Accounts that would constitute Eligible Billed Accounts but for the
provisions of paragraphs (a), (b) and (k) of the definition of Eligible
Billed Accounts, provided that Additional Freshkills Accounts shall not
include any Account any portion of which has remained unpaid for a
period exceeding 180 days from the invoice date thereof.
"Dilution" shall mean any reduction in the value of Accounts
at any time caused by: returns, allowances, discounts, rebills (to the
extent of any downward adjustment effected thereby), credits and/or any
other non-cash offsets.
"Dilution Percentage" shall mean, at any time for any period,
a quotient, expressed as a percentage, the numerator of which equals
Dilution at such time and the denominator of which equals the Company's
gross Accounts for the period ending at such time.
"Eligible Unbilled Accounts" shall mean all accounts
receivable that have not been invoiced by the Company or any Subsidiary
but that comply in all other respects with the requirements, and are
subject to the terms of, the definition of Eligible Billed Accounts,
provided that the invoice for each such Account is in fact billable, and
is invoiced, within 60 days from the date on which the Company has
recorded the cost of services performed as an unbilled receivable in
accordance with its ordinary and usual practices.
"Freshkills Accounts" shall mean Accounts arising in
connection with the New York City Department of Sanitation - Freshkills
project.
"Eligible Additional Asset Amount" shall mean at any date,
the lesser of (i) $30,000,000 or (ii) 45% of the then net book value of
(a) property, plant and, equipment, and construction-in-progress, (b)
inventory and (c) the property described on Schedule I-A, in each case
constituting Collateral, of the Parent and its Subsidiaries, determined
in accordance with GAAP, provided that the amount set forth in clause
(i) of this definition shall be reduced by $5,000,000 on each of the
first four anniversaries of the Closing Date.
"Borrowing Base Certificate" shall mean the Borrowing Base
Certificate substantially in the form of Exhibit I-B.
"Business Day" shall mean any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York and Los
Angeles, California are required or authorized by law to close.
"Capital Expenditures" shall mean (a) amounts expended on
property, plant and equipment, (b) cash Closure Expenditures, and (c)
the cash acquisition cost of businesses acquired, excluding any Debt
issued or assumed in such acquisition, provided such Debt is permitted
under Section 1 of Schedule III.
"Capital Lease" shall mean any lease of any property (whether
real, personal or mixed) by a Person, as lessee, which would be required
to be classified and accounted for as a capital lease on a balance sheet
of such Person in accordance with GAAP.
"Capital Lease Obligation" shall mean, with respect to any
Person and a Capital Lease, the amount of the obligation of such Person
as the lessee under such Capital Lease which would, in accordance with
GAAP, appear as a liability on a balance sheet of such Person.
"Cash Collateral Agreements" shall mean the collective
reference to the Company Cash Collateral Agreement, the Parent Cash
Collateral Agreement and the Subsidiaries Cash Collateral Agreement.
"Cash Equivalents" shall mean (a) securities with maturities
of one year or less from the date of acquisition issued or fully
guaranteed or insured by the United States Government or any agency
thereof, (b) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition and
overnight bank deposits of any Lender or of any commercial bank having
capital and surplus in excess of $500,000,000, (c) repurchase
obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more
than 30 days with respect to securities issued or fully guaranteed or
insured by the United States Government, (d) commercial paper of a
domestic issuer rated at least A-2 by Standard and Poor's Rating Group
or P-2 by Moody's Investors Service, Inc., (e) securities with
maturities of one year or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be)
are rated at least A by Standard and Poor's Ratings Group or A by
Moody's Investors Services, Inc., (f) securities with maturities of one
year or less from the date of acquisition backed by standby letters of
credit issued by any Lender or any commercial bank satisfying the
requirements of clause (b) of this definition or (g) shares of money
market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this
definition.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as from time to time amended,
including, without limitation, by the Superfund Amendment and
Reauthorization Act of 1986 and regulations promulgated thereunder.
"Change of Control" shall mean (a) the sale or other
disposition of all or substantially all of the assets or stock of the
Company, (b) the merger or consolidation of the Parent or the Company,
if the effect thereof is that the stockholders of the Parent immediately
prior to such merger or consolidation directly or indirectly hold less
than 50% of the total Voting Stock of the surviving corporation, (c) the
acquisition of 33% or more of the Voting Stock of the Parent or the
Company (or the surviving corporation of a merger involving the Parent
or the Company if the surviving corporation is not the Parent or the
Company) by any person or related group of Persons (other than the
management of the Company) or (d) the liquidation or dissolution of the
Company or the Parent.
"Closing Date" shall mean the date on which the initial
borrowing under the Credit Agreement and on which the Purchasers'
purchase of the Senior Notes under the Note Agreements both occur.
"Closure Expenditures" shall mean those cash costs related to
closure and post closure activities of the Company's disposal sites and
those cash costs associated with respect to matters as to which the
Company is, or is alleged to be, a Potentially Responsible Party as
contemplated by or under CERCLA.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean all assets of the Parent, the Company
and each Subsidiary a party to a Security Document upon which a Lien is
purported to be created by any Security Document.
"Collateral Agent" shall mean Chemical Bank, in its capacity
as Collateral Agent under the Security Documents and the Collateral
Trust Agreement.
"Collateral Trust Agreement" shall mean the Master Collateral
and Intercreditor Agreement, dated as of October 24, 1995, between the
Credit Providers and the Collateral Agent and acknowledged by the
Company substantially in the form of Exhibit I-A.
"Commission" shall mean the Securities and Exchange Commission
or any other Federal agency at the time succeeding to its functions.
"Commitment" shall mean as to any Lender, the obligation of
such Lender to make Loans to and/or issue or participate in Letters of
Credit issued on behalf of the Company under the Credit Agreement in an
aggregate principal amount at any one time outstanding not to exceed the
amount set forth opposite such Lender's name on Schedule IA to the
Credit Agreement, as such amount may be reduced from time to time in
accordance with the provisions to the Credit Agreement.
"Commitment Percentage" shall mean as to any Lender at any
time, the percentage which such Lender's Commitment then constitutes of
the aggregate Commitments (or, at any time after the Commitments shall
have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Loans then outstanding constitutes of the
aggregate principal amount of the Loans then outstanding).
"Company" shall mean IT Corporation, a California corporation,
and its permitted successors and assigns.
"Company Cash Collateral Agreement" shall mean the Cash
Collateral Agreement to be executed and delivered by the Company.
"Company Mortgage" shall mean the Mortgage to be executed and
delivered by the Company.
"Company Pledge Agreement" shall mean the Company Pledge
Agreement to be executed and delivered by the Company, substantially in
the form of Exhibit G of the Collateral Trust Agreement.
"Company Security Agreement" shall mean the Security Agreement
to be executed and delivered by the Company, substantially in the form
of Exhibit D of the Collateral Trust Agreement.
"Company Security Documents" shall mean the collective
reference to the Company Cash Collateral Agreement, the Company
Mortgage, the Company Security Agreement and the Company Pledge
Agreement.
"Consolidated Net Worth" shall mean, without duplication, the
capital stock (but excluding treasury stock and capital stock subscribed
but unissued and preferred stock of the Parent or any of its
Subsidiaries redeemable prior to October 31, 2003) and surplus accounts
of the Parent and its Restricted Subsidiaries appearing on a
consolidated balance sheet of the Parent and its Restricted Subsidiaries
prepared in accordance with GAAP, provided that the investment in
Quanterra represented in such accounts and surplus shall be included
only to the extent of such investment existing on the Closing Date at
all times valued at its book value plus the book value of up to
$10,000,000 of additional investment in Quanterra, minus Restricted
Investments, and minus:
(i) the net book amount of all assets, after deducting any
reserves applicable thereto, which would be treated as intangible under
GAAP, including, without limitation, such items as good will,
trademarks, trade names, service marks, brand names, copyrights,
patents and licenses, and rights with respect to the foregoing,
unamortized debt discount and expense (other than the capitalized
expenses related to the Credit Agreement and the Note Purchase
Agreements, but not any amendments, refinancings or waivers relating
thereto), organizational expenses and the excess of cost of purchased
Subsidiaries over equity in the net assets thereof at the date of
acquisition;
(ii) any write-up in the book value of any asset on the books
of the Parent or any Restricted Subsidiary resulting from a revaluation
thereof subsequent to the Closing Date;
(iii) the amounts, if any, at which any shares of stock of
the Parent or any Restricted Subsidiary appear on the asset side of
such balance sheet; and
(iv) all deferred charges (other than deferred taxes and
prepaid expenses).
"Consolidated Tangible Assets" shall mean the total assets of
the Parent and its Restricted Subsidiaries appearing on a consolidated
balance sheet of the Parent and its Restricted Subsidiaries prepared in
accordance with GAAP, after eliminating all intercompany transactions
and all amounts properly attributable to minority interests, if any, in
the stock and surplus of Restricted Subsidiaries and after deducting
therefrom (without duplication of deductions):
(a) the net book amount of all assets, after deducting
any reserves applicable thereto, which would be treated as intangible
under GAAP including, without limitation, such items as good will,
trademarks, trade names, service marks, brand names, copyrights, patents
and licenses, and rights with respect to the foregoing, unamortized debt
discount and expense (other than the capitalized expenses related to the
Credit Agreement and the Note Purchase Agreements, but not any
amendments, refinancings or waivers relating thereto) organization
expenses and the excess of cost of purchased Restricted Subsidiaries
over equity in the net assets thereof at the date of acquisition;
(b) any write-up in the book value of any asset on the books
of the Parent or any Restricted Subsidiary resulting from a revaluation
thereof subsequent to the Closing Date;
(c) the amounts, if any, at which any shares of stock of the
Parent or any Restricted Subsidiary appear on the asset side of such
balance sheet;
(d) all deferred charges (other than deferred taxes and
prepaid expenses); and
(e) all Restricted Investments.
"Contractual Obligation" shall mean as to any Person, any
provision of any security issued by such Person or of any material
agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.
"Credit Agreement" shall mean that credit agreement among the
Parent, the Company, Chemical Bank, as Administrative Agent, and each of
the Lenders party thereto, dated as of October 24, 1995, and any
successor credit facilities in respect of loans, advances, letters of
credit, acceptances and other similar credit facilities provided to the
Company and any of the Restricted Subsidiaries by any commercial bank or
other financial institutions.
"Credit Providers" shall mean, at any time, the Noteholders
and the Lenders.
"Current Assets" shall mean the total assets of the Parent and
its Restricted Subsidiaries and Permitted Joint Ventures which would be
shown as current assets on a consolidated balance sheet of the Parent
and its Restricted Subsidiaries prepared in accordance with GAAP
provided that in determining such current assets (a) notes and accounts
receivable shall be included only if good and collectible and shall be
valued at their face value less reserves or accruals for uncollectible
accounts determined to be sufficient in accordance with GAAP, (b) life
insurance policies (other than the cash surrender value of any
unencumbered policies that is properly classified as a current asset in
accordance with GAAP) shall be excluded, and (c) Restricted Investments
that otherwise would be Current Assets shall be excluded.
"Current Liabilities" shall mean the total liabilities of the
Parent and its Restricted Subsidiaries and Permitted Joint Ventures
which would be shown as current liabilities on a consolidated balance
sheet of the Parent and its Restricted Subsidiaries prepared in
accordance with GAAP but in any event including as current liabilities,
without limitation, current maturities of Debt.
"Current Ratio" shall mean the ratio of Current Assets to
Current Liabilities.
"Debt" shall mean, with respect to any Person, at any time
(without duplication):
(a) its liabilities for borrowed money (whether or not
evidenced by a security) including, without limitation, the current
portion of such obligation;
(b) its obligations in respect of Redeemable Stock (to the
extent redeemable prior to October 31, 2003) in each case taken at the
greatest of (i) its voluntary liquidation or redemption price, (ii) its
involuntary liquidation or redemption price and (iii) its stated par
value, as determined at such time;
(c) any liabilities secured by any Lien existing on property
owned by such Person (whether or not such liabilities have been assumed)
other than those liabilities associated with contract performance and
payment bonds in the ordinary course of business;
(d) its liabilities in respect of its Capital Leases;
(e) the present value of all payments due under any
arrangement for retention of title or any conditional sale agreement
(other than a Capital Lease) discounted at the implicit rate, if known,
with respect thereto or, if unknown, at eight percent (8%) per annum;
(f) obligations of such Person in respect of letters of
credit, acceptances, or instruments serving a similar function issued or
accepted by banks or other financial institutions for the account of
such Person (whether or not representing obligations for borrowed
money); and
(g) its Guaranty of any liabilities of another Person
constituting liabilities of a type set forth in clause (a) through
clause (f), inclusive.
"Default" shall mean any condition or event that constitutes
an Event of Default or which with the giving of notice or the lapse of
time or both would, unless cured or waived, become an Event of Default.
"Dollars" and "$" shall mean lawful currency of the United
States of America.
"EBIT" shall mean, for any period, the sum of (a) Net Income,
and (b) net interest expense and federal, state and local taxes (but
only to the extent that any such item was deducted in computing Net
Income for such period), in each case accrued for such period by the
Parent and its Restricted Subsidiaries and Permitted Joint Ventures,
determined on a consolidated basis.
"EBITDA" shall mean, for any period, the sum of (a) EBIT, and
(b) depreciation, amortization and other non-cash charges (but only to
the extent that any such item was deducted in computing Net Income for
such period), in each case accrued for such period by the Parent and its
Restricted Subsidiaries and Permitted Joint Ventures, determined on a
consolidated basis.
"Environmental Laws" shall mean any and all foreign, Federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, legally binding decrees, or other requirement of any
Governmental Authority (including, without limitation, common law)
regulating, relating to or imposing liability or standards of conduct
concerning protection of the environment or of human health relating to
exposure of any kind of hazardous substances, as has been, is now, or
may at any time hereafter be, in effect.
"Environmental Permits" shall mean any and all permits,
licenses, registrations, notifications, exemptions and any other
authorization required under any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Event of Default" shall mean any of the events or conditions
set forth as "Uniform Events of Default" in Schedule IV.
"Excess Capital Expenditures" shall have the meaning specified
in Section 6 of Schedule III.
"Excess Proceeds" shall have the meaning specified in Section
7.4 of the Note Agreements.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Fair Market Value" shall mean the sale value of property that
would be realized in an arm's length sale at such time between an
informed and willing buyer and an informed and willing seller under no
compulsion, respectively, to buy or sell, in each case, determined by
the Board in its good faith opinion.
"Form 10-K" shall have the meaning specified in Section 4 of
Schedule II.
"Form 10-Q" shall have the meaning specified in Section 4 of
Schedule II.
"GAAP" shall mean generally accepted accounting principles as,
from time to time, applied in the United States of America.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantees" shall mean the collective reference to the
Parent Guarantee and the Subsidiaries Guarantee.
"Guaranty" as applied to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing, and any direct or
indirect liability, contingent or otherwise, of such Person with respect
to, any indebtedness, lease, dividend or other obligation of another
Person, including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business) or discounted or sold with
recourse by such Person, or in respect of which such Person is otherwise
directly or indirectly liable, including, without limitation, any such
obligation in effect guaranteed by such Person through any agreement
(contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any direct or indirect security therefor, or to
advance or provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain working capital or equity
capital or to maintain the net worth or the solvency or any balance
sheet, level of income or other financial condition of the obligor of
such obligation, or to make payment for any securities, products,
materials or supplies or for any transportation or services regardless
of the non-delivery or non-furnishing thereof, in any such case if the
purpose or intent of such agreement is to provide assurance that such
obligation will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation
will be protected against loss in respect thereof. The amount of any
Guaranty shall be equal to the amount of the obligation guaranteed.
"Hazardous Materials" shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos or
asbestos-containing materials, pollutants, contaminants, radioactivity,
and any other materials or substances of any kind, whether or not any
such substance is defined as hazardous under any Environmental Law, that
is regulated pursuant to any Environmental Law or that could give rise
to liability under any Environmental Law.
"HTTS Equipment" shall mean Hybrid Thermal Treatment System
equipment.
"Intellectual Property" shall mean any and all United States
and foreign: (a) patents (including design patents, industrial designs
and utility models) and patent applications (including patent
disclosures, reissues, divisions, continuations-in-part and extensions),
inventions and improvements thereto; (b) trademarks, service marks,
certification marks, trade names, trade dress, logos, business and
product names, slogans, and registrations and applications for
registration thereof; (c) copyrights (including software) and
registrations thereof; (d) inventions, processes, designs, formulae,
trade secrets, know-how, industrial models, confidential and technical
information, manufacturing, engineering and technical drawings, product
specifications and confidential business information; (e) intellectual
property rights similar to any of the foregoing;(f) copies and tangible
embodiments thereof (in whatever form or medium, including electronic
media); and (g) any licenses to use the foregoing.
"Interest Expense" shall mean, with respect to any period, the
sum (without duplication) of the following (in each case, eliminating
all offsetting debits and credits between the Parent and its Restricted
Subsidiaries and all other items required to be eliminated in the course
of the preparation of consolidated financial statements of the Parent
and its Restricted Subsidiaries in accordance with GAAP): (a) all
interest in respect of Debt of the Parent and its Restricted
Subsidiaries (including imputed interest on Capital Lease Obligations)
deducted in determining Net Income for such period, together with all
interest capitalized or deferred during such period and not deducted in
determining Net Income for such period, (b) all debt discount and
expense (other than the capitalized expenses related to the Credit
Agreement and the Note Purchase Agreements, but not such expenses
related to any amendments, refinancings or waivers thereof) amortized or
required to be amortized in the determination of Net Income for such
period, and (c) all Restricted Payments in respect of any Redeemable
Stock that is included within the definition of Debt.
"Investment" shall mean, as applied to any Person, any direct
or indirect purchase or other acquisition by such Person of stock or
other securities of any other Person, or any direct or indirect loan,
advance (other than advances to employees for moving and travel
expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by such Person to any other
Person, including all Debt and accounts receivable from such other
Person which are not current assets or did not arise from sales to such
other Person in the ordinary course of business, and any direct or
indirect purchase or other acquisition by such Person of any assets
other than assets used in the ordinary course of business. In computing
the amount involved in any Investment at the time outstanding, (a)
undistributed earnings of, and interest accrued in respect of Debt owing
by, such other Person accrued after the date of such Investment shall
not be included, (b) there shall not be deducted from the amounts
invested in such other Person any amounts received as earnings (in the
form of dividends, interest or otherwise) on such Investment or as loans
from such other Person, and (c) unrealized increases or decreases in
value, or write-ups, write-downs or write-offs, of Investments in such
other Person shall be disregarded.
"Issuing Bank" shall mean Chemical Bank, in its capacity as
issuer of any Letter of Credit.
"L/C Obligations" shall mean at any time, an amount equal to
the sum of (a) the aggregate then undrawn and unexpired amount of the
then outstanding Letters of Credit and (b) the aggregate amount of
drawings under Letters of Credit which have not then been reimbursed
pursuant to subsection 3.5(a) of the Credit Agreement.
"Lenders" shall mean each of the banks and other financial
institutions party to the Credit Agreement, and each transferee of all
or part of a bank's rights and interests thereunder as provided in
subsection 9.6 of the Credit Agreement.
"Letters of Credit" shall have the meaning specified in
paragraph 3.1(a) of the Credit Agreement.
"Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, a party other than the owner of the
property, whether such interest is based on the common law, statute or
contract, and including, without limitation, any mortgage, lien, pledge,
adverse claim, charge, security interest or other encumbrance existing
in or on, or any interest or title of any vendor, lessor, lender or
other secured party to or of a Person under any conditional sale, trust
receipt or other title retention agreement or Capital Lease, consignment
or bailment with respect to, any property or asset of a Person, or the
signing or filing of a financing statement which names such Person as
debtor, or the signing by such Person of any then effective security
agreement authorizing any other party as the secured party thereunder to
file any financing statement. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting property. For the purposes hereof, the
Company or any of its Restricted Subsidiaries shall be deemed to be the
owner of any property which it has acquired or holds subject to a
conditional sale agreement, capitalized lease or other arrangement
pursuant to which title to the property has been retained by or vested
in some other Person for security purposes and such retention or vesting
shall constitute a Lien.
"Loan" shall mean any loan made by any Lender pursuant to the
Credit Agreement.
"Loans" shall have the meaning specified in the Credit
Agreement.
"Make-Whole Amount" shall mean, with respect to any Senior
Note, an amount equal to the excess, if any, of the Discounted Value of
the Remaining Scheduled Payments with respect to the Called Principal of
such Senior Note over the amount of such Called Principal, provided that
the Make-Whole Amount may in no event be less than zero. For the
purposes of determining the Make-Whole Amount, the following terms have
the following meanings:
"Called Principal" means, with respect to any Senior Note, the
principal of such Senior Note that is to be prepaid pursuant to Section
7 of the Note Agreements or has become or is declared to be immediately
due and payable pursuant to Section 10 of the Note Agreements, as the
context requires.
"Discounted Value" means, with respect to the Called Principal
of any Senior Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice
and at a discount factor (applied on the same periodic basis as that on
which interest on the Senior Notes is payable) equal to the Reinvestment
Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Senior Note, 1.0% over the yield to maturity implied by
(a) the yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page 678" on the
Telerate Access Service (or such other display as may replace Page 678
on Telerate Access Service) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (b) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of the
second Business Day preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15 (519) (or
any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied
yield will be determined, if necessary, by (i) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with accepted
financial practice and (ii) interpolating linearly between (1) the
actively traded U.S. Treasury security with the duration closest to and
greater than the Remaining Average Life and (2) the actively traded U.S.
Treasury security with the duration closest to and less than the
Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (a) such Called Principal into (b) the sum of
the products obtained by multiplying (i) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by
(ii) the number of years (calculated to the nearest one-twelfth
year)that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Senior Note, all payments of such Called
Principal and interest thereon that would be due after the Settlement
Date with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if
such Settlement Date is not a date on which interest payments are due to
be made under the terms of the Senior Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on such
Settlement Date pursuant to Section 7 or 10 of the Note Agreements.
"Settlement Date" means, with respect to the Called Principal
of any Senior Note, the date on which such Called Principal is to be
prepaid pursuant to Section 7 of the Note Agreements or has become or is
declared to be immediately due and payable pursuant to Section 10 of the
Note Agreements, as the context requires.
"Majority Creditors" shall mean, at any time, Required Lenders
and Required Noteholders.
"Material Adverse Effect" shall mean a material and adverse
effect on (a) the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Parent and its
Restricted Subsidiaries, considered as a whole, or the Company and its
Restricted Subsidiaries, considered as a whole, or the ability of the
Parent, the Company or any Subsidiary Guarantor to perform their
respective obligations under the Operative Agreements, or (b) the
validity or enforceability of any Operative Agreement, the perfection or
priority of any Lien created pursuant to any Security Document or the
rights and remedies of the Collateral Agent and/or the Credit Providers
under any of the Operative Agreements.
"Memorandum" shall have the meaning specified in Section 4 of
Schedule II.
"Mortgages" shall mean the collective reference to the Company
Mortgages and the Subsidiary Mortgages.
"MOTCO Trust Lawsuit" shall mean Civil Action H-91-3532 in the
United States District Court for the Southern District of Texas, Houston
Division, IT Corporation, plaintiff, v. MOTCO Site Trust Fund and
Monsanto Company, as defendants.
"Multiemployer Plan" shall mean any Plan which is a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean, with respect to any sale,
assignment, transfer or other disposition of an asset of the Parent or
any of its Restricted Subsidiaries, the sum of the aggregate amount of
cash received by the Parent and its Restricted Subsidiaries in respect
of such disposition (including any cash received by the Parent and its
Restricted Subsidiaries as income or other proceeds of any non-cash
consideration received in respect of any such disposition) minus all
ordinary and reasonable out-of-pocket costs and expenses actually
incurred by the Parent or such Restricted Subsidiary in connection with
such sale, assignment, transfer or other disposition.
"Net Income" shall mean, with reference to any period, the net
earnings (or loss) of the Parent and its Restricted Subsidiaries and
Permitted Joint Ventures for such period (taken as a cumulative whole),
after deducting all operating expenses, provisions for all taxes and
reserves (including reserves for deferred income taxes) and all other
proper deductions, all determined in accordance with GAAP on a
consolidated basis, after eliminating all intercompany transactions and
after deducting portions of income properly attributable to minority
interests, if any, in the stock and surplus of Restricted Subsidiaries,
provided that there shall be excluded:
(a) net earnings (or loss) of any discontinued business;
(b) any gain or loss (net of tax effects applicable thereto)
resulting from the sale, conversion or other disposition of capital
assets (such term to include all fixed assets, whether tangible or
intangible, and all inventory sold in connection with the disposition of
such fixed assets) other than in the ordinary course of business;
(c) any extraordinary, unusual or nonrecurring gains or
losses (other than gains resulting from the MOTCO Trust Lawsuit);
(d) any gain arising from any reappraisal or write-up of
assets;
(e) any portion of the net earnings of any Restricted
Subsidiary that for any reason is unavailable for payment of dividends
to the Parent or a Restricted Subsidiary by the terms of its charter or
by-laws or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to such Restricted
Subsidiary;
(f) any gain or loss (net of tax effects applicable thereto)
other than in the ordinary course of business during such period
resulting from the receipt of any proceeds of any insurance policy;
(g) any earnings of any Person acquired by the Parent or any
Restricted Subsidiary through purchase, merger or consolidation or
otherwise, or earnings of any Person substantially all of whose assets
have been acquired by the Parent or any Restricted Subsidiary, for any
period prior to the date of acquisition, or of any Subsidiary accrued
prior to the date it became a Restricted Subsidiary;
(h) net earnings or losses of any person (other than a
Restricted Subsidiary or a Permitted Joint Venture) in which the Parent
or any Restricted Subsidiary shall have an ownership interest unless
such net earnings shall have actually been received by the Parent or
such Restricted Subsidiary in the form of cash distributions; and
(i) any restoration during such period to income of any
contingency reserve, except to the extent that provision for such
reserve was made during such period out of income accrued during such
period.
"Non-Cash Asset Sale Proceeds" shall have the meaning
specified in Section 10(b) of Schedule III.
"Note Agreements" shall mean the separate Note Purchase
Agreements, each dated as of October 24, 1995, between the Company and
the respective Purchasers.
"Notes" shall mean the Senior Notes and the Bank Notes.
"Noteholder" shall mean, at any time, a holder of a Senior
Note that is outstanding at such time.
"Obligations" shall mean, without duplication, each and every
obligation of the Parent, the Company, any Restricted Subsidiary and
the Subsidiary Guarantors pursuant to or under any of the Operative
Agreements, including, without limitation, the payment obligations of
the Company under the Credit Agreement, the Note Agreements and the
Senior Notes, including any interest accruing after the commencement of
a proceeding under Title 11 of the United States Code.
"Officer's Certificate" as applied to any Person, a
certificate executed on behalf of such Person by any of its Responsible
Officers.
"Operative Agreements" shall mean the Note Agreements, the
Credit Agreement, the Senior Notes, the Guarantees and the Security
Documents.
"Parent" shall mean International Technology Corporation, a
Delaware corporation, and its permitted successors and assigns.
"Parent Guarantee" shall mean the Guarantee to be executed and
delivered by the Parent, substantially in the form of Exhibit A of the
Collateral Trust Agreement.
"Parent Pledge Agreement" shall mean the Pledge Agreement to
be executed and delivered by the Parent, substantially in the form of
Exhibit F of the Collateral Trust Agreement.
"Parent Security Agreement" shall mean the Security Agreement
to be executed and delivered by the Parent, substantially in the form of
Exhibit C of the Collateral Trust Agreement.
"Parent Security Documents" shall mean the collective
reference to the Parent Pledge Agreement, the Parent Guarantee and the
Parent Security Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any governmental authority succeeding to any of its functions.
"Permitted Joint Ventures" shall mean operating joint ventures
(i) relating to specifically identifiable environmental engineering and
consulting or remediation projects, the Investment in which is permitted
by Section 7(g) of Schedule III, (ii) that shall not owe or incur any
Debt, (iii) that shall not have any restrictions on any portion of the
net earnings making them unavailable for any reason for payment of
dividends or earnings to the Parent or a Restricted Subsidiary and its
co-venturer in such operating joint venture by the terms of its charter
or by-laws or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such operating
joint venture and (iv) the aggregate net worth of which shall not
exceed$15,000,000 at any time. For purposes of this definition, "net
worth" shall mean the excess of assets over liabilities.
"Permitted Liens" shall have the meaning specified in Section
12 of Schedule III.
"Person" shall mean any individual, corporation, partnership,
business trust, limited liability company, trust, incorporated or
unincorporated association, joint venture, joint stock company,
government, Governmental Authority or other entity of any kind.
"Plan" shall mean an "employee benefit plan" (as defined in
Section 3 of ERISA) which is or has been established or maintained, or
to which contributions are or have been made by the Company, any of its
Subsidiaries or any Related Persons, or with respect to which the
Company, any of its Subsidiaries or any Related Person may have any
liability.
"Pledge Agreements" shall mean the collective reference to the
Company Pledge Agreement, the Parent Pledge Agreement and the
Subsidiaries Pledge Agreement.
"Preferred Stock" means, in respect of any corporation, shares
of the capital stock of such corporation that are entitled to preference
or priority over any other shares of the capital stock of such
corporation in respect of payment of dividends or distribution of
assets upon liquidation or both.
"Priority Debt" shall mean (a) any Debt of the Parent or the
Company secured by a Lien other than Debt secured by Liens permitted
pursuant to Sections 12(f), 12(g) and 12(i) of Schedule III and (b) any
Debt, whether secured or unsecured, of any Restricted Subsidiary (other
than the Company and other than Debt of UPIC pursuant to the Letters of
Credit to which it is an account party or a co-account party), provided
that intercompany Debt among the Parent and its Restricted Subsidiaries
shall not constitute Priority Debt.
"Purchasers" shall mean the respective purchasers of the
Senior Notes under the Note Agreements.
"Quanterra" shall mean Quanterra Incorporated, a Delaware
corporation.
"Redeemable Stock" shall mean any shares of capital stock
which (a) the issuer undertakes to redeem at a fixed or determinable
date or dates, whether by operation of a sinking fund or otherwise, (b)
redeemable at the option of the holder, or (c) have conditions for
redemption which are not solely within the control of the issuer, such
as stocks which must be redeemed out of future earnings.
"Register" shall have the meaning specified in subsection
9.6(d) of the Credit Agreement.
"Reimbursement Obligation" shall mean the obligation of the
Company
to reimburse pursuant to subsection 3.5(a) of the Credit Agreement for
amounts drawn under Letters of Credit.
"Related Person" shall mean any trade or business, whether or
not incorporated, which, together with the Company or any of its
Subsidiaries, is treated as a single employer under Section 414 of the
Code or the regulations promulgated thereunder.
"Required Lenders" shall mean at any time, Lenders the
Commitment Percentages of which aggregate more than 50%.
"Required Noteholders" shall mean the holders of more than 50%
in aggregate principal amount of the Senior Notes then outstanding
which, for purposes hereof, shall not include any Senior Notes owned by
the Company or any of its Subsidiaries or Affiliates.
"Requirement of Law" shall mean, as to any Person, the
Certificate of Incorporation and By-Laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"Responsible Officer" shall mean the President, any Vice
President, the Treasurer and the Secretary.
"Restricted Investment" shall have the meaning specified in
Section 7 of Schedule III.
"Restricted Payment" shall mean, as to any Person (a) any
dividend or other distribution, direct or indirect, on account of any
shares of any class of stock of such Person now or hereafter
outstanding, except a dividend payment solely in shares of stock of such
Person which are not shares of Preferred Stock; (b) any redemption,
retirement, purchase or other acquisition, direct or indirect, of any
shares of any class of stock of such Person now or hereafter
outstanding, or of any warrants, rights or options to acquire any such
shares, except for directors' fees and for the repurchase of shares
pursuant to employee benefit or compensation plans not to exceed
$1,500,000 per year, and (c) any payment other than a regularly
scheduled payment of principal or interest, direct or indirect, of or on
account of any principal of or premium on any Debt which by its terms is
junior and subordinate in right of payment to the Senior Notes and/or
the Loans now or hereafter outstanding, or any defeasance, redemption,
retirement, purchase or other acquisition prior to maturity, direct or
indirect, of any such Debt (except in connection with a refunding or
refinancing otherwise permitted by Section 1 of Schedule III).
"Restricted Subsidiary" shall mean any Subsidiary (a) at least
80% of the Voting Stock of which is owned, directly or indirectly, by
the Parent, (b) that is a party to the Subsidiaries Guarantee and the
Subsidiaries Security Agreement and (c) the stock of which has been
pledged to the Collateral Agent pursuant to a pledge agreement, provided
that the Company shall always be a Restricted Subsidiary of the Parent,
provided further, that so long as UPIC is a Subsidiary Guarantor, UPIC's
stock is pledged to the Collateral Agent pursuant to a Pledge Agreement
and at least 80% of the Voting Stock is owned, directly or indirectly,
by the Parent, UPIC shall be a Restricted Subsidiary.
"Sale and Leaseback Transaction" shall mean a transaction or
series of transactions pursuant to which the Parent or any Restricted
Subsidiary shall sell or transfer to any Person (other than the Parent
or a Restricted Subsidiary) any property, whether now owned or hereafter
acquired, and, as part of the same transaction or series of
transactions, the Parent or any Restricted Subsidiary shall rent or
lease as lessee (other than pursuant to a Capital Lease), or similarly
acquire the right to possession or use of, such property or one or more
properties which it intends to use for the same purpose or purposes as
such property.
"Securities Act" the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Security Agreements" shall mean the collective reference to
the Company Security Agreement, the Parent Security Agreement and the
Subsidiaries Security Agreement.
"Security Documents" shall mean the collective reference to
the Collateral Trust Agreement, the Cash Collateral Agreements, the
Mortgages, the Security Agreements, the Pledge Agreements, the
Guarantees and all other security documents hereafter delivered to the
Collateral Agent granting a Lien on any asset or assets of any Person to
secure the obligations and liabilities of the Company hereunder and
under any of the other Operative Agreements or to secure any guaranty of
any such obligations and liabilities.
"Senior Notes" shall have the meaning specified in Section 1
of the Note Agreements.
"Senior Notes Register" shall have the meaning specified in
Section 11.1 of the Note Agreements.
"Subsidiaries Guarantee" shall mean the Guarantee to be
executed and delivered by each Subsidiary, substantially in the form of
Exhibit B of the Collateral Trust Agreement.
"Subsidiaries Security Agreement" shall mean the Security
Agreement to be executed and delivered by each Subsidiary in favor of
the Collateral Agent substantially in the form of Exhibit E of the
Collateral Trust Agreement.
"Subsidiaries Security Documents" shall mean the collective
reference to the Subsidiaries Guarantee and the Subsidiaries Security
Agreement.
"Subsidiary" shall mean, as to any Person, (i) any
corporation, association or other business entity in which such Person
or one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect
a majority of the directors (or Persons performing similar functions) of
such entity, and (ii) any partnership or joint venture if more than a
50% interest in the profits or capital thereof is owned by such Person
or one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries, except for any partnership or joint venture in which such
Person does not have operating or voting control and where such
partnership or joint venture is not consolidated with such Person,
provided that, if such Person would be liable by contract or otherwise
for the obligations and/or activities of such partnership or joint
venture, that partnership or joint venture shall be a Subsidiary.
Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Parent.
"Subsidiary Guarantors" shall mean the Subsidiaries party to
the Subsidiaries Guarantee.
"Substitute Collateral" shall mean any asset not constituting
Collateral that is of substantially equal value and quality, and of
substantially the same character and type, as the Collateral that was
sold pursuant to Section 10(b) of Schedule III and which shall
thereafter be subject to a Lien created pursuant to the Security
Documents.
"Swap" shall mean, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps and
similar obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the purposes
hereof, the amount of the obligation under any Swap shall be the amount
determined in respect thereof as of the end of the then most recently
ended fiscal quarter of such Person, based on the assumption that such
Swap had terminated at the end of such fiscal quarter, and in making
such determination, if any agreement relating to such Swap provides for
the netting of amounts payable by and to such Person thereunder or if
any such agreement provides for the simultaneous payment of amounts by
and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Taxes" any present or future taxes, assessments, duties,
fees, levies, imposts, deductions, withholdings or other governmental
charges of any nature whatsoever and any liabilities with respect
thereto, including any penalties, additions to tax, fines or interest
thereon or any expenses in connection therewith.
"Total Debt" shall mean the sum (without duplication) of: (i)
all Debt of the Parent and its Restricted Subsidiaries and (ii) all
accrued liabilities of discontinued operations of the Parent and its
Restricted Subsidiaries not supported by letters of credit already
included in (i) above.
"Unrestricted Subsidiary" shall mean any Subsidiary of the
Parent other than a Restricted Subsidiary, provided that, in all cases,
Quanterra shall be an Unrestricted Subsidiary.
"UPIC" shall mean Universal Professional Insurance Company,
Inc., a Vermont corporation.
"Voting Stock" shall mean securities of any class or classes,
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or Persons
performing similar functions).
"Weighted Average Life to Maturity" shall mean as applied to
any Debt at any date, the number of years obtained by dividing (a) the
then outstanding principal amount of such Debt into (b) the total of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment,
including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will
elapse between such date and the date on which such payment is to be
made; as applied to any Preferred Stock at any date, the number of years
obtained by dividing (x) the then liquidation value of such Preferred
Stock into (y) the total of the products obtained by multiplying (i) the
amount of each then remaining installment, sinking fund or other
required redemption, including redemption at final maturity, in respect
thereof, by (ii) the number of years (calculated to the nearest
one-twelfth) which will elapse between such date and the making of such
redemption.
"wholly-owned" shall mean, as applied to any Subsidiary of a
Person, a Subsidiary of such Person all the outstanding shares (other
than directors' qualifying shares, if required by law) of every class of
capital stock of which are at the time owned by such Person or by one or
more wholly-owned Subsidiaries of such Person.
SCHEDULE II
UNIFORM REPRESENTATIONS AND WARRANTIES
SECTION 1. ORGANIZATION, STANDING, ETC.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California and has all requisite corporate power and authority to own
and operate its properties, to carry on its business as now conducted
and as proposed to be conducted, and to enter into and to carry out the
terms of the Operative Agreements to which it is a party.
(b) The Company has all governmental licenses,
authorizations, consents, approvals and permits, including, without
limitation, under all Environmental Laws to own and operate its
properties, to carry on its business as now conducted and as proposed to
be conducted, and to enter into and to carry out the terms of the
Operative Agreements to which it is a party, except where the failure to
have such license, authorization, consent, approval or permit would not
reasonably be expected to have a Material Adverse Effect.
SECTION 2. SUBSIDIARIES.
(a) Schedule II-A correctly lists all of the Company's
Subsidiaries and, as to each Restricted Subsidiary (i) its name, (ii)
the jurisdiction of its incorporation, and (iii) the percentage of its
issued and outstanding shares owned by the Company or another Restricted
Subsidiary (specifying such other Restricted Subsidiary). Each
Restricted Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own
and operate its properties and to carry on its business as now conducted
and as proposed to be conducted. All the outstanding shares of capital
stock of each Restricted Subsidiary are validly issued, fully paid and
nonassessable, and all such shares indicated in Schedule II-2 as owned
by the Company or by any other Restricted Subsidiary are so owned
beneficially and of record by the Company or by such other Restricted
Subsidiary free and clear of any Lien.
(b) Each such Restricted Subsidiary has all governmental
licenses, authorizations, consents, approvals and permits, including,
without limitation, under all Environmental Laws, to own and operate its
properties, to carry on its business as now conducted and as proposed to
be conducted, and to enter into and to carry out the terms of the
Operative Agreements to which it is a party, except where the failure to
have such license, authorization, consent, approval or permit would not
reasonably be expected to have a Material Adverse Effect.
SECTION 3. QUALIFICATION.
Each of the Company and its Restricted Subsidiaries is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction (other than the jurisdiction of its
incorporation) in which the nature of the business conducted or the
property owned or leased makes such qualification necessary and in which
the failure so to qualify would have a Material Adverse Effect.
SECTION 4. BUSINESS; FINANCIAL STATEMENTS.
The Company has delivered to each Purchaser and each Lender
complete and correct copies of (a) the Parent's annual report on Form
10-K for the fiscal year ended March 31, 1995 as filed with the
Commission (the "Form 10-K"), (b) the Parent's quarterly report on Form
10-Q for the quarter ended June 30, 1995 as filed with the Commission
(the "Form 10-Q") and (c) a memorandum dated August, 1995, prepared by
the Company with the assistance of Donaldson, Lufkin & Jenrette for use
in connection with the Company's sale of the Senior Notes and entering
into the Credit Agreement (the "Memorandum"). The Form 10-K and the
Memorandum correctly describe, as of their respective dates, the
business then conducted and proposed to be conducted by the Company and
its Restricted Subsidiaries. There is included in the Form 10-K
consolidated financial statements of the Parent and its consolidated
Subsidiaries for each of the fiscal years ended March 31, 1993 through
1995, accompanied in each case by the opinion thereon of Ernst & Young
LLP. There is included in the Form 10-Q consolidated financial
statements of the Parent and its consolidated Subsidiaries for the
fiscal quarter that ended June 30, 1995. All financial statements
included in the foregoing materials (except as otherwise specified
therein) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods specified and present fairly the
financial position of the corporation or corporations to which they
relate as of the respective dates specified and the results of its or
their operations and cash flows for the respective periods specified.
SECTION 5. CHANGES, ETC.
Since March 31, 1995, (a) there has been no change in the
assets, liabilities or financial condition of the Company or any of its
Restricted Subsidiaries, other than changes which would not have, either
in any case or in the aggregate, a Material Adverse Effect, (b) neither
the business, operations or affairs nor any of the properties or assets
of the Company or any of its Restricted Subsidiaries have been affected
by any occurrence or development (whether or not insured against) which
would have a Material Adverse Effect and (c) other than the payment of
regularly scheduled dividends on the Parent's 7% Cumulative Convertible
Exchangeable Preferred Stock, neither the Company nor any Restricted
Subsidiary has directly or indirectly declared, ordered, paid, made or
set apart any sum or property for any Restricted Payment or agreed to do
so, or made or become obligated to make any Restricted Investment.
SECTION 6. TAX RETURNS AND PAYMENTS.
The Company and its Restricted Subsidiaries have filed (i) all
federal and state income tax returns and (ii) all other material tax
returns, in each case required by law to be filed by them and have paid
all taxes, assessments and other governmental charges levied upon the
Company and its Restricted Subsidiaries or any of their respective
properties, assets, income or franchises which are due and payable,
other than those presently payable without penalty or interest and those
presently being contested in good faith by appropriate proceedings
diligently conducted for which such reserves or other appropriate
provision, if any, as shall be required by GAAP shall have been made.
The Federal income tax liabilities of the Company have been finally
determined by the Internal Revenue Service and satisfied, or the time
for audit has expired, for all fiscal periods through March 31, 1991,
and the Federal income tax liabilities of its Restricted Subsidiaries
have been finally determined by the Internal Revenue Service and
satisfied, or the time for audit has expired, for all fiscal periods
through the respective dates specified in Schedule II-6. The charges,
accruals and reserves on the books of the Company and its Restricted
Subsidiaries in respect of Federal, state and foreign income taxes for
all fiscal periods are adequate in the opinion of the Company, and the
Company knows of no unpaid material assessment for additional Federal,
state or foreign income taxes for any period or any basis for any such
assessment.
SECTION 7. DEBT.
Schedule II-7 correctly describes all secured and unsecured
Debt of the Parent and its Restricted Subsidiaries (including any
intercompany items between (i) the Parent or any of its Restricted
Subsidiaries, on the one hand, and (ii) any Unrestricted Subsidiaries on
the other hand) outstanding, or for which the Company and its Restricted
Subsidiaries have commitments, on the date hereof and identifies the
collateral securing any secured Debt. Neither the Company nor any
Restricted Subsidiary is in default with respect to any Debt or any
instrument or agreement relating thereto, and no instrument or agreement
applicable to or binding on the Company or any Affiliate contains any
restrictions on the incurrence by the Company of additional Debt.
SECTION 8. TITLE TO PROPERTIES; LIENS.
The Company and its Restricted Subsidiaries have good and
sufficient title to their respective properties and assets, including
the properties and assets reflected in the financial statements as of
March 31, 1995 referred to in Section 4 this of Schedule II (except
properties and assets disposed of since such date in the ordinary
course of business), and none of such properties or assets is subject to
any Liens except such as are of the character permitted by Section 12 of
Schedule III. The Company and its Restricted Subsidiaries enjoy
peaceful and undisturbed possession under all leases necessary for the
operation of their respective properties and assets, and all such leases
are valid and subsisting and are in full force and effect. Except to
perfect and protect security interests of the character permitted by
Section 12 of Schedule III, and except as set forth in Schedule II-8, no
presently effective financing statement under the Uniform Commercial
Code which names the Company or any Restricted Subsidiary as debtor or
lessee is on file in any jurisdiction and neither the Company nor any
Restricted Subsidiary has signed any presently effective financing
statement or any presently effective security agreement authorizing any
secured party thereunder to file any such financing statement.
SECTION 9. LITIGATION, ETC.
Except as described in the Form 10-K and the Form 10-Q, there
is no action, proceeding or investigation pending or threatened (or any
basis therefor known to the Company) which questions the validity of any
of the Operative Agreements or any action taken or to be taken pursuant
thereto, or which might result, either in any case or in the aggregate,
in a Material Adverse Effect.
SECTION 10. ENFORCEABILITY; COMPLIANCE WITH
OTHER INSTRUMENTS, ETC.
(a) Each Operative Agreement to which the Company or
any of its Restricted Subsidiaries is a party has been duly authorized
by all action (corporate or otherwise) on the part of the Company and
its Restricted Subsidiaries, as the case may be, and constitutes a
legal, valid and binding obligation of the Company or such Restricted
Subsidiary, as the case may be, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law).
(b) Neither the Company nor any of its Restricted
Subsidiaries is in violation of any term of its certificate or articles
of incorporation or by-laws, and neither the Company nor any of its
Restricted Subsidiaries is in violation of any term of any agreement or
instrument to which it or any of its Affiliates is a party or by which
it or any of its properties is bound or any term of any applicable law,
ordinance, rule or regulation of any governmental authority or any term
of any applicable order, judgment or decree of any court, arbitrator or
governmental authority, in any case the consequences of which violation
would reasonably be expected to have a Material Adverse Effect; the
execution, delivery and performance of the Operative Agreements will not
result in any violation of or be in conflict with or constitute a
default under any such term or result in the creation of (or impose any
obligation on the Company or any of its Restricted Subsidiaries to
create) any Lien upon any of the properties or assets of the Company or
any of its Restricted Subsidiaries pursuant to any such term; and there
is no such term which materially adversely affects or in the future may
(so far as the Company can now foresee) materially adversely affect the
business, operations, affairs, condition (financial or otherwise),
properties or assets of the Company and its Restricted Subsidiaries
taken as a whole.
(c) Except as set forth in Schedule II-10(c), neither the
Company nor any of its Restricted Subsidiaries is in default under or
with respect to any of its contractual obligations, except where any
such defaults would not reasonably be expected to have a Material
Adverse Effect.
(d) No Default or Event of Default has occurred and is
continuing.
SECTION 11. GOVERNMENTAL CONSENT.
No consent, approval or authorization of, or declaration or
filing with, any governmental authority is required for the valid
execution, delivery and performance of any of the Operative Agreements
or the valid offer, issue, sale and delivery of the Senior Notes
pursuant to the Note Agreements.
SECTION 12. PATENTS, TRADEMARKS, AUTHORIZATIONS,
ETC.
The Company and its Restricted Subsidiaries own or possess
rights to use all Intellectual Property necessary for the conduct of
their respective businesses as now conducted, without any known material
conflict with the rights of others. Except as described in Schedule
II-12, no claim has been asserted or is pending by any Person
challenging or questioning the use of any Intellectual Property or the
validity or effectiveness of any such Intellectual Property and the
Company knows of no basis for any such claim. The claims listed on
Schedule II-12 would not reasonably be expected to have a Material
Adverse Effect.
SECTION 13. USE OF PROCEEDS.
The Company will apply the proceeds of the Loans and of the
sale of the Senior Notes, to defease and redeem the Parent's 9-3/8%
Notes due 1996, to repay other existing Debt and for other general
corporate purposes.
SECTION 14. FEDERAL RESERVE REGULATIONS.
Neither the Company nor any of its Affiliates will, directly
or indirectly, use any of the proceeds of the Loans or the sale of the
Senior Notes for the purpose, whether immediate, incidental or ultimate,
of buying a "margin stock" or of maintaining, reducing or retiring any
indebtedness originally incurred to purchase a stock that is currently a
"margin stock", or for any other purpose which might constitute this
transaction a "purpose credit", in each case within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System (12
C.F.R. 207, as amended) or Regulation U of such Board (12 C.F.R. 221, as
amended), or otherwise take or permit to be taken any action which would
involve a violation of such Regulation G or Regulation U or of
Regulation T (12 C.F.R. 220, as amended) or Regulation X (12 C.F.R. 224,
as amended) or any other regulation of such Board. No indebtedness
being reduced or retired out of the proceeds of the Loans or the sale of
the Senior Notes was incurred for the purpose of purchasing or carrying
any such "margin stock", and neither the Company nor any of its
Affiliates owns or has any present intention of acquiring any such
"margin stock".
SECTION 15. INVESTMENT COMPANY ACT.
The Company is not an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 16. PUBLIC UTILITY HOLDING COMPANY ACT.
The Company is not a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", as such terms
are defined in the Public Utility Holding Company Act of 1935, as
amended.
SECTION 17. FEDERAL POWER ACT.
The Company is not a "public utility", as such term is defined
in the Federal Power Act, as amended.
SECTION 18. COMPLIANCE WITH ERISA.
(a) Neither the Company, any of its Subsidiaries nor
any Related Person has breached the fiduciary rules of ERISA or engaged
in any prohibited transaction, and no such breach or prohibited
transaction has occurred, which, in any such case, could result in any
direct or indirect liability (including, without limitation, as a
result of an indemnification obligation) to the Company or any of its
Subsidiaries in connection with a suit for damages or pursuant to
section 409, 502(i) or 502(l) of ERISA or section 4975 of the Code,
which liability, either individually or in the aggregate, has had or
could have a Material Adverse Effect.
(b) Other than for premiums payable in the normal
course that are not past due, none of the Company, any of its
Subsidiaries nor any Related Person has incurred any direct or indirect
material liability (including, without limitation, as a result of an
indemnification obligation) under or pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of the Code relating to employee
benefit plans and no event, transaction or condition has occurred or
exists or, to the Company's best knowledge, is expected to occur or
exist with respect to any Plan that could result in any such liability
to the Company, any of its Subsidiaries or any Related Person. There
has been no reportable event (within the meaning of section 4043(b) of
ERISA) or any other event or condition with respect to any Plan which
presents a risk of the termination of, or the appointment of a trustee
to administer, any such Plan by the PBGC.
(c) Full timely payment has been made of all amounts
which the Company, any of its Subsidiaries or any Related Person is
required under applicable law, the terms of each Plan or any collective
bargaining agreement to have paid as contributions to each such Plan,
and no accumulated funding deficiency (as defined in section 302 of
ERISA or section 412 of the Code), whether or not waived, exists or is
expected to exist with respect to any Plan (other than a Multiemployer
Plan).
(d) Except as disclosed on Schedule II-18(d), the
present value of the benefit liabilities (whether or not vested) under
each Plan, determined as of the end of each such Plan's most recently
ended Plan year on the basis of the actuarial assumptions specified for
funding purposes in each such Plan's actuarial valuation report for such
Plan year, each of which assumptions is reasonable and in compliance
with section 412 of the Code, did not exceed the current value of the
assets of each such Plan allocable to such benefit liabilities, and no
event has occurred since such date that could reasonably be expected to
cause the present value of such benefit liabilities to increase by a
material amount. The terms "present value," "current value," and
"benefit liabilities" shall have the meanings assigned to such terms in
section 3 or 4001 of ERISA, as applicable.
(e) Neither the Company, nor any of its Subsidiaries
nor any Related Person has maintained or contributed, or has had any
obligation to maintain or contribute, within the 6 year period ending on
the date hereof, to any Multiemployer Plan within the meaning of Section
3(37) of ERISA ("Multiemployer Plan"). The aggregate withdrawal
liability of the Company, its Subsidiaries and the Related Persons with
respect to all Plans that are "multiple employer plans" within the
meaning of section 4063 or 4064 of ERISA, does not exceed $1,000,000.
(f) The "expected postretirement benefit obligation"
(determined as of the last day of the Company's most recently ended
fiscal year in accordance with Financial Accounting Standards Board
Statement No. 106, without regard to liabilities attributable to
continuation coverage mandated by section 4980B of the Code) of the
Company and its Subsidiaries did not exceed $1,000,000.
(g) The execution and delivery of the Note Agreements
and the Credit Agreement, the making of the Loans and the issuance and
sale of the Senior Notes thereunder will not involve any transaction
which is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to section 4975 of
the Code.
The Company is not a party in interest with respect to any
employee benefit plan whose name has been disclosed to the Company
pursuant to Section 6.2 of the Note Agreements and securities of the
Company are not employer securities with respect to any such plan.
With respect to each employee benefit plan identified in
writing to the Company in accordance with Section 6.2 of the Note
Agreements, neither the Company nor any "affiliate" thereof (as defined
in section V(c) of Prohibited Transaction Class Exemption 84-14 (the
"QPAM Exemption")) has at this time, and has not exercised at any time
within the preceding year, the authority to appoint or terminate the
"QPAM" (as defined in the QPAM Exemption) identified in accordance with
Section 6.2 of the Note Agreements as manager of any of the assets of
any such plan, or to negotiate the terms of any management agreement
with such QPAM on behalf of any such plan and the Company is not an
"affiliate" (as defined in Section V(c) of the QPAM Exemption) of such
QPAM.
The representation by the Company in the preceding sentences
is made in reliance upon and subject to the accuracy of the
representation of (i) the Purchasers in Section 6 of the Note Agreements
as to the source of the funds to be used by the Purchasers to pay the
purchase price of the Senior Notes to be purchased by the Purchasers as
to the source of funds to be used to make the Loans. As used in this
Section 18, the terms "employee benefit plan" and "party in interest"
have the respective meanings assigned to such terms in section 3 of
ERISA and the term "employer securities" has the meaning assigned to
such term in section 407(d)(1) of ERISA.
SECTION 19. FOREIGN ASSETS CONTROL REGULATIONS,
ETC.
Neither the issue and sale of the Senior Notes or the
borrowing of the Loans by the Company nor its use of the proceeds
thereof as contemplated by the Operative Agreements will violate
regulations administered by the Office of Foreign Assets Control, the
United States Treasury Department including, without limitation, the
Foreign Assets Control Regulations, the Transaction Control Regulations,
the Cuban Assets Control Regulations, the Foreign Funds Control
Regulations, the Iranian Assets Control Regulations, the Iranian
Transaction Regulations, the Iraqi Sanctions Regulations, the Libyan
Sanctions Regulations, or the Soviet Gold Coin Regulations of the United
States Treasury Department (31 C.F.R., Subtitle B, Chapter V as amended)
or the restrictions set forth in Executive Orders No. 8389, 9193, 12543
(Libya), 12544 (Libya), 12801 (Libya), 12722 (Iraq) or 12724 (Iraq),
12775 (Haiti), 12808 (Yugoslavia), 12810 (Yugoslavia) or 12831
(Yugoslavia) or 12799 (Haiti), 12808 Yugoslavia), 12810 (Yugoslavia) or
12831 (Yugoslavia) as amended, of the President of the United States of
America or of any rules or regulations issued thereunder.
SECTION 20. DISCLOSURE.
The Memorandum, the Form 10-K, the Form 10-Q and any other
document, certificate or instrument (other than financial projections)
delivered to the Purchasers and/or the Lenders by or on behalf of the
Company in connection with the transactions contemplated by the
Operative Agreements, taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not misleading. The
Company reasonably believes that the financial projections delivered to
the Purchasers and the Lenders were based upon assumptions that the
Company believes at the time such projections were made to be reasonable
in all material respects. There is no fact (other than matters of a
general economic or political nature which do not affect the Company or
its Restricted Subsidiaries uniquely) known to the Company which
materially adversely affects or in the future may (so far as the Company
can now foresee) materially adversely affect the business, operations,
affairs, condition (financial or otherwise), properties or assets of the
Company and its Restricted Subsidiaries taken as a whole which has not
been set forth in the Operative Agreements or in the other documents,
certificates and instruments delivered to the Purchasers and/or the
Lenders by or on behalf of the Company specifically for use in
connection with the transactions contemplated by the Operative
Agreements.
SECTION 21. SECURITY INTERESTS.
On the Closing Date, the Security Documents will create in
favor of the Collateral Agent, for the benefit of the Lenders and the
Noteholders, a first lien on and a first priority perfected security
interest in the Collateral.
SECTION 22. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in Schedule II-22(a), the
Company and its Subsidiaries: (i) are, and within the period of all
applicable statutes of limitation have been, in compliance with all
applicable Environmental Laws; (ii) hold all Environmental Permits (each
of which is in full force and effect) required for any of their current
or intended operations or for any property owned, leased, or otherwise
operated by any of them; (iii) are, and within the period of all
applicable statutes of limitation have been, in compliance with all of
their Environmental Permits; and (iv) reasonably believe that each of
their Environmental Permits will be renewed effective prior to the
expiration of such Environmental Permit currently in effect, except
where the failure to so comply with such Environmental Laws, hold or
comply with such Environmental Permits or timely renew such
Environmental Permits would not reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed in Schedule II-22(b) or
reserved in the financial statements delivered to the Credit Providers,
there is no judicial, administrative, or arbitral proceeding (including
a notice of violation or alleged violation) under any Environmental Law
to which the Company or any of its Subsidiaries is or, to the knowledge
of the Company or any of its Subsidiaries, will be named as party that
is pending or, to the knowledge of the Company and its Subsidiaries,
threatened, except where such proceeding would not reasonably be
expected to have a Material Adverse Effect.
(c) Except as disclosed in Schedule II-22(c) and except
with respect to such matters as have been fully and finally resolved and
as to which there are no remaining obligations known or reasonably
anticipated, neither the Company nor any of its Subsidiaries has entered
into or agreed to any consent decree, order, or settlement or other
agreement, nor is subject to any judgment, decree, or order or other
agreement, in any judicial, administrative, arbitral, or other forum,
relating to compliance with or liability under any Environmental Law,
except where such obligations, consent decrees, orders, settlement or
other agreements would not reasonably be expected to have a Material
Adverse Effect.
(d) Except as disclosed in Schedule II-22(d), neither
the Company nor any of its Subsidiaries has received any written request
for information, or been notified in writing that it is a potentially
responsible party under: (x) CERCLA or any similar Environmental Law;
or (y) except where such request or notification would not reasonably be
expected to have a Material Adverse Effect, otherwise with respect to
any Hazardous Materials.
(e) Except as disclosed in Schedule II-22(e), Hazardous
Materials have not been transported, disposed of, emitted, discharged,
or otherwise released or threatened to be released, to or at any real
property presently or formerly owned or leased by the Company or any of
its Subsidiaries, or to the knowledge of the Company or any of its
Subsidiaries, any other location, which could reasonably be expected to
(i) give rise to liability of the Company or any Subsidiary under any
applicable Environmental Law, except where such liability would not
reasonably be expected to have a Material Adverse Effect, or (ii)
interfere with the Company's or any Subsidiary's continued operations,
except where such interference would not reasonably be expected to have
a Material Adverse Effect, or (iii) impair the fair saleable value of
any real property owned or leased by the Company or any Subsidiary
except for such impairment as would not reasonably be expected to have a
Material Adverse Effect, or materially impair the fair saleable value of
any real property constituting Collateral.
(f) Except as disclosed in Schedule II-22(f), neither
the Company nor any of its Subsidiaries has assumed or retained, by
contract or operation of law in connection with the sale or transfer of
any assets or business, any liabilities arising from or associated or
otherwise in connection with such assets or business, of any kind, fixed
or contingent, known or unknown, under any applicable Environmental Law,
except where such liabilities would not reasonably be expected to have a
Material Adverse Effect.
(g) The Company reasonably believes that the items on
Schedules 22(a) through 22(f), and all other matters referred to in or
excepted from clauses (a) through (f) of this Section 22, individually
and in the aggregate, will not have a Material Adverse Effect.
SECTION 23. RECENT ASSET SALES.
The Parent and the Company closed transactions pursuant to the
following agreements:
(a) Agreement of Purchase and Sale, dated as of April 11,
1989, by and among the Parent, the Company, and others identified
therein as Vendors, and GSX Chemical Services, Inc., and others
identified therein collectively as Purchaser.
(b) Asset Purchase Agreement, dated as of March 31, 1992, by
and between the Parent, the Company, IT-Tulsa Holdings, Inc. (then known
as IT McGill Pollution Control Systems, Inc.) and others and Koch
Engineering Company, Inc.
(c) Asset Transfer Agreement, dated as of May 2, 1994, by an
among Corning Clinical Laboratories, Inc. (fka MetPath, Inc.), the
Parent and the Company, as amended.
Except as provided in Schedule II-23, the Parent, the Company
and each of their respective Subsidiaries party to any of the Sale
Contracts have performed in all material respects their respective
obligations under the Sale Contracts to which they are a party and the
Sale Contracts are in full force and effect, have not been rescinded or
terminated and (ii) there are no defaults on the part of any of the
parties thereto that, in the case of this clause (ii), would reasonably
be expected to have a Material Adverse Effect, and there are no grounds
for rescission of such contracts.
SCHEDULE III
UNIFORM BUSINESS AND FINANCIAL COVENANTS
OF THE PARENT AND COMPANY
SECTION 1. DEBT.
(a) The Parent will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur,
assume, guarantee, or otherwise be or become directly or indirectly
liable with respect to, any Debt, except:
(i) Debt outstanding on the date hereof and referred to in
Schedule III-1(a), but the Parent and its Restricted Subsidiaries may
not extend, renew or refund any thereof except as otherwise permitted by
this Section l;
(ii) Debt evidenced by the Senior Notes;
(iii) Debt in respect of (a) the Credit Agreement, or (b)
any complete refunding or replacement of the Credit Agreement (without
regard to paragraph (vi) below), in either case so long as the aggregate
principal amount then outstanding thereunder plus the aggregate
principal amount then outstanding under the Senior Notes (the "Combined
Amount") would not exceed the Borrowing Base, provided that if the
Combined Amount thereby would exceed $125,000,000 (assuming the Credit
Agreement is fully drawn), the Company may increase the Combined Amount
in excess of $125,000,000 only in compliance (calculated as if the
Credit Agreement were fully drawn) with paragraph (viii) below;
(iv) Debt in connection with Swaps to the extent permitted
under Section 7;
(v) Debt (not otherwise permitted by this Section 1) in an
amount not exceeding $10,000,000;
(vi) extensions and renewals of any Debt, or any Debt issued
in exchange for, or the proceeds of which are used to refund or
refinance, the Senior Notes or any Debt permitted by paragraphs (i),
(iv), (v) or (viii), provided that (a) the principal amount of the new
Debt so issued does not exceed the principal amount of the Debt
exchanged, refunded or refinanced, (b) the new Debt so issued does not
mature prior to the stated maturity of the Debt exchanged, refunded or
refinanced, (b) the new Debt so issued has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity
of the Debt so exchanged, refunded or refinanced, (iv) the new Debt so
issued has a ranking which is not senior to the Debt so exchanged,
refunded or refinanced, and (v) the new Debt so issued bears an
effective interest rate no greater than 1% above the effective interest
rate of the Debt so exchanged, refunded or refinanced, except for Debt
permitted under paragraph (viii), in which case the Debt so issued bears
an interest rate no greater than the Debt under such paragraph (viii)
being exchanged, refunded or refinanced;
(vii) Debt of the Parent or any Restricted Subsidiary, as
the case may be, owing to the Parent or a Restricted Subsidiary; and
(viii) Debt (not otherwise permitted by this Section 1) if
at the time such Debt is issued (and after giving effect thereto and to
the use of proceeds thereof to repay other Debt) the ratio of (1) Total
Debt (assuming for these purposes that the full amount of the Credit
Agreement (or any refunding or successor Credit Agreement) or such
additional Debt is drawn) to (2) EBITDA for the four consecutive fiscal
quarters ended immediately prior to the incurrence of such Debt, is
equal to or less than the ratios specified below opposite the period in
which such incurrence occurred:
Fiscal Quarter Ending Ratio
--------------------- -----
On or before March 31, 1996 3.75 to 1.00
April 1, 1996 through and
including March 31, 1997 3.50 to 1.00
April 1, 1997 through and
including March 31, 1998 3.30 to 1.00
April 1, 1998 through and
including March 31, 1999 3.20 to 1.00
Thereafter 3.10 to 1.00
For purposes of this Section 1(a), any Person becoming a
Restricted Subsidiary after the date hereof shall be deemed, at the time
it becomes a Restricted Subsidiary, to have incurred all of its then
outstanding Debt and the incurrence of such Debt is therefore subject to
this Section 1(a).
(b) Notwithstanding paragraph (a) of this Section 1, the
Parent will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume, guarantee or
otherwise be or become directly or indirectly liable with respect to any
Priority Debt in an amount exceeding $10,000,000 at any time
outstanding. <PAGE>
SECTION 2. CURRENT RATIO.
The Parent will not, as at the end of any fiscal quarter,
permit the ratio of the then Current Assets to the then Current
Liabilities to be less than the ratios specified below for the fiscal
quarters specified below:
Fiscal Quarter Ending Ratio
--------------------- -----
On or before December 31, 1995
through and including March 31, 1998 1.50:1
Thereafter 1.75:1
SECTION 3. LEVERAGE RATIO.
The Parent will not, as at the end of any fiscal quarter,
permit the ratio of the then Total Debt to the then Consolidated Net
Worth to be greater than the ratios specified below for the fiscal
quarters specified below:
Fiscal Quarter Ending Ratio
--------------------- -----
On or before December 31, 1995
through and including March 31, 1996 1.30:1
On or before April 1, 1996 through
and including March 31, 1998 1.25:1
Thereafter 1.15:1
SECTION 4. CONSOLIDATED NET WORTH.
The Parent will not, as at the end of any fiscal quarter,
permit Consolidated Net Worth to be less than the sum of (a)
$130,000,000, plus (b) 50% of the cumulative Net Income (without
reduction for loss during any fiscal quarter) for all fiscal quarters
ending after June 30, 1995, provided that any net loss incurred by
Quanterra during such fiscal quarters shall be deducted from Net Income,
provided further, that such amounts deducted shall not exceed the lesser
of (x) $10,000,000 in the aggregate or (y) the aggregate amount of
capital contributions made by the Parent or any Restricted Subsidiary to
Quanterra after the Closing Date, plus (c) 50% of (i) the net proceeds
from the sale or issuance of any of the Parent's common stock directly
or through the conversion of convertible debt and (ii) any cash proceeds
received from the exercise of any warrants and rights to purchase the
Parent's common stock.
SECTION 5. DEBT SERVICE COVERAGE RATIO; NET INTEREST
COVERAGE RATIO.
(a) The Parent will not, as at the end of each fiscal quarter
specified below, permit the ratio of (i) EBIT for the period specified
below, to (ii) the sum of (A) Interest Expense for such fiscal quarter,
plus (B) all dividends on Preferred Stock paid during such period, to be
less than the ratios specified below for such period:
Fiscal Quarter Ending Ratio
--------------------- -----
Quarter Ended December 29, 1995 1.50:1.00
Six Months Ended March 29, 1996 1.50:1.00
Nine Months Ended June 28, 1996 1.50:1.00
Four Quarters Ended
September 29, 1996 1.50:1.00
Rolling Four Quarter Periods Ended on
or before December 31, 1996 through
and including March 31, 1997 1.50:1.00
Rolling Four Quarter Periods Ended on
or before June 30, 1997 through
and including March 31, 1998 1.75:1.00
Rolling Four Quarter Periods Ended on
or before June 30, 1998 and thereafter 2.00:1.00
(b) The Parent will not, as at the end of each fiscal quarter
specified below, permit the ratio of (i) EBIT for the period specified
below, to (ii) the sum of (x) Interest Expense net of any interest
income, plus (y) all dividends on Preferred Stock paid during such
period to be less than the ratios specified below for such period:
Fiscal Quarter Ending Ratio
--------------------- -----
Quarter Ended December 29,
1995 1.65 to 1.00
Six Months Ended March 29,
1996 1.65 to 1.00
Nine Months Ended June 28,
1996 2.00 to 1.00
Rolling Four Quarter Periods
Ended September 30, 1996
through and including
March 31, 1997 2.00 to 1.00
Rolling Four Quarter Periods
Ended June 30, 1997 through
and including March 31, 1998 2.15 to 1.00
Rolling Four Quarter Periods
Ended On or before June 30, 1998
through and including
March 31, 2000 2.25 to 1.00
SECTION 6. CAPITAL EXPENDITURES.
(a) The Parent will not, and will not permit any of its
Restricted Subsidiaries to, make any Capital Expenditure, provided that
the Parent and its Restricted Subsidiaries may make aggregate annual
Capital Expenditures in the respective amounts (each an "Annual Amount")
specified below opposite each of the respective periods specified below
(each an "Annual Period") in which such aggregate annual Capital
Expenditures are made:
Annual Period Aggregate Amount
------------- ----------------
April 1, 1995 through March 31, 1996 $26,000,000
April 1, 1996 through March 31, 1997 $28,000,000
April 1, 1997 through March 31, 1998 $28,000,000
April 1, 1998 through March 31, 1999 $24,000,000
April 1, 1999 through March 31, 2000 $20,000,000
Each 12 month period beginning $20,000,000
April 1 thereafter
(b) Any portion of an Annual Amount not used to make Capital
Expenditures for the corresponding Annual Period may be used in the
immediately succeeding Annual Period (a "Carryover Amount") for purposes
of making Capital Expenditures in such Annual Period, provided that the
maximum amount carried over from one Annual Period to the next shall not
exceed $10,000,000. In addition, the Parent and its Restricted
Subsidiaries may make aggregate Capital Expenditures in any Annual
Period in excess of the sum of the Annual Amount and any Carryover
Amount for such Annual Period ("Excess Capital Expenditures") in an
aggregate amount not exceeding 35% of the net proceeds to the Company
from (i) the sale or issuance of any of the Parent's capital stock
(other than Redeemable Stock) directly or through the conversion of
convertible debt and (ii) the exercise of any warrants and rights to
purchase the Parent's capital stock.
SECTION 7. INVESTMENTS, ETC.
The Parent will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make or own any Investment in
any Person except that:
(a) the Parent and its Restricted Subsidiaries may make and
own Investments in
(i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America, or which are
supported by the full faith and credit of the United States of America,
maturing within one year from the date of acquisition thereof;
(ii) marketable direct obligations issued by any
state of the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing within one
year from the date of acquisition thereof so long as such obligations
have a rating of A or better from either Standard & Poor's Ratings Group
or Moody's Investors Service, Inc.;
(iii) commercial paper maturing not more than 270
days from the date of creation thereof or other corporate obligations
maturing within one year from the date of acquisition, in either case so
long as such obligations have a rating of A-2 or better from Standard &
Poor's Ratings Group or a rating of P-2 or better from Moody's Investors
Service, Inc.;
(iv) certificates of deposit maturing within one
year from the date of acquisition thereof issued by (A) any Lender or
(B) commercial banks incorporated under the laws of the United States of
America or any state thereof or the District of Columbia and with
respect to clause (B), each having combined capital and surplus of not
less than $500,000,000 and whose senior unsecured long-term debt has a
rating of AA or better from Standard & Poor's Ratings Group or Aa or
better from Moody's Investors Service, Inc. for so long as such
certificates of deposit are held by the Parent or any of its Restricted
Subsidiaries;
(b) the Parent or the Company may make and own
Investments in any Restricted Subsidiary or any Person which
simultaneously therewith becomes a Restricted Subsidiary, provided that
the Parent or the Company may make and own Investments made on or after
the Closing Date in UPIC only to the extent necessary to satisfy the
minimum capitalization requirements pursuant to the insurance laws of
the State of Vermont;
(c) any Restricted Subsidiary may make an advance or
loan to the Parent or the Company, provided that such Restricted
Subsidiary is a Guarantor Subsidiary or such loan or advance is
subordinated to the Obligations on terms reasonably satisfactory to the
Majority Creditors;
(d) the Parent and its Restricted Subsidiaries may
acquire and own Accounts Receivable of customers incurred in the
ordinary course of business;
(e) the Parent and its Restricted Subsidiaries may make
and permit to be outstanding loans and advances (including interest free
loans) to officers and employees for moving, relocation and travel
expenses, drawing accounts and similar expenditures in the ordinary
course of business not to exceed at any time $1,500,000 outstanding to
any one individual and $4,000,000 outstanding in the aggregate;
(f) the Company may enter into Swaps with a
counter-party whose senior unsecured, long-term debt rating is, at
least, A- from Standard and Poor's Ratings Group or A3 from Moody's
Investors Service, Inc. in order to (i) hedge specific exposure to
foreign currency fluctuations in which the Company has currency
exposure, but in no event in an amount greater than the amount of such
currency exposure, and (ii) to fix interest rate obligations or to lower
interest rate costs, provided that the notional amount thereof does not
exceed the principal amount of the obligations with respect to which
such costs are being fixed or lowered;
(g) the Parent and its Restricted Subsidiaries may make
and own net Investments in Permitted Joint Ventures in an amount not to
exceed $15,000,000 in the aggregate;
(h) the Parent may own the Investment in Quanterra
existing on the Closing Date plus, from and after the Closing Date, an
additional Investment not to exceed $10,000,000;
(i) in addition to Investments permitted by paragraphs
(a) through (h), the Parent and its Restricted Subsidiaries may make and
own Investments in any Unrestricted Subsidiary (other than Quanterra) in
an aggregate amount not to exceed $10,000,000 less Non-Cash Asset Sale
Proceeds;
(j) in addition to the Investments permitted by
paragraphs (a) through (i), the Parent and its Restricted Subsidiaries
may make and own Investments if the Parent would be permitted to make
such Investment pursuant to, and within the limitations specified in,
Section 8 of this Schedule III (any such Investment made pursuant to
this paragraph (j) being referred to as a "Restricted Investment" and
any such investment at all times being valued at the cost thereof to the
Parent or the Restricted Subsidiary making such investment); and
(k) the Parent and its Restricted Subsidiaries may own
Investments in non-cash assets constituting the proceeds of sales of
assets for non-cash consideration permitted in Section 10(b)(v) of this
Schedule III.
Investments shall be valued at cost less any net return of
capital through the sale or liquidation thereof up to the amount of the
original Investment.
SECTION 8. RESTRICTED PAYMENTS, RESTRICTED INVESTMENTS.
The Parent will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly declare, order, pay, make or set
apart any sum or property for any Restricted Payment and the Parent will
not, and will not permit any of its Restricted Subsidiaries to, make or
become obligated to make any Restricted Investment, except that:
(a) the Parent may pay a dividend solely in shares of
capital stock of the Parent;
(b) any Restricted Subsidiary of the Parent may pay a
dividend to the Parent or the Company, provided that dividends paid to
the Parent shall be in an aggregate amount not exceeding (i) the amount
of any Restricted Payment the Parent is permitted to make under this
Section 8 and (ii) any amounts necessary to pay taxes and other
operating costs and expenses incurred by the Parent in the ordinary
course of the operation of its business as conducted on the Closing
Date;
(c) so long as no Default or Event of Default has
occurred and is continuing, the Company may pay Restricted Payments to
the Parent (i) to enable the Parent to pay, and the Parent may pay,
dividends on its 7% Cumulative Convertible Exchangeable Preferred Stock
(or depository shares relating thereto), but only in accordance with the
Certificate of Designation relating thereto (as in effect on the date
hereof) or (ii) to enable the Parent to pay dividends it would be
permitted to pay pursuant to paragraph (d);
(d) the Parent may declare, make or pay a Restricted
Payment and the Parent and its Restricted Subsidiaries may make and own
Restricted Investments, if, immediately after giving effect to any such
proposed action,
(i) no condition or event shall exist which
constitutes a Default or Event of Default, and
(ii) the sum of (x) the aggregate amount of all
sums included in all Restricted Payments directly or indirectly
declared, ordered, paid, made or set apart by the Parent since the date
hereof to and including the date of such action, and (y) the aggregate
amount of all Restricted Investments directly or indirectly made by the
Parent and its Restricted Subsidiaries (or which they have become
obligated to make) does not exceed the following (the "Allowable
Restricted Payment Amount"):
(A) 50% (but in the case of a loss or deficiency
100%) of Net Income for the period (taken as one accounting period)
beginning with the first fiscal quarter ending after Consolidated Net
Worth exceeds $150,000,000 and ending with the end of the last fiscal
quarter immediately preceding the date of such action, plus
(B) the aggregate net cash proceeds of the sale or
issuance of the Parent's capital stock (other than Redeemable Stock)
directly or through the conversion of convertible debt and the proceeds
received from the exercise of warrants and rights to purchase capital
stock; less
(C) the aggregate amount of any Excess Capital
Expenditures since the Closing Date; less
(D) amounts paid to the Parent pursuant to
paragraph (c) of this Section 8 after the Closing Date; or
(e) so long as no Default or Event of Default shall have
occurred and be continuing, if any Noteholder does not accept an offer
of prepayment pursuant to Section 7.3(b) of the Note Agreements, the
Company may utilize amounts that would otherwise have been used for such
prepayment (the "Prepayment Amount") to prepay any of its subordinated
Debt and/or to purchase shares of the Parent's Preferred Stock in an
aggregate amount equal to the Prepayment Amount.
SECTION 9. RESTRICTED SUBSIDIARY STOCK AND DEBT.
The Parent will not, and will not permit any of its Restricted
Subsidiaries to:
(a) directly or indirectly sell, assign, pledge or
otherwise dispose of any Debt of, or any shares of capital stock of (or
warrants, rights or options to acquire capital stock of), any of its
Restricted Subsidiaries, except a sale to a wholly-owned Restricted
Subsidiary and except as permitted by Section 10 of this Schedule III;
(b) permit any of its Restricted Subsidiaries directly
or indirectly to sell, assign, pledge or otherwise dispose of any Debt
of the Parent or any other Restricted Subsidiary, or any shares of
capital stock of (or warrants, rights or options to acquire capital
stock of), any other Restricted Subsidiary except to the Parent or a
wholly-owned Restricted Subsidiary;
(c) permit any of its Restricted Subsidiaries to have
outstanding any shares of Preferred Stock other than shares of Preferred
Stock which are owned by the Parent; or
(d) permit any of its Restricted Subsidiaries directly
or indirectly to issue or sell (or otherwise dispose of) any shares of
its own capital stock (or warrants, rights or options to acquire its own
capital stock) except (i) to the Parent or to a wholly-owned Restricted
Subsidiary, (ii) director's qualifying shares, (iii) in connection with
a merger permitted by Section 10 of this Schedule III, or (iv) shares
issued in connection with a stock dividend or otherwise on a basis such
that the percentage ownership of the Parent in each class of capital
stock in such Restricted Subsidiary after such issuance is, at least,
equal to its percentage ownership in each class of capital stock prior
to such issuance;
provided that, subject to Section 10 of this Schedule III and so long as
no Default or Event of Default has occurred and is continuing, all
shares of all classes of capital stock and all Debt of any Restricted
Subsidiary (other than the Company) owned by the Parent and/or its
Restricted Subsidiaries may be sold as an entirety for Fair Market Value
so long as (A) the Restricted Subsidiary whose capital stock and Debt
are being sold does not own capital stock and/or Debt of any other
Restricted Subsidiary (other than a Restricted Subsidiary all of whose
capital stock and Debt are simultaneously being sold pursuant hereto),
and (B) after giving effect to such sale, any Debt of the Parent or any
Restricted Subsidiary owing to the former Restricted Subsidiary whose
Debt and capital stock are so sold could be incurred by the Parent and
its Restricted Subsidiaries pursuant to Section 1 of this Schedule III.
SECTION 10. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
The Parent will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly,
(a) consolidate with, merge or amalgamate with or into any
other Person or permit any other Person to consolidate with, merge or
amalgamate into it, or sell, lease, lend, assign, transfer, convey or
dispose of all or substantially all of its properties, business or
assets to any other Person, except that:
(i) any such Restricted Subsidiary (other than
the Company) may consolidate with or merge into the Parent or into any
wholly-owned Restricted Subsidiary; and
(ii) any corporation may consolidate with or
merge with or into the Parent or a Restricted Subsidiary if the Parent
or such Restricted Subsidiary, as the case may be, shall be the
surviving corporation and if (x) immediately prior to and after giving
effect to such transaction, no condition or event shall exist which
constitutes a Default or Event of Default, and (y) after giving effect
to such transaction and immediately thereafter the Parent could incur at
least $1 of additional Debt in compliance with Section 1(a)(viii) of
this Schedule III (for purposes of this clause (ii), compliance with
Section 1(a)(viii) of this Schedule III shall be calculated based on the
sum of (A) the Aggregate Outstanding Extensions of Credit and (B) the
outstanding Senior Notes); or
(b) sell, lease, lend, assign, abandon, transfer, convey or
otherwise dispose of any of its properties, business or assets, except
by a Restricted Subsidiary (other than the Company) to the Parent or to
a wholly-owned Restricted Subsidiary (other than UPIC, except to the
extent necessary to meet the minimum capitalization requirements
pursuant to the insurance laws of the State of Vermont) or in a
transaction permitted by paragraph (a) of this Section 10, and except
that:
(i) the Parent and its Restricted Subsidiaries
may sell the Collateral for cash at not less than the Fair Market Value
thereof, provided that (x) immediately prior to and after such sale no
condition or event exists which constitutes a Default or Event of
Default; and (y) either (1) the aggregate net book value of all such
Collateral of the Parent and its Restricted Subsidiaries then proposed
to be disposed of plus the aggregate net book value of all other
Collateral disposed of by the Parent and its Restricted Subsidiaries
during the period from the Closing Date to the date of such proposed
disposition does not exceed $5,000,000, or (2) either (A) within 60 days
after such disposition (I) the net proceeds of such disposition are used
to repay amounts outstanding under the Credit Agreement as provided
therein and/or (II) the Company makes an offer to redeem Senior Notes in
an aggregate principal amount equal to such net proceeds of such
disposition as provided in Section 7.4 of the Note Agreements (Senior
Notes previously acquired or redeemed not to be applied against such
offer to redeem), and/or (B) within 180 days after such disposition such
net proceeds of such disposition are reinvested in Substitute Collateral
which will become Collateral (provided that until such reinvestment such
proceeds are invested in Permitted Investments which are pledged to the
Collateral Agent);
(ii) the Parent and its Restricted Subsidiaries
may sell property or assets which do not constitute Collateral for cash
at not less than the Fair Market Value thereof, provided that (x)
immediately prior to and after such sale no condition or event exists
which constitutes a Default or an Event of Default; (y) the aggregate
net book value of all assets then proposed to be disposed of plus the
aggregate net book value of all other assets disposed of by the Parent
and its Restricted Subsidiaries (including those sold pursuant to clause
(i)(y)(1) of this Section 10) in the 12-month period immediately
preceding the date of such proposed disposition does not exceed 10% of
Consolidated Tangible Assets at the end of the preceding fiscal year;
and (z) the aggregate net book value of all assets then proposed to be
disposed of plus the aggregate net book value of all assets disposed of
by the Parent and its Restricted Subsidiaries (including those sold
pursuant to clause (i)(y)(1) of this Section 10), during the period from
the Closing Date to the date of such proposed disposition does not
exceed 15% of Consolidated Tangible Assets at the end of the preceding
fiscal year (it being understood that the net book value of any assets,
the proceeds of the sale of which are reinvested in assets useful to the
business as provided in paragraph (iii) below, shall not, on and after
the date of such reinvestment, be included in the calculation of 10% and
15% of Consolidated Tangible Assets specified in this clause (ii));
(iii) the Parent and its Restricted Subsidiaries
may, so long as no condition or event exists which constitutes a Default
or Event of Default, sell property or assets which are not Collateral
for cash in excess of the percentage limitations contained in clauses
(y) and (z) of paragraph (ii) above if within 180 days after such
disposition (1) the net proceeds of such disposition are used as
specified in clause (y)(2)(A) of paragraph (i) above or are used to
permanently reduce other senior Debt, or (2) such proceeds are
reinvested in assets useful to the business;
(iv) the Parent or any Restricted Subsidiary
may make sales of assets for cash in order to comply with any applicable
law, provided that the aggregate net book value of all assets so
disposed of by the Parent and its Restricted Subsidiaries shall (I) if
such assets constitute Collateral, be counted against the limitation
contained in clause (y)(1) of paragraph (i) above (or, if such
limitation would be exceeded, the net proceeds of such disposition are
used as provided in clause (y)(2) of such paragraph (i)), and (II) if
such assets do not constitute Collateral, be counted against the
limitations contained in clauses (y) and (z) of paragraph (ii) above
(or, if such limitations would be exceeded, the net proceeds of such
disposition are used as provided in paragraph (iii) above); and
(v) notwithstanding anything to the contrary
contained in this Section 10(b), subject to the dollar and percentage
limitations otherwise contained in paragraphs (i) through (iv) above,
the Parent and its Restricted Subsidiaries may sell property or assets
described in paragraphs (ii) through (iv) above for non-cash
consideration (the "Non-Cash Asset Sale Proceeds") at not less than the
Fair Market Value thereof, provided that (x) no more than $10,000,000 of
such non-cash consideration in the aggregate is held by the Parent and
its Restricted Subsidiaries at any one time, and (y) to the extent that
any such non-cash consideration is subsequently converted to cash, such
cash shall be applied as provided in paragraphs (i), (ii) or (iii) above
whenever unapplied cash proceeds aggregate at least $1,000,000.
SECTION 11. SALE AND LEASEBACK TRANSACTIONS.
The Parent will not, and will not permit any of its Restricted
Subsidiaries to, enter into a Sale and Leaseback Transaction unless
immediately after giving effect thereto (a) no condition or event
exists which constitutes a Default or Event of Default, (b) the property
or asset subject to such transaction is acquired or constructed after
the Closing Date and is not Collateral, (c) such transaction is
consummated within 180 days of the date of acquisition or completion of
construction of the property or asset which is the subject of such
transaction, (d) the assets are sold for cash at not less than Fair
Market Value, and (e) immediately after giving effect to such Sale and
Leaseback Transaction, (i) to the extent applicable, the requirements
under Sections 10 and 12 of this Schedule III are met, and (ii) to the
extent such lease is a Capitalized Lease, the requirements under Section
1 of this Schedule III are met.
Notwithstanding the foregoing, so long as (i) no event or
condition exists which constitutes a Default or Event of Default and
(ii) to the extent applicable, the requirements under Sections 10 and 12
of this Schedule III are met, the Company may enter into a Sale and
Leaseback Transaction of Collateral if such assets are sold at not less
than Fair Market Value and within 30 days after such sale the net
proceeds of such sale are applied to repay or redeem, on a pro rata
basis, amounts outstanding under the Credit Agreement and the Senior
Notes pursuant to the Credit Agreement and Section 7.2 of the Note
Agreements, respectively.
SECTION 12. LIENS.
The Parent will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or permit
to exist any Lien on or with respect to any property or asset (including
any document or instrument in respect of goods or accounts receivable)
of the Parent or any of its Restricted Subsidiaries whether now owned or
held or hereafter acquired, or any income or profits therefrom (whether
or not provision is made for the equal and ratable securing of the
Obligations in accordance with the last sentence of this Section 12),
except the following ("Permitted Liens"):
(a) Liens for taxes, assessments or other governmental
charges arising in the ordinary course of business, the payment of which
is not at the time required by Section 14 of this Schedule III;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary course
of business for sums not yet due or the payment of which is not at the
time required by Section 14 of this Schedule III;
(c) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business (i) in
connection with workers' compensation, unemployment insurance and other
types of social legislation, or (ii) to secure (or to obtain letters of
credit that secure) the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, performance bonds, purchase,
construction or sales contracts and other similar obligations, in each
case not incurred or made in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the deferred purchase
price of property;
(d) any attachment or judgment Lien, unless the judgment
it secures shall not, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have
been discharged within 30 days after the expiration of any such stay;
(e) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances,
in each case incidental to, and not interfering with, in any material
respect, the ordinary conduct of the business of the Parent or any
Restricted Subsidiary;
(f) the Liens securing the Senior Notes and the Credit
Agreement;
(g) Liens on property or assets of any Restricted
Subsidiary (other than the Company) securing Debt of such Restricted
Subsidiary owing to the Parent or to a wholly-owned Restricted
Subsidiary;
(h) Liens existing on the date hereof and securing Debt
of the Parent or any Restricted Subsidiary referred to in Schedule
III-12(h);
(i) any Lien created to secure all or any part of the
purchase price (or construction or improvement cost), or to secure Debt
incurred or assumed to pay, or reimburse the Company for payment of,
all or any part of the purchase price (or construction or improvement
cost) of the acquisition, construction or improvement of property by the
Parent or any of its Restricted Subsidiaries after the Closing Date,
provided that (i) any such Lien shall be confined solely to the item or
items of property so acquired, constructed or improved, (ii) the
principal amount of the Debt secured by any such Lien shall at no time
exceed an amount equal to 100% of the cost to the Parent or such
Restricted Subsidiary of the property so acquired, constructed or
improved, (iii) any such Lien shall be created within 6 months after,
in the case of property, its acquisition or construction or, in the case
of improvements, their completion and (iv) if the Debt secured thereby
is used to reimburse the Company, such reimbursement shall occur within
6 months after the payment thereof by the Company;
(j) any Lien existing on property at the time of its
acquisition by the Parent or a Restricted Subsidiary, or any Lien
existing on property of a Person immediately prior to its being
consolidated with or merged into the Parent or a Restricted Subsidiary
or its becoming a Restricted Subsidiary, or any Lien on the stock of a
Person immediately prior to its becoming a Restricted Subsidiary,
including, in each case, Liens incurred in connection with such
acquisition, provided that (i) no such Lien shall have been created or
assumed in contemplation of such consolidation or merger or such
Person's becoming a Restricted Subsidiary, (ii) each such Lien shall at
all times be confined solely to the item or items of property so
acquired and, if required by the terms of the instrument originally
creating such Lien, other property which is an improvement to or is
acquired for specific use in connection with such acquired property and
(iii) the Debt, if any, secured by such Lien is permitted to be incurred
under Section 1(a)(viii) of this Schedule III (for purposes hereof, such
Debt being deemed to have been incurred at the time of such acquisition,
consolidation or merger);
(k) any Lien renewing, extending or refunding any Lien
permitted by paragraphs (a) through (j) of this Section 12, provided
that the principal amount of Debt secured by such Lien immediately prior
thereto is not increased or the maturity thereof reduced and such Lien
is not extended to other property;
(l) any Lien securing Priority Debt not to exceed
$10,000,000 at any time outstanding; and
(m) the contractual rights arising out of the Company's
service contracts, in favor of a project owner, prime contractor or
general contractor party to such service contract, to use the Company's
equipment subject to such service contract to complete the Company's
performance obligations pursuant to such service contract, to the extent
that such rights do not constitute an ownership interest or security
interest.
In addition to the foregoing, the Parent will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, create,
incur, assume or permit to exist any Lien on or with respect to any
Intellectual Property except for Permitted Liens of the types specified
in paragraph (a) through (g).
If, notwithstanding the prohibition contained in this Section
12, the Parent or any of its Restricted Subsidiaries shall create,
assume or permit to exist any Lien upon any of its property or assets,
or the property or assets of any of its Restricted Subsidiaries, whether
now owned or hereafter acquired, other than those permitted by the
provisions of this Section 12, it will make or cause to be made
effective provision whereby the Obligations will be secured equally and
ratably with any and all other Debt thereby secured so long as such
other Debt shall be so secured, provided that such grant of an equal and
ratable Lien securing the Obligations shall not cure (nor shall it be
deemed to cure) the Default and Event of Default arising from the breach
of the prohibition contained in this Section 12.
SECTION 13. CORPORATE EXISTENCE, ETC.; BUSINESS.
The Parent will at all times preserve and keep in full force
and effect its corporate existence, and rights and franchises deemed
material to its business, and those of each of its Restricted
Subsidiaries, except that the corporate existence of any Restricted
Subsidiary (other than the Company) may be terminated if, in the good
faith judgment of the Board of the Parent, such termination is in the
best interest of the Parent and will not have a Material Adverse Effect.
The Parent will not, and will not permit any of its Restricted
Subsidiaries to, engage, substantially, in any business other than
environmental consulting, engineering, design, construction, remediation
and related businesses.
SECTION 14. PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
(a) The Parent will, and will cause each of its Restricted
Subsidiaries to, pay all Taxes, imposed upon it or any of its properties
or assets or in respect of any of its franchises, business, income or
profits before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials
and supplies) for sums which have become due and payable and which by
law have or might become a Lien upon any of its properties or assets,
provided that no such charge or claim need be paid if being contested in
good faith by appropriate proceedings promptly initiated and diligently
conducted and if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor.
(b) The Parent will not consent to or permit the filing of or
be a party to any consolidated income tax return on behalf of itself or
any of its Subsidiaries with any Person, other than a consolidated
return of the Parent and its own Subsidiaries.
SECTION 15. COMPLIANCE WITH ERISA.
The Parent will not, and will not permit any of its
Subsidiaries to:
(a) (i) engage in any transaction in connection with which
the Parent or any of its Subsidiaries could be subject to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, (ii) terminate or withdraw from any Plan
(other than a Multiemployer Plan) in a manner, or take any other action
with respect to any such Plan (including, without limitation, a
substantial cessation of operations within the meaning of section
4062(e) of ERISA), which could result in any liability of the Parent or
any of its Subsidiaries to the PBGC or to a trustee appointed under
section 4042(b) or (c) of ERISA, (iii) incur any liability to the PBGC
on account of a termination of a Plan under section 4064 of ERISA, (iv)
fail to make full payment when due of all amounts which, under the
provisions of any Plan, applicable law or applicable collective
bargaining agreements, the Parent or any of its Subsidiaries is required
to pay as contributions thereto, or permit to exist any accumulated
funding deficiency, whether or not waived, with respect to any Plan
(other than a Multiemployer Plan) if, in any such case, such penalty or
tax or such liability, or the failure to make such payment, or the
existence of such deficiency, as the case may be, could have a Material
Adverse Effect;
(b) permit their share of the aggregate amount of
unfunded benefit liabilities (within the meaning of Section 4001(a)(18)
of ERISA) under all Plans (other than Multiemployer Plans) subject to
Title IV of ERISA maintained at such time by the Parent, its
Subsidiaries and Related Persons for which the Parent, its
Subsidiaries or Related Persons would be liable to exceed $3,000,000 in
the aggregate;
(c) permit the aggregate complete or partial withdrawal
liability under Title IV of ERISA with respect to all Plans which are
"multiple employer plans" and all Multiemployer Plans incurred by the
Parent, its Subsidiaries and Related Persons to exceed $3,000,000;
(d) create or suffer to exist any unfunded expected
post-retirement benefit obligation (determined in accordance with
Statement No. 106 of the Financial Accounting Standards Board, without
taking into account liabilities attributable to coverage mandated under
Section 4980B of the Code of Section 601 of ERISA) of the Parent and any
of its Subsidiaries in excess of $3,000,000 ;
(e) adopt an amendment to any Plan which would require
the Parent or any of its Subsidiaries to provide security to such Plan
under Section 307 of ERISA or Section 401(a)(29) of the Code or permit
any condition to exist or event to occur which could result in the
imposition of a Lien on the property of the Parent and any of its
Subsidiaries pursuant to Section 412 of the Code or Title IV of ERISA;
or
(f) permit the sum of (i) the aggregate amount of
unfunded benefit liabilities referred to in paragraph (b) of this
Section 15, (ii) the amount of the aggregate incurred withdrawal
liability referred to in paragraph (c) of this Section 15 and (iii) the
amount of the welfare benefit plan liability referred to in paragraph
(d) of this Section 15 to exceed $6,000,000.
For the purposes of paragraphs (c) and (d) of this Section 15, the
amount of the withdrawal liability of the Parent and its Subsidiaries at
any date shall be the aggregate present value of the amount claimed to
have been incurred less any portion thereof as to which the Parent
reasonably believes, after appropriate consideration of possible
adjustments arising under sections 4219 and 4221 of ERISA, it and its
Subsidiaries will have no liability, provided that the Parent shall
obtain prompt written advice from independent actuarial consultants
supporting such determination. The Parent agrees (i) once in each
calendar year, beginning in 1996, to request and obtain a current
statement of withdrawal liability from each Multiemployer Plan and (ii)
to transmit a copy of such statement to each Noteholder and Lender
within 15 days after the Parent receives the same. As used in this
Section 15, the term "accumulated funding deficiency" has the meaning
specified in section 302 of ERISA and section 412 of the Code, and the
terms "present value", "current value" and "accrued benefit" have the
meanings specified in Section 3 of ERISA.
SECTION 16. MAINTENANCE OF PROPERTIES; INSURANCE.
The Parent will maintain or cause to be maintained in good
repair, working order and condition all properties owned, leased or
controlled and used or useful in the business of the Parent and its
Restricted Subsidiaries and from time to time will make or cause to be
made all appropriate repairs, renewals and replacements thereof. In
addition to any insurance required to be obtained pursuant to the
Security Documents, the Parent will maintain or cause to be maintained,
with financially sound and reputable insurers, insurance with respect to
its properties and business and the properties and business of its
Restricted Subsidiaries against loss or damage of the kinds customarily
insured against by corporations or partnerships of established
reputation engaged in the same or similar business and of similar
situation and size, of such types and in such amounts as are
customarily carried under similar circumstances by such other
corporations or partnerships and, in any event, of such types, in such
amounts and with insurers of comparable quality as exist on the date
hereof, provided that in the event of the replacement of any insurer
after the date hereof, such insurer will have a rating of at least "B+"
according to A.M. Best Company's rating of property/casualty insurance
companies. Such insurance may be subject to deductibility clauses
which, in effect, result in self-insurance of certain losses, provided
that such self-insurance (i) shall not at any time be in respect of an
aggregate amount greater than $10,000,000 and (ii) is in accord with the
approved practices of corporations or partnerships of similar situation
and size and adequate insurance reserves are maintained in connection
with such self-insurance.
SECTION 17. RESTRICTIONS AFFECTING SUBSIDIARIES.
Except as expressly provided in the Operative Agreements, the
Parent will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist
or become effective any direct encumbrance or restriction on the ability
of any Restricted Subsidiary of the Parent to (a) pay dividends or make
any other distributions on its capital stock or any other equity
interest or participation in its profits owned by the Parent or any
other Restricted Subsidiary or pay any Debt owed to the Parent or any
other Restricted Subsidiary; (b) make loans or advances to the Parent or
to any other Restricted Subsidiary; or (c) transfer any of its
properties or assets to the Parent or any other Restricted Subsidiary
except such encumbrances or restrictions existing under or by reason of
(i) applicable law, (ii) the Senior Notes, (iii) the Credit Agreement or
any successor or replacement thereof, (iv) any agreements relating to
existing Debt or any other contractual obligation of the Parent or any
Restricted Subsidiary outstanding on the Closing Date and listed on
Schedule III-17 or any amendment, modification, renewal, replacement or
refunding thereof, provided the restrictions contained therein are no
less favorable in all material respects to the Lenders and to the
Noteholders, (v) any agreements relating to Debt of Unrestricted
Subsidiaries which are non-recourse to the Parent or any Restricted
Subsidiary, (vi) any instrument governing Debt of any Person acquired by
the Parent or any of its Restricted Subsidiaries, which instrument was
in effect on the date of such acquisition, provided that (A) the Lenders
and Noteholders have received prior notice of such acquisition and of
such instrument, (B) such provision was not entered into in
contemplation of such acquisition, and (C) the Lenders and Noteholders
have determined in the exercise of their reasonable discretion that such
provision does not adversely affect the Lenders or the Noteholders,
(vii) customary provisions restricting subletting or assignment of any
lease governing a leasehold interest of the Parent or any of its
Restricted Subsidiaries, and (viii) customary restrictions on
dispositions of real property interests found in reciprocal easement
agreements of the Parent or any of its Restricted Subsidiaries.
SECTION 18. TRANSACTIONS WITH AFFILIATES.
The Parent will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, engage in any transaction with
any Affiliate of the Parent, including, without limitation, the
purchase, sale or exchange of assets or the rendering of any service,
except in the ordinary course of business and pursuant to the reasonable
requirements of the Parent's or such Restricted Subsidiary's business
and upon fair and reasonable terms that are no less favorable to the
Parent or such Restricted Subsidiary than those which might be obtained
in an arm's length transaction at the time from Persons which are not
such an Affiliate, provided that transactions pursuant to (i) the IT
Services Agreement, dated as of June 28, 1994, between the Company and
Quanterra, (ii) the Equity Investors' Undertaking, dated June 28, 1994,
among certain investors of Quanterra, including the Company and
Quanterra, as amended by the Amendment and Waiver, dated as of June 28,
1995 (and other Investments permitted by Section 7(h) of this Schedule
III), and (iii) the Shareholders' Agreement, dated as of June 28, 1994,
among Corning Clinical Laboratories, Inc. (formerly known as MetPath
Inc.), a Delaware corporation, the Parent, the Company and Quanterra
shall not be subject to the limitation contained in this Section 18.
SECTION 19. COMPLIANCE WITH LAWS.
The Parent will, and will cause each of its Restricted
Subsidiaries to, comply with all applicable statutes, rules,
regulations, and orders of, and all applicable restrictions imposed by,
the United States of America, foreign countries, states, provinces and
municipalities, and of or by any governmental department, commission,
board, regulatory authority, bureau, agency and instrumentality of the
foregoing, and of or by any court, arbitrator or grand jury, in respect
of the conduct of their respective businesses and the ownership of their
respective properties or business (including, without limitation,
Environmental Laws), except such as are being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted and
if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor and the failure to so
comply would not reasonably be expected to have a Material Adverse
Effect.
SECTION 20. COMPLIANCE WITH OPERATIVE AGREEMENTS.
The Parent will, and will cause each of its Restricted
Subsidiaries to, comply in all respects with each of the terms and
provisions of each Operative Agreement to which each thereof is a party.
SECTION 21. ACCOUNTING: FINANCIAL STATEMENTS
AND OTHER INFORMATION.
The Parent will maintain, and will cause each of its
Restricted Subsidiaries to maintain, a system of accounting established
and administered in accordance with GAAP and will accrue, and will cause
each of its Restricted Subsidiaries to accrue, all such liabilities as
shall be required by GAAP. The Parent will deliver (in duplicate) to
each Noteholder and to each Lender:
(a) within 50 days after the end of each of the first three
quarterly fiscal periods in each fiscal year of the Parent, (x)
consolidated (and, if consolidated Unrestricted Subsidiaries constitute
more than a Substantial Portion, consolidating) balance sheets of the
Parent and its Restricted Subsidiaries and consolidated Subsidiaries and
a balance sheet for each Permitted Joint Venture, as at the end of such
period and (y) the related consolidated (and, as to statements of
income, if appropriate, consolidating) statements of income, cash flow
and stockholders' equity of the Parent and its Restricted Subsidiaries
and consolidated Subsidiaries and statements of income, cash flow and
stockholders' equity of each Permitted Joint Venture, in each case, for
such period and (in the case of the second and third quarterly periods)
for the period from the beginning of the current fiscal year to the end
of such quarterly period, setting forth in each case in comparative form
the consolidated and (where applicable and appropriate) consolidating
figures for the corresponding periods of the previous fiscal year, all
in reasonable detail and certified by the principal financial officer of
the Parent as presenting fairly, in accordance with GAAP applied (except
as specifically set forth therein) on a basis consistent with such prior
fiscal periods, the information contained therein, subject to changes
resulting from normal year-end audit adjustments, which financial
statements will be accompanied by a certificate of the principal
financial officer of the Parent reconciling such financial statements to
financial statements of the Parent and its Restricted Subsidiaries and
Permitted Joint Ventures (for purposes of this Section 21, "Substantial
Portion" shall mean (i) the book value of the assets of consolidated
Unrestricted Subsidiaries exceeds 5% of the consolidated assets of the
Parent and its Restricted Subsidiaries and consolidated Subsidiaries as
of the date of the applicable financial statements or (ii) the net
income of the consolidated Unrestricted Subsidiaries exceeds 5% of the
consolidated net income of the Parent and its Restricted Subsidiaries
and consolidated Subsidiaries as of the date of the applicable financial
statements);
(b) (I) within 95 days after the end of each fiscal year of
the Parent, (x) consolidated (and if consolidated Unrestricted
Subsidiaries constitute more than a Substantial Portion, consolidating)
balance sheets of the Parent and its Restricted Subsidiaries and
consolidated Subsidiaries and a balance sheet for each Permitted
Joint Venture, in each case, as at the end of such year and (y) the
related consolidated (and, as to statements of income, if appropriate,
consolidating) statements of income and cash flow and stockholders'
equity of the Parent and its Restricted Subsidiaries and consolidated
Subsidiaries and statements of income and cash flow and stockholders'
equity of each Permitted Joint Venture, in each case, for such fiscal
year, setting forth in each case in comparative form the consolidated
and (where applicable and appropriate) consolidating figures for the
previous fiscal year, all in reasonable detail and (i) in the case of
such consolidated financial statements, accompanied by a report thereon,
acceptable to the Majority Creditors, of Ernst & Young LLP or other
independent public accountants of recognized national standing selected
by the Parent (and reasonably satisfactory to the Majority Creditors),
which report shall state that such consolidated financial statements
present fairly the financial position of the Parent and its Restricted
Subsidiaries and consolidated Subsidiaries as at the dates indicated and
the results of their operations and changes in their financial position
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise specified in such
report) and that the audit by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards, together with a certificate
from the principal financial officer of the Parent reconciling such
financial statements to the financial statements of the Parent and its
Restricted Subsidiaries and (ii) in the case of such consolidating
financial statements, certified by the principal financial officer of
the Parent as presenting fairly, in accordance with GAAP applied (except
as specifically set forth therein) on a basis consistent with such prior
fiscal periods, the information contained therein, and (II) within 10
days after the meeting of the Board of Directors of the Parent (at which
such projections are reviewed and approved) and in any event within 30
days after the end of each fiscal year, quarterly income statements,
balance sheets and cash flow projections of the Parent and its
Restricted Subsidiaries for the immediately succeeding fiscal year, and
annual cash projections for each successive fiscal year thereafter
through the year 2001;
(c) together with each delivery of financial statements
pursuant to paragraphs (a) and (b) of this Section 21, an Officer's
Certificate (i) stating that the signers have reviewed the terms of the
Operative Agreements and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and
condition of the Parent and its Subsidiaries during the accounting
period covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting period,
and that the signers do not have knowledge of the existence as at the
date of the Officer's Certificate, of any condition or event which
constitutes a Default or Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence
thereof and what action the Parent has taken or is taking or proposes to
take with respect thereto, and (ii) demonstrating in reasonable detail
compliance during and at the end of such accounting period with the
restrictions contained in Sections 1 through 8, 10 and 12 of this
Schedule III;
(d) together with each delivery of consolidated financial
statements pursuant to paragraph (b) of this Section 21 a written
statement by the independent public accountants giving the report
thereon (i) stating that their audit examination has included a review
of the terms of this Agreement, the Operative Agreements and that such
review is sufficient to enable them to make the statement referred to in
clause (iii) of this paragraph (d), (ii) stating whether, in the
course of their audit examination, they obtained knowledge (and whether,
as of the date of such written statement, they have knowledge) of the
existence of any condition or event which constitutes a Default or Event
of Default, and, if so, specifying the nature and period of existence
thereof (it being understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain knowledge of any
Default or Event of Default unless such accountants should have
obtained knowledge thereof in making an audit in accordance with
generally accepted auditing standards or did not make such an audit),
and (iii) stating that they have examined the Officer's Certificates
delivered in connection therewith pursuant to paragraph (c) of this
Section 21 and, on the face of the Officer's Certificates the matters
set forth in such Officer's Certificates pursuant to clause (ii) of such
paragraph (c) have been accurately calculated;
(e) promptly upon receipt thereof, copies of all reports
submitted to the Parent or the Company by independent public accountants
in connection with each annual, interim or special audit of the books of
the Parent or any of its Subsidiaries made by such accountants
including, without limitation, the comment letter submitted by such
accountants to management in connection with their annual audit;
(f) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available by the Parent or by any of its Subsidiaries to its security
holders other than the Parent or another such Subsidiary, of all regular
and periodic reports and all registration statements and prospectuses
filed by the Parent or any of its Subsidiaries with any securities
exchange or with the Commission and of all press releases and other
statements made available by the Parent or any of its Subsidiaries to
the public concerning material developments in the business of the
Parent or any of its Subsidiaries;
(g) promptly upon (and in any event within 3 Business Days
of) any Responsible Officer of the Parent or the Company obtaining
knowledge of any condition or event which constitutes a Default or Event
of Default, or that any holder of a Senior Note or any Lender has given
any notice or taken any other action with respect to a claimed default,
Default or Event of Default or that any Person has given any notice to
the Parent or any of its Affiliates or taken any other action with
respect to a claimed default or event or condition of the type referred
to in paragraph (f) of Schedule IV, an Officer's Certificate describing
the same and the period of existence thereof and what action the Parent
or the Company has taken, is taking and proposes to take with respect
thereto;
(h) promptly upon (and in any event within 3 Business Days
of) any Responsible Officer of the Parent or the Company obtaining
knowledge of the occurrence of any (i) "reportable event", as such term
is defined in Section 4043 of ERISA, (ii) "prohibited transaction", as
such term is defined in Section 4975 of the Code, in connection with any
Plan relating to the Parent or the Company or any trust created
thereunder, or (iii) other event which could lead to the termination
of any Plan, or the complete or partial withdrawal by the Parent or the
Company, and of its Subsidiaries or any Related Person under Section
4063, 4203 or 4205 of ERISA from a Plan which is a "multiple employer
plan" or a Multiemployer Plan, a written notice specifying the nature
thereof, what action the Parent or the Company has taken, is taking and
proposes to take with respect thereto, and any action taken or
threatened by the Internal Revenue Service or the PBGC with respect
thereto;
(i) written notice within 30 days of the Parent or any
Subsidiary obtaining knowledge of any of the following matters; and,
with respect to (i) through (iii) of this Section 21(i), as to which (x)
the Parent or any Subsidiary has received written notice that it is or
may be liable, or (y) such matter would reasonably be expected to have a
Material Adverse Effect:
(i) under CERCLA, or any equivalent or similar
Environmental Law, for the purpose of listing or placing on the National
Priorities List or equivalent or similar state list or registry, the
performance of a preliminary assessment, site inspection, listing site
inspection or Hazardous Ranking System scoring of any real property
previously, presently or hereafter owned, leased, occupied or operated
by the Parent or any of its Subsidiaries, or with respect to which the
Parent or any of its Subsidiaries may otherwise have liability under
CERCLA or any such Environmental Law; or
(ii) the performance of a facility assessment pursuant to
the Resource Conservation and Recovery Act of 1976, as amended from time
to time ("RCRA"), a RCRA facility investigation or a corrective measures
study of any facility previously, presently or hereafter owned, leased,
occupied or operated by the Parent or any of its Subsidiaries, or with
espect to which the Parent or any of its Subsidiaries may otherwise have
liability under RCRA or any such Environmental Law; or
(iii) the proposed or final listing or placement of
any real property presently, previously or hereafter owned, leased,
occupied or operated by the Parent or any of its Subsidiaries on the
Federal National Priorities List or any similar list or registry, or
with respect to which the Parent or any of its Subsidiaries may
otherwise have liability under CERCLA or any equivalent or similar
Environmental Law; or
(iv) the issuance, promulgation or lodging of any
material order, unilaterally or by consent, or any judicial order or
judgment that is directed to the Parent or any of its Subsidiaries or to
which the Parent or any of its Subsidiaries is a party, pursuant to any
Environmental Law or;
(v) the issuance, publication, service or delivery of
any compliance inquiry, letter or notice of violation or noncompliance,
administrative or judicial complaint or citation, or similar
proceedings, actions or determinations by any Governmental Authority or
any entity purporting to act pursuant to any Environmental Law, which
includes allegations or claims of criminal liability or civil penalties
or fines under Environmental Laws, unless the Parent and its
Subsidiaries reasonably determine that the total amount the Parent and
its Subsidiaries will incur in connection with such matter will not
exceed $5,000,000;
the Parent shall, and shall cause each of its Subsidiaries to, deliver
to any Credit Provider any such documents or records regarding the above
matters which may be reasonably requested by any such Credit Provider
and which may be obtained without due expense and without need to
initiate legal proceedings, except if such documents or records were
generated by the Parent or any of its Subsidiaries for litigation and
are protected from discovery, or if such documents or records were
provided to the Parent or any of its Subsidiaries pursuant to a written
confidentiality agreement entered into by the Parent or any of its
Subsidiaries for the purpose of maintaining the confidentiality of
information provided to the Parent or any of its Subsidiaries by any
Person other than an Affiliate;
(j) upon the request of any Noteholder or Lender, such
information as is specified in paragraph (d)(4) of Rule 144A under the
Securities Act, to such Noteholder or Lender or to a prospective
assignee or transferee of the Senior Notes or the Loans who a Noteholder
or Lender informs the Parent or the Company such Noteholder or Lender
reasonably believes is a qualified institutional buyer within the
meaning of Rule 144A, in order to permit compliance by such Noteholder
or Lender with Rule 144A in connection with the assignment or transfer
of such Parent unless, at the time of such request the Parent is subject
to the reporting requirements of Section 13 or 15(d) of the Exchange
Act;
(k) within 20 days of the last Friday of each accounting
month, reporting as to such matters relating to the business as the
Agent or any Noteholder may request, including, without limitation, as
to sales, collections, debit and credit adjustment schedules, accounts
receivable agings and reconciliations, accounts payable aging and
Borrowing Base Certificates, provided that, if an Event of Default shall
have occurred and be continuing, the sales, collection, debit and credit
adjustment schedule reporting shall be delivered on a daily basis and,
in which case, the Borrowing Base will be determined based on such daily
information;
(l) contemporaneous with any notice of any prepayment
sent to either the Lenders or the Noteholders, as the case may be,
pursuant to Section 7.3 or Section 7.4 of the Note Agreements, copies of
such notice to the Lenders or the Noteholders, as the case may be,
together with information as to which Loans or Senior Notes are not
being prepaid;
(m) such other information as any Credit Provider may
reasonably request;
(n) without request or demand, as soon as practicable upon
becoming aware of any material release or alleged or threatened material
release of any Hazardous Material at, upon, under, within or about any
real property owned or leased by the Parent or any of its Subsidiaries
and immediately upon becoming aware that any Governmental Authority or
other Person has made any claim or taken or threatened to take any
action relating to Hazardous Materials on or emanating from any real
property owned or leased by the Parent or any of its Subsidiaries or any
property adjacent to or abutting such real property, and immediately
upon receipt of any notice from any Governmental Authority or from any
tenant or other occupant or from any other Person with respect to any
such alleged presence or release, a notice specifying the facts relating
thereto, the claim made or action taken or threatened and what action
the Parent or its Subsidiary is taking or causing to be taken or
proposes to take or cause to be taken with respect thereto;
(o) quarterly reports setting forth in reasonable detail
information related to the performance bonds of the Company and its
Restricted Subsidiaries then in effect; and
(p) promptly upon (and in any event within 1 Business Day of)
the refusal by the Lenders to make an extension of credit requested by
the Company to be made pursuant to the Credit Agreement, notice to the
Noteholders, together with a description of the reason for the Lenders'
refusal to make the extension of credit.
SECTION 22. INSPECTION.
The Parent will permit any authorized representative
designated by any Credit Provider to visit and inspect any of the
properties of the Parent or any of its Restricted Subsidiaries,
including its and their books of account, and, to the extent reasonable,
to make copies and take extracts therefrom, and to discuss its and their
affairs, finances and accounts with its and their officers and
independent public accountants (and by this provision the Parent
authorizes such accountants to discuss with such representatives the
affairs, finances and accounts of the Parent and its respective
Restricted Subsidiaries, whether or not the Parent is present). Upon
the occurrence and during the continuance of an Event of Default, the
Company shall be responsible for the reasonable out-of-pocket expenses
of the Credit Providers incurred in connection with any such visits,
inspections, copies and discussions.
SECTION 23. LIMITATION ON CHANGES IN FISCAL QUARTERS.
Neither the Parent nor any of its consolidated Subsidiaries or
Restricted Subsidiaries shall permit the fiscal year of the Parent, its
consolidated Subsidiaries or Restricted Subsidiaries to end on a day
other than the last Friday of March.
SECTION 24. COMPLIANCE WITH BORROWING BASE
The Company shall not at any time permit the aggregate amount
of (a) the Aggregate Outstanding Extensions of Credit and (b) the Senior
Notes outstanding to exceed the Borrowing Base applicable at such time.
SECTION 25. ENVIRONMENTAL MATTERS.
The Parent will, and will cause each of its Subsidiaries to:
(a) (i) comply with, and use reasonable best efforts to
ensure compliance by all tenants and subtenants, if any, with,
applicable Environmental Laws; (ii) obtain, comply with and maintain any
and all Environmental Permits necessary or desirable under applicable
Environmental Laws for their respective operations as conducted and as
planned; and (iii) use reasonable best efforts to ensure that all
tenants and subtenants obtain, comply with and maintain any and all
Environmental Permits necessary for their operations as conducted, with
respect to any property leased or subleased from the Parent or any of
its Subsidiaries; the Parent and any Subsidiaries shall be deemed to be
in compliance with an Environmental Law or Environmental Permit for
purposes of this Section III-25(a), provided that, upon learning of any
actual or suspected non-compliance, the Parent and the affected
Subsidiary shall promptly undertake reasonable best efforts to ensure
that full compliance is achieved and, provided further that, in any case
such non-compliance would not reasonably be expected to have a Material
Adverse Effect.
(b) conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal, and other actions
required under applicable Environmental Laws and promptly comply with
all orders and directives of all Governmental Authorities regarding
Environmental Laws, other than such orders and directives which are
being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have
been made therefor and the pendency of any and all such appeals does not
have a Material Adverse Effect; and
(c) upon the reasonable written request of the Required
Noteholders or the Required Lenders, and promptly upon the request of
the Required Noteholders or the Required Lenders if an Event of Default
has occurred and is continuing, permit an environmental consultant whom
the Required Noteholders or the Required Lenders in their respective
discretion designate to perform an environmental assessment (including,
without limitation: reviewing documents; interviewing knowledgeable
persons; and sampling and analyzing soil, air, surface water,
groundwater, and/or other media in or about property owned or leased by
the Parent or any of its Subsidiaries) of any of the operations of, or
any property owned or leased by, the Parent or any of its Subsidiaries.
Such environmental assessment shall be in form, scope, and substance
satisfactory to the Required Noteholders or the Required Lenders, as the
case may be. The Parent and its Subsidiaries shall cooperate fully in
the conduct of such environmental assessment, and the Company shall pay
the costs of such environmental assessment promptly upon written demand
by the Required Noteholders or the Required Lenders, as the case may be.
Pursuant to this Section 25(c), the Required Noteholders or the Required
Lenders shall have the right, but shall not have any duty, to request
and/or obtain such environmental assessment. With respect to any such
environmental assessment that may be commenced, no Lender or Noteholder
shall have any liability for not making the same carefully or properly,
or for not completing the same, nor shall the fact that such inspection
may not have been made by the Required Noteholders or the Required
Lenders, as the case may be, relieve the Parent, the Company or any
Subsidiary of any obligations they may otherwise have under the
Operative Agreements.
SECTION 26. POST-CLOSING DELIVERIES.
(a) Landlord Waivers. The Company shall use its best
efforts to deliver to each Credit Provider and the Collateral Agent
within 30 days after the Closing Date, such landlord waivers and
consents as each Credit Provider and the Collateral Agent shall require
in connection with the Collateral, in form and substance satisfactory to
each Credit Provider and the Collateral Agent.
(b) Surveys. The Company shall deliver to each Credit
Provider and the Collateral Agent, within 30 days after the Closing
Date, as well as the title insurance company issuing the policies
referred to in Section 4.12 of the Note Purchase Agreements (the "Title
Insurance Company"), maps or plats of an as-built survey of the sites of
the property covered by each Mortgage certified to each Credit Provider,
the Collateral Agent and the Title Insurance Company in a manner
satisfactory to each Credit Provider, the Collateral Agent and the Title
Insurance Company, dated a date satisfactory to each Credit Provider,
the Collateral Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to each Credit
Provider, the Collateral Agent and the Title Insurance Company, which
maps or plats and the surveys on which they are based shall be made in
accordance with the Minimum Standard Detail Requirements for Land Title
Surveys jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in 1962,
and, without limiting the generality of the foregoing, there shall be
surveyed and shown on such maps, plats or surveys the following: (i) the
locations on such sites of all the buildings, structures and other
improvements and the established building setback lines; (ii) the lines
of streets abutting the sites and width thereof; (iii) all access and
other easements appurtenant to the sites or necessary or desirable to
use the sites; (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (v) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (vi) if the site is described as being on
a filed map, a legend relating the survey to said map, and the
Company shall deliver such surveys described in this clause (b) in
connection with any property to become subject to a Mortgage after the
Closing Date.
(c) Flood Insurance. If requested by the Collateral Agent or any
Credit Provider, the Company shall provide, within 30 days after the
Closing Date, (i) a policy of flood insurance which (A) covers any
parcel of improved real property which is encumbered by any Mortgage,
(B) is written in an amount not less than the outstanding principal
amount of the indebtedness secured by such Mortgage which is reasonably
allocable to such real property or the maximum limit of coverage made
available with respect to the particular type of property under the
National Flood Insurance Act of 1968, whichever is less, and (C) has a
term ending not earlier than the maturity of the indebtedness secured by
such Mortgage, and the Company shall provide, if applicable, a policy
of flood insurance described in this clause (c) in connection with any
property to become subject to a Mortgage after the Closing Date
(d) Title Insurance. If requested by the Collateral Agent or any
Credit Provider, the Company shall deliver to the Collateral Agent and
each Credit Provider endorsements and affirmative coverage to the title
policies delivered on the Closing Date as the Collateral Agent or any
Credit Provider may request. In addition, with respect to any Mortgages
delivered after the Closing Date, the Company shall deliver in respect
of each parcel of real property covered by such Mortgage, a mortgagee's
title policy (or policies) or a marked up unconditional binder for such
insurance dated the date of the Mortgage. Each title policy shall (i) be
in an amount reasonably satisfactory to the Collateral Agent and each
Credit Provider; (ii) assure that the Mortgage insured thereby creates a
valid first Lien on such parcel free and clear of all defects and
encumbrances, except such as may be approved by the Credit Providers and
the Collateral Agent; (iii) name the Collateral Agent as the insured
thereunder; (iv) be in a form of an ALTA Loan Policy-1970 (Amended
10/17/70); (v) contain such endorsements and affirmative coverage as you
may request; and (vi) be issued by title companies satisfactory to each
Credit Provider and the Collateral Agent (including such title companies
acting as co-insurers or re-insurers, at the Credit Providers' or
Collateral Agent's option). Each Credit Provider and the Collateral
Agent shall have received evidence satisfactory to you that all premiums
in respect of each such policy, and all charges for mortgage recording
taxes, if any, have been paid. Each Credit Provider and the Collateral
Agent shall have also received a copy of all recorded documents referred
to, or listed as exceptions to title in, such title policy or policies.
(e) Intellectual Property Opinion. If the opinion to be delivered
by intellectual property counsel is not delivered on the Closing Date,
the Company shall deliver such opinion, in form and substance
satisfactory to each Credit Provider, within 30 days after the Closing
Date.
(f) Satisfaction of Debt. Within 45 days after the Closing Date,
the Company shall deliver evidence satisfactory to each Credit Provider
that the Parent's outstanding 9-3/8% Notes due 1996 have been paid and
redeemed within 30 days after the Closing Date.
SCHEDULE IV
UNIFORM EVENTS OF DEFAULT
(a) the Company shall default in the payment of any amount
due and payable under any Operative Agreement (other than the Note
Agreements or the Credit Agreement), in any case, for more than 5
Business Days after the same becomes due and payable; or
(b) (i) the Parent shall default in the performance of or
compliance with any term contained in (A) each of Sections 1 through 12,
14, 15, 16 or 18 through 26 of Schedule III to the Note Purchase
Agreements and the Credit Agreement, (B) Section 10 of the Parent
Guarantee, (C) Sections 4.2, 4.3(a), 4.4, 5.2 or 6.4(a) of the Parent
Security Agreement, or (D) Section 5 of the Parent Pledge Agreement,
(ii) the Company shall default in the performance of or compliance with
any term contained in (A) Sections 1 through 12, 14, 15, 16 or 18
through 26 of Schedule III, (B) Sections 4.2, 4.3(a), 4.4, 5.2 or 6.4(a)
of the Company Security Agreement, (C) Sections 2, 3, 4, 6, 7, 9, 10 and
12 of any Company Mortgage or (D) Section 5 of the Company Pledge
Agreement, (iii) Subsidiary Guarantor shall default in the performance
of or compliance with Section 10 contained in the Subsidiaries Guarantee
or (iv) any Subsidiary shall default in the performance of or compliance
with any term contained in Sections 4.2, 4.3(a), 4.4, 5.2 or 6.4(a) of
the Subsidiaries Security Agreement to which it is a party, or
(c) the Company, the Parent, any of its Restricted
Subsidiaries or any Subsidiary Guarantor shall default in the
performance of or compliance with any term contained in any Operative
Agreement (other than the Note Agreements and the Credit Agreement and
other than those referred to above) and such default shall not have been
remedied within 30 days after the earlier of (i) such failure first
became known to any Responsible Officer of the Company, the Parent, such
Restricted Subsidiary or such Subsidiary Guarantor or (ii) written
notice thereof having been received by the Company, the Parent, such
Restricted Subsidiary or such Subsidiary Guarantor from any Credit
Provider; or
(d) any representation or warranty made (or deemed made) by
or on behalf of the Company, the Parent, any of its Restricted
Subsidiaries or any Subsidiary Guarantor in any of the Operative
Agreements (other than the Note Agreements and the Credit Agreement) or
in any instrument furnished in compliance with or in connection with any
Operative Agreement (other than the Note Agreements and the Credit
Agreement) or otherwise made in connection with the transactions
contemplated by the Operative Agreements shall prove to have been false
or incorrect in any material respect on the date as of which made; or
(e) the Company, the Parent, any of its Restricted
Subsidiaries or any Subsidiary Guarantor shall default (as principal or
guarantor or other surety) in the payment of any principal of, or
premium or interest on, (x) the Senior Notes or the Loans, or (y) any
other Debt (other than the Note Agreements and the Credit Agreement)
which is outstanding and in the case of this clause (y), in an aggregate
principal amount of at least $5,000,000, or if any event shall occur or
condition shall exist in respect of any such Senior Notes or Loans or
such other Debt or under any evidence of any such Senior Notes or Loans
or such other Debt or of any mortgage, indenture or other agreement
evidencing, securing or relating thereto the effect of which is to cause
(or to permit one or more Persons, or a trustee or agent on behalf
thereof to cause) such Senior Notes or Loans or other Debt to become due
before its stated maturity or before its regularly scheduled dates of
payment, and such default, event or condition shall continue for more
than the period of grace, if any, specified therein; or
(f) the Company, the Parent, any of its Restricted
Subsidiaries or any Subsidiary Guarantor shall (i) be generally not
paying its debts as they become due, (ii) file, or consent by answer or
otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy or insolvency law of
any jurisdiction, (iii) make an assignment for the benefit of its
creditors, (iv) consent to the appointment of a custodian, receiver,
trustee or other officer with similar powers of itself or of any
substantial part of its property, (v) be adjudicated insolvent or (vi)
take corporate action for the purpose of any of the foregoing; or
(g) a court or governmental authority of competent
jurisdiction shall enter an order appointing, without consent by the
Company, the Parent, any of its Restricted Subsidiaries or any
Subsidiary Guarantor, as the case may be, a custodian, receiver, trustee
or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or if an order for relief shall
be entered in any case or proceeding for liquidation or reorganization
or otherwise to take advantage of any bankruptcy or insolvency law of
any jurisdiction, or ordering the dissolution, winding-up or liquidation
of the Company, the Parent, any of its Restricted Subsidiaries or any
Subsidiary Guarantor, or if any petition for any such relief shall be
filed against the Company, the Parent, any of its Restricted
Subsidiaries or any Subsidiary Guarantor and such petition shall not be
dismissed within 60 days; or
(h) (i) fines and/or penalties relating to Environmental
Laws shall be imposed and/or (ii) a final judgment or judgments shall be
rendered, in any such case against the Company or any of its Restricted
Subsidiaries for the payment of money in excess of $5,000,000 in the
aggregate, and such fines and/or penalties and/or judgments shall not be
paid or otherwise discharged or execution thereon stayed pending appeal
within 30 days after entry thereof (or, if later, when the same becomes
due and payable in accordance with the terms thereof), or, in the event
of such a stay, such fines and/or penalties and/or judgments shall not
be paid or otherwise discharged within 60 days after such stay expires;
or
(i) any authorization, approval, consent, license or
exemption necessary for the enforceability of any of the Operative
Agreements or necessary for the Company, the Parent, any of its
Restricted Subsidiaries or any Subsidiary Guarantor to comply with its
obligations under any Operative Agreement or otherwise necessary to
conduct their respective businesses is revoked, withheld or modified or
fails to remain in full force and effect; or the validity of any
Operative Agreement is contested or denied by any of the Company, the
Parent, any of its Restricted Subsidiaries or any Subsidiary Guarantor;
or any Security Document ceases to constitute a valid and perfected Lien
on the Collateral purported to be subject thereto or the Collateral
Agent does not have, or ceases to have, valid and perfected Liens on any
part of the Collateral securing all of the Obligations, or any such Lien
shall no longer have the effect or priority purported to be created
thereby; or
(j) the Company ceases to be a wholly-owned Subsidiary of the
Parent; or
(k) the Parent Guarantee or any Subsidiaries Guarantee shall
become invalid or unenforceable or shall otherwise cease to be in full
force and effect as a result of any action taken by the Parent or any
Subsidiary Guarantor or the Parent or such Subsidiary Guarantor disavows
its obligations under the Parent Guarantee or Subsidiaries Guarantee.
EXHIBIT 10(ii) 3.
CONFORMED COPY
=======================================================================
MASTER COLLATERAL
AND
INTERCREDITOR AGREEMENT
Dated as of October 24, 1995
Among
Certain Participating Creditors
of
IT CORPORATION
and
CHEMICAL BANK,
as Collateral Agent
=======================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . 2
Section 1.1 Definitions of Certain Terms . . . . . . . . 2
Section 1.2 Terms Generally. . . . . . . . . . . . . . . 5
ARTICLE II
ACTS OF PARTICIPATING CREDITORS;
AMOUNTS OF OBLIGATIONS . . . . . . . . . 5
Section 2.1 Acts of Participating Creditors. . . . . . . 5
Section 2.2 Determination of Amounts of Obligations. . . 5
Section 2.3 Restrictions on Actions. . . . . . . . . . . 6
ARTICLE III
DUTIES OF COLLATERAL AGENT . . . . . . . . 7
Section 3.1 Notices to Participating Creditors . . . . . 7
Section 3.2 Actions Under Security Documents . . . . . . 7
Section 3.3 Meetings; Voting . . . . . . . . . . . . . . 7
Section 3.4 Records. . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
PROCEEDS RECEIVED UNDER SECURITY DOCUMENTS . . . . 8
Section 4.1 Collateral Accounts. . . . . . . . . . . . . 8
Section 4.2 Application of Proceeds. . . . . . . . . . . 10
Section 4.3 Time of Payments . . . . . . . . . . . . . . 12
Section 4.4 Application of Amounts Not Distributable . . 12
Section 4.5 Investment of Amounts in Collateral Accounts 12
Section 4.6 Liquidity Cash Collateral Account. . . . . . 13
ARTICLE V
CONCERNING THE COLLATERAL AGENT . . . . . . . 14
Section 5.1 Appointment of Collateral Agent. . . . . . . 14
Section 5.2 Limitations on Responsibility of Collateral
Agent. . . . . . . . . . . . . . . . . . . . 14
Section 5.3 Reliance by Collateral Agent; Indemnity
Against Liabilities; etc. . . . . . . . . . 15
Section 5.4 Resignation or Removal of the Collateral
Agent. . . . . . . . . . . . . . . . . . . . 16
Section 5.5 Expenses and Indemnification by Borrower . . 16
Section 5.6 Expenses and Indemnification by Lenders and
Purchasers. . . . . . . . . . . . . . . . . 17
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . 17
ARTICLE VII
INTERCREDITOR ARRANGEMENTS . . . . . . . . 18
Section 7.1 Security Interests . . . . . . . . . . . . . 18
Section 7.2 Turnover of Collateral and Certain Payments. 18
Section 7.3 Setoffs. . . . . . . . . . . . . . . . . . . 19
Section 7.4 Amendment of Certain Provisions of the
Credit Agreement and the Purchase Agreement. 20
Section 7.5 Waivers, Amendments and Consents . . . . . . 21
Section 7.6 Release of Collateral and Guarantees . . . . 21
Section 7.7 Additional Collateral. . . . . . . . . . . . 22
Section 7.8 Purchase of Collateral . . . . . . . . . . . 22
Section 7.9 Further Assurances, etc. . . . . . . . . . . 23
Section 7.10 Solicitations . . . . . . . . . . . . . . . 23
ARTICLE VIII
APPROVAL BY THE GRANTORS. . . . . . . . . 23
ARTICLE IX
MISCELLANEOUS. . . . . . . . . . . . 24
Section 9.1 No Individual Action . . . . . . . . . . . . 24
Section 9.2 Successors and Assigns . . . . . . . . . . . 24
Section 9.3 Notices. . . . . . . . . . . . . . . . . . . 25
Section 9.4 Termination. . . . . . . . . . . . . . . . . 25
Section 9.5 APPLICABLE LAW . . . . . . . . . . . . . . . 25
Section 9.6 Modification of Agreement. . . . . . . . . . 25
Section 9.7 Waiver of Rights . . . . . . . . . . . . . . 26
Section 9.8 Severability . . . . . . . . . . . . . . . . 26
Section 9.9 Counterparts . . . . . . . . . . . . . . . . 26
Section 9.10 Section Headings. . . . . . . . . . . . . . 26
Section 9.11 Complete Agreement. . . . . . . . . . . . . 26
MASTER COLLATERAL AND INTERCREDITOR
AGREEMENT dated as of October 24, 1995, among the
Participating Creditors (as defined below), and Chemical Bank, as
collateral agent (the "Collateral Agent") for the Participating
Creditors.
A. The Lenders (such term, and the other capitalized terms
used in this preliminary statement, having the meanings hereinafter
referred to) have agreed to extend credit in an aggregate principal
amount of up to $60,000,000 to IT Corporation, a California corporation
(the "Borrower"), pursuant to the Credit Agreement dated as of October
24, 1995 (as amended and in effect from time to time, the "Credit
Agreement"), among the Borrower, the financial institutions party
thereto as lenders (the "Lenders"), and Chemical Bank, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent", and
together with the Lenders and the Issuing Bank, the "Credit Agreement
Creditors").
B. The Purchasers have agreed to purchase $65,000,000
aggregate principal amount of 8.67% Guaranteed Senior Secured Notes of
the Borrower due October 30, 2003 (the "Senior Notes") pursuant to the
several Note Purchase Agreements dated as of October 24, 1995 (as
amended and in effect from time to time, the "Note Purchase
Agreements"), among the Borrower and the respective financial
institutions party thereto as purchasers (collectively, the
"Purchasers").
C. Pursuant to the Credit Agreement and the Note Purchase
Agreements, (i) the Grantors are entering into certain Security
Documents, under which the Grantors are granting to the Collateral
Agent, for the ratable benefit of the Participating Creditors, a Lien on
and first priority perfected security interest in certain properties and
assets of the Grantors to secure the Obligations, and (ii) the
Guarantors are entering into the Guarantee Agreements under which the
Guarantors are guaranteeing the Obligations.
D. To induce the Purchasers to purchase the Senior Notes
pursuant to the Note Purchase Agreements, each of the Credit Agreement
Creditors is willing to enter into this Agreement. To induce each of
the Lenders and the Issuing Bank to extend credit to the Borrower
pursuant to the Credit Agreement, each of the Purchasers is willing to
enter into this Agreement. In extending credit to the Borrower and in
entering into this Agreement, each of the Credit Agreement Creditors is
relying on the undertakings of each of the Purchasers as set forth
herein. In purchasing the Senior Notes and in entering into this
Agreement, each of the Purchasers is relying on the undertakings of each
of the Credit Agreement Creditors as set forth herein.
E. Each of the Participating Creditors desires to provide
for their respective rights in respect of the Collateral and certain
collections from the Grantors and the Guarantors and to make certain
other commitments and undertakings in connection with the Credit
Agreement, the Note Purchase Agreements, the Security Documents, the
Guarantees, the Obligations incurred by the Grantors and the Guarantors
under such agreements and the rights of the Participating Creditors
under such agreements.
Accordingly, each of the Participating Creditors and the
Collateral Agent hereby agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions of Certain Terms. As used herein,
unless otherwise defined herein, all terms defined in the Schedule I to
the Credit Agreement and the Note Purchase Agreements shall be used
herein as therein defined, and the following terms shall have the
meanings set forth below:
"Actionable Default" shall mean any Event of Default under and
as defined in the Credit Agreement or any Event of Default under and as
defined in any Note Purchase Agreement.
"Collateral Accounts" shall have the meaning set forth in
Section 4.1.
"Credit Agreement Collateral Account" shall have the meaning
set forth in subsection 4.1(a).
"Grantors" shall mean the Parent, the Borrower and each
subsidiary thereof that is or becomes a party to any Security Document.
"Letter of Credit Disbursement" shall mean a payment or
disbursement made by the Issuing Bank pursuant to a Letter of Credit.
"Liquidity Account Triggering Event" shall have the meaning
set forth in Section 4.6.
"Lockbox Collections" shall have the meaning set forth in
Section 4.6.
"L/C Creditors" shall mean the Issuing Bank and the Lenders
that hold participations in Letters of Credit.
"Majority Creditors" shall mean Participating Creditors
holding (a) Voting Credit Agreement Obligations representing a majority
of the Voting Credit Agreement Obligations and (b) Voting Purchase
Agreement Obligations representing a majority of the Voting Purchase
Agreement Obligations, each voting as a separate class, provided that at
any time that (i) an Actionable Default has occurred and is continuing
and the Outstanding Senior Notes have been declared due and payable
pursuant to the acceleration provisions of the Note Purchase Agreements,
(ii) no amount of Loans is outstanding at such time, no amount of
interest payable under the Credit Agreement is unpaid at such time, no
Letters of Credit are outstanding, no fees, premiums, Reimbursement
Obligations, expenses or any other obligations are payable to the Credit
Agreement Creditors or the Administrative Agent under or in connection
with any Operative Agreement, and (iii) no agreement, amendment or
waiver has been entered into pursuant to which the Credit Agreement
Creditors will extend credit under the Credit Agreement, Majority
Creditors shall at such time be determined only by reference to clause
(b) of this definition.
"Notice of Actionable Default" shall mean a notice delivered
by any Participating Creditor or the Borrower to the Collateral Agent,
stating that an Actionable Default has occurred. A Notice of Actionable
Default shall be deemed to have been given when the notice referred to
in the preceding sentence has actually been received by the Collateral
Agent and shall be deemed to have been rescinded when the Collateral
Agent has received satisfactory evidence that such Actionable Default
has been cured or when such Actionable Default has been effectively
waived in accordance with this Agreement. A Notice of Actionable
Default shall be deemed to be outstanding at all times after such Notice
has been given until such time, if any, as such Notice has been
rescinded.
"Obligations" shall mean all obligations defined as
"Obligations" in the Security Documents.
"Outstanding Credit Agreement Obligations" shall mean, at any
time, the sum (without duplication) of (a) the aggregate principal
amount of the loans outstanding at such time and the aggregate amount of
accrued and unpaid interest thereon at such time, (b) the aggregate
amount of all Letter of Credit Disbursements not yet reimbursed to the
L/C Creditors and accrued and unpaid interest thereon at such time, (c)
the aggregate amount of accrued and unpaid fees payable to the Credit
Agreement Creditors, or any of them, under or in connection with the
Credit Agreement, and (d) the aggregate amount of all other monetary
obligations of the Borrower, the Guarantors and the Grantors that are
accrued and owing at such time to the Credit Agreement Creditors or any
of them under the Credit Agreement and the Security Documents, including
indemnification and expense reimbursement obligations and any premium
payable pursuant to subsection 2.4(b) of the Credit Agreement (but
excluding any Unfunded L/C Exposure).
"Outstanding Obligations" shall mean, at any time, the sum of
(a) the Outstanding Credit Agreement Obligations at such time, (b) the
Outstanding Purchase Agreement Obligations at such time and (c) the
Unfunded L/C Exposure at such time.
"Outstanding Premium Obligations" shall mean, at any time, the
sum (without duplication) of (a) the aggregate amount of premium payable
pursuant to subsection 2.4(b) of the Credit Agreement, if any, and (b)
the aggregate Make-Whole Amount payable, if any.
"Outstanding Purchase Agreement Obligations" shall mean, at
any time, the sum (without duplication) of (a) the aggregate outstanding
principal amount of the Outstanding Senior Notes at such time and the
aggregate amount of accrued and unpaid interest thereon at such time and
(b) the aggregate amount of all other monetary obligations of the
Borrower, the Guarantors and the Grantors that are accrued and owing at
such time to the Purchasers or any of them under the Note Purchase
Agreements and the Security Documents, including indemnification and
expense reimbursement obligations and premium, including Make-Whole
Amount, if any.
"Outstanding Senior Notes" shall mean, at any time, the Senior
Notes then outstanding (other than any Senior Notes held by the Parent
or any of its Affiliates).
"Participating Creditors" shall mean the Credit Agreement
Creditors and the Noteholders and their respective successors and
permitted assigns under the Credit Agreement or the Note Purchase
Agreements, as the case may be.
"Payment Default" shall mean any Default arising from a
failure to pay any of the Outstanding Credit Agreement Obligations or
Outstanding Purchase Agreement Obligations when and as due, but only if
such Obligations that have not been paid include principal, interest,
premium, Make-Whole Amount, fees or unreimbursed Letter of Credit
Disbursements.
"Premium Collateral Account" shall have the meaning set forth
in subsection 4.1(a).
"Purchase Agreement Collateral Account" shall have the meaning
set forth in subsection 4.1(a).
"Special Collateral Account" shall have the meaning set forth
in subsection 7.2(b).
"Unfunded L/C Exposure" shall mean, at any time, the aggregate
undrawn amount of all outstanding Letters of Credit at such time.
"Voting Actions" shall mean (a) all amendments and
modifications to, and waivers of any provisions of, and consents granted
under, any of the Security Documents and (b) any action hereunder that
requires the direction or consent of the Majority Creditors as set forth
herein.
"Voting Credit Agreement Obligations" shall mean, at any time,
(a) the aggregate principal amount of the Loans outstanding at such
time, (b) the Unfunded L/C Exposure at such time, (c) the aggregate
amount of unreimbursed Letter of Credit Disbursements at such time and
(d) the aggregate unused amount of the Commitments in effect at such
time.
"Voting Obligations" shall mean the Voting Credit Agreement
Obligations and the Voting Purchase Agreement Obligations.
"Voting Purchase Agreement Obligations" shall mean, at any
time, the aggregate outstanding principal amount of the Outstanding
Senior Notes at such time.
Section 1.2 Terms Generally. The definitions in Section 1.1
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". All references herein to Articles and
Sections shall be deemed references to Articles and Sections of this
Agreement unless the context shall otherwise require. Capitalized terms
used herein and not defined shall have the meanings set forth in the
Uniform Definitions attached as Schedule I hereto.
ARTICLE II
ACTS OF PARTICIPATING CREDITORS;
AMOUNTS OF OBLIGATIONS
Section 2.1 Acts of Participating Creditors. Any request,
demand, authorization, direction, notice, consent, waiver or other
action permitted or required by this Agreement to be given or taken by
the Participating Creditors or any portion thereof (including the
Majority Creditors) may be and, at the request of the Collateral Agent,
shall be embodied in and evidenced by one or more instruments reasonably
satisfactory in form to the Collateral Agent and signed by or on behalf
of such persons and, except as otherwise expressly provided in any such
instrument, any such action shall become effective when such instrument
or instruments shall have been delivered to the Collateral Agent. The
instrument or instruments evidencing any action (and the action embodied
therein and evidenced thereby) are sometimes referred to herein as an
"Act" of the persons signing such instrument or instruments. The
Collateral Agent shall be entitled to rely absolutely upon an Act of any
Participating Creditor if such Act purports to be taken by or on behalf
of such Participating Creditor, and nothing in this Section 2.1 or
elsewhere in this Agreement shall be construed to require any
Participating Creditor to demonstrate that it has been authorized to
take any action which it purports to be taking, the Collateral Agent
being entitled to rely conclusively, and being fully protected in so
relying, on any Act of such Participating Creditor.
Section 2.2 Determination of Amounts of Obligations. Whenever
the Collateral Agent is required to determine the existence or amount of
any of the Outstanding Obligations or Voting Obligations or any portion
thereof or the existence of any Actionable Default or Payment Default
for any purposes of this Agreement, it shall be entitled to make such
determination on the basis of one or more certificates of any
Participating Creditor (with respect to the Obligations owed to such
Participating Creditor) or the Administrative Agent (with respect to the
Obligations owed to the Credit Agreement Creditors, or any of them);
provided, however, that if, notwithstanding the request of the
Collateral Agent, any Participating Creditor shall fail or refuse within
five business days of such request to certify as to the existence or
amount of any Outstanding Obligations or Voting Obligations or any
portion thereof owed to it or the existence of any Actionable Default or
Payment Default, the Collateral Agent shall be entitled to determine
such existence or amount by such method as the Collateral Agent may, in
its sole discretion, determine, including by reliance upon a certificate
of the Borrower; provided, further, however, that, promptly following
determination of any such amount pursuant to the foregoing proviso, the
Collateral Agent shall notify such Participating Creditor of such
determination and thereafter shall correct any error that such
Participating Creditor brings to the attention of the Collateral Agent.
The Collateral Agent may rely conclusively, and shall be fully protected
in so relying, on any determination made by it in accordance with the
provisions of the preceding sentence (or as otherwise directed by a
court of competent jurisdiction) and shall have no liability to the
Borrower or any other Grantor or Guarantor, any Participating Creditor
or any other person as a result of any action taken by the Collateral
Agent based upon such determination prior to receipt of notice of any
error in such determination. Upon any request of the Collateral Agent,
the Borrower will, and by countersigning this Agreement the Borrower
agrees to, as promptly as practicable furnish a certificate to the
Collateral Agent as to the existence or amount of any Outstanding
Obligation or Voting Obligation or as to the existence of any Actionable
Default or Payment Default. For all purposes of this Agreement to the
extent any Outstanding Obligation has been taken into account for
purposes of determining the amount to which any Participating Creditor
is entitled in any distribution hereunder, any guarantee of such
Outstanding Obligation which is itself an Outstanding Obligation shall
not be taken into account for such purpose.
Section 2.3 Restrictions on Actions. Each Participating
Creditor agrees that, as long as any Outstanding Obligations exist, the
provisions of this Agreement shall provide the exclusive method by which
any Participating Creditor may exercise rights and remedies under the
Security Documents. Therefore, each Participating Creditor shall, for
the mutual benefit of all Participating Creditors, except as permitted
under this Agreement:
(a) refrain from taking or filing any action, judicial or
otherwise, to enforce any rights or pursue any remedies under the
Security Documents, except for delivering notices hereunder; and
(b) refrain from exercising any rights or remedies under the
Security Documents which may be exercisable as a result of an Actionable
Default;
provided, however, that the foregoing shall not prevent (i) any
Participating Creditor from imposing a default rate of interest in
accordance with the Credit Agreement or the Note Purchase Agreements, as
applicable, (ii) a Participating Creditor from raising any defenses in
any action in which it has been made a party defendant or has been
joined as a third party, except that the Collateral Agent may direct and
control any defense to the extent directly relating to the Collateral or
any one or more of the Security Documents, subject to and in accordance
with the provisions of this Agreement, or (iii) a Participating Creditor
from exercising its rights and remedies as a general creditor in
accordance with the Operative Agreements and applicable law, including
the right to accelerate any Obligations owed to such Participating
Creditor, commence legal proceedings to collect any Outstanding
Obligation due and payable to such Participating Creditor and remaining
unpaid, to obtain a judgment and to enforce such judgment, in each case
to the same extent as if such Participating Creditor were an unsecured
creditor.
ARTICLE III
DUTIES OF COLLATERAL AGENT
Section 3.1 Notices to Participating Creditors. The
Collateral Agent shall promptly notify each Participating Creditor in
the event it shall receive any Notice of Actionable Default or
certificate rescinding a Notice of Actionable Default or any request by
any party hereto or by the Borrower or any Grantor or Guarantor for any
consent, waiver or amendment with respect hereto or any other Operative
Agreement.
Section 3.2 Actions Under Security Documents. (a) The
Collateral Agent shall not be obligated to take any action under this
Agreement or any of the Security Documents except for the performance of
such duties as are specifically set forth herein or therein. Subject to
the provisions of Article V, the Collateral Agent shall take any action
under or with respect to the Security Documents which is requested by
the Majority Creditors and which is not inconsistent with or contrary to
the provisions of this Agreement or the Operative Agreements. At any
time when a Notice of Actionable Default shall have been given and shall
be outstanding, the Collateral Agent shall, subject in all cases to the
provisions of Article V, exercise or refrain from exercising all such
rights, powers and remedies as shall be available to it under the
Security Documents or any of them in accordance with any written
instructions received from the Majority Creditors. Absent written
instructions from the Majority Creditors at a time when a Notice of
Actionable Default shall be outstanding, the Collateral Agent may take,
but shall have no obligation to take, any and all such actions under the
Security Documents or any of them or otherwise as it shall deem to be in
the best interests of the Participating Creditors in order to maintain
the Collateral and protect and preserve the Collateral and the rights of
the Participating Creditors; provided, however, that, except as provided
in paragraph (b) below or the last sentence of subsection 5.3(d), in the
absence of written instructions (which may relate to the exercise of
specific remedies or to the exercise of remedies in general) from the
Majority Creditors the Collateral Agent shall not foreclose any Lien on
the Collateral or exercise any other remedies available to it under any
Security Documents with respect to the Collateral or any part thereof.
(b) If the Collateral Agent has requested instructions from
the Majority Creditors at a time when a Notice of Actionable Default
shall be outstanding and the Majority Creditors have not responded to
such request within 30 days thereafter, the Collateral Agent may take,
but shall have no obligation to take, any and all actions under the
Security Documents or any of them or otherwise, including foreclosure of
any Lien or any other exercise of remedies, as the Collateral Agent, in
good faith, shall determine to be in the interests of the Participating
Creditors and to maximize both the value of the Collateral and the
present value of the recovery by each of the Participating Creditors on
the Outstanding Obligations; provided, however, that, if instructions
are thereafter received from the Majority Creditors, then the actions of
the Collateral Agent shall be subject to paragraph (a) above.
Section 3.3 Meetings; Voting. (a) When the Collateral Agent
receives a Notice of Actionable Default, the Collateral Agent shall give
prompt notice thereof to the Participating Creditors and, upon the
request of any Participating Creditor, shall schedule a meeting of all
Participating Creditors to be held at the offices of the Collateral
Agent, or another mutually convenient place, provided that any
Participating Creditor may participate by telephone.
(b) Whenever it is necessary to take any Voting Action, the
Collateral Agent shall notify each Participating Creditor entitled to
participate therein of the proposed Voting Action, shall collect
instructions from the Participating Creditors regarding such Voting
Action and shall notify all Participating Creditors entitled to
participate in such Voting Action of the results thereof.
Section 3.4 Records. The Collateral Agent shall maintain
records regarding Voting Actions, determinations of the amounts of the
Outstanding Obligations and Voting Obligations for any purpose, the
allocation of deposits to the Collateral Accounts and any distributions
therefrom. The information contained in such records shall be made
available to any Participating Creditor upon request.
ARTICLE IV
PROCEEDS RECEIVED UNDER SECURITY DOCUMENTS
Section 4.1 Collateral Accounts. (a) The Collateral Agent
shall establish and maintain at its principal banking office in New York
City three accounts into which it shall deposit all amounts received by
it in its capacity as Collateral Agent (and not in any other capacity)
in respect of the Collateral or pursuant to enforcement of the Guarantee
Agreements upon a Payment Default or Actionable Default, including all
monies received on account of any sale of or other realization upon any
of the Collateral pursuant to any Security Document; provided, however,
that notwithstanding any other provision of this Agreement, amounts
which Chemical Bank shall receive on account of the Outstanding Credit
Agreement Obligations in its capacity as Administrative Agent, and not
through enforcement of the Guarantee Agreements upon an Actionable
Default or through the sale of or other realization upon any Collateral
as provided herein and in the Security Documents, shall be distributed
by it in accordance with the provisions of the Credit Agreement and
shall not be deposited in the Collateral Accounts except as set forth in
subsection 4.6. One of the three accounts referred to in the preceding
sentence shall be established and maintained for the benefit of the
Credit Agreement Creditors (the "Credit Agreement Collateral Account"),
the second such account shall be established and maintained for the
benefit of the Purchasers (the "Purchase Agreement Collateral Account")
and the third such account shall be established and maintained for the
benefit of the Credit Agreement Creditors and the Purchasers in respect
of the Outstanding Premium Obligations, if any (the "Premium Collateral
Account"; together with the Credit Agreement Collateral Account and the
Purchase Agreement Collateral Account, the "Collateral Accounts"). All
amounts deposited in the respective Collateral Accounts shall be held by
the Collateral Agent subject to the terms hereof and of the Security
Documents, it being understood that any such amounts may be released to
any Grantor to the extent required by any of the Security Documents (any
amounts so released to be released from the respective Collateral
Accounts pro rata in accordance with the aggregate amounts deposited in
such accounts during the term of this Agreement). The Borrower, the
Grantors and the Guarantors shall have no rights with respect to, and
the Collateral Agent shall have exclusive dominion and control over, the
Collateral Accounts.
(b) Except as set forth in subsections 4.1(d), (e), (f) and
(g), all amounts which the Collateral Agent is required at any time to
deposit in the respective Collateral Accounts pursuant to subsection
4.1(a) shall be first allocated between, and deposited in, the Credit
Agreement Collateral Account and the Purchase Agreement Collateral
Account, pro rata in accordance with the respective aggregate amounts at
such time of (i) the sum of the Outstanding Credit Agreement Obligations
(less any Outstanding Premium Obligations otherwise included therein)
plus the amount of the Unfunded L/C Exposure, in the case of the Credit
Agreement Collateral Account, and (ii) the Outstanding Purchase
Agreement Obligations (less any Make-Whole Amount), in the case of the
Purchase Agreement Collateral Account, and second, after the amount in
each of such Accounts equals such respective aggregate amounts of (i)
the sum of the Outstanding Credit Agreement Obligations (less any
Outstanding Premium Obligations otherwise included therein) plus the
amount of the Unfunded L/C Exposure and (ii) Outstanding Purchase
Agreement Obligations (less any Make-Whole Amount), deposited in the
Premium Collateral Account.
(c) The Collateral Agent shall establish a sub-account in the
Credit Agreement Collateral Account in respect of Outstanding Credit
Agreement Obligations (other than Unfunded L/C Exposure or any
Outstanding Premium Obligations otherwise included therein) and in
respect of each outstanding Letter of Credit. All amounts deposited in
the Credit Agreement Collateral Account shall be allocated between, and
deposited in, the respective sub-accounts therein pro rata in accordance
with (i) the amount of such Outstanding Credit Agreement Obligations
(other than Unfunded L/C Exposure or any Outstanding Premium Obligations
otherwise included therein) and the portions of the Unfunded L/C
Exposure represented by each such Letter of Credit. If, on or after the
date on which any funds are deposited in the Letter of Credit Collateral
Account pursuant to subsection 4.1(b), any Letter of Credit is drawn
upon by the beneficiary thereof, the Collateral Agent shall, upon the
written request of the Administrative Agent, apply any funds in the
sub-account of the Credit Agreement Collateral Account related to such
Letter of Credit to the reimbursement of such Letter of Credit
Disbursement, including any taxes, fees, charges or other costs or
expenses related thereto, as if such reimbursement were being made by
the Borrower pursuant to the Credit Agreement.
(d) At the time of any expiration or cancellation of any
outstanding Letter of Credit, or any other reduction in the amount of
Unfunded L/C Exposure thereunder (other than as a result of a Letter of
Credit Disbursement), the amount of funds in the sub-account with
respect to such Letter of Credit (or, in the case of any partial
reduction in the amount of Unfunded L/C Exposure thereunder, a pro rata
portion of such funds) shall be released from such sub-account, and the
funds so released shall be allocated between, and deposited in, the
Credit Agreement Collateral Account, the Purchase Agreement Collateral
Account and the Premium Collateral Account in the proportions and in the
order set forth in subsection 4.1(b).
(e) The Collateral Agent shall have the right at any time and
from time to time to apply any amounts in the Collateral Accounts to the
payment of the out-of-pocket costs and expenses (including reasonable
attorney fees and disbursements) incurred by the Collateral Agent in
administering and carrying out its obligations under this Agreement or
any of the Security Documents, in exercising or attempting to exercise
any right or remedy hereunder or thereunder or in taking possession of,
protecting, preserving or disposing of any item of Collateral, and all
amounts against or for which the Collateral Agent is to be indemnified
or reimbursed hereunder (excluding any such costs, expenses or amounts
which have theretofore been reimbursed) until all of such costs,
expenses and amounts have been paid in full; provided, however, that any
such application shall be allocated first to the Premium Collateral
Account and then, as between the Credit Agreement Collateral Account
(provided that the aggregate amounts deposited in the Credit Agreement
Collateral Account shall be deemed to have been reduced by any amounts
released from such Account pursuant to subsection 4.1(d)) and the
Purchase Agreement Collateral Account ratably in accordance with the
aggregate amounts deposited in such Accounts during the term of this
Agreement. The Collateral Agent shall reimburse any Credit Agreement
Creditor or Noteholder, as the case may be, prior to applying any
amounts in the Collateral Accounts pursuant to Section 4.2 for any and
all losses with respect to any amounts expended with respect to any
indemnity provided in accordance with subsection 5.3(e) by such Credit
Agreement Creditor or Noteholder by application of funds in the
Collateral Accounts in the same manner as provided in the proviso to the
preceding sentence.
(f) For purposes of determining allocations and deposits of
funds (but not distributions of funds) pursuant to this Section 4.1 and
Section 4.2, any Outstanding Obligations shall be deemed to be reduced
by the amount, if any, held by the Collateral Agent in the Collateral
Account (or sub-account therein) from which distributions are to be paid
in respect of such Outstanding Obligation (it being understood that such
reduction shall be for the purpose of determining allocations and
deposits of funds and shall not reduce actual Outstanding Obligations).
Section 4.2 Application of Proceeds. (a) All amounts
deposited in the Credit Agreement Collateral Account shall be applied in
the following order of priority:
First, to the payment of all Outstanding Credit Agreement
Obligations that consist of costs and expenses incurred in connection
with the enforcement or protection of the rights of the Credit Agreement
Creditors;
Second, to the Credit Agreement Creditors pro rata in
accordance with the aggregate amounts of the Outstanding Credit
Agreement Obligations (less any amount payable pursuant to subsection
2.4(b) of the Credit Agreement) at such time, until the Outstanding
Credit Agreement Obligations (less any amount payable pursuant to
subsection 2.4(b) of the Credit Agreement) shall have been paid in full;
Third, if there is any Unfunded L/C Exposure, to the
sub-accounts in the Credit Agreement Collateral Account in respect of
the related Letters of Credit until the amount on deposit in such
sub-accounts is equal to the aggregate amount of Unfunded L/C Exposure;
Fourth, if there are any Outstanding Purchase Agreement
Obligations, to the Purchase Agreement Collateral Account until the
amount on deposit in such account is equal to the aggregate amount of
such Outstanding Purchase Agreement Obligations;
Fifth, if there are any Outstanding Premium Obligations, to
the Premium Collateral Account; and
Sixth, the balance, if any, to the Borrower or such other
person or persons as shall be entitled thereto.
(b) All amounts deposited in the Purchase Agreement
Collateral Account shall be applied in the following order of priority:
First, to the payment of all Outstanding Purchase Agreement
Obligations that consist of costs and expenses incurred in connection
with the enforcement or protection of the rights of the Purchasers;
Second, to the Purchasers pro rata in accordance with the
aggregate amounts of the Outstanding Purchase Agreement Obligations
(less any Make-Whole Amount) until the Outstanding Purchase Agreement
Obligations (less any Make-Whole Amount) shall have been paid in full;
Third, if there are any Outstanding Credit Agreement
Obligations, or if there is any Unfunded L/C Exposure, or if the Lenders
shall have any remaining commitments to lend in respect of or to
participate in the issuance of Letters of Credit under the Credit
Agreement, to the Credit Agreement Collateral Account and the Letter of
Credit Collateral Account pro rata in accordance with the respective
amounts of such Outstanding Obligations until the amounts on deposit in
such accounts are equal to the respective aggregate amounts of such
Outstanding Credit Agreement Obligations and such Unfunded L/C
Obligations;
Fourth, if there are any Outstanding Premium Obligations, to
the Premium Collateral Account; and
Fifth, the balance, if any, to the Borrower or such other
person or persons as shall be entitled thereto.
(c) All amounts deposited in the Premium Collateral Account
shall be applied in the following order of priority:
First, to the payment of all Outstanding Premium Obligations,
if any, pro rata to the Credit Agreement Creditors and the Purchasers
according to the respective amounts owing to each;
Second, if there are any Outstanding Credit Agreement
Obligations or Outstanding Purchase Agreement Obligations, or if there
is any Unfunded L/C Exposure, or if the Lenders shall have any remaining
commitments to lend or to participate in the issuance of Letters of
Credit under the Credit Agreement, to the Credit Agreement Collateral
Account, the Purchase Agreement Collateral Account and the Letter of
Credit Collateral Account pro rata in accordance with the respective
amounts of such Outstanding Obligations; and
Third, the balance, if any, to the Borrower or such other
person or persons as shall be entitled thereto.
(d) Each Participating Creditor agrees that, notwithstanding
any provision of this Agreement or the other Operative Agreements, any
sums and amounts received by such Participating Creditor pursuant to
this Section shall be applied to the payment of its Outstanding
Obligations as follows: first, to the payment of all Outstanding
Obligations owed to such Participating Creditor, other than principal,
interest and obligations in respect of reimbursement of Letter of Credit
Disbursements; second, to the payment of all Outstanding Obligations
owed to such Participating Creditor consisting of accrued interest;
third, to the payment of all Outstanding Obligations owed to such
Participating Creditor consisting of principal and obligations in
respect of reimbursement of Letter of Credit Disbursements; and
last, to the payment of Outstanding Premium Obligations, if any, owed to
such Participating Creditor.
Section 4.3 Time of Payments. Unless the Collateral Agent
shall have received written instructions from the Majority Creditors as
to the times at which any amounts are to be distributed pursuant to
Section 4.2, all distributions under Section 4.2 shall be made at such
times as the Collateral Agent shall in its reasonable discretion
determine to be as soon as practicable, subject to Section 4.4; provided
that any distributions from the Credit Agreement Collateral Account and
the Purchase Agreement Collateral Account shall be made substantially
simultaneously.
Section 4.4 Application of Amounts Not Distributable. If any
Participating Creditor shall inform the Collateral Agent that there is
no provision under the Credit Agreement or Note Purchase Agreements, as
the case may be, for the application of amounts which are to be
distributed to the parties to such Agreement pursuant to Section 4.2
(whether by virtue of the applicable Outstanding Obligations thereunder
not being then due and payable or otherwise) or for the holding of such
amounts by or on behalf of such parties pending application thereof,
then the Collateral Agent shall invest the amounts in the applicable
Collateral Account in investments permitted by Section 4.5 and shall
hold such amounts, and all proceeds of such investments in such
Collateral Account for the benefit of such Participating Creditor until
such Participating Creditor shall request the delivery thereof by the
Collateral Agent for application against such Outstanding Obligations or
shall notify the Collateral Agent that such Outstanding Obligations have
been paid.
Section 4.5 Investment of Amounts in Collateral Accounts.
Pending the disbursement thereof pursuant to the terms of this
Agreement, all amounts in the Collateral Accounts shall (to the extent
the Collateral Agent deems practical) be invested by the Collateral
Agent in Cash Equivalents. Any reduction in such amounts so invested
resulting from a reduction in the value of such Cash Equivalents shall
not be deemed to reduce any Outstanding Obligations or to give rise to
any claim or right by any party. The Collateral Agent shall, to the
extent that the timing of distributions to be made from any Collateral
Account is known or can be reasonably anticipated, select Cash
Equivalents for such Collateral Account that mature prior to the
anticipated date of any distribution to be made from such Collateral
Account. The Collateral Agent shall not discriminate between Collateral
Accounts in the selection of Cash Equivalents.
Section 4.6 Liquidity Cash Collateral Account.
Notwithstanding any other provisions of this Agreement, the procedures
described in this Section shall apply to any amounts collected in the
lockboxes and related deposit accounts described in subsection 2.6(c) of
the Credit Agreement ("Lockbox Collections") at any time after any of
the following three events (a "Liquidity Account Triggering Event")
shall have occurred: (a) the refusal by the Lenders to make an
extension of credit requested by the Borrower to be made pursuant to the
Credit Agreement because a Default or Event of Default shall have
occurred and be continuing thereunder, (b) receipt by the Collateral
Agent of notice thereof from one or more of the Participating Creditors
given at a time when any Default or Event of Default shall exist under
Section 7(a) of the Credit Agreement, in any case where the
Participating Creditor giving such notice is a Lender, or under Section
9(a) or 9(b) of the Note Purchase Agreements, in any case where the
Participating Creditor giving such notice is a Noteholder or (c) receipt
by the Collateral Agent of notice thereof from the Required Lenders or
the Required Noteholders given at a time when any Actionable Default
shall exist under clause (c) of the Uniform Events of Default by reason
of a failure by the Borrower to comply with Section 1, 2, 3, 4, 5 or 24
of Schedule III of the Uniform Provisions (a "Financial Covenant
Default"). Upon the occurrence of a Liquidity Account Triggering Event
the Collateral Agent shall thereafter deposit all Lockbox Collections
into an account which the Collateral Agent shall establish and maintain
at its principal banking office in New York City (the "Liquidity
Account") for application in accordance with this Section. Accounts on
deposit in the Liquidity Account may be released by the Collateral Agent
only in accordance with the following procedures: (a) the Borrower
shall notify each Participating Creditor by 12:00 noon (New York City
time) on any Business Day of each amount it wishes to have so released,
and (b) unless the Collateral Agent shall have received notice objecting
to such release by 12:00 noon (New York City time) on the Business Day
immediately succeeding the Business Day described in the foregoing
clause (a) from (i) any Participating Creditor (if a Payment Default
with respect to such Participating Creditor then exists) or (ii) the
Required Lenders or the Required Noteholders (if a Financial Covenant
Default then exists), the Collateral Agent shall release such requested
amount to the Borrower (it being understood that the Participating
Creditors giving or withholding such notice as set forth above may do so
in their absolute discretion) provided, however, that no amounts shall
be so released to the Borrower after the fifteenth Business Day
following the date of the Liquidity Account Triggering Event, and
provided, further, that any amounts on deposit in the Liquidity Account
at the earlier of (A) the acceleration of Obligations pursuant to
Section 7 of the Credit Agreement or Section 9 of the Purchase
Agreements or (B) the close of business on such fifteenth Business Day,
shall at such time be transferred by the Collateral Agent to the
Collateral Accounts for application in accordance with the provisions of
Section 4.1 and 4.2. If at any time when any amounts are being held in
the Liquidity Account (i) there shall no longer exist any Payment
Default or Financial Covenant Default which gave rise to such Liquidity
Account Triggering Event, but any other Event of Default shall be
continuing, any and all amounts then held in the Liquidity Account shall
be promptly turned over by the Collateral Agent to the Administrative
Agent for application in accordance with the Credit Agreement or (ii)
there shall no longer exist any such Payment Default or Financial
Covenant Default or any other Event of Default, any and all amounts then
held in the Liquidity Account shall be promptly turned over by the
Collateral Agent to the Borrower. At any time following the occurrence
of the events described in clauses (A) or (B) of the proviso to the
second preceding sentence, Lockbox Collections will (i) during the
continuance of the Payment Default or Financial Covenant Default which
gave rise to the applicable Liquidity Account Triggering Event, be
applied to the Collateral Accounts in accordance with Sections 4.1 and
4.2 and (ii) after such Payment Default or Financial Covenant Default
shall no longer exist (and the Outstanding Obligations have not be
accelerated), be turned over to the Administrative Agent, if any other
Event of Default shall be continuing, or the Borrower, if no Event of
Default is continuing, in accordance with the provisions of the Credit
Agreement. The Borrower, the Grantors and the Guarantors shall have no
rights with respect to, and the Collateral Agent shall have exclusive
dominion and control over, the Liquidity Account or Collateral Accounts.
The Administrative Agent agrees to use its best efforts to notify the
Collateral Agent, and the Collateral Agent agrees in turn to notify each
Participating Creditor, promptly upon the refusal by the Lenders to make
an extension of credit requested (in accordance with the procedures for
such requests set forth in the Credit Agreement) by the Borrower to be
made pursuant to the Credit Agreement.
ARTICLE V
CONCERNING THE COLLATERAL AGENT
Section 5.1 Appointment of Collateral Agent. Each of the
Participating Creditors appoints Chemical Bank to act as Collateral
Agent pursuant to the terms of the Security Documents and this
Agreement, and Chemical Bank agrees to act as Collateral Agent for such
Participating Creditors, pursuant to the terms of the Security Documents
and this Agreement.
Section 5.2 Limitations on Responsibility of Collateral
Agent. The Collateral Agent shall not be responsible in any manner
whatsoever for the correctness of any recitals, statements,
representations or warranties contained herein or in any other Operative
Agreement, except for those expressly made by it herein. The Collateral
Agent makes no representation as to the value or condition of the
Collateral or any part thereof, as to the title of the Grantors to the
Collateral, as to the security afforded by this Agreement or any
Security Document, except as expressly set forth in Article VI, as to
the validity, execution, enforceability, legality or sufficiency of this
Agreement or any other Operative Agreement, and the Collateral Agent
shall incur no liability or responsibility in respect of any such
matters. The Collateral Agent shall not be responsible for insuring the
Collateral, for the payment of taxes, charges, assessments or liens upon
the Collateral or otherwise as to the maintenance of the Collateral,
except as provided in the immediately following sentence when the
Collateral Agent has possession of the Collateral. The Collateral Agent
shall have no duty to the Grantors or to the Participating Creditors as
to any Collateral in its possession or control or in the possession or
control of any agent or nominee of the Collateral Agent or any income
thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto, except the duty to accord such of the
Collateral as may be in its possession substantially the same care as it
accords its own assets and the duty to account for monies received by
it. The Collateral Agent shall not be required to ascertain or inquire
as to the performance by the Borrower or the other Grantors or
Guarantors of any of the covenants or agreements contained herein or in
the other Operative Agreements. Neither the Collateral Agent nor any
officer, agent or representative thereof shall be personally liable for
any action taken or omitted to be taken by any such person in connection
with this Agreement or any other Operative Agreement except for its or
such person's own gross negligence or wilful misconduct. Neither the
Collateral Agent nor any officer, agent or representative thereof shall
be personally liable for any action taken by it or any such person in
accordance with any notice given by the requisite number of
Participating Creditors hereunder entitled to give such notice, even if,
at the time such action is taken by it or any such person, the
Participating Creditors which gave the notice to take such action are no
longer Participating Creditors and if the Collateral Agent has not
received written notice of such fact. The Collateral Agent may execute
any of the powers granted under this Agreement or any of the Security
Documents and perform any duty hereunder or thereunder either directly
or by or through agents or attorneys-in-fact, and shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care and without gross
negligence or wilful misconduct.
Section 5.3 Reliance by Collateral Agent; Indemnity Against
Liabilities; etc.(a) Whenever in the performance of its duties under
this Agreement the Collateral Agent shall deem it necessary or desirable
that a matter be proved or established with respect to any Guarantor or
Grantor or other person in connection with the taking, suffering or
omitting of any action hereunder by the Collateral Agent, such matter
may be conclusively deemed to be proved or established by a certificate
purporting to be executed by an officer of such person, and the
Collateral Agent shall have no liability with respect to any action
taken, suffered or omitted in reliance thereon.
(b) The Collateral Agent may consult with counsel and shall
be fully protected in taking any action hereunder in accordance with any
advice of such counsel. The Collateral Agent shall have the right but
not the obligation at any time to seek instructions concerning the
administration of this Agreement, the duties created hereunder or the
Collateral from any court of competent jurisdiction.
(c) The Collateral Agent shall be fully protected in relying
upon any resolution, statement, certificate, instrument, opinion,
report, notice, request, consent, order or other paper or document which
it believes to be genuine and to have been signed or presented by the
proper party or parties. In the absence of its gross negligence or
wilful misconduct or actual notice to the contrary, the Collateral Agent
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificate or
opinions furnished to the Collateral Agent in connection with this
Agreement.
(d) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect notice or knowledge of the occurrence
of any Payment Default or Actionable Default unless and until the
Collateral Agent shall have received a Notice of Actionable Default or a
notice from the Borrower indicating that an Actionable Default has
occurred. The Collateral Agent shall have no obligation whatsoever
either prior to or after receiving such a notice to inquire whether a
Payment Default or an Actionable Default has, in fact, occurred and
shall be entitled to rely conclusively, and shall be fully protected in
so relying, on any notice so furnished to it. The Collateral Agent may
(but shall not be obligated to) take action hereunder on the basis of an
Actionable Default of the type specified in clause (g) or (h) of the
Uniform Events of Default (Schedule IV to each of the Credit Agreement
and the Note Purchase Agreements) whether or not the Collateral Agent
has received any Notice of Actionable Default stating that such
Actionable Default has occurred; provided that any such action taken by
the Collateral Agent without direction from the Majority Creditors shall
be limited to actions that the Collateral Agent determines to be
necessary to protect and preserve the Collateral and the rights of the
Participating Creditors.
(e) If the Collateral Agent has been requested to take any
specific action pursuant to any provision of this Agreement, the
Collateral Agent shall not be under any obligation to exercise any of
the rights or powers vested in it by this Agreement in the manner so
requested unless it shall have been provided indemnity satisfactory to
it against the costs, expenses and liabilities which may be incurred by
it in compliance with such request or direction.
Section 5.4 Resignation or Removal of the Collateral Agent.
The Collateral Agent may at any time (a) by giving 30 days' prior
written notice to the Borrower and each Participating Creditor, resign
and be discharged from the responsibilities hereby created, or (b) if
the Majority Creditors conclude that the Collateral Agent shall have
acted under and in respect of this Agreement in a manner which
constitutes wilful misconduct or gross negligence, be removed from its
position as Collateral Agent by the Majority Creditors, such resignation
or removal to become effective upon the earlier of (i) the acceptance of
the appointment of a successor pursuant to the next sentence of, this
Section or (ii) the appointment of a successor by the Majority Creditors
and the acceptance of such appointment by such successor. If no
successor shall be appointed and approved pursuant to clause (ii) above
within 30 days after the date of any such resignation, the Collateral
Agent may apply to any court of competent jurisdiction to appoint a
successor to act until a successor shall have been appointed by the
Majority Creditors as above provided or may, on behalf of the
Participating Creditors, appoint a successor Collateral Agent. Any
successor Collateral Agent shall be a bank organized under the laws of
the United States or any State thereof, with an office in New York, New
York, having a combined capital and surplus of at least $500,000,000
that is authorized to perform the functions of the Collateral Agent
hereunder.
Section 5.5 Expenses and Indemnification by Borrower. By
countersigning this Agreement, the Borrower agrees (i) to reimburse the
Collateral Agent, on demand, for any expenses incurred by the Collateral
Agent, including counsel fees and compensation of agents, arising out
of, in any way connected with, or as a result of, the execution or
delivery of this Agreement or any Support Document or any agreement or
instrument contemplated hereby or thereby or the performance by the
parties hereto or thereto of their respective obligations hereunder or
thereunder or in connection with the enforcement or protection of the
rights of the Collateral Agent and the Participating Creditors under
this Agreement and the Security Documents and (ii) to indemnify and hold
harmless the Collateral Agent and its directors, officers, employees and
agents, on demand, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Collateral Agent
in its capacity as the Collateral Agent or any of them in any way
relating to or arising out of this Agreement or any Support Document or
any action taken or omitted by them under this Agreement or any Support
Document; provided that the Borrower shall not be liable to the
Collateral Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements resulting from the gross negligence or wilful
misconduct of the Collateral Agent or any of its directors, officers,
employees or agents.
Section 5.6 Expenses and Indemnification by Lenders and
Purchasers. Each Lender and Purchaser agrees (i) to reimburse the
Collateral Agent, on demand, in the amount of its pro rata share (in the
case of Credit Agreement Creditors, based on the amount of its
Outstanding Credit Agreement Obligations owed to it and, in the case of
Noteholders, based on the amount of its Outstanding Purchase Agreement
Obligations owed to it), for any expenses referred to in Section 5.5
which shall not have been reimbursed by the Borrower or any other
Grantor or Guarantor or paid from the proceeds of Collateral as provided
herein and (ii) to indemnify and hold harmless the Collateral Agent and
its directors, officers, employees and agents, on demand, in the amount
of such pro rata share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements referred to in Section 5.5, to the
extent the same shall not have been reimbursed by the Borrower or any
other Grantor or any Guarantor or paid from the proceeds of Collateral
as provided herein; provided that no Lender or Purchaser shall be liable
to the Collateral Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or
wilful misconduct of the Collateral Agent or any of its directors,
officers, employees or agents.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Collateral Agent and each Participating Creditor
represents and warrants to the other parties hereto that (a) the
execution, delivery and performance of this Agreement (i) have been duly
authorized by all requisite corporate action on its part and (ii) will
not contravene any provision of its charter or by-laws or any order of
any court or other Governmental Authority having applicability to it or
any applicable law, and (b) this Agreement has been duly executed and
delivered by it and constitutes its legal, valid, enforceable and
binding obligation.
ARTICLE VII
INTERCREDITOR ARRANGEMENTS
Section 7.1 Security Interests. The Collateral Agent and
each of the Participating Creditors hereby agrees that the Liens and
security interests granted to the Collateral Agent under the Security
Documents, and the guarantees provided under the Guarantee Agreements,
shall be treated, as among the Participating Creditors, as having equal
priority and shall at all times be shared by the Participating Creditors
as provided herein. Any and all amounts required to be provided as cash
collateral for Unfunded L/C Exposure pursuant to subsection 2.6(b) and
Section 7 of the Credit Agreement shall be deemed to be Collateral for
purposes of this Agreement.
Section 7.2 Turnover of Collateral and Certain Payments. (a)
If any Participating Creditor (i) acquires custody, control or
possession of any Collateral or proceeds therefrom or (ii) receives any
payment, including pursuant to enforcement of the Guarantees, in each
case at any time that an Actionable Default, or, at any time after a
Liquidity Account Triggering Event or any other Payment Default, has
occurred and is continuing, other than pursuant to the terms of this
Agreement, then such Participating Creditor shall in each such case
promptly cause such Collateral, proceeds or payments to be delivered to
or put in the custody, possession or control of the Collateral Agent for
disposition or distribution in accordance with the provisions of
Sections 4.1 and 4.2. Until such time as the provisions of the
immediately preceding sentence have been complied with, such
Participating Creditor shall be deemed to hold such Collateral, proceeds
or payments in trust for the parties entitled thereto hereunder.
Notwithstanding the foregoing, subject to paragraph (b) below, no
Participating Creditor shall be required to deliver to or put in the
custody, possession or control of the Collateral Agent or to hold in
trust as specified in the preceding sentence any amount of any
Outstanding Obligation paid or prepaid by the Borrower to it (and not
obtained by it through any sale of or other realization upon any
Collateral or by enforcement of its rights under the Guarantee
Agreements as provided herein and in the Security Documents) in
accordance with the terms of the Credit Agreement or the Note Purchase
Agreements, as applicable.
(b) In the event that any Payment Default occurs and
continues unremedied for three Business Days, the Collateral Agent
shall, promptly following receipt of notice or actual knowledge thereof,
notify all Participating Creditors of (i) such Payment Default, (ii)
the amount and nature thereof, (iii) the date on which the payment was
due that is the subject of such Payment Default and (iv) their
obligations under this paragraph. Each Participating Creditor agrees
that, in the event that it receives any payment (other than pursuant to
this Agreement) in respect of its Outstanding Obligations at any time
that any other Participating Creditor's Outstanding Obligations, or any
part thereof, are due and payable but have not been paid (any such
payment so received being referred to as a "Non-Pro-Rata Payment"),
then, promptly following receipt of any notice pursuant to the preceding
sentence (and thereafter promptly following any receipt of a
Non-Pro-Rata Payment), such Participating Creditor will deliver such
payment to the Collateral Agent for deposit in a special collateral
account (the "Special Collateral Account"), and such amounts shall be
retained in the Special Collateral Account until distributed as
described below. To the extent that receipt of such Non-Pro-Rata
Payment reduced such Participating Creditor's Outstanding Obligations,
such Outstanding Obligations shall be deemed to be re-adjusted to
reflect such delivery thereof to the Collateral Agent in accordance with
the foregoing. In the event that all Payment Defaults are cured, the
Collateral Agent shall return all amounts on deposit in the Special
Collateral Account to the Participating Creditors from which such
amounts were received, together with any earnings thereon from the
investment of such amounts in accordance with Section 4.5. In the event
that, prior to the return of amounts on deposit in the Special
Collateral Account to the applicable Participating Creditors as provided
herein, all the Outstanding Credit Agreement Obligations and Outstanding
Purchase Agreement Obligations are declared due and payable as provided
in the Credit Agreement and the Note Purchase Agreements, all amounts on
deposit in the Special Collateral Account shall be allocated and applied
as Collateral pursuant to Article IV. In the event that any Payment
Default occurs and remains continuing for more than 30 days without all
the Outstanding Credit Agreement Obligations and Outstanding Purchase
Agreement Obligations having been declared due and payable, then the
Collateral Agent shall apply the amounts then on deposit in the Special
Collateral Account to pay (and shall continue to apply Non-Pro-Rata
Payments thereafter received by it to pay) Outstanding Obligations that
are then due and payable pro rata in accordance with the amounts so due
and payable; provided that the foregoing shall not relieve any
Participating Creditor from its obligation to deliver to the Collateral
Agent any Non-Pro-Rata Payment received by it while any Payment Default
remains continuing. By its execution hereof, the Borrower agrees that
any amounts paid to a Participating Creditor in respect of any
Outstanding Obligation shall not relieve the Borrower from liability in
respect of such Outstanding Obligation to the extent that such amounts
are distributed to other Participating Creditors pursuant to this
paragraph.
Section 7.3 Setoffs. If any Participating Creditor exercises
any right of setoff or similar right with respect to any assets (whether
or not such assets shall constitute Collateral) of the Borrower or any
Guarantor or Grantor for payment of any Outstanding Obligations at any
time that an Actionable Default, or, at any time after a Liquidity
Account Triggering Event or any other Payment Default, has occurred and
is continuing, the amounts so set off shall constitute Collateral for
the purposes of this Agreement and such Participating Creditor shall
promptly cause such amounts to be delivered or put in the custody,
possession or control of the Collateral Agent for disposition or
distribution in accordance with the provisions of Sections 4.1 and 4.2.
Until such time as the provisions of the immediately preceding sentence
have been complied with, such Participating Creditor shall be deemed to
hold such Collateral in trust for the parties hereto entitled thereto
hereunder. The foregoing provisions shall not be deemed to apply to
amounts set off or deducted by the Collateral Agent in accordance with
subsection 4.1(e) or the provisions of the Security Documents in respect
of costs and expenses, instruments returned because of insufficient
funds or other amounts which the Collateral Agent is permitted so to
deduct or set-off under such subsection or the Security Documents.
Section 7.4 Amendment of Certain Provisions of the Credit
Agreement and the Purchase Agreement. (a) The Lenders agree that,
after the date hereof, they shall not, without prior notice to the
Noteholders and without the prior written consent of Noteholders holding
Voting Purchase Agreement Obligations representing a majority of the
Voting Purchase Agreement Obligations, amend or revise the Credit
Agreement in any manner which would:
(i) shorten the maturity of any scheduled principal payment
date;
(ii) adjust the method or formula by which the interest
due on the Loans is determined so as to increase the effective interest
rate, except for adjustments made pursuant to Sections 2.13, 2.14, 2.15
and 2.16 of the Credit Agreement;
(iii) adjust the method of calculating the commitment fee
provided for in Section 2.3 of the Credit Agreement, the L/C Fee
provided for in Section 3.3, or the premium provided for in subsection
2.4(d) of the Credit Agreement, in each case in any manner that would
have the effect of increasing the amount thereof;
(iv) amend the Credit Agreement to increase the aggregate
amount of Commitments of the Lenders thereunder;
(v) alter any of the covenants set forth in Section 6 of the
Credit Agreement in a manner which would make it materially more
difficult for the Borrower to comply with or remain in compliance with
those covenants, or add additional covenants to the Credit Agreement;
(vi) make any amendment or revision to the Credit
Agreement which would place restrictions upon the Borrower making any
payment or prepayment on the Senior Notes;
(vii) alter Section 7 of the Credit Agreement in a manner
which would make it materially more likely that any of the events set
forth therein will occur or which would add additional events thereto;
or
(viii) alter the definition of Required Lenders to change
the percentage set forth therein.
(b) The Noteholders agree that, after the date hereof, they
shall not, without prior notice to the Lenders and without the prior
written consent of Lenders holding Voting Credit Agreement Obligations
representing a majority of the Voting Credit Agreement Obligations amend
or revise the Purchase Agreement in any manner which would:
(i) shorten the maturity of any scheduled principal payment;
(ii) increase the interest rate due on the Senior Notes as set
forth in Section 2 of the Note Purchase Agreements, except for
adjustments currently provided for in each of the Note Purchase
Agreements;
(iii) alter the calculation of the Make-Whole Amount
provided for in any Note Purchase Agreement in any manner that would
have the effect of increasing the amount thereof;
(iv) alter any of the covenants set forth in Section 8 of
any Note Purchase Agreement in a manner which would make it materially
more difficult for the Borrower to comply with or remain in compliance
with those covenants or add additional covenants to the Note Purchase
Agreements;
(v) make any amendment or revision to the Note Purchase
Agreements which would place restrictions upon the Borrower making any
payment or prepayment on the Loans;
(vi) alter Section 9 of the Note Purchase Agreements in a
manner which would make it materially more likely that any of the events
set forth therein will occur or which would add additional events
thereto; or
(vii) alter the definition of Required Noteholders to
change the percentage set forth therein.
Section 7.5 Waivers, Amendments and Consents.
Notwithstanding any contrary provisions contained in any other Operative
Agreement, as long as there are both Outstanding Credit Agreement
Obligations and Outstanding Purchase Agreement Obligations, all Voting
Actions (other than Voting Actions expressly provided for elsewhere in
this Agreement) shall be subject to the provisions of this Section.
Each Voting Action approved in accordance with this Agreement shall be
effective and binding upon all Participating Creditors and any Voting
Action that is taken, made or granted without obtaining the approval
required under this Agreement shall not be effective or binding for any
purpose. Each Voting Action shall require the prior written approval of
the Majority Creditors.
Section 7.6 Release of Collateral and Guarantees. (a) In
connection with any sale, transfer or disposition of any Collateral to
any person other than the Borrower or any subsidiary of the Borrower
that is (x) permitted by Section 10 of the Uniform Business and
Financial Covenants of the Borrower (Schedule III to each of the Credit
Agreement and the Note Purchase Agreements), (y) expressly permitted by
the terms of the Operative Agreements (or any of them) or (z) approved
by all Participating Creditors (subject to subsection 7.6(c)), the
Participating Creditors agree that any Liens on such Collateral created
pursuant to the Security Documents will be released upon the delivery of
evidence satisfactory to the Collateral Agent that such sale, transfer
or disposition is in compliance with the requirements of such Section
(or the terms of any such approval by all Participating Creditors) and
the proceeds of such transaction have been or will be applied as set
forth in such Section (or any applicable terms of any such approval).
In the event any such sale, transfer or disposition to a person other
than the Borrower or any subsidiary of the Borrower shall be of 100% of
the capital stock of a Subsidiary Guarantor, the Participating Creditors
hereby authorize the Collateral Agent upon the delivery of such evidence
to release such Subsidiary Guarantor and its assets from its obligations
under and the Liens created by the Security Documents and to execute an
amendment, release or other document in form and substance satisfactory
to the Collateral Agent confirming such release.
(b) Collateral may be released in connection with the
exercise of any rights, powers or remedies by the Collateral Agent
pursuant to and in accordance with Section 3.2, and such release shall
not require any approval under this Section.
(c) In the case of any proposed release of Collateral from
the Lien of any Security Document that is not permitted under paragraph
(a) or (b) above, such release shall require the prior written approval
of all of the Participating Creditors. Upon any request of the
Collateral Agent, the Borrower will, and by countersigning this
Agreement the Borrower agrees to, furnish a certificate to the
Collateral Agent as to the fair market value of any Collateral. If the
fair market value of any item of Collateral (or group of items that
constitutes an integrated portion of the Collateral) proposed to be
released is certified by the Borrower to be in excess of $500,000 then,
upon any request of the Collateral Agent, the Borrower will, and by
countersigning this Agreement the Borrower agrees to, furnish to the
Collateral Agent an appraisal of the fair market value of such
Collateral from an independent appraiser. The Collateral Agent and the
Participating Creditors may rely conclusively, and shall be fully
protected in so relying, on any such certificate or appraisal.
(d) The Participating Creditors hereby authorize the
Collateral Agent to execute releases and other documents in form and
substance satisfactory to the Collateral Agent in respect of any release
of Collateral permitted under this Section.
Section 7.7 Additional Collateral. Each of the Participating
Creditors hereby covenants and agrees that it (i) will not accept any
guarantee of any of the Obligations by the Parent or any subsidiary
thereof unless such person's guarantee is provided pursuant to the
Guarantee Agreement or otherwise guarantees the payment of all the
Obligations on a pari passu basis and (ii) will not take any security
interest in or Lien on any assets of the Borrower or any subsidiary
thereof to secure any of the Obligations unless such security interest
or Liensecures the payment of all the Obligations on a pari passu basis
pursuant to the Security Documents.
Section 7.8 Purchase of Collateral. Any Participating
Creditor may purchase Collateral at any public sale of such Collateral
pursuant to any of the Security Documents and may make payment on
account thereof by using any Outstanding Obligation then due and payable
to such Participating Creditor from the person which granted a security
interest in such Collateral as a credit against the purchase price to
the extent, but only to the extent, approved by the Majority Creditors.
The Collateral Agent shall give prior notice of any such sale to each
Participating Creditor (to the extent that the Collateral Agent has
received notice of such sale).
Section 7.9 Further Assurances, etc. Each party hereto shall
execute and deliver such other documents and instruments, in form and
substance reasonably satisfactory to the other parties hereto, and shall
take such other action, in each case as any other party hereto may
reasonably have requested (at the cost and expense of the Borrower
which, by countersigning this Agreement, agrees to pay such costs and
expenses), to effectuate and carry out the provisions of this Agreement,
including by recording or filing in such places as the requesting party
may deem desirable, this Agreement or such other documents or
instruments.
Section 7.10 Solicitations. By countersigning this
Agreement, the Borrower agrees that it will not, and will not permit any
person acting on its behalf to, solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the
provisions of this Agreement or any other Operative Agreement (other
than in connection with matters not requiring the consent or approval of
any particular class or group of Participating Creditors, in which this
sentence shall not apply to such class or group) unless each
Participating Creditor shall be informed thereof by the Borrower and
shall be afforded the opportunity of considering the same and shall be
supplied by the Borrower with sufficient information to enable it to
make an informed decision with respect thereto. Executed or true and
correct copies of any amendment, waiver or consent effected pursuant to
the provisions of this Agreement shall be delivered by the Borrower to
each Participating Creditor forthwith following the date on which the
same shall have been executed and delivered by the required percentage
of the Participating Creditors. By countersigning this Agreement, the
Borrower agrees that it will not, and will not permit any person acting
on its behalf to, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of purchase of all or any party of any
Senior Note or Loan or payment of any supplemental or additional
interest, fee or otherwise, to any Participating Creditor as
consideration for or as an inducement to the entering into by any
Participating Creditor of any waiver or amendment of any of the terms
and provisions of this Agreement or any other Operative Agreement (other
than in connection with matters not requiring the consent or approval of
any particular class or group of Participating Creditors, in which case
this sentence shall not apply to such class or group) unless such
remuneration is concurrently paid, on the same terms, ratably to each
Participating Creditor.
ARTICLE VIII
APPROVAL BY THE GRANTORS
By entering into the Security Documents, each Grantor and
Guarantor, although not a party hereto, acknowledges and consents to and
agrees to perform and be bound by the provisions hereof.
ARTICLE IX
MISCELLANEOUS
Section 9.1 No Individual Action. No Participating Creditor
may require the Collateral Agent to take or refrain from taking any
action hereunder or under any of the Security Documents or with respect
to any of the Collateral except as and to the extent expressly set forth
in this Agreement.
Section 9.2 Successors and Assigns. (a) This Agreement
shall be binding on and inure to the benefit of the Collateral Agent,
each of the Participating Creditors and their respective successors and
permitted assigns (including any assignee of any Lender in accordance
with the Credit Agreement and the holders from time to time of the
Senior Notes); provided, however, that, except as provided in the next
sentence, no Credit Agreement Creditor or Noteholder may assign its
rights or obligations hereunder. The rights and obligations of any
Credit Agreement Creditor or Noteholder under this Agreement shall be
assigned automatically, without the need for the execution of any
document or any other action, to, and the term "Credit Agreement
Creditor" or "Purchaser" as used in this Agreement shall include, any
assignee, transferee or successor of such Participating Creditor under
the Credit Agreement or the Note Purchase Agreements, as the case may
be, in accordance with the terms of and upon the effectiveness of an
assignment pursuant to Section 9.6 of the Credit Agreement or a transfer
of Senior Notes pursuant to Section 14.4 of the Note Purchase
Agreements, as the case may be, and any such assignee, transferee or
successor shall automatically become a party to this Agreement. If
required by any party to this Agreement, such assignee, transferee or
successor shall execute and deliver to the other parties to this
Agreement a written confirmation of its assumption of the obligations of
the assignor or transferor hereunder. Each of the Credit Agreement
Creditors and the Purchasers agrees that it shall deliver a complete
copy of this Agreement to any potential assignee, transferee or
successor of such Credit Agreement Creditor or Purchaser prior to the
execution of any such assignment or transfer. Any Lender may, without
the consent of the other Credit Agreement Creditors and Purchasers, sell
one or more participations in the Loans or Letters of Credit held by it
or issued pursuant to the terms and conditions of the Credit Agreement;
provided, however, that (except as otherwise specified herein) each of
the Credit Agreement Creditors shall remain liable to each other for the
full performance of their obligations hereunder with the same effect as
though no such participation had been sold and as though any and all
amounts, payments or security received by a participant with whom it
dealt in respect of the loan or note participation were received by such
party and shall continue to deal solely and directly with each other
with respect to their respective rights and obligations under this
Agreement. Except as specifically set forth above and in paragraph (b)
below, this Agreement is not intended to confer any benefit on, or
create any obligation of the Collateral Agent or any Participating
Creditor to, the Borrower or any third party, including the Guarantors
and other Grantors.
(b) The provisions of Sections 7.5 and 7.6 (and the
provisions of this paragraph and clause (iii) of Section 9.6) are
intended to confer a benefit upon the Borrower and shall be enforceable
by the Borrower.
Section 9.3 Notices. Notices and other communications
provided for herein or in any Support Document shall be in writing and
shall be delivered by hand or overnight courier service, mailed or sent
by telex, graphic scanning or other telegraphic communications equipment
of the sending party, as follows:
(a) if to any Credit Agreement Creditor, to it as set forth
on Schedule I;
(b) if to any Purchaser, to it as set forth on Schedule II;
(c) if to the Collateral Agent, to it as set forth with
respect to the Agent on Schedule I; and
(d) if to the Borrower or any other Grantor, to it as
specified in the Credit Agreement, the Note Purchase Agreements or the
Support Document to which it is a party.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have
been given on the date of receipt if delivered by hand or overnight
courier service or sent by telex, graphic scanning or other telegraphic
communications equipment of the sender, or on the date five Business
Days after dispatch by certified or registered mail if mailed, in each
case delivered, sent or mailed (properly addressed) to such party as
provided in this Section 9.3 or in accordance with the latest unrevoked
direction from such party given in accordance with this Section 9.3
(each such unrevoked direction from any Credit Agreement Creditor or
Purchaser or any assignee or successor of either shall be deemed to be
an amendment of and to be listed on Schedule I or II, as the case may
be). Addresses of any party may be changed by written notice by such
party to the Collateral Agent.
Section 9.4 Termination. This Agreement shall terminate
automatically upon the indefeasible payment in full of the Outstanding
Credit Agreement Obligations [or] the Outstanding Purchase Agreement
Obligations; provided, however, that (a) Articles I, II, III, IV, V,
VIII and IX, and Sections 7.1, 7.2, 7.3, 7.6, 7.8 and 7.9 shall survive,
and remain operative and in full force and effect, as long as there are
any Outstanding Obligations that are secured by any of the Security
Documents or guaranteed pursuant to the Guarantees and (b) this Section
9.4 and Sections 5.5, 5.6 and 9.5 of this Agreement shall survive, and
remain operative and in full force and effect, regardless of the
termination of this Agreement.
Section 9.5 APPLICABLE LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS
OF THE STATE OF NEW YORK.
Section 9.6 Modification of Agreement. No modification or
amendment of any provision of this Agreement shall in any event be
effective unless the same shall be in writing and signed by the Required
Lenders (as defined in the Credit Agreement) and the Required
Noteholders (as defined, in the Note Purchase Agreements); provided,
however, that (i) no such modification or amendment shall adversely
affect any of the Collateral Agent's rights, immunities or rights to
indemnification hereunder or under any Support Document or expand its
duties hereunder or under any Support Document, without the prior
written consent of the Collateral Agent, (ii) no such modification or
amendment shall modify any provision hereof which is intended to provide
for the equal and ratable security of all Outstanding Obligations
without the prior written consent of all Participating Creditors, (iii)
no such modification or amendment shall be made to Section 7.5 or 7.6 or
to the definition of "Majority Creditors" for purposes of such Sections,
or to subsection 9.2(b) or to this clause (iii), without the prior
written consent of the Borrower, and (iv) no such modification or
amendment shall change the definition of "Majority Creditors" or this
Section or Sections 3.2, 7.2(b), 7.5 or 7.6 without the prior written
consent of each Lender and Purchaser. No waiver of any provision of
this Agreement and no consent to any departure by any party hereto from
the provisions hereof shall be effective unless such waiver or consent
shall be set forth in a written instrument executed by the party against
which it is sought to be enforced, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any party hereto in any case shall
entitle such party to any other or further notice or demand in the same,
similar or other circumstances.
Section 9.7 Waiver of Rights. Neither any failure nor any
delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, and a single or
partial exercise thereof shall not preclude any other or further
exercise or the exercise of any other right, power or privilege.
Section 9.8 Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provision.
Section 9.9 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original,
but all of which, when taken together, shall constitute but one
instrument.
Section 9.10 Section Headings. The Article and Section
headings used herein are for convenience of reference only and are not
to affect the construction of or be taken into consideration in
interpreting this Agreement.
Section 9.11 Complete Agreement. This Agreement constitutes
the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior representations,
negotiations, writings, memoranda and agreements. To the extent
any provision of this Agreement conflicts with any other Operative
Agreement, the provisions of this Agreement shall be controlling.<PAGE>
IN WITNESS WHEREOF, the Collateral Agent, the Credit Agreement
Creditors and the Purchasers have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year
first above written.
CHEMICAL BANK, as Agent, Collateral Agent
and a Lender,
By:
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:
Name:
Title:
SOCIETE GENERALE
By:
Name:
Title:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By:
Title:
JOHN HANCOCK LIFE INSURANCE
COMPANY OF AMERICA
By:
Title:
ALLSTATE LIFE INSURANCE
COMPANY
By:
Name:
By:
Name:
THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK
By:
Title:
MONY LIFE INSURANCE
COMPANY OF AMERICA
By:
Title:
Countersigned by:
IT CORPORATION
By:
Name:
Title:
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the Company's
Condensed Consolidated Balance Sheet as of September 29, 1995, and its
Condensed Consolidated Statement of Operations for the Second Fiscal Quarter
Ended September 29, 1995, which were filed with the SEC on November 13, 1995 on
Form 10-Q for the quarter ended September 29, 1995 (commission file number
1-9037) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-29-1995
<CASH> 15,437
<SECURITIES> 0
<RECEIVABLES> 139,198
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 174,123
<PP&E> 154,904
<DEPRECIATION> 95,043
<TOTAL-ASSETS> 325,418
<CURRENT-LIABILITIES> 87,837
<BONDS> 50,107
<COMMON> 36,097
0
2,400
<OTHER-SE> 110,122
<TOTAL-LIABILITY-AND-EQUITY> 325,418
<SALES> 0
<TOTAL-REVENUES> 106,259
<CGS> 0
<TOTAL-COSTS> 101,101
<OTHER-EXPENSES> (224)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,652
<INCOME-PRETAX> 3,730
<INCOME-TAX> 1,375
<INCOME-CONTINUING> 2,355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,355
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0
</TABLE>
